More and more people are continuing to work past what was seen for years as the traditional retirement age of 65.
The change in the State pension age to 66 in 2014 is one reason for this, along with the option of delaying receipt of the pension up to the age of 70, encouraging many to work the extra year and often beyond.
Longer lifespans, better health and the increasing percentage of people working in office jobs more suited to longer working are also key factors.
With the population ageing, this is good for the economy and economists have called for more to be done to encourage people to keep working.
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New legislation is going to change the picture here, but employers and employees await vital guidance from the Workplace Relations Commission (WRC) on how this is to operate and how it fits in with existing rules. This will be important for those now approaching retirement age as they consider their options.
The numbers
The Central Statistics Office Labour Force Survey figures going back to 1998 show a revolution in older-age working since them. There were 33,100 over-65s in employment in 1998. By the third quarter of last year this had risen to 128,500. Over the past twenty years the participation rates of over-65s in the jobs market has almost doubled from 8 per cent to 15 per cent. The male participation rate is much higher, at 21.5 per cent compared to 9.5 per cent for women.
We don’t know, of course, whether this is driven by choice or necessity. A 2019 Economic and Social Research Institute study suggested that the rise up to the middle of the last decade was driven in large part by a shortage of pension income, which remains an issue for many. As well as employees, a significant number of those working beyond 65 were self-employed – a group with traditionally poor pension provision. While women over the age of 65 are less likely to work than their male counterparts, the gender pensions gap – the lower level of occupational pensions for many women – mean a higher participation rate among single women.
The increase in older employees is also being driven by the increase in the mandatory public sector retirement age to 70 introduced in 2018 and applicable to most employees including the vast majority who joined from 2013 on, except for a group including An Garda Síochána, prison officers, firefighters and members of the Permanent Defence Force to whom special arrangements apply. There is no mandatory retirement age in the private sector, meaning most employees rely on contracts.
The existing rules
In many workplaces the issue of working beyond a contractual employment data is sorted out without rancour between employers and employees. According to Dr Laura Bambrick, head of social policy and employment affairs at the ICTU: “The Labour Force survey shows growth in employment in the over 65s is faster than all age groups, which is promising and looks like more and more individual employees and their employers are coming to agreements.”
The tight labour market has undoubtedly also been a factor here, with employers in many sectors facing skills shortages and willing to be more flexible to accommodate older employees. A 2024 IBEC survey found that around two thirds of member organisations had received and agreed to a request from an employee or employees to work beyond 65. These arrangements generally involve fixed term contracts which specify the purpose of the extension, whether that be to complete a certain project or to undertake a certain work programme. According to Jennifer Cashman, employment law partner at RDJ, these arrangements have allowed employers to maintain their approach to having a mandatory employment age in employee contracts while also allowing many to remain on for a period.
Under equality legislation, employees have had a right to request that they work beyond a contracted employment age and there is a code of practice set down by the Workplace Relations Commission in relation to this. An employer is not legally obliged to grant an extension request but if not doing so must have an “objective and legitimate grounds” for a refusal. These can include issues such as health and safety, having a balanced age structure in the workforce, or allowing younger workers to progress. Appeals to the WRC on the basis of equality legislation have increased and when they get it wrong employers can be liable to paying significant penalties.
The new rules
The increase in the State pension age to 66 in 2014 was meant to be the start of a progression to 68 by 2028. Politics dictated otherwise and now the age will remain at 66. To give employees the right to work to this age – even if their contracts dictate retirement at 65 – the Government has introduced new legislation. Employers would have to provide “reasoned, written justification” to refuse such a request. However, while the act has now been signed into law, it has not yet been commenced – in other words the required ministerial order has not been issued. This is to allow the WRC to issue guidelines on how the new laws will be interpreted in practice. The unions are pressing for this to happen as soon as possible, saying it is time to get on with it.
There will be important issues to be clarified. Cashman says that employers and employees need a clear system which would encompass a variety of existing legislation.
A key issue is how the new rules, outlining a process for people on contracts specifying retirement at 65 to extend by one year, will fit in with the existing process outlined by the WRC based on equality law, which can in many cases involve people working beyond the age of 66.
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While all relevant legislation will still apply, it would appear unsatisfactory for both sides to have to go through one process to extend to 66 and then another if the employee wants to stay longer. There should be a way around this, though as the extension to 66 would be on the basis of the existing contract and people working longer would typically do so on a new fixed term contract, there are issues to be sorted.
And Cashman and other employment law experts have also pointed to some differences in the new legislation from a landmark Supreme Court decision – the Mallon judgement involving a county sheriff – which said that employers could, provided that had objectives reasons, set a generalised compulsory age for employees. The 2026 legislation, on the other hand, indicated that an employer should provide a rationale for retirement related to an individual employee. This might, if not clarified, leaver the new legislation open to legal challenge. That said, many employers are taking the sensible approach and extending contracts to the age of 66, or are considering doing so.
So while the trend towards over-65s working is only going one way, and employee rights to do so are being boosted, the WRC has important work to do which will outlining the future rules of play. The key guidelines look set to be published during the second quarter.
