New Retirement Age Legislation in Ireland: What Employers Need to Know
The introduction of the Employment (Contractual Retirement Ages) Act 2025 represents an important change to Irish employment law, introducing additional protections for employees who wish to remain in employment beyond their contractual retirement age.
The legislation, which came into effect on 29 June 2026, establishes new obligations for employers operating contractual retirement ages below the State Pension age, currently 66.
While employers may continue to maintain mandatory retirement ages in certain circumstances, the legislation places greater emphasis on the requirement to objectively justify those arrangements and introduces a formal process through which eligible employees can seek to remain in employment.
For businesses with a contractual retirement age of 65 or younger, the changes are particularly significant and may require a review of employment contracts, retirement policies and existing HR procedures.
What Has Changed Under the New Legislation?
Previously, employees could request to remain in employment beyond their contractual retirement age. However, there was no equivalent statutory procedure requiring employers to consider such requests within a prescribed timeframe.
The Employment (Contractual Retirement Ages) Act 2025 introduces a formal mechanism allowing eligible employees to notify their employer that they do not consent to retiring at their contractual retirement age.
Where an employee submits a valid notification, the employer must consider whether there is an objectively justifiable basis for enforcing the retirement age.
The legislation seeks to address the gap between contractual retirement ages, which commonly remain at 65, and the State Pension age of 66, while supporting employees who wish to continue working.
Importantly, the Act does not automatically abolish contractual retirement ages below 66. Instead, it introduces additional requirements that employers must satisfy before enforcing them.
Who Is Covered by the Act?
The legislation applies to employees who meet the relevant eligibility criteria, including those who:
Have a contractual retirement age below the State Pension age of 66.
Have successfully completed any applicable probationary period.
Are not subject to a statutory retirement age or maximum period of service prescribed by legislation.
Certain occupations, including some public sector and emergency service positions, may be subject to separate statutory retirement provisions.
The new framework does not override retirement ages expressly required by legislation.
How Can an Employee Request to Work Beyond Their Retirement Age?
Under section 5(1) of the Act, an eligible employee who wishes to continue working beyond their contractual retirement age must formally notify their employer in writing.
The notification must expressly state that the employee does not consent to retiring at the contractual retirement age and must identify that the notification is being made under section 5(1) of the Employment (Contractual Retirement Ages) Act 2025.
Notification Timeframes
Employees must comply with specific notification requirements.
Generally, written notification must be submitted:
No earlier than 12 months before the contractual retirement date.
At least three months before the contractual retirement date.
Where the employee's contract requires a notice period exceeding three months, the employee must provide notice equivalent to the contractual notice period or six months, whichever is shorter.
The legislation also limits employees to submitting no more than two such notifications within any six-month period.
These requirements provide employers with advance notice of an employee's intention to remain in employment and allow time for the necessary assessment to take place.
What Must Employers Do When a Notification Is Received?
One of the most significant changes is the introduction of a statutory obligation to respond to an employee's notification within a defined timeframe.
Where an employer receives a valid notification, it must consider whether the contractual retirement age can lawfully be enforced.
If the employer intends to refuse the employee's request and proceed with retirement at the contractual age, it must issue a reasoned written response within one month of receiving the notification.
The response must explain the basis upon which the employer considers the retirement age to be objectively justified.
Employers cannot simply rely on the existence of a retirement clause within the employment contract or a longstanding company policy.
Instead, they must be able to demonstrate that requiring retirement at the specified age is objectively and reasonably justified by a legitimate aim and that the means of achieving that aim are appropriate and necessary.
The updated Code of Practice on Longer Working, published in conjunction with the legislative changes, provides additional guidance on managing retirement-related discussions and requests.
Where an employer agrees to an employee remaining in employment beyond the contractual retirement age, the arrangement should be confirmed in writing, including any agreed changes to the employee's terms and conditions.
Consideration of Employee Benefits
Employers should also consider the implications of extending employment beyond the original retirement date for benefits linked to retirement age.
These may include:
Death-in-service benefits.
Private medical insurance.
Employer pension contributions.
Other insured or age-related employee benefits.
Certain benefit schemes may contain age restrictions or eligibility conditions that affect whether cover can continue.
Employers should therefore engage with their insurers, pension providers and other relevant third parties to establish what arrangements can be maintained and ensure that employees are informed of any changes.
Can Employers Still Enforce a Mandatory Retirement Age?
Yes. The legislation does not prevent employers from maintaining or enforcing a contractual retirement age below the State Pension age where there is a lawful and objectively justifiable basis for doing so.
However, the existence of a retirement age in an employment contract is not sufficient, in itself, to establish that compulsory retirement is lawful.
An employer seeking to enforce a contractual retirement age must be able to demonstrate that the retirement requirement:
- Pursues a legitimate objective.
- Is appropriate for achieving that objective.
- Is necessary and proportionate in the circumstances.
What Constitutes Objective Justification?
Irish employment equality law and relevant case law recognise that certain legitimate business objectives may support the use of mandatory retirement ages.
Depending on the circumstances, these may include workforce and succession planning, facilitating career progression, promoting intergenerational fairness and addressing genuine health and safety considerations.
However, these objectives cannot simply be relied upon as general statements.
Employers must be able to demonstrate how the identified objective applies to their business and why requiring retirement at the particular age is an appropriate and necessary means of achieving it.
For example, an employer relying on succession planning should be in a position to explain why the compulsory retirement age is necessary to support that objective, rather than merely stating that succession planning forms part of its retirement policy.
The key consideration is whether the retirement age can be objectively justified in the particular circumstances.
This assessment should take account of the employer's stated objectives, the employee's individual circumstances and the evidence supporting the decision.
What About Employees Who Wish to Work Beyond 66?
The new statutory framework specifically addresses contractual retirement ages below the State Pension age.
Requests to remain in employment beyond the State Pension age continue to require consideration under the Employment Equality Acts 1998–2015 and relevant case law.
Employers should therefore distinguish between requests made by employees seeking to remain in employment until the State Pension age and requests to continue working beyond that age.
Although objective justification remains relevant in both circumstances, the statutory procedures and legal considerations are not identical.
Employers should ensure that their retirement policies and internal procedures appropriately distinguish between these situations.
What Are the Consequences of Non-Compliance?
The Employment (Contractual Retirement Ages) Act 2025 introduces potentially significant consequences for employers who fail to comply with their statutory obligations.
These include criminal penalties for certain procedural breaches and civil remedies where employees establish that their rights under the legislation have been infringed.
Failure to Provide a Written Response
Under section 10(1) of the Act, an employer who, without reasonable cause, fails to provide the reasoned written response required under section 5(5) within the prescribed timeframe may be guilty of an offence.
On summary conviction, the legislation provides for a Class A fine and/or imprisonment for a period of up to 12 months.
Where an offence is committed by a corporate entity with the consent, connivance or neglect of a director, manager, secretary or other relevant officer, that individual may also face liability.
The WRC may initiate and prosecute summary proceedings within 12 months of the date of the alleged offence.
Separately, the legislation provides for potential compensation of up to 104 weeks' remuneration, or €40,000 where remuneration cannot readily be calculated, in respect of certain breaches of statutory obligations.
This highlights the importance of ensuring that employers have appropriate procedures in place to identify, assess and respond to employee notifications within the required timeframe.
Protection Against Penalisation
Section 8 of the Act also protects employees against penalisation for exercising, or proposing to exercise, their statutory rights.
Employers must not subject employees to unfavourable treatment because they have indicated that they wish to remain in employment beyond their contractual retirement age.
Penalisation may include actions such as an unjustified change in duties, relocation, adverse treatment or other detrimental measures connected to the employee's exercise of their rights.
Where an employee successfully establishes penalisation, the WRC may award appropriate redress, including reinstatement, re-engagement or compensation.
The legislation provides for compensation of up to two years' remuneration or €40,000, whichever is greater.
Employers should therefore be mindful that decisions affecting an employee's working arrangements following a retirement notification may be scrutinised where the employee believes those decisions are connected to their request.
Retirement Without Objective Justification
An employer may also face a claim where it proceeds to terminate an employee's employment at the contractual retirement age despite receiving a valid notification objecting to retirement.
Under section 5(4) of the Act, an employee may bring a complaint where the employer cannot establish an objective justification for enforcing the retirement age.
Where the complaint is upheld, the WRC may order reinstatement, re-engagement or compensation considered just and equitable in the circumstances.
Compensation may be awarded up to a maximum of two years' remuneration or €40,000, whichever is greater.
The legislation also provides separate protections against penalisation, meaning that employers may potentially face complaints under more than one provision where the relevant statutory requirements are satisfied.
What Should Employers Be Doing Now?
With the legislation now in effect, employers should take a proactive approach to reviewing their existing retirement arrangements.
Businesses that currently operate a contractual retirement age below 66 should pay particular attention to whether those arrangements remain appropriate and whether they can be objectively justified.
1. Review Employment Contracts
Employers should identify any contractual retirement ages below the State Pension age and determine whether those provisions require amendment.
Consideration should also be given to whether any employees are subject to separate statutory retirement requirements.
2. Review Retirement Policies
Existing retirement policies should be updated to reflect the new statutory rights and notification requirements.
Where an employer does not currently have a formal retirement policy, introducing one may assist in ensuring that retirement-related decisions are managed consistently.
Policies should clearly outline the process for submitting a notification, the employer's assessment procedure and the relevant response timeframes.
3. Assess Objective Justifications
Employers should review the business reasons supporting their current retirement age.
Where succession planning, workforce management or health and safety considerations are relied upon, employers should assess whether these objectives can be supported by appropriate evidence.
It is particularly important to avoid relying on generic justifications that have not been considered in the context of the organisation's circumstances.
4. Introduce a Formal Notification Process
Employers should establish an internal procedure for receiving and responding to employee notifications.
This should include clear responsibility for managing requests, recording relevant dates, undertaking the necessary assessment and ensuring that written responses are issued within the statutory one-month timeframe.
5. Review Employee Benefits
Employers should engage with pension administrators, insurers and other benefit providers to understand whether existing benefits can continue where an employee remains in employment beyond their original retirement date.
Any limitations should be clearly communicated to affected employees.
6. Consider Workforce and Succession Planning
The legislation may also have implications for longer-term workforce planning.
Employers should consider whether existing succession plans, recruitment strategies and workforce forecasts remain appropriate where employees may choose to remain in employment for longer.
7. Train Managers and HR Personnel
Managers and HR teams should understand the new requirements, particularly the importance of responding to notifications within the prescribed timeframe and avoiding decisions that could constitute penalisation.
Retirement-related discussions should be managed carefully and consistently, with appropriate HR involvement.
WorkWise HR Perspective
The Employment (Contractual Retirement Ages) Act 2025 represents a significant development in the regulation of mandatory retirement ages in Ireland.
Although employers may continue to operate contractual retirement ages below the State Pension age, the legislation introduces a more formal and structured approach to determining whether those arrangements can be enforced.
For employers, the most important consideration is that a contractual retirement clause does not, on its own, provide sufficient justification for requiring an employee to retire.
Businesses must be able to demonstrate that their retirement arrangements serve a legitimate purpose and that enforcing retirement at the specified age is appropriate and necessary.
The introduction of strict notification and response requirements also means that employers must pay greater attention to the procedures followed when dealing with employees approaching retirement.
Failure to comply may result in significant financial exposure, even where the employer believes that the underlying retirement age is justified.
For organisations with a retirement age of 65, it may be appropriate to consider whether increasing the contractual retirement age to 66 would simplify the application of the new legislation. However, doing so does not remove the need to comply with the Employment Equality Acts or the requirement to objectively justify mandatory retirement where applicable.
Ultimately, the legislation reinforces the importance of having a clearly defined, legally compliant retirement policy supported by appropriate business justification and fair, consistent procedures.
Employers should use the introduction of the Act as an opportunity to review their existing arrangements and ensure that both their contractual provisions and retirement practices remain compliant with Irish employment law.