The issue
of the legality of mandatory retirement ages is a complex one. For many
non-employment law aficionados, there was an assumption that the introduction
of legislation combating age discrimination in 2006 would lead to an abolition
of an employer’s right to dismiss people just because they reached a certain
age. After all, what could be more based on age? However, after some agonising
and a suggestion at one point that there should be a ‘flexible decade of
retirement’, the UK Government decided to retain the ability of employers to
require their employees to retire. This is so long as a basic procedure is
followed, consisting of prior notification and the holding of a meeting.
In response
to this, Heyday – a membership organisation for those approaching or already in
retirement – commenced judicial review proceedings arguing that the retention
of the right to automatically retire was contrary to the European Directive which
lies behind the age discrimination rules – Directive 2000/78/EC. Many commentators predicted failure
for the Heyday challenge and many more have said that a recent decision of the
ECJ supports the likely failure. However, I think that they may have missed a
point.
The
decision in question is Palacios de la Villa v Cortefiel Servicios SA (Case
C-411/05). The case concern a provision contained in Spanish law which
allows for clauses in collective agreements which provide for termination of
employment where an employee has reached normal retirement age, completed the
minimum period of pension contributions, and satisfied the requirements to draw
a pension as set out in Spanish social security legislation. Senor Palacios de
la Villa sought to challenge the fact that he was retired under such a clause,
arguing that it was contrary to the age discrimination provisions in the
Directive. The European Court of Justice decided that the circumstances were
permitted by the Directive, but – unlike the Advocate General – it did not
decide that such a situation was outwith the prohibitions contained in the
Directive, rather they found that on the facts it could be possible for the
retirement to be justified, even though it was based on age.
The key issue, therefore, is how the court approached
justification. In short, the Court held that the compulsory retirement clause was part of a national
policy seeking to promote better access to employment by means of better
distribution of work between the generations. This was clear from the
context of the introduction of the law – a period of high unemployment – and
statements made subsequently.
More specifically, the Court noted that the relevant law makes
it possible, in collective agreements, to include clauses authorising the
termination of an employment contract on the ground that the worker has reached
retirement age, provided that that measure is ‘linked to objectives which are
consistent with employment policy and are set out in the collective agreement’,
such as ‘the conversion of temporary contracts into permanent contracts [or]
the recruitment of new workers’.
Applying this case to the UK context, it does not, contrary to what some commentators have said, provide an
automatic read across that the UK courts will also hold that the UK rules are
justified. The decision does mean that the UK Government will have to come up
with some cogent explanation why the ability for employers to retire employees
at 65 (or a lower normal retiring age) were retained. Now, it may well be that
in the light of the Palacios de la Villa decision, the lawyers representing the
Government feel confident that they can convince the courts of similar grounds,
namely the need to get younger people into the workforce and reduce
unemployment – all laudible aims. The difficult I think that they will have is
demonstrating proof that this is in fact the reason why we still have mandatory
retirement ages. In Spain
there was a clearly documented debate around unemployment that led to the
introduction of the rules and, what’s more, the collective agreement in
question specifically referred to the reduction in unemployment. In the UK, the only
clear statement from the Government as to why the mandatory retirement
provisions were retained was as follows:
“In setting the default age, we have taken careful note of a
number of representations we received in the course of consultations, which
made it clear that significant numbers of employers use a set retirement age as
a necessary part of their workforce planning. Whilst an increasing number of
employers are able to organise their business around the best practice of
having no set retirement age for all or particular groups of their workforce,
some nevertheless still rely on it heavily. This is our primary reason for
setting the default retirement age” – Equality and Diversity: Coming of Age -
Consultation on the draft Employment Equality (Age) Regulations 2006
Now, I don’t know about you, but I would have thought that
the fact that “some nevertheless still rely on it heavily” is hardly a
compelling reason for continuing with an age discriminatory measure. Further, UK law does not have the specific requirements
for any mandatory retirement to be collectively agreed, as occurs in Spain
and a number of other European states. The days of the UK mandatory
retirement age may yet be numbered. Watch this space
