The Employment Equality (Age) Regulations 2006 came into force almost two years ago, on 1 October 2006, and prohibit discrimination in employment and training on the grounds of age. The Regulations also introduced a new, rather complex procedure for retiring employees. The UK’s default retirement age of 65 has been the subject of much litigation, perhaps most notably the proceedings brought by Age Concern, commonly known as the Heyday Challenge.*

The Advocate General of the European Court of Justice (ECJ) has just given his Opinion in that case and it is disappointing news for those individuals who do not want to be compulsorily retired on reaching 65.

Regulation 30 provides that it is not unlawful to dismiss an employee at or after the age of 65 where the reason for dismissal is retirement and the procedural requirements for retiring employees are followed. Specifically, the organisation must notify the employee of the intended date of retirement and the employee has the right to request to continue working beyond that date. Age Concern argued that the default retirement age of 65 is discriminatory and incompatible with the Equal Treatment Framework Directive (from which the Regulations are derived). It made an application for judicial review and the High Court referred the matter to the ECJ in summer 2007.

The Advocate General’s Opinion is that legislation permitting employers to dismiss employees aged 65 or over can, in principle, be justified if the legislation is objectively and reasonably justified by reference to a legitimate aim; and the means employed to achieve that aim are ‘appropriate and necessary’.    

It is important to remember that the Advocate General’s Opinion is not binding on the ECJ which may well come to a different conclusion when its judgment is given, expected to be some time in December. However, if the ECJ judgment does follow the Opinion it will then be for the UK government  to show that it can objectively justify the default retirement age of 65.

The Opinion was perhaps not entirely unexpected as there was a ruling last year in a Spanish case (Palacios de la Villa v Cortefiel Servicios SA ) which dealt with a similar issue.  In that case, the ECJ held that national governments have a wide discretion to use appropriate means to achieve a legitimate aim. The Spanish government adopted a law permitting collective agreements that laid down a compulsory retirement age for workers (65 in the case of Mr Palacios) provided the workers had sufficient service to qualify for a full retirement pension. The Spanish government was able to show that it had legitimate reasons for imposing this requirement, namely the creation of employment opportunities for younger workers. A specific social policy objective identified by the Department of Trade and Industry (as it then was) prior to the  introduction of the Regulations here was that of 'workforce planning'.

For the time being therefore there is still uncertainty for employers, employees approaching retirement age and those individuals who have already brought Employment Tribunal claims where the retirement age is an issue. Around 260 claims are currently stayed pending the ECJ judgment. The Opinion is probably welcome news for many employers but they should continue to comply with the Regulations and to ensure that they follow all the requirements of the retirement procedures. For employees, some may take the view that to protect their position they need to lodge an Employment Tribunal claim where they have been forced to retire at 65, but with the knowledge that any claim will be stayed pending the ECJ judgment.

In reality, a number of organisations have already removed their normal retirement age on the basis that it does not make business sense to retire employees simply because they reach an arbitrary age. They would rather retain the skills and talents of older workers and maintain greater diversity in the workforce. Other employers however argue that having a mandatory  retirement age is an essential management tool because it enables them to plan for their employees’ retirement and address succession issues.

Recent research published by the CIPD suggests there is a greater interest among individuals in working beyond retirement age and the reasons for this are job satisfaction and financial. The CIPD found that around 38% of individuals have planned to carry on working beyond 65. Significantly, of those who said that they did not plan to work past that age, 30% would change their mind if their employer allowed them to work flexibly.

At the time of implementing the Regulations, the government had already made it clear that it would be reviewing the issue of the default retirement age of 65 and its effectiveness in 2011. Depending on the ECJ judgment in the Heyday case, it may be looking at the issue sooner than it