Legal lens blurs bigger pensions picture – MHC

The recent WRC decision in Patrick Donnellan and Eircom Limited upholding Eir’s mandatory retirement age has landed at an awkward moment in Ireland’s public-policy debate, writes MHC partner and head of pensions Stephen Gillick (pictured).

On one hand, we are repeatedly told that people will need to work longer to fund longer and increasingly expensive retirements, and to ease pressure on the State pension.

On the other, employers continue to defend mandatory retirement as a necessary tool for workforce planning and renewal.

The Eir case brings that tension into very sharp focus.

From a legal perspective, the outcome was not especially surprising.

Legitimate aim

Irish equality law permits a compulsory retirement age where it can be objectively justified by a legitimate aim and where the means of achieving that aim are proportionate.

In this case, Eir relied on familiar grounds, including:

• Succession planning,
• Inter-generational fairness,
• Workforce diversity, and
• Health and safety in a physically demanding role.

The WRC accepted that justification, placing weight on the fact that the policy was long-standing, clearly communicated, and supported by evidence.

But, while the decision may make sense within the confines of current law, it sits less comfortably with the broader direction of travel in pensions and labour-market policy.

Demographic challenge

Ireland, like most developed economies, faces a demographic challenge.

People are living longer, drawing pensions for longer, and entering retirement with increasingly varied financial circumstances.

Extending working lives is frequently presented as part of the solution, both to improve individual retirement outcomes and to reduce pressure on the public purse.

Indeed, the State pension age has already risen to 66, and further increases remain a live political issue.

Against that backdrop, mandatory retirement at 65 can appear increasingly outdated.

For many workers, it represents a forced exit from the labour market before they qualify for the full State pension, at precisely the point when continued earnings could materially improve their retirement security.

Aggrieved workers

It is not difficult to see why these workers feel aggrieved, even where the law ultimately sides with the employer.

Eir’s defence, however, reflects a different, and not illegitimate, policy concern.

The evidence before the WRC showed a striking age profile among field technicians, with a significant concentration of workers over 60.

In these circumstances, an employer can reasonably argue that predictable retirement points are essential to allow for recruitment, training, and progression of younger workers.

Without that predictability, bottlenecks emerge and long-term workforce planning becomes guesswork.

This is where the concept of ‘intergenerational fairness’ becomes more than a slogan.

A labour market dominated by older workers who cannot, or will not, retire serves the interests of those individuals primarily.

The adverse impact of this, however, also is that opportunities become limited for younger cohorts trying to establish careers, particularly in specialised or unionised roles with limited turnover.

It also has social and economic consequences.

Uncomfortable truth

The uncomfortable truth is that both positions have merit.

The law, as it stands, forces adjudicators to choose between them on a case-by-case basis, using a blunt proportionality test.

This is an imperfect way to resolve what is, at heart, a structural policy problem.

Since the conclusion of the case, the Employment (Contractual Retirement Ages) Act 2025 has been enacted, although it is yet to come into force.

This act is the Government’s attempt to square this circle.

It provides that an employee may notify their employer if they do not consent to retire at the mandatory retirement age provided for in their contract, and instead, wish to work to the State pension age of 66, in circumstances where the mandatory retirement age is less than this.

Employers who receive such a notification may not enforce the contractual retirement age unless the retirement of the employee concerned is objectively and reasonably justified by a legitimate aim, and the means of achieving that aim are appropriate and necessary.

Genuine business needs

This is set to tilt the balance towards longer working lives, while still preserving flexibility where genuine business needs exist.  

Whether that balance has been struck successfully remains to be seen.

Ultimately, adjudicators will still be asked to decide whether employers who persist in enforcing an earlier contractual retirement age do so proportionally in the context of legitimate aims.

What the Eir decision ultimately illustrates is that mandatory retirement cannot be assessed solely through the lens of discrimination law.

It sits at the intersection of pensions policy, workforce planning, and inter-generational equity.

Treating it as a purely legal issue risks missing the bigger picture.

Realities of aging population

As Ireland grapples with the realities of an ageing population, the question is not simply whether mandatory retirement ages can be justified, but whether they remain the right default at all.

A more nuanced approach, one that encourages flexibility, values, experience, and still creates space for younger workers, may prove a better fit for the labour market we are becoming, rather than the one we once were.

• Stephen Gillick is partner and head of pensions at MHC, and a member of the Law Society Pensions Sub-Committee.