New laws will prevent employers forcing workers to retire below State pension age

And, if employers breach the law and a worker successfully takes a case at the Workplace Relations Commission, compensation could stretch to two years’ salary.

Last week, Cabinet approved the Employment (Contractual Retirement Ages) Bill 2025. Delivering a new employment right, it states a worker is allowed, but in no way compelled, to stay in employment until the State pension age of 66.

If passed, it will mean an employer cannot force a worker to retire at an age below the State pension age if that worker does not consent to retirement.

Minister for enterprise Peter Burke said one of the main objectives was to “bridge the income gap” experienced by a person forced to retire at an age before they can access the State pension.

Unions have also welcomed the move, saying there was a sizeable and growing number of workers being forced to retire earlier than they would have wished given the compulsory age of retirement in their employment contract or company policies, which was usually set at 65.

The regulatory impact analysis performed by the Government analysed three scenarios to address the issue and what the impact of each one would be.

The first — to do nothing and make no intervention — was deemed “not viable”.

The second was to enact a standalone legislative provision. Under this scenario, it said there was potential savings for the State, as people who stay in work will not claim jobseekers benefit or benefit payments for 65-year-olds.

However, it also noted there would be challenges for employers in relation to interaction with existing provisions relating to retirement age contained in separate legislation. It said an appropriate lead-in time would be necessary to prepare for the changes.

In the third scenario, the Employment Equality Acts could be amended.

However, the department said: “If inserted into employment equality legislation, there is a danger of unintendingly creating a de facto retirement age of 66. It could be interpreted as 66 being the routine age that employers are allowed to enforce retirement, which is not the intention.” 

The department said the second scenario was the preferred option, and said employers would be able to retain experienced employees and draw on their expertise for longer periods.

While it said there could be potential challenges around attracting new talent and retaining staff if their promotional opportunities were reduced, it pointed out research from the Pensions Commission in this regard.

“[It stated] the argument is frequently made that the amount of work in an economy is fixed, so therefore one more job for an older person means one less job for a younger person — the belief that older persons are ‘crowding out younger workers from jobs’,” it said.

“The 2016 group noted that research had shown this theory to be a fallacy.”