Employer Resources Newsletter - Aug 2023
HR Best Practice: Retirement
Retirement is a significant milestone in an individual's life, and ensuring legal compliance during this period is crucial for both employers and employees. There are specific regulations and procedures that must be followed to facilitate a smooth and lawful retirement process and essential steps to ensure legal compliance.
Age of Retirement
Currently, there is no compulsory retirement age for Irish employees. The Equality (Miscellaneous Provisions) Act 2015 provides that an employer must objectively justify the mandatory retirement age. The Code of Practice requires that compulsory retirement ages must be ‘capable of objective justification both by the existence of a legitimate aim and evidence that the means of achieving that aim are appropriate and necessary’. This could include:
- Intergenerational fairness (allowing younger workers to progress).
- Motivation and dynamism through the increased prospect of promotion.
- Health and Safety (generally in more safety/critical occupations).
- Creation of a balanced age structure in the workforce.
- Personal and professional dignity (avoiding capability issues with older employees).
- Succession planning.
Under the Code, good practice regarding impending retirement involves “an employer notifying an employee (in writing) of their intention to retire him/her on the contractual retirement date within 6-12 months of that date”.
Written notifications should be followed with a face-to-face meeting which addresses issues such as:
- Clear understanding of the retirement date and any possible issues arising.
- Exploration of measures (subject to agreement) which would support the pathway to retirement, for example flexible working, looking at alternative roles up to the date of retirement.
- Transitional arrangements in regard to the particular post, and
- Assistance around guidance and information.
Alignment to the Code of Practice is essential but as a standard it is best practice to specify a retirement age in contracts of employment where you are seeking to ensure that a compulsory retirement age forms a part of the employee’s terms and conditions.
It is also important for organisations in the non-profit sector to be consistent in enforcing their retirement age to correspond with the contract. If an organisation deviates from this contractual condition, it may set precedence for the future. In order to defend against a compulsory retirement age claim taken by an employee, an organisation must be able to prove that a normal retirement age exists in the organisation and that an employee should have been aware of this or was actually aware of this.
Firstly, it is advisable for employers to ensure there is a retirement age specified in the Terms of Employment for all employees.
It is also recommended that employers take requests to work beyond retirement age seriously and assess if there are good grounds to grant such requests. Older employees continue to have a lot to offer organisations and experience and expertise in particular sectors are not always easy to find. Under the Equality (Miscellaneous Provisions) Act 2015, any fixed term contract offered post-retirement must be objectively justified.
Employers need to bear in mind that every employee must be treated fairly and consistently when addressing future requests as well as the potential impacts on existing contracts.
Finally, it is recommended that the employer examine all potential options available such as part-time working if they believe this is a more suitable arrangement for all parties.
One of the single biggest factors influencing age of retirement for many individuals is their financial security and this is generally dictated by their pension, both personal and State.
Auto-enrolment Pension Scheme
In March 2022 the Government announced a significant step forward in addressing the issues faced by an aging population and the need for sustainable retirement solutions by implementing Auto-Enrolment pension schemes. The Bill cited as the Automatic Enrolment Retirement Savings System Bill 2022 is scheduled to go live in the first quarter of 2024. The concept behind this is to ensure that more people have access to retirement savings and financial security in their golden years and represents a pivotal development for Ireland's retirement planning landscape.
It is estimated that 750,000 workers aged between 26 and 60 will be impacted once introduced.
Workers who are not already in an occupational pension scheme will be automatically enrolled in a pension plan co-funded by their employer and the State. However, they will have the choice to opt out if they so wish.
Every €1 contributed by the worker to the pension scheme will be matched by the employer, and the State will contribute €1 for every €3 saved by the worker.
Employers should seek professional advice and review any current pension scheme considering if they want to encourage participation in an existing plan or whether Auto-Enrolment is a better solution for their organisation and employees in the future. Employers need to understand all financial and compliance implications for both them and their employee's pension rights. Seeking expert guidance in this area is strongly advised.
WRC / Labour Court Decisions
Industrial Relations Act, 1969 Found Not to Apply in Work Placement Dispute
The dispute concerns a Work Placement in a Voluntary Shop. The worker alleged that she had been Unfairly Dismissed from this shop and that the Manager there, Mr X, had bullied and harassed her.
The Employer completely rejected these claims.
Summary of Workers Case
The worker commenced with the overall Statutory Body on October 14, 2019. She was placed as a retail assistant in a voluntary Charity Shop. The shop was not run in a proper or fair professional manner. The Manager used foul language to the worker and bullied and harassed her. The physical environment of the shop, hygiene standards etc, were very poor. She dreaded going into work there. Eventually in January 2020 she was effectively dismissed by the Manager who stated the “He did not want her there anymore”. The Manager from the Statutory Body had a completely false, positive impression of the shop Manager.
In cross examination from the employer’s solicitor the worker maintained that she had never received a contract or a handbook. She was not aware of any formal grievance procedure. She was afraid during her shop placement that the shop manager would “take it out on her” if she ever raised any complaint to the Statutory Body.
