Background
When the UK government outlawed age discrimination in 2006, it introduced a specific exemption for compulsory retirement. According to this exemption, an employer can require an employee to retire at age 65 or above and be immune from an age discrimination or unfair dismissal claim as long as certain procedures are followed.
However, an organisation formed by Age Concern and operating under the name ‘Heyday’ is bringing a High Court challenge arguing that this exemption is out of line with EU Directive 2000/78 which requires member states to implement legislation prohibiting age discrimination. We explained the implications of the case and gave practical advice to employers on the risks of compulsory retirement in our article 'Is compulsory retirement no longer safe?'
The lawfulness of the compulsory retirement exemption turns on whether or not the UK government can persuade the High Court that it is justified.
Referral to European Court
The High Court referred a number of questions to the European Court of Justice (ECJ). In summary, the High Court asked:
- Is retirement covered by the EU Directive at all?
- If so, how do we approach the question of justification?
The Advocate-General has now given a preliminary opinion. In his view, the answers are:
- Yes – and this means that the UK is not completely free to decide its own rules of retirement and that they must be in line with EU law; but
- EU Member states have a relatively wide discretion to set rules about retirement. As long as the compulsory retirement exemption has a legitimate aim relating to employment policy and the labour markets then it will be justified unless ‘the means put in place to achieve that aim of public interest are inappropriate and unnecessary for the purpose’.
What are the implications?
It is unsurprising that the Advocate-General concluded that retirement is covered by the EU. The ECJ recently decided this question in a Spanish case about compulsory retirement (‘ECJ rules that compulsory retirement is lawful’). However, it is very encouraging that he thinks member states have a relatively low hurdle to overcome in justifying their compulsory retirement rules. Heyday argued for the bar to be set much higher and for a ruling that compulsory retirement could be justified only in exceptional circumstances.
This is certainly not the end of the story, however. The Advocate-General’s opinion is not binding or authoritative and the ECJ can choose to ignore it when they issue their judgment (probably at the end of this year or early next year). We also know from an opinion he delivered in the Spanish case about compulsory retirement that this particular Advocate-General takes a very permissive approach to retirement – in the Spanish case he wanted the ECJ to go even further than it was ultimately prepared to go in allowing compulsory retirement in Spain. Nonetheless, his opinion is a blow to the Heyday challenge and will encourage the UK government.
We must now wait to hear what the ECJ has to say on the matter. In the meantime, our advice to employers remains as we set out in our previous article on compulsory retirement - 'Is compulsory retirement no longer safe?'