Closing the Gap: New Law Gives Workers the Right to Delay Retirement Until 66

A major shift in employment law is officially here. Starting Monday, June 29, new legislation takes effect that effectively bridges the income gap for thousands of workers caught between contractual retirement and the State pension.

Under the new rules, eligible employees can now choose to stay in the workforce beyond their contract’s retirement age—provided that age is below the State pension age of 66.

Historically, many workers faced forced retirement at age 65, leaving them with a one-year financial shortfall before their State pension kicked in. This legislation corrects that friction point, giving employees the option—but not the obligation—to work an additional year.

How the New Process Works

The law introduces a formal framework for employees wishing to extend their employment:

• Employee Notification: Workers must formally notify their employer in writing that they do not consent to retire at their contract’s stipulated age.
• Timeline: This notice must be submitted at least 3 months—and no more than 12 months—before the scheduled retirement date.
• Employer Response: Employers have one month to respond in writing.

A Much Higher Bar for Employers

For business owners and managers, the days of blanket mandatory retirement at 65 are over. Under the new legal threshold, an employer cannot force retirement unless they can objectively and reasonably justify the decision by a legitimate business aim, proving that forcing retirement is both appropriate and necessary.

Exceptions to the Rule: These new rules do not apply to employees whose contracts already set retirement at 66 or higher, or professions where retirement ages are legally mandated (such as the Defence Forces and An Garda Síochána). Additionally, the compulsory retirement age for most public and civil servants was already increased to 70 back in 2018.

“This legislation gives employees greater choice and flexibility by allowing them to remain in employment until the State pension age, if they wish to do so,” said Peter Burke, Minister for Enterprise, Tourism and Employment.

Compliance and High-Stakes Penalties

To smooth the transition, the Workplace Relations Commission (WRC) has rolled out an updated Code of Practice on Longer Working. While not strictly law, this code is fully admissible in legal proceedings.

Failing to comply carries heavy financial and legal risks for businesses. Employees who feel their rights have been breached can take their case to the WRC. If successful, employers face:

• Orders to reverse the breach.
• Compensation payouts of up to 104 weeks’ pay or €40,000 (whichever is greater).
• Fines up to €5,000 and/or up to 12 months of imprisonment for breaching the new regulations.

Audrey Cahill, Director General of the WRC, noted that the updated code is designed to guide both sides through the new statutory rights, while also outlining principles for employees aged 66 and older who want to keep working.

The Macroeconomic Impact

While the Irish Congress of Trade Unions (ICTU) welcomed the new law, they reminded workers that this only covers the bridge to age 66. It does not erase an employee’s existing right to challenge forced retirement beyond 66 as age discrimination under the Employment Equality Acts.

Still, the overarching sentiment from the business and labor community is positive.

“Restricting the use of mandatory retirement ages is good for workers, business and the economy,” said ICTU General Secretary Owen Reidy. “It is essential in a tight labour market, an ageing population and for the future sustainability of the public finances.”

Source: Adapted from the ACCA Global Media Bulletin. View the original coverage via ACCA AB Direct.