As Ireland’s population ages and more employees wish to continue working into their late 60s and beyond, the Government is responding. The Employment (Contractual Retirement Ages) Bill 2025 (the “Bill”) marks a significant shift in how retirement management could be developed in the workplace. While not yet law, it’s something employers need to start thinking about.

New Right to Opt Out of Contractual Retirement Age

The Bill essentially adopts a consent-based approach to retirement. It provides employees with a new right to opt out of their contractual retirement age if it falls below the State pension age (currently 66). This new right aims to bridge the income gap for employees who would otherwise face financial difficulties if forced to retire before being entitled to the State pension.

Employees can formally notify their employer in writing if they do not consent to retire at the contractual age if it's below the State pension age. This must be done:

• no less than three months and no more than one year before their contractual retirement date, or
• where the notification period provided in the employee’s contract for termination of their employment is greater than three months, not less than this period or the period of six months, whichever is the shorter.

Withdrawal of Notification to Opt Out

The Bill also provides employees with a right to change their minds. Employees will be able to withdraw their notice to opt out of the contractual retirement age i.e. decide to stick with their original contractual retirement date after all. If they do, they’ll need to give the shorter of either their contractual notice or the relevant statutory notice period.

New Obligations for Employers

If an employee notifies their employer that they do not agree to retire at the contractual retirement age, the employer must issue a written response within one month of receiving the notification, regardless of whether they intend to allow the employee to remain in employment or not. The response must clearly state whether the request to continue working is accepted or refused, and the reasoning behind that decision.

Significantly, the Bill provides that an employer who, without reasonable cause, fails to provide an employee with a reasoned written reply will be guilty of an offence and liable on summary conviction to a class A fine (i.e. a fine not exceeding €5,000) or imprisonment for up to 12 months or both. However, it will be a defence in such proceedings for a person to prove that they exercised due diligence and took reasonable precautions to ensure that the Bill was complied with.

If the employer agrees to extend employment

Where the employer agrees to the employee continuing to work beyond the contractual retirement age, the written response must include:

a. Confirmation of agreement

A clear, written acknowledgment that the employer consents to the employee remaining in employment beyond the original retirement date.

b. Any amendments to terms

Details of any changes to the terms and conditions of employment that will apply during the extended period. This could include:

• adjustments to working hours or shift patterns;
• changes in job responsibilities;
• modifications to pay, benefits, or bonus eligibility;
• clarification of how long the extended period will last (e.g. until the State pension age, or subject to future review).

If the employer refuses the request

If an employer intends to enforce the contractual retirement age despite the employee’s objection, the employer must provide a detailed, written justification that satisfies two key criteria:

a. Objective justification

The employer must provide a reasoned written reply that clearly and lawfully justifies the decision to enforce the contractual retirement age. This justification must be based on a legitimate aim, and the means of achieving that aim must be appropriate and necessary, such as:

• succession planning;
• workforce planning or restructuring;
• promoting intergenerational fairness;
• health and safety considerations for certain roles;
• business efficiency.

The employer must also demonstrate that the means of achieving that aim are proportionate — in other words, that enforcing retirement is a necessary and appropriate way to achieve that aim, and that there are no less discriminatory alternatives available.

b. Individualised assessment

The employer must also be capable of justifying the contractual retirement age for the individual employee, rather than relying on a general policy applicable to all employees. This requirement would set a higher threshold than the Employment Equality Acts 1998-2015.

Protection against Penalisation

The Bill prohibits employers from penalising employees for asserting their right to opt out of the contractual retirement age and continue working. As such, this would require employers to ensure HR policies, training, and line manager practices are all aligned with the new Bill.

Complaints to the WRC

Under the Bill, an employee has the right to bring a complaint to the WRC if their employer fails to meet the following key obligations:

• enforcing a contractual retirement age without first providing a reasoned written response to the employee;
• applying the contractual retirement age without being able to demonstrate that it is objectively and reasonably justified by a legitimate aim;
• setting out the justification for the contractual retirement age in writing; and,
• not penalising employees in any way for seeking to challenge or defer their contractual retirement age.

The WRC has the authority to determine whether or not a complaint is well founded. Where the complaint is upheld, the WRC can direct the employer to take specific action - this may include reinstatement or re-engagement of the employee. Additionally, the WRC may award compensation of up to €40,000 or the equivalent of two years' remuneration, whichever is greater.

What this could mean for employers

As the Bill is only at early stages in the legislative process, it may be subject to changes. However, for now, there are several steps that employers may take in preparation for its possible enactment.

• The proposed legislation will likely increase the administrative burden on employers. Employers will need to establish processes for managing notifications from employees, documenting objective justifications for retirement and ensuring compliance with the new protections against penalisation.
• Review existing policies and contractual provisions to ensure they are in line with the provisions of the Bill.
• Employers will need to consider the impact of the Bill on their workforce planning and succession strategies and adapt them accordingly. The ability of employees to continue working beyond the contractual retirement age may affect the availability of positions for younger employees and the overall structure of the workforce.

Conclusion

The Bill introduces significant changes for employers, particularly in managing contractual retirement ages and protecting employees from penalisation. Employers should be proactive in understanding and implementing the new requirements to ensure compliance and minimise potential exposure or disputes.  Ensuring relevant HR staff and management are aware of the proposed developments and arranging appropriate training in the event the Bill is enacted will be important. As the Bill progresses through the legislative process, employers should stay informed of any further developments.

The Employment (Contractual Retirement Ages) Bill 2025 can be found here