European court rejects challenge to compulsory retirement age

23 September 2008

A campaign challenging the right of employers to set a compulsory retirement age for workers has suffered a defeat at the European Court of Justice.

UK laws allow employers to set an age of 65 or over at which employees must retire.

Campaigners, including the charity Age Concern, which brought the case to the European court, have argued that the law is discriminatory on grounds of age.

However, Jan Marzak, the court’s advocate-general, ruled that a fixed retirement age is not necessarily in breach of EU rules.

The ruling will come as a setback to over 200 people who are currently pursuing claims through employment tribunals after being forced to retire.

Were the tribunals to find in their favour, they would be entitled to compensation from their former employers.

Age Concern had argued at the court that the UK’s Employment Equality (Age) Regulations were contrary to the EU’s Equal Treatment Directive.

Under the UK rules, age discrimination is banned, but, while older workers can request to stay in their jobs beyond 65, employers are not legally bound to consent to the requests. Employees can be required to retire at 65, or at their employers’ set retirement age if this is higher, without redundancy payments.

While the advocate-general agreed that the regulations on retirement age were covered by the EU directive, he judged that a fixed retirement age “can in principle be justified if that rule is objectively and reasonably justified in the context of national law by a legitimate aim relating to employment policy and the labour market, and it is not apparent that the means put in place to achieve that aim of public interest are inappropriate and unnecessary for the purpose”.

Although the ruling is not binding, it may have some influence over the decisions of employment tribunals in the UK when deciding on the outcome of the age discrimination cases before them.

Employer groups welcomed the decision.

Katja Hall, the CBI’s director of employment, said: “Employees already have the right to request postponement of retirement. Our surveys show that just over 30 per cent of employees requested postponed retirement in the last year and over 80 per cent of these requests were granted.

“This right ensures that employers and employees sit down and find solutions that work for both sides. Firms offer a growing range of options but they must retain the right to say no and retire people with dignity at the end of their career with the company.”

She added: “Companies value the skills and experience that older staff bring to the workplace, and want to treat them well. Employees already have the right to request postponement of retirement - and this right is working well.

“Losing the ability to retire people at 65 could lead to unintended consequences, with employers less inclined to take on older workers and forced to dismiss on grounds of poor performance at an earlier stage.”

David Frost, the director general of the British Chambers of Commerce, commented: “The Advocate-General’s opinion is clearly well thought through. The vast majority of businesses value their older employees and the considerable experience that they can bring to an organisation’s running.

“Considering the right to request a postponement to retirement already exists, there is no need to try and remove what should be a normal process of communication between employer and employee. The existing rules allow for the fairest outcome on both sides.”

But Gordon Lishman, director of Age Concern, responded by saying that millions of older workers will be “fuming” that ageism is considered less invidious than other forms of unfair workplace treatment.

He described the decision as “a set back but not a disaster”, adding that the “advocate–general’s opinion confirms that the EU directive requires age discrimination to be justified”.

He said: “It’s now up to the UK government to prove to the high court that their social and employment policies are important enough to justify kicking people out of work at 65.”