Summary of Employer’s Case
The worker was employed by the Statutory Body from October 14, 2019, to October 9, 2020. She was never dismissed and served the full term of her Statutory Training Placement /Contract.
In January 2020 she requested a move to a different Work Placement, which the Statutory Body Manager facilitated. It was entirely at the complainant’s request as she had stated to the Statutory Body Manager that she found the retail shop work a “bit too much for her” and the shop was always very busy.
At no time during her placement in the shop had she ever raised any complaints regarding the shop Manager and had always appeared quite happy there. The Statutory Body Manager knew the Shop Manager well having placed staff there before. The description given by the worker did not agree with her views.
In summary the employers view was that the worker had never been dismissed and had been facilitated with a transfer of Work Placements when she requested same.
She had never raised any complaint or grievances although these were well provided for in the handbook and contract which the worker had received.
In conducting the investigation, the Adjudicator took into account all relevant submissions presented by the parties.
On balance, the Adjudication view had to be that no dismissal had taken place. The worker was on a job placement contract for 12 months and it had come to a natural end, citing that she had been paid, in full, throughout the contract.
The worker was heartfelt in her description of working in the Charity Shop. Regrettably the Manager of the shop was not available to the hearing. However, it was accepted that the Charity shop was not the worker’s employer and there was no Industrial Relations Act,1969 dispute involving them before the hearing. Allegations regarding the shop Manager were unsupported hearsay and could not be commented upon in the Adjudication.
A change of placement had been requested by the worker, on the basis of the shop being “Too much” for her.
She appeared to have been very satisfied with the alternative placement in a smaller more Office type unit.
The Statutory Body presented three witnesses who all corroborated the view of the Statutory Body Manager, that there had been no issues of complaint regarding the Shop or the Manager, ever raised with the Body by the worker.
The Charity Shop had accepted numerous placements before without issue.
The Statutory Body Manager and her colleague presented as experienced workers in the Job placement / Statutory Sector and their evidence was found to be persuasive. Copies of the contract and handbook were submitted in evidence.
Section 13 of the Industrial Relations Act 1969 requires that the Adjudicator to make a recommendation in relation to the dispute. In this instance the Adjudicator recommended that the worker accept that no dismissal took place from her employer, the Statutory Placement Body.
Any issues with the Charity Shop Manager are now effectively well in the past and nothing can be gained by pursuing then further at this stage.
Clarity on the status of any worker is paramount to understanding the employment relationship and thereafter your obligations as an employer.
Statutory Body Work Placements as well as Vocational Programme Work Placements are an integral part of gaining experience within an organisation with a focus on learning and development for the benefit of the worker. But ensuring your organisation applies the correct procedures is essential. Other arrangement applying to internships and work placements must be carefully considered. The National Minimum Wage Act applies to all individuals engaged under a contract of employment.
The law defines a contract of employment as any contract whereby an individual agrees with another person, to do or to perform personally, any work or service for that person or a third person.
Apart from the employment of close family relatives and the engagement of registered industrial apprentices, there is no exemption in law from the obligation to pay the national minimum hourly rate of pay. Therefore, national minimum wage rates apply to work experience placements, work trials, internships and any other employment practice involving unpaid work or working for room and board, regardless of the duration of the engagement.
Understanding the rights of workers under these types of arrangements will ensure protections for both parties and create clarity on the obligations of an organisation in relation to the appropriate procedures being in place.
Did You Know?
Fully Paid Domestic Violence Leave to Commence in the Autumn
The Minister for Children, Equality, Disability, Integration and Youth, has outlined that victims of domestic violence will receive their full pay if they need to take domestic violence leave.
The provision for domestic violence leave is a new entitlement under the Work Life Balance and Miscellaneous Provisions Act 2023 passed earlier this year and provides for five days of paid for those impacted by domestic violence. Employees seeking to avail of this type of leave will have to disclose the nature of the leave to their employer but will not have to provide evidence beyond that.
Domestic violence leave will be formally introduced in the autumn with the publication of regulations setting out the rate of pay and guidance for employers. Part of this guidance will include supports for employers to develop their own domestic violence workplace policies, which will be published at the same time as the leave is commenced.
The decision on the rate of pay was reached following consultation with employers' representatives, trade unions and domestic violence support organisations. The requirement to consult with domestic violence support organisations on the rate of pay was added to the legislation at Report Stage by Minister O’Gorman to ensure that those who work most closely with victims of domestic violence would have the opportunity to contribute their views to the process.
Regulations to give effect to the rate of pay will be published in the autumn and section 7 of the Act will then be commenced.
Call to Action
Organisations in the nonprofit sector should prepare a draft policy for the new statutory leave ensuring the details of which are communicated to all staff once commenced in the autumn.
If your organisation requires support, advice or guidance on developing and implementing policies and procedures, employee relations support or details of the supports provided under our Partnership Programme contact our expert-led team at Adare Human Resource Management.