Ireland: Employment (Contractual Retirement Ages) Act 2025 - what employers need to know

New employer obligations

The key change for employers will be the introduction of a new employee right to seek to extend their employment past their CRA. While employees could always request to work beyond their CRA, there was previously no specific statutory obligation requiring employers to consider such requests. It is unsurprising that this right has been introduced given the gap between employers' contractual retirement age which often sits at 65, the state pension age of 66 and the continuing cost of living crisis.

The 2025 Act applies to employees who:

• Are subject to a CRA that is lower than the State pension age of 66
• Have completed any applicable probationary period
• Are not subject to a retirement age or service limit prescribed by legislation

The legislation does not apply where employees are required by law to retire at a specified age, such as certain public sector or emergency service roles.

Employee notification requirements

Where an eligible employee wishes to remain in employment beyond their CRA, they must notify their employer in writing that they do not consent to retiring at the CRA. The notification must state that it is being made pursuant to section 5(1) of the Employment (Contractual Retirement Ages) Act 2025, and expressly state that the employee does not consent to retirement at the contractual retirement age.

The notification must generally be made no more than one year before the CRA and not less than three months before that date. Where an employee's contract of employment requires a notice period greater than three months, any notification that the employee does not consent to retire at their contractual retirement age must be given not less than that contractual notice period, or six months, whichever is the shorter. An employee may submit such a notification on no more than two occasions within any six-month period.

Employer obligations following notification

Given that this is a new right, employers should ensure that they have systems in place to respond to such notifications within the one-month deadline.

Once a valid notification is received, the 2025 Act requires employers to consider the request to determine whether there is a lawful basis for enforcing the retirement age. An employer who wishes to reject an employee's request must provide the employee with a reasoned written response within one month of receiving the notification. The response must explain why the employer believes the retirement age should continue to apply. The updated WRC Code of Practice on Longer Working provides guidance on handling these requests.

An employer cannot enforce a CRA unless it can demonstrate that the retirement is objectively and reasonably justified by a legitimate aim and that the means used to achieve that aim are appropriate and necessary. This requires employers to ensure that retirement decisions are supported by clear evidence and careful consideration.

If the employer consents to the request, this should be clearly documented.

Employers should also review any benefits that were due to cease at the original CRA and clearly communicate to the employee whether those benefits can be extended or whether they will end at that point. This may include death-in-service cover, private medical insurance, pension contributions, and any other age-related benefits, subject to the applicable scheme rules and provider requirements.

Employers should engage with relevant third-party providers and carefully review the applicable scheme rules and terms to determine whether those benefits may continue beyond the original retirement age.

Objective justification

Employers seeking to enforce a CRA must be able to identify a legitimate business objective and show that requiring retirement at a particular age is a proportionate means of achieving that objective. Objectives which have been accepted by the WRC include workforce and succession planning, promoting intergenerational fairness, facilitating promotion opportunities, and health and safety considerations. This assessment must be carried out on a case-by-case basis, by reference to the company's objective justification and the employee's individual circumstances. This statutory assessment differs from the analysis that may arise where an employee seeks to work beyond state pension age, which continues to be governed principally by the Employment Equality Acts 1998-2015 and relevant case law and can be more difficult to justify.

The role-based assessment will remain in place for requests to work past the State pension age of 66 in line with the employers' obligations under the Employment Equality Acts 1998-2015.

Other obligations under 2025 Act

The Act also introduces extensive protections against penalisation and prevents employers from treating an employee unfavourably because they have exercised, or propose to exercise, their rights under the 2025 Act. 

Sanctions

Failure to respond to notification

The 2025 Act provides for both criminal and civil sanctions.

Section 10(1) of the 2025 Act provides that an employer who, without reasonable cause, fails to provide an employee with a reasoned written reply in accordance with Section 5(5) within the prescribed timeframe is guilty of an offence and is liable, on summary conviction, to a Class A fine and/or imprisonment for a term of up to 12 months. Where the offence is committed with the consent, connivance, or neglect of a director, manager, secretary, or other officer of the body corporate, that individual may also be held liable. Summary proceedings may be initiated and prosecuted by the WRC within 12 months of the date on which the offence was committed.

Separately, the WRC appears to have broad discretion under the Act to award compensation of up to 104 weeks' remuneration (or €40,000 where remuneration cannot readily be calculated) for an employer's failure to comply with its obligations under the Act, including the requirement to respond to an employee's notification. While it remains to be seen how the WRC will exercise this discretion in practice, the potential exposure arising from what may initially appear to be a procedural breach is significant.

Failure to comply with other obligations

Penalisation

Under Section 8 of the 2025 Act an employer must not penalise, or threaten to penalise, an employee for exercising or proposing to exercise their rights under the 2025 Act. It is open to the employee to bring a claim for penalisation under the 2025 Act. If successful an Adjudication Officer may make an order for reinstatement, re-engagement, or compensation they consider to be just and equitable, up to the sum of two years remuneration or €40,000, whichever is greater.

This can include any unfavourable treatment to include but not limited to a transfer of duties or change of location which would not have occurred if the employee had not asserted their rights under the 2025 Act. This means that it is open to the employee to link any unfavourable treatment, for example, the termination of employment by reason of retirement to the assertion of their rights.

Termination of employment by reason of retirement without objective justification

If an employer proceeds to terminate an employee's employment in accordance with the contractual retirement age after receiving written notification that the employee does not consent to the retirement, and the employer fails to provide objective justification for enforcing the compulsory retirement age, the employee may bring a claim before the WRC under section 5(4) of the 2025 Act.

If the claim is successful, an Adjudication Officer may order reinstatement, re-engagement, or such compensation as is considered just and equitable in the circumstances, up to a maximum of two years' remuneration or €40,000, whichever is the greater.

There appears to be no bar to an employee taking claims under both Section 5 and Section 8 of the 2025 Act increasing the potential compensation which might be awarded.

Conclusion

The Employment (Contractual Retirement Ages) Act 2025 introduces a new layer of protection for employees approaching retirement and places additional obligations on employers that maintain a CRA below the State pension age. While employers may still enforce the CRA in appropriate circumstances, they must now be able to objectively justify doing so and comply with strict procedural requirements. As the right to extend an employee's working life past contractual retirement age has now been put on a statutory basis, we anticipate greater scrutiny of mandatory retirement ages and an uplift in claims both under the 2025 Act and equality legislation.

Practical steps for employers

Given that the 2025 Act is now in force, employers should consider taking the following steps:

• Review employment contracts to identify retirement ages below the state pension age of 66 and confirm whether any roles have statutory maximum age limits or are exempt by law
• Consider the reason for your current mandatory retirement age and whether it would be appropriate to increase their retirement age to the state pension age to avoid the application of the 2025 Act noting that claims are still possible under equality legislation
• Review your Retirement Policy or consider putting one in place given the mandatory obligations under the 2025 Act
• Consider whether the objective justifications contained in your Retirement Policy (or consider putting one in place) stand up to scrutiny and future proof those objectives
• Establish a process to address employee requests objecting to the CRA and seeking to work up to State pension age ensuring the one-month deadline is met
• Establish a separate process to address requests made after the state pension age (noting the different assessment), if this process is not already in place
• Examine any benefits linked to retirement age and discuss with scheme providers whether benefits can continue beyond the original retirement age
• Consider whether the business needs to accommodate longer working careers and revise succession plans, recruitment strategies, and workforce forecasting to manage delayed vacancies
• Train HR personnel and line managers on the new statutory requirements
• Consider whether internal strategies such as offering early retirement and any terms of collective agreements align with the 2025 Act