Is forced retirement at 65 now discriminatory?
We previously told you that a challenge to the default retirement age of 65 had been brought by “Heyday”. The European Court of Justice recently published its ruling. What was the outcome and how does it affect you?
Is it still out at 65?
As you know, discrimination on the grounds of age was outlawed on October 1 2006. However, at that time a statutory or default retirement age (DRA) of 65 was also introduced. This meant that an employee could be forced to retire at 65, irrespective of their wishes. But in a case that’s become known simply as Heyday the legality of the DRA was challenged. The European Court of Justice (ECJ) has now given its ruling. What did it say and is this now an end to the matter?
Heyday challenge
Originally, the government had promised to review the DRA before 2011. But Heyday (which is part of the charity Age Concern) wasn’t prepared to wait. By using the Equal Treatment Directive it challenged the concept of the DRA and argued it: (1) limited employment protection for those over 65; and (2) amounted to age discrimination.
New ECJ finding
The ECJ decided that a DRA is compatible with the Directive provided it’s a: “proportionate means of achieving a legitimate aim”. In a later press release it clarified this saying:
“Certain differences of treatment on grounds of age do not constitute discrimination if they are objectively and reasonably justified by legitimate aims, such as those related to employment policy, the labour market or vocational training.”
Say again. So, in other words, forced retirement at 65 can be justified if it meets social and economic policy objectives including labour market needs, e.g. it provides jobs for younger workers.
Over to you
But in reality, the ECJ ruling doesn’t yet give a definite answer on the legality of the DRA. What the ECJ has done in fact is to “pass the buck” back to the UK. It’s now up to our courts to decide if the DRA meets the ECJ’s test.
What next?
The case will now return to the High Court where the government will have to show that the DRA is necessary. In practice, the needs of individual businesses are irrelevant when determining if this test is met. If the government loses, the DRA will need to be abolished, but it’s likely to be up to a year before this case is heard.
How does this affect you?
At the moment, the law is technically in limbo - but there’s no need to change your retirement policies (see The next step). Until this issue is finally resolved, we would advise that you can safely continue to follow them.
Tip 1. For now, continue to deal with those approaching retirement as you do already. If you wish to retire an individual at 65, ensure that you have other non age-based reasons to justify your decision, e.g. for succession planning purposes.
Tip 2. It’s not too early to consider how you would manage if the DRA were abolished. So look at the age profile of your workforce and identify how many employees are coming up to 65 in the next couple of years.
For a free sample retirement policy, visit http://personnel.indicator.co.uk (PS 11.08.02).
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