Overview

The Minister has signed the Employment (Contractual Retirement Ages) Act 2025 (the “Act”) (Commencement) Order, meaning that the Act will now take effect on 29 June 2026.  Helpfully, the Code of Practice on Longer Working has also been updated to assist employers in managing requests from employees to work longer.

The Act introduces a new, consent-based framework for employees, subject to certain exceptions, whose contracts specify a retirement age below the State pension age (currently 66). While employees may still retire at a contractual retirement age below the State pension age, they now have a statutory right to notify their employer that they do not consent to retire at their contractual retirement age and instead wish to continue working.

Notification Requirements

To avail of this right, employees must provide written notice at least three months before and not more than one year prior to reaching the contractual retirement age. The Act applies only to employees who have completed their probationary period and does not extend to roles where a maximum retirement age is required by law or where a maximum service limit applies.

Once a valid notification has been received, an employer cannot simply proceed to enforce the contractual retirement age. Instead, the employer must engage with the request and, if it wishes to proceed with retirement, must provide the employee with a “reasoned written reply” within one month of receipt of the notification. This reply must set out why retirement at the age, “of the employee concerned”, is “objectively and reasonably justified by a legitimate aim” and why the “means of achieving that aim are appropriate and necessary”.

This reflects the existing legal position under discrimination law but goes further in one key respect in that the Act requires an individualised assessment related to the retirement of the “employee concerned”. Therefore, employers will need to ensure that their reasoning is tailored to the specific circumstances of the particular employee.

Potential Penalisation

If an employer fails to provide a reasoned written reply, or if the justification advanced does not meet the required legal standard, the Act provides that the employee may bring a complaint to the Workplace Relations Commission (“WRC”). The WRC has the ability to order reinstatement or re-engagement, as well as to award compensation of up to the greater of €40,000 or 104 weeks remuneration. Employees are also protected from penalisation for exercising their rights under the Act.

The Act also introduces a criminal dimension. An employer who, without reasonable cause, fails to provide a reasoned written reply commits an offence and may be subject to a fine of €5,000 and/or imprisonment of up to 12 months. This liability may extend beyond the corporate entity to directors, managers and other officers.

Code of Practice

As and from the 29th of June 2026 an updated Code of Practice on Longer Working will be in place and the existing Code revoked.

The updated Code now deals with two scenarios where older workers wish to continue in their employment. Firstly, where employees are approaching the contractual retirement age for their organisation which is less than the qualifying age and secondly, in relation to workers who are aged 66 and older who wish to continue working.

Section 6 of the Code deals with “objective justification”, where an employer seeks to set compulsory retirement ages for older workers and these must be capable of objective justification by reference to a legitimate aim of the employer. While this applies to both workers who are covered by the Act and workers who are aged 66 and older, the distinction is that in accordance with the Act, for workers who come within the scope of the Act (less than the State retirement age), the contractual retirement must be objectively and reasonably justified by a legitimate aim related to the retirement of the employee concerned at their contractual retirement age and the means of achieving that aim must be appropriate and necessary.

The Code also outlines that it is expected that where the Act applies and requests are approved there will be no change in the status of the employee contracts of employment. However, for workers who are above the State retirement age and where requests are approved, it will be reflected in a post-retirement fixed term contract of employment.

What should Employers do now

While the Code is not legally binding, it is important for employers to be aware that failure to abide by the Code can be read against an employer to include in any claim taken by an employee. We would advise all employers to:

  • Review your current normal retirement ages to ensure you can stand over any objective justification
  • Where the retirement age is below the State pension age, ensure the objective justification applies to the retirement of any particular employees approaching retirement age
  • Update existing contracts and policies
  • Develop internal procedures to handle notification requests and company responses
  • Review any employee benefits policies (pension, health insurance, death in service) in terms of the impact of later retirement ages
  • Ensure staff awareness of the provision of the Act and any updated policies

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As outlined above, Employers should ensure all contracts, policies and procedures are updated to take into account the Act and the Code of Practice.

For further information please contact Caoimhe Heery, Partner or Claire McDermott, Partner or any other member of our Employment Team, who will be glad to assist.

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