Legislation was enacted on 16 December 2025 that will raise the bar for employers seeking to enforce contractual retirement ages occurring prior to the State pension age, currently 66. The Employment (Contractual Retirement Ages) Act 2025 (‘the Act‘) has been passed but at the time of writing, its provisions have not yet been implemented.
What is Changing?
Mandatory retirement ages are legal in Ireland subject to certain criteria (summarised below).
The changes brought in by this Act will be relevant only where the employment contract specifies a retirement age lower than (currently) 66 and where the employee objects to leaving. The provisions prohibit mandatory retirement unless the employer can objectively justify it. The employer will need to respond to employee objections within a tight legislative timeline of one month.
Employers wishing to compulsorily retire employees below age 66 (or such later pensionable age as may later be enacted) will be more constrained in doing so.
Context
There is often a gap in retirement and pensionable age. The legislation contemplates a need for an express contractual term to enforce retirement. Many employers do not routinely include these in their employment contracts, instead relying on custom, practice, handbooks or policies. It is possible that employees and employers will seek to invoke custom and practice arguments, e.g. is there clearly a consistently applied retirement age?
Who Will Be Impacted?
All employees are impacted once: they have a contractual retirement age below the State pension age, they have passed probation and they notify their employer that they wish to continue working until at least their 66th birthday.
No issue will arise unless the employee notifies the business that they wish to continue working until their 66th birthday.
How Will Relevant Employees Trigger the Obligations?
Employees must object in line with certain legislative requirements, such as notifying the business up to a year and at least three months before their scheduled retirement date.
For those who are required to give longer notice periods on resigning (senior or key staff), their notification under this Act must align with that notice period, or if shorter, it can be six months.
Once the employee sends the notification, the employer is presented with several choices:
- Seek agreement on the retirement date
- Extend it to the pensionable age
- Seek to enforce the earlier contractual date. This latter course is subject to the employer setting out in writing why this employee’s retirement is objectively justified. This is significant and is addressed below. The employer must set out this ‘reasoned reply’ within one month of the employee’s notification
What Are the Risks?
Companies are required to comply and there are additional protections for employees who assert rights under this Act from penalisation. This is broadly defined and would include, for example, dismissal, loss of promotion opportunities, transfer of duties or location or demotion, to name but a few.
An employee wishing to bring a legal challenge must elect to claim under this Act or for age discrimination under the Employment Equality Act.
Potential remedies include reinstatement or compensation of up to two years’ pay or €40,000, whichever is greater.
Employers should also note that failure to provide a reasoned written reply will be an offence. This offence does not arise where the employer is agreeing to extend the employment to pensionable age, or another agreed date.
What Should Companies Do Now?
Companies should examine whether their employment contracts include a mandatory retirement date falling below pensionable age. Many contracts will have a clause tracking the State pension age and nothing changes in relation to those employees as a result of this legislation. For others, there may be a gap of a relatively short period. The impact for many will be minimal. Many employers will have no issue with employees working until 66. Retirement dates which track pensionable age or are being implemented on a consensual basis will not be impacted.
This Act does not impact on common practices such as offering fixed term arrangements to staff on reaching retirement.
It is noteworthy that prior to its enactment, some complainants before the WRC were already referring to its provisions. The Act reflects growing expectations to work at least to pensionable age.
A practical step for planning purposes is for managers to assess what their business needs are and scope out employee preferences as retirement approaches. This includes considering if there will be financial hardship, which could of itself potentially render a mandatory retirement unlawful. It may be possible to mitigate such hardship, including through temporary alternative working arrangements. The Workplace Relations Commission code of practice (which is not legally binding) provides guidance for managing those nearing retirement age. The employer should assess what is necessary for their business and be consistent where possible.
One to Watch
When commenced and where triggered, the Act appears to require employers to justify retirement for reasons specific to the employee in question. This will surprise many as recent cases had clarified that individual assessment (except for financial hardship) is not necessary for justifying retirements. Yet, this new legislation appears to envisage just that for relevant employees. How this plays out in 2026 will be one to watch and employers should keep a close eye on this issue.
Importantly, it generally remains the case that mandatory retirement ages are legal in Ireland provided that they are ‘objectively justified’. A recent WRC decision regarding the private sector confirmed that employers are best placed to assess what is necessary for their business/sector1. They must implement policy appropriately and proportionately and be consistent and systematic.
The retirement issue is evolving and continues to warrant careful consideration. Each instance should be carefully considered and appropriate advice obtained where employees could potentially challenge an employer’s approach.
Footnote
- Patrick Donnellan -v- Eircom Limited ADJ-00051860 October 2025 ↩︎
