UK: Default Retirement Laws – A Ray Of Light For Employers?

Last Updated: 4 November 2011
Article by Justin McGilloway

The EU Equal Treatment Framework Directive (the Directive)1 outlaws direct or indirect discrimination. However, it stipulates that member states may provide that differences of treatment do not constitute discrimination if "they are objectively justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary".

In Fuchs v Land Hessen,2 the European Court of Justice (ECJ) recently held that operating a fixed retirement age may be justified if it helps to prevent possible disputes concerning employees' fitness to work beyond a certain age.

Default Retirement Age - a reminder

  • The Default Retirement Age was removed in the UK with effect from 6 April 2011.
  • Employers can no longer serve employees notice relying on the statutory retirement procedures under the Employment Rights Act 1996.
  • Employers are able to operate a fixed retirement age where it can be objectively justified and shown to be a proportionate response to a legitimate social aim.

Facts of the case

Land Hessen is a state in Germany and its laws provide that civil servants shall retire at the age of 65. It is possible for retirement to be postponed on the request of the employees for periods of no more than one year, subject to an overall age limit of 68. However, postponement will only be allowed 'if it is in the interests of the service.'

This retirement age did not apply to all civil servants, such as teachers and lecturers. Elected officials retire at 71 if their term of office had not yet expired. At federal level, the retirement age of civil servants had slowly increased, since 2009, to 67 years of age. However, this was not compulsory at state level and had not been adopted in the Land Hessen.

The case involved two state prosecutors named Mr Fuchs and Mr Kohler. They both worked for the Land Hessen until 2009 when they reached the age of 65. Both were refused postponed retirement on the grounds that it was not in the interests of the service. As a result, they applied to the court and questions were referred to the ECJ regarding the compatibility of the German laws with the Directive.

Decision

The ECJ held that the compulsory retirement age of 65 would satisfy the requirements of the Directive, provided that certain conditions were met.

Were the aims legitimate?

The court concluded that the aim of establishing an age structure that balances young and older employees can constitute a legitimate aim of employment. It was also a legitimate aim to encourage the recruitment and promotion of young people, to improve personnel management and thereby to prevent possible disputes concerning employees' fitness to work beyond a certain age. The age balance ensures that the experience of the older staff is passed on to the younger staff who in turn share their recently acquired knowledge, thus helping to provide a high-quality service.

As the retirement of a prosecutor did not necessarily result in the hiring of a replacement, it was argued that the aim was to save costs. It was held that EU law does not prevent member states taking into account budgetary considerations at the same time as political, social or demographic considerations. However, regardless of the importance of the budgetary considerations, they cannot constitute a legitimate aim on their own.

What evidence is required to show aims were 'appropriate and necessary'?

The Directive imposes a high standard of proof on the member states to show that their aims are justifiable. The measure 'must not appear unreasonable in the light of the aim pursued' and must be supported by evidence, which may include statistical evidence.

In this case the aim was considered appropriate and necessary as compulsory retirement at age 65 did achieve the aim of encouraging recruitment and it was not unduly prejudicing the employees concerned as they were entitled to a pension that was considered reasonable. The Pension available to most prosecutors was the equivalent to 75% of their salary.

Did the measure lack sufficient 'coherence'?

For a law to be considered 'appropriate' it must achieve its aim in a 'consistent and systematic manner'. It is noted that 'exceptions to the provision of a law can undermine the consistency of that law', thus leading to a result contrary to the objective pursued.

The exception which enables prosecutors to work until the age of 68 is unlikely to undermine the aim pursued. The Land Hessen argued that it was an exception which intended to cover prosecutors who reached the retirement age before all their criminal case proceedings had been concluded, thus avoiding any complications with replacing the prosecutor. It was argued that this positively mitigated the rigidity of the law.

It was argued that the reduction in pension rights for those seeking voluntary retirement between the age of 60 and 63 was not coherent with the law. However it was deemed to aid the aim pursued by discouraging early retirement and thus ensuring the age balance.

The fact that the federal government retirement ages were increasing to 67 did not undermine the legitimate aim of the law. There must be a transition from one law to another, which will not be immediate and may take time.

Implications

Some commentators have argued that this ruling will have little impact on employers who are seeking to justify the compulsory retirement of employees. Others believe it to be a wasted opportunity to bring some clarity to this area of the law.

The governments of EU Member States are afforded a degree of freedom when implementing their own discriminatory laws and whilst it may provide useful guidance on the ECJ's approach to objective justification, it cannot be looked at in isolation. UK employers face far more stringent tests, especially in the UK courts and tribunals. Despite this, however, the legitimate aims discussed above could justify compulsory retirement provided they are 'appropriate and necessary' - demonstrating this is where the problem lies!

Footnotes

1.The Equal Treatment Framework Directive 2000/78/EC is available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2000:303:0016:0022:EN:PDF.

2 Fuchs v Land Hessen C-159/10 and C-160/10 is available at http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62010J0159:EN:HTML.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.