The Future Of Retirement In The Workplace: What The Contractual Retirement Ages Act 2025 Means For Employers

Introduction

The Employment (Contractual Retirement Ages) Act 2025 (“the 2025 Act”) was signed into law by the President in December 2025 and allows eligible employees to choose to remain in employment beyond their contractual retirement age, where that age is below the State Pension age of 66. 

However, the commencement of the 2025 Act was delayed, pending the drafting of an updated Code of Practice on Longer Working (“the Code”) to support the implementation of the new legislation.

On 22nd June last, the Minister for Enterprise, Tourism and Employment, Peter Burke TD, announced that the 2025 Act will come into effect on 29 June 2026. On the same day, the Minister of State for Small Businesses, Retail and Employment, Alan Dillon TD, signed into law the Code, developed by the Workplace Relations Commission (“the WRC”). This will also take effect on 29 June 2026. 

This Insight is Part 1 of a series of Insights on this topic and will examine the 2025 Act and some of the practical implications of this significant legal development for employers.

Executive Summary: The 2025 Act at a Glance

The core purpose of the 2025 Act is to ensure employees are not left in an income "gap" between their forced retirement (often at age 65) and reaching the State Pension age, which is currently 66 years. It gives employees the right to notify their employer that they object to retirement until they turn 66 – however, it does not confer on employees an absolute right to remain in employment until age 66 as the employer can still seek to enforce the contractual retirement age as set out further below.

The commencement date of the 2025 Act is 29 June 2026. However, due to statutory notice periods now outlined in the 2025 Act, the earliest contractual retirement date which this new law can disrupt is 29 September 2026.

Who is Covered (Scope)

The Mechanics: Employee Notification

The Act operates on a consent-based model. An employee to whom the 2025 Act applies and who does not wish to retire at their contractual retirement age must formally notify their employer in writing of that fact. The employee must give this formal written notification at least 3 months, but no more than 12 months, before their contractual retirement date.

The 2025 Act also provides that if the “employer notification period” is greater than 3 months, the employee must give the employer not less than the employer notification period specified or the period of 6 months, whichever is the shorter. “Employer notification period” under the 2025 Act means the minimum period of notice specified by an employer as set out in a written contract of employment that an employee must provide when intending to terminate a contract of employment. 

An employee may, not more than twice in any 6-month period, notify his or her employer of their objection to retirement at the contractual retirement age.

The Employer’s Mandate: Respond or Risk Prosecution and/or a WRC Claim

Once an employee notification is received, the employer cannot enforce the contractual retirement age before either providing what the 2025 Act refers to as a reasoned written reply to the employee (setting out the basis on which the employer is refusing the application) or alternatively agreeing a retirement date to which the employee consents. The employer has exactly one month to issue the formal, "reasoned written reply" if they intend to deny the request.

In the reply, the employer must set out why this specific employee must retire at the contractual retirement age, and why the retirement is objectively and reasonably justified by a legitimate aim and that the means of achieving that aim are "appropriate and necessary". This means that the employer must carry out an individual assessment on the specific employee to determine whether there is an objective justification for forcing the employee in question to retire at the contractual retirement age. (Generic corporate policies or blanket clauses that apply to all employees will not be sufficient – the objective justification must be specific to the employee in question). This is new from a legal perspective as up to this point, the legal position has been that an individualised assessment of the objective justification for having a contractual retirement age was not required. 

Failing to provide a reasoned written response to the employee within the one-month window is a criminal offence. It carries summary conviction fines of up to €5,000, up to 12 months in prison, or both—applying to the corporate body and potentially its directors/officers personally.

Furthermore, if an employer unlawfully forces an employee to retire without meeting these strict guidelines, the employee can lodge a complaint with the WRC.

The WRC has the power to order:

• Reinstatement or re-engagement of the employee.
• Financial compensation of up to 104 weeks (2 years) of the employee's salary or €40,000, whichever is greater.

The 2025 Act also provides that an employer shall not penalise or threaten penalisation of an employee for proposing to exercise, or having exercised, his or her entitlement to notify his or her employer that he or she does not consent to retire at the contractual retirement age.

“Penalisation” means any act or omission by an employer or a person acting on behalf of an employer that affects an employee to his or her detriment with respect to any term or condition of his or her employment and, without prejudice to the generality of the foregoing, includes—

1. suspension, lay-off or dismissal (including a dismissal within the meaning of the Unfair Dismissals Acts 1977 to 2015), or the threat of suspension, lay-off or dismissal,
2. demotion or loss of opportunity for promotion or withholding of promotion,
3. transfer of duties, change of location of place of work, reduction in wages or change in working hours,
4. the imposition or the administering of any discipline, reprimand or other penalty (including a financial penalty),
5. coercion or intimidation, harassment or ostracism,
6. discrimination, disadvantage or unfair treatment,
7. injury, damage or loss,
8. threat of reprisal,
9. withholding of training, and
10. a negative performance assessment or employment reference.

A natural question that arises on foot of the provisions of the 2025 Act is whether it is penalisation of an employee, or indeed a breach of any other provision of the 2025 Act, to allow an employee to remain on beyond their contractual retirement age to age 66, in line with the 2025 Act, but not continue certain benefits under their contract of employment which cease at the contractual retirement age, such as the occupational pension scheme. So, for example, an employer has an existing occupational pension scheme and under the Rules of that scheme, occupational pension benefits cease at age 65 years. How does an employer now deal with a situation whereby an employee applies to work to age 66 years and the employer can grant the request but cannot continue the pension benefits under the Rules of the scheme? Our view is that provided the contract sets out that employees will be eligible for benefits in accordance with the documents governing the relevant plan or scheme , the employer is not obliged to continue those benefits where it simply cannot do so. Employers may look in this instance at providing a different but equivalent benefit to the employee for the remaining period of employment and specific advice should be taken in this regard where this issue arises.

The Updated Code of Practice on Longer Working

As outlined above, the Code supports the implementation of the 2025 Act by taking account of relevant provisions in the 2025 Act and ensuring that the Code remains fit for purpose. 

The Code provides:

• practical guidance for employers and employees
• clear procedures on how the new right operates
• templates for:
  • employee notification letters
  • employer responses and policies

While not legally binding, the Code is admissible in legal proceedings and serves as an important reference in disputes.

The Code now deals with two scenarios as follows:

1. Explaining how the 2025 Act covers employees who are approaching the contractual retirement age for their organisation which is less than the qualifying age for the State pension but wish to continue in their employment beyond this date, and 
2. The position relating to workers who are aged 66 and older who wish to continue working.

Therefore, employers who have a contractual retirement age which is less than the State Pension Age now have to provide for two application processes – 

1. from employees below the State Pension Age of 66 years, and who object to retiring at their contractual retirement age, and 
2. another from employees who are aged 66 years and older and who wish to remain on in employment for longer.

For employees in category A, if the employer agrees to them remaining on longer than the contractual retirement age, they will remain on in employment under their existing contract of employment.

For employees in category B, they can be placed on fixed term or specific purpose contracts of employment to facilitate them remaining on in employment, as has been the case to date for employees who were facilitated to remain on with the employer beyond their contractual retirement age. 

In a Part 2 Insight, we will examine the two application processes provided for under the Code.

Conclusion

The 2025 Act introduces a significant change and further administrative burden for employers who have an existing contractual retirement age that is less than the State Pension age of 66 years. When in receipt of applications to remain working beyond the contractual retirement age, employers must now consider which process applies – the process provided for under the 2025 Act or the usual process that has been in existence for some time to address requests to work longer.

Internal policies may need to be updated to bring them in line with the Code.

Some employers will consider increasing their contractual retirement age to 66 years to avoid having to deal with applications under the 2025 Act – but of course must keep in mind that not every employee will want to remain on in employment beyond their contractual retirement age and will need to be facilitated if they wish to leave earlier.

At a time when employers are already under increasing regulatory and compliance pressure, the 2025 Act brings a new set of considerations which need to be addressed.

As always, the RDJ Employment Team will be here to assist employers to navigate these new challenges.