As our readers will be aware, Age Concern England (now "Age UK"), challenged UK law to the extent that it allows employers to compel workers to retire at 65, on the basis that to allow this is inconsistent with the EU Equal Treatment Framework Directive and is age discrimination.
Back in March, the European Court of Justice ruled that a designated retirement age ("DRA") of 65 was capable of being objectively justified (see our e-update). The case returned to the High Court, which has now ruled that the DRA is lawful, the UK having succeeded in objectively justifying it as a proportionate means of achieving a legitimate aim. The question is, for how long...
The Court ruled that the government had proved that a DRA achieved legitimate social policy aims such as securing the integrity of the labour market and its short-term competiveness. As to proportionality, the Court considered both (i) the adoption of a DRA and (ii) the adoption of age 65 as the DRA. In relation to (i), the Court, for example, contrasted the use of a DRA with a mandatory retirement age. Whilst the latter affords no discretion to either employee or employer, a DRA does not require an employer to dismiss on grounds of age/retirement but merely enables it to do so lawfully when that age is reached. In the circumstances, the Court did not consider this to be a disproportionate way of giving effect to the social aim of labour market confidence.
With regard to (ii), the Court recognised that there were powerful reasons why a DRA higher than 65 could have been adopted, such as, creating a cultural change in relation to age discrimination and retirement. In addition, the Court commented that a DRA of 65 seemed "particularly odd" in light of the government's intention to increase pensionable age to 68 in the future and recognised that the use of, for example, age 68 as the DRA would not have undermined or diminished any of the government's objectives in adopting a DRA at all.
However, the Court also had regard to the fact that a DRA of 65 had the support of the preponderance of consultees in the consultations on the Regulations and continuing practice elsewhere in the EU. In addition, no one was making a case for age 68 and the case for age 70 had commanded little popular support in the consultations. Finally, an appropriate margin of discretion had to be afforded to the government in the selection of a DRA. The Court therefore concluded that setting the DRA at 65 was within the competence of the government in implementing the Directive and was not void.
Interestingly, the Court placed importance on the fact that the case had to be considered on the basis of when the Regulations came into force, i.e. 2006 and not now and also that a review of the Regulations was imminent. The Court indicated that if a DRA of 65 had been introduced in 2009, it would not have found it to be proportionate, since it "creates greater discriminatory effect than is necessary on a class of people who both are able to and want to continue in their employment. A higher age would not have any general detrimental labour market consequences or block access to high level jobs by future generations. If the selection of age 65 is not necessary it cannot therefore be justified..."
Save for one reference to the "changed economic circumstances", it is not entirely clear, however, why this reasoning would not have applied in 2006 to render a DRA of 65 disproportionate.
In any event, the decision confirms that employers can lawfully retire employees at age 65, provided this is done in accordance with the statutory retirement procedure and means that the numerous employment tribunal claims which have been sisted, pending the outcome of this case, are likely to be dismissed. The DRA is, however, to be reviewed in 2010 and is unlikely to remain at 65, if at all, in light of Mr Justice Blake's view that: "in the light of changed economic circumstances and the generally recognised problems that a longer living population creates for the social security system, the case for advancing the DRA beyond the minimum age of 65 at least would seem to be compelling." He went on to say that he could not "presently see how 65 could remain as a DRA after the review".
To assist our clients in complying with the statutory retirement procedures, we have a package that includes style letters and a unique software product that helps you plan when retirement notices require to be issued and the last date for employees to make requests to continue working, updates you on forthcoming retirements and maps how this affects your employee age profile. All you have to do is enter staff dates of birth.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
