Mr. Martin Shanagher:

I thank the joint committee for its invitation. My Department welcomes the opportunity to have this discussion with it. I am joined by Ms Deirdre Sweeney of the Equality Tribunal which recently transferred from the Department of Justice and Equality to my Department and by my colleagues, Mr. Dermot Sheridan and Ms Siobhán O'Connell, from the employment rights policy unit. I am speaking on behalf of the Department of Jobs, Enterprise and Innovation.

As my colleague from the Department of Social Protection, Dr. Quinn, has pointed out, the increase in State pension age is linked with broader public policy issues and is taking place against a backdrop of fundamental shifts in the demographics of the population. As a society, we are ageing which, ultimately, will lead to a shrinking ratio of working population to pensioners. People are living longer. Older people are healthier and more active and have valuable contributions to make to society, either from within the workforce or in other aspects of their lives. Our colleagues have also referred to the issues around improving the long-term sustainability and adequacy of pension systems and the public finances. All of these issues are interlinked and one of the key policy responses is to encourage longer working lives, a goal of which my Department is fully supportive. Encouraging people to stay in the workforce beyond what society may view as a normal retirement age is as much about cultural change as it is about removing more tangible obstacles to working longer. We need to challenge societal norms around retirement or retirement age and other cultural issues or societal attitudes to older people to promote the many positive aspects of their remaining in the workforce. Addressing that issue is very much a societal challenge.

In addressing the specific issue of the implications for employees of the increase in the State pension age, it is important to clarify for the committee the statutory position on retirement ages. Apart from certain public sector employees where certain statutory retirement ages may apply, in our legislation there is no statutory retirement age for employees. A contract of employment will generally contain a retirement age, although not always, but this is a matter of contract between the relevant parties. Consequently, there is absolutely no prohibition on employers and employees setting down a retirement age beyond the normal retirement age or the age at which the State pension is payable. An employer and an employee are free to agree to a retirement age of 60 years, 70 or any other number they choose. In general, employment rights legislation which is administered by my Department does not contain an upper age limit. The upper age limit for bringing claims under the Unfair Dismissals Acts 1977 to 2007 was removed by a provision in the Equality Act 2004. It is now the case that a person of any age, if dismissed, may take a case under the Unfair Dismissals Acts, unless she or he has reached what is considered to be the normal retirement age for employees in similar employment, if there is one. In such circumstances the burden of proof is on the employer to prove the normal retiring age. Furthermore, the upper age limit of 66 years for receipt of statutory redundancy payments was removed by the Protection of Employment (Exceptional Collective Redundancies and Related Matters) Acts 2007.

The key issue that arises around compulsory retirement at a given age is whether this entails discrimination on age grounds. Therefore, the more usual avenue for redress for employees compulsorily retired is to take a claim under the Employment Equality Acts to the Equality Tribunal. I must draw the committee's attention to the fact that policy responsibility for these Acts remains with the Minister for Justice and Equality. However, the Equality Tribunal, the independent statutory body responsible for investigating and mediating on complaints made under the Acts, has recently been brought under the umbrella of the Department of Jobs, Enterprise and Innovation in the context of the creation of a streamlined workplace relations service. Essentially, this will bring the Equality Tribunal, the rights commissioner service and, in the first instance, the activity of the Employment Appeals Tribunal together in a single adjudication mechanism in the same organisation with the Labour Relations Commission, LRC, and the National Employment Rights Authority, NERA, to form the workplace relations commission, from which appeals will go to the Labour Court as heretofore.

While section 34(4) of the Employment Equality Acts provides that it is not unlawful for an employer to fix a compulsory retirement age for employees, the Equality Tribunal has in recent decisions interpreted these Acts in the light of rulings of the European Court of Justice in cases concerning Framework Directive 2000/78/EC which prohibits discrimination in employment and occupation on various grounds, including age. In these cases the European Court of Justice has found that terminating someone's employment on the basis of his or her chronological age is considered as direct discrimination under EU law. However, the court has further found that this discrimination can be justified if it arises as the result of a legitimate aim in a state's social or employment policy. If an employer chooses to defend the mandatory retirement age before the tribunal, he or she faces the challenge of objectively justifying that retirement age. In a number of cases heard by the Equality Tribunal employees have successfully challenged the retirement age set by their employers.

In terms of scale of the impact of the changed State pension age, it is worth recalling the figures quoted by my colleague. Of the 11,000 individuals awarded the State pension - transition in 2012, only 1,390 came from persons who were in employment, the remainder being already retired, on another social protection payment scheme or self-employed. In the broader scheme of things, that is a significantly reduced figure of employees who will be impacted on by the increase in the State pension age this year.

With regard to how employers are responding to the change in the State pension age and its implications for them and their employees, it is too early to form a definitive picture. However, it is our understanding from our discussions with IBEC and employer representatives that while many employers are defending their right to set a normal retirement age within their enterprise which would normally still be 65 years, a significant proportion of employers are trying to facilitate employees who wish to continue working beyond their 65th birthday. Some employers have already changed the retirement age for their employees, while others have indicated that they intend to change it for all employees. As mentioned, others have awarded one year fixed-term contracts to see people through the additional age. That is not surprising because to refer to a UK study, when the United Kingdom had a default retirement age, an employer had to remind an employee one year in advance of the retirement age. The employee had to apply formally and receive a written response from the employer on whether he or she was allowed to stay in the job. The study found that, apart from a few very exceptional cases, employees were committed to staying on. We hope that is the picture emerging here.

My Department will continue to work closely with the other relevant Departments on these issues through the interdepartmental committee on working and retirement, chaired by our colleagues in the Department of Social Protection. As Dr. Quinn advised, that group is considering a range of measures to address the need for longer working in the context of demographic change. My Department will also keep lines of communication open with both employer and employee representative organisations to ensure we have an understanding of what is actually happening on this issue since it was crystallised in practice from 1 January this year.

I hope that gives the committee a broad sense of the employment aspects involved. I look forward to hearing members' views and responding to questions, as needed.