The European Court of Justice (ECJ) has confirmed that the compulsory retirement provisions of the UK's Age Discrimination Regulations, which specify a default retirement age of 65, are capable of being justified and not necessarily discriminatory.
Heyday, an offshoot group of the charity Age Concern, alleged that the UK government was breaking European laws by allowing employers to compulsorily retire employees who have attained the age of 65. They claimed the dismissal was discrimination on the grounds of age discrimination. However, the ECJ has ruled that the regulation permitting such dismissal, is not unlawful under the Equal Treatment Framework Directive, if it can be justified by "legitimate social policy objectives such as those related to employment policy, the labour market or vocational training".
Not quite the end of the road for employees in their Heyday
The ECJ did not itself decide whether the UK's default retirement age of 65 is justified and the case will now return to the High Court to determine that point. The UK government will have to establish that its compulsory retirement provisions are justified by a legitimate aim and that they are also an appropriate and necessary way of achieving that aim.
In satisfying the High Court that the regulations are justified by a legitimate aim, the burden is on the UK government to prove that the laws are drafted to meet social policy objectives that have a "public interest nature" rather than being available to accommodate "individual reasons particular to the employer's situation". Unless the former motivation is proved, the default retiral age of 65 may be found to be contrary to European laws and the legislation itself may have to be retired.
The UK government has so far provided two reasons for justifying the legislation. Firstly, workforce planning: employers can manage their workforce against a known attrition profile, enabling the younger workforce to progress through promotion while encouraging employees to make provision for retirement. Secondly, to reduce the risk that employers who are faced with the increased costs of providing insurance benefits and pensions to older employees do not remove these benefits from the workforce entirely.
A number of retirement related claims which have arisen in the Employment Tribunals have been placed on hold, pending the outcome of the ECJ ruling - they will now have to await the High Court's decision.
Implications for Employers
Until the High Court has decided the case, employers will have to submit to the waiting game. In the meantime, it may be advisable to refrain from dismissing employees, or refusing to employ individuals, only because they have reached the age of 65, for fear that this may lead them to raise a claim in the Employment Tribunal on grounds of age discrimination. If the High Court decides in favour of Heyday, finding that the default retirement age of 65 is not justified this will mean that employers will not be able to rely on the fair retirement provisions of the Age Discrimination Regulations. Consequently an employer who had dismissed an employee because of their age would be found guilty of age discrimination unless they could justify the dismissal by showing it was a proportionate way of achieving a legitimate aim.
In any event, the Government is committed to reviewing the default retirement age in 2011, when it may well be abolished altogether. So, whatever the outcome of this case, employers may wish to start preparing for the possibility that they cannot force employees to retire just because they have reached the age of 65.
Kim Pattullo is a partner specialising in employment law at leading UK law firm Shepherd and Wedderburn LLP.