Peter Burke (Longford-Westmeath, Fine Gael) | Oireachtas source

I move: "That the Bill be now read a Second Time."

I welcome the opportunity to discuss the Employment (Contractual Retirement Ages) Bill 2025. Before I go through the main provisions of the Bill, I will first give some background and context to the legislation. The Bill implements one of the commitments included in the Government’s response to the pensions commission recommendations and implementation plan. The majority of the Government’s commitments relate to significant reform of the State pension system and are being led by my colleague, Deputy Calleary, the Minister for Social Protection. The overarching objective is to ensure that the pensions system is sustainable in the face of demographic change, and that people relying on the State pension will have an adequate income in retirement.

In its terms of reference, the pensions commission was also asked to consider the issue of retirement ages in private employment contracts that are set below the State pension age. Currently an employer is permitted to set a retirement age for a worker. However, employment equality legislation provides that this can only be done where it is objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.

Following its extensive deliberations, the pensions commission’s final recommendation on this issue was for the introduction of measures that allow, but do not compel, an employee to stay in employment until the pensionable age; that is, the age at which people may normally first access the State pension, which is 66. This element of consent reflects the fact that many employees may want to retire at the contractual retirement age. The Bill will implement that recommendation. It will create a new employment right for employees who are subject to a contractual retirement age which is below the pensionable age. It will particularly benefit employees who do not have an occupational pension scheme, or those who have a modest supplementary pension, and who may experience a significant drop in their income if they retire before reaching pensionable age.

I am aware that while there is broad support for the measure, there have been some calls for a complete abolition of retirement ages. This option, among others, was examined by the pensions commission in its extensive deliberations. Ultimately, its final recommendation was to align contractual retirement ages with the pensionable age. Complete abolition of any mandatory retirement age would impose a potentially substantial burden on employers. It would restrict their ability to plan their workforces, including succession planning and providing promotional opportunities. It would also run counter to recent case law. The Bill implements the pensions commission’s carefully considered recommendation on this topic. I believe it represents a fair balance between the needs of employers and those of employees.

I will now outline the main provisions of the Bill. The Bill consists of ten sections, divided into four Parts. An explanatory memorandum has been published and provides a summary of the provisions.

Part 1 of the Bill deals with preliminary and general matters. Sections 1 and 2 set out the Short Title of the Bill and commencement provisions and necessary definitions. Section 3 provides that the Bill applies to employees with a contractual retirement age which is below the State pension age and who have completed their probation. This section also excludes employees with a retirement age set out in law, such as gardaí or members of the Defence Forces, from the Bill’s effect. Section 4 is a standard provision relating to expenses incurred in the Bill’s administration.

Part 2 of the Bill sets out how the new employment right operates. Section 5 provides that an employee may give notice to their employer that they do not consent to retire at a contractual retirement age below the State pension age. This notice period must be a minimum of three months but not greater than one year. An employer’s handbook may require a longer minimum notice period, but this cannot be more than six months. An employee also has the right to change their mind. They can choose to withdraw this notification and retire. However, they must give the employer notice in accordance with their contract or minimum notice legislation, whichever is the shorter. When an employer receives this notification, they cannot enforce the retirement age except in limited circumstances. If the employer does want to enforce the contractual retirement age, they must give the employee a written reply which sets out an objective and reasonable justification for applying the retirement age to that individual employee. This exemption recognises that there may be limited circumstances where it is necessary that a retirement age below the age of 66 applies. This fact was recognised by the pensions commission in its report. I will make an important point here. The employer must be capable of justifying the retirement age for the individual worker as distinct from a general class of worker. The threshold to be met is therefore higher than is provided for in the employment equality Acts, which will continue to have effect more generally.

Part 3 sets out how an employee can enforce their rights under this Bill. Section 6 of the Bill sets out the complaints procedure, which is in line with other employment rights legislation.

Employees will be able to refer a complaint and seek redress through the Workplace Relations Commission, WRC, if their rights provided for in this Bill are breached. Where a complaint is well founded, the WRC may require the employer to take a specific course of action, including reinstatement or re-engagement. The WRC can also award compensation, with an upper limit equal to the greater of 104 weeks’ remuneration or €40,000. Section 7 makes technical changes to the Workplace Relations Act 2015 to provide for this complaint mechanism.

Part 4 of the Bill relates to penalisation and offences. Section 8 of the Bill protects employees from penalisation for exercising, or proposing to exercise, their entitlements. Section 9 of the Bill states that employees’ existing rights under employment equality legislation are retained but redress cannot be granted by the WRC under both pieces of legislation. Section 10 makes it an offence for an employer to retire an employee having failed to provide a written reasoned reply in response to the employee’s written notification.

In summary, this Bill aims to achieve a number of things. It will facilitate employees who wish to continue working beyond the normal retirement age of 65. It will bridge the income gap for those workers who may experience a significant drop in their income when they are forced to retire before they can access the State pension. It will improve adequacy and predictability of income for older workers. This Bill will further encourage and support longer and fuller working lives and facilitate older peoples’ engagement in economic and social life. I commend this Bill to the House.

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