CHECK AGAINST DELIVERY
Speech by David Stanton TD, Minister of State at the Department of Justice and Equality with special responsibility for Equality, Immigration and Integration
Dáil Private Members’ Bill - Employment Equality (Abolition of Mandatory Retirement Age) Bill 2016
Thursday 23 February 2017
I thank Deputy Brady for the opportunity to discuss this important issue. I have long had an interest in reforming our retirement age regime so that persons who have something valuable to contribute can continue to do so even beyond so-called ‘normal’ retirement age.
The Government has decided not to oppose this Bill. The Government supports in principle measures aimed at facilitating fuller working lives. This is notwithstanding that there are serious technical problems with the Bill as drafted and that there are serious policy and expenditure issues that need to be considered very carefully. I’ll come back to those in a moment.
I note that Fianna Fáil has also put forward a Private Members’ Bill on this issue, so clearly this is of considerable interest to many Deputies and Senators.
It should be noted that Ireland does not have a mandatory statutory retirement age in the private sector (where retirement issues are regulated by employment contracts) but there are mandatory retirement ages in the civil and public services.
The Bill is presented as an amendment to equality legislation that would have the effect of abolishing mandatory retirement ages, save in relation to specified security-related employments. However, the policy implications that would flow from this step are fundamentally not in the equality area, but rather in relation to employment policy, including issues around youth unemployment, pensions and public sector recruitment and expenditure.
Deputies will be aware that this Bill is very similar to the Bill proposed by the then Labour Deputy Anne Ferris towards the end of the last Government. The Oireachtas Joint Committee, which I chaired at the time, subsequently invited public submissions, held a day of hearings and published a supportive Report on the Bill. At the time, I said that the Report was marked by its progressive nature, taking account of our changing workforce and aging population.
In December 2015, an amendment was made to the Equality (Miscellaneous Provisions) Act 2015, bringing our equality legislation further into line, but not completely, with the jurisprudence of the Court of Justice of the European Union. This reform specified that any compulsory retirement age must be objectively and reasonably justified by a legitimate aim, and that the means of achieving that aim must be appropriate and necessary.
In August 2016, the Department of Public Expenditure and Reform published the report of the Interdepartmental Group on Fuller Working Lives. That Report made a number of recommendations assigned to Government Departments and employer and worker representatives for follow-up. For example, the Report recommended that the Department of Jobs should ask the Workplace Relations Commission to prepare a Code of Practice under section 42 of the Industrial Relations Act 1990 on the issue of longer working in order to set out best industrial relations practice in managing the engagement between employers and employees in the run-up to retirement, including requests to work beyond what would be considered the normal retirement age in the employment concerned. The WRC has commenced work on preparing the Code, in consultation with relevant stakeholders.
The Report of the Interdepartmental Group also recommended that the Department of Public Expenditure and Reform, with public service employers, review the current statutory and operational considerations giving rise to barriers to extended participation in the public service workforce up to and including the current and planned age of entitlement to the Contributory State Pension. This review is currently underway and is expected to be completed in Q2, 2017. I believe it would be preferable to await the outcome of this review before any related legislation is pursued.
Retirement ages in the public service are generally set out in legislation. Amendment of multiple pieces of primary legislation would be required in the context of the enactment of the Private Members' Bill as proposed. The key point for the Deputy to consider is that the Bill would not set aside such specific provisions in other legislation unless they are amended in the Bill one-by-one.
In the context of the Public Service Pensions (Single Scheme and Other Provisions) Act 2012, the issue of a mandatory retirement age was considered. The outcome to those considerations was that the retirement age for members of the Public Service Pension Scheme was linked to the age of qualification for the Contributory State Pension (currently 66, 67 in 2021, and 68 in 2028) but it also incorporated a mandatory retirement age of 70 (subject to certain exceptions). This was considered as an appropriate balance between making provision for longer working lives arising from the increased mortality expectancy of the population while incorporating a mandatory retirement age. The mandatory retirement age can be changed by Order of the Minister for Public Expenditure and Reform. This approach reflects the approach at European level incorporated in the EU Framework Employment Directive 2000/78/EC which provides that national authorities can provide for mandatory retirement ages if they can be objectively justified.
I would reiterate that the policy issues here and the implications for the economy and labour market are very complex and need to be considered carefully.
The proposal in the Bill would involve setting aside the retirement provisions of most existing employment contracts on a unilateral basis and would have serious implications which we need to tease out carefully for public sector employment, for pensions policy and for labour market policy generally. My stating this is not to raise a principled objective to the Bill, but to flag that we consider that the Deputy has substantial work to do yet before we are in a position to consider the Bill in detail.
It appears that the Bill is intended to apply retrospectively to pre-existing contracts of employment. The Attorney General has advised that legislation of this nature may be susceptible to legal challenges having regard to Article 15.5.1 of the Constitution which precludes the Oireachtas from declaring unlawful acts which were not so at the date of their commission. In addition, employers may consider that the legislation amounts to an interference with contractual relations and disproportionately interferes with their constitutionally-protected property rights. The legislation may further impact on pending legal proceedings (where an employee has challenged the justifications advanced by an employer for imposing a compulsory retirement age). This issue may, in the absence of transitional provisions, generate disputes and legal challenges. I would be interested in hearing how the Deputy proposes to address questions such as this.
In financial terms, I would also like to point out that the Bill may have implications – not all of which would be favourable – for older workers and pensioners. The need for consequential amendments to income tax and Pay Related Social Insurance (PRSI) measures connected to retirement age arises and should be considered in relation to this Bill. These include the Age Tax Credit, which is currently available to individuals aged over 65, and the exemption from PRSI available to those aged 66 and over.
Close consideration would be required to ascertain the impact of the proposed measures on Defined Benefit schemes and their sponsoring employers and employees in particular. This would involve developing an understanding of the potential range of positive and negative consequences for employers, employees and Defined Benefit scheme funding. We also need to consider the consequences of legislative changes to mandatory retirement ages provisions that may conflict with the existing legal and regulatory conditions stemming from employment law, Defined Benefit scheme trust deeds and rules, pensions law and pension drawdown rules.
On the other hand, however, abolition of fixed retirement ages may have a positive impact on the ability of women to quality for the full State pension and this also needs to be weighed in the balance.
There may be significant implications for youth employment if considerable numbers of older workers do not retire as envisaged in their original employment contracts and if this reduces the number of new hires. The impact is difficult to quantify at this stage without detailed research and analysis.
The Tánaiste requested officials from the Department of Justice & Equality to meet with the sponsors of the Bill and at that meeting a number of fundamental drafting errors were pointed out.
The current Bill seeks to amend section 34 of the Employment Equality Act 1998 by substituting a new subsection for subsection (3). However, it would appear that the drafter is seeking to replace the original subsection (3) in the Bill as enacted. In fact, it should be noted that subsection (3), as originally enacted, was replaced by the Equality Act 2004 and the substance of the revised subsection now relates to occupational benefits schemes; the proposed approach in the Bill would cause this to be replaced. Presumably this is an error; the resulting loss would include the explicit prohibition in occupational benefit schemes of discrimination on the gender ground.
Moving on to section 34(4), this subsection was also replaced by a new subsection in the Equality Act 2004. Again, this drafting error would need to be addressed as the Bill seeks to make special provision for members of An Garda Síochána, the Defence Forces, the Fire Service, etc., but the proposed amendment does not make any reference to the related provisions for recruitment and retention in those professions in section 37(3) and (4).
I would also point out that the collective citation to the Bill should be revised to reflect all relevant legislation – the amendments made in the Equality (Miscellaneous Provisions) Bill 2015 are not reflected here.
The Attorney General has advised that the scope and objective of the Bill requires clarification in light of its opening paragraph. On first reading, this language goes beyond the title and stated objective of the Bill. It would appear the amendment in its present form would repeal employment equality rules prohibiting discrimination on the grounds of age or disability in the employment area. Clarification of the position is essential to ensure that the State continues to comply with its EU Treaty obligations.
It is important to note, as I said, that the cost implications arising from this Bill could be very significant. The Bill would appear to allow for financial incentives to be offered to employees to cease work at any particular age. There is an overriding need to stay within the parameters of the fiscal rules and this must be borne in mind in any policy change such as the Bill proposes.
In closing, I would note that Government is open to debate on the current Bill. However, we need to proceed carefully in what is a complex area. What we would not want is a Bill that could have serious adverse or unintended consequences arriving on the Statute books where the State would then be vulnerable.
I look forward to the debate and welcome the comments and views of colleagues.