Mandatory retirement also known as enforced retirement or compulsory retirement, is the set age at which people who hold certain jobs or offices are required by industry custom or by law to leave their employment, or retire.
Typically, mandatory retirement is justified by the argument that certain occupations are either too dangerous (military personnel) or require high levels of physical and mental skill (air traffic controllers, airline pilots). Most rely on the notion that a worker's productivity declines significantly after age 70, and the mandatory retirement is the employer's way to avoid reduced productivity. However, since the age at which retirement is mandated is often somewhat arbitrary and not based upon an actual physical evaluation of an individual person, many view the practice as a form of age discrimination, or ageism.
Economist Edward Lazear has argued that mandatory retirement can be an important tool for employers to construct wage contracts that prevent worker shirking. Employers can tilt the wage profile of a worker so that it is below marginal productivity early on and above marginal productivity toward the end of the employment relationship. In this way, the employer retains extra profits from the worker early on, which he returns in the later period if the worker has not shirked his duties or responsibilities in the first period (assuming a competitive market).
South Korea enforces compulsory retirement before age 60 at the latest to all private companies, and 65 for public sectors. However, it is custom for most companies to lay off their employees between the ages of 50 to 55.
In Australia, compulsory retirement is generally unlawful throughout the various State and Territory jurisdictions in Australia. However, there are some exemptions. For instance, permanent members of the Australian Defence Force must retire at the age of 60 and reservists at 65.
The Constitution of Brazil says in Article 40, Paragraph 1, Item II, that all public servants in the Union, States, Cities and the Federal District shall mandatorily retire at the age of 70. This regulation encompasses servants from the executive, legislative and judicial branches. It also applies to the Supreme Federal Court Justices, as per Article 93, Item VI, of the Constitution, and the Court of Accounts of the Union Judges, as stated in Article 73, Paragraph 3 of the Constitution (disposition added after the 20th Amendment).
The normal age for retirement in Canada is 65, but one cannot be forced to retire at that age. Labour laws in the country do not specify a retirement age. Age 65 is when federal Old Age Security pension benefits begin, and most private and public retirement plans have been designed to provide income to the person starting at 65 (an age is needed to select premium payments by contributors to be able to calculate how much money is available to retirees when they leave the program by retiring).
Mandatory retirement of federally regulated employees is prohibited as of December 2012.
Employees working in the government, who can retire as early as age 60, have a set mandatory retirement age of 65. Personnel including officials of the Philippine Armed Forces, the Philippine Coast Guard, the Philippine National Police, the Bureau of Fire Protection, and the Bureau of Jail Management and Penology are required to retire once they reach age 56.
In the private sector, it is illegal to force employees and executives in the private sector to be forced to retire before age 65 with the exception of underground miners who are required to retire at age 60, and professional racehorse jockeys at age 55.
In October 2006 the Employment Equality (Age) Regulations 2006, the UK Labour Government introduced a Default Retirement Age, whereby employers are able to terminate or deny employment to people over 65 without a reason. A legal challenge to this failed in September 2009, although a review of the legislation was expected in 2010 by the new Conservative/Liberal Democrat coalition government. This review has taken place and on 17 February 2011 BIS published the draft Regulations abolishing the Default Retirement Age. The draft Regulations were later revised and the final version was laid before Parliament on 1 March 2011. As of 6 April 2011, employers can no longer give employees notice of retirement under Default Retirement Age provisions and will need to objectively justify any compulsory retirement age still in place to avoid age discrimination claims.
Mandatory retirement is generally unlawful in the United States, except in certain industries and occupations that are regulated by law, and are often part of the government (such as military service and federal police agencies, such as the Federal Bureau of Investigation).
From the U.S. Equal Employment Opportunity Commission website:
The Age Discrimination in Employment Act of 1967 (ADEA) protects individuals who are 40 years of age or older from employment discrimination based on age. The ADEA's protections apply to both employees and job applicants. Under the ADEA, it is unlawful to discriminate against a person because of his/her age with respect to any term, condition, or privilege of employment, including hiring, firing, promotion, layoff, compensation, benefits, job assignments, and training.
From the U.S. Code of Federal Regulations discussing the Age Discrimination in Employment Act:
...one of the original purposes of this provision, namely, that the exception does not authorize an employer to require or permit involuntary retirement of an employee within the protected age group on account of age,
...an employer can no longer force retirement or otherwise discriminate on the basis of age against an individual because (s)he is 70 or older.
There is no mandatory retirement age for cardinals nor for the pope, as they hold these positions for life, but cardinals age 80 or over are prohibited from participating in the papal conclave.
For the Anglican Communion clergy, they[who?] introduced the mandatory retirement age of 65 for priests and 70 for bishops and archbishops, five years younger than their Roman Catholic counterparts, as a result of changes imposed in the Protestant Reformation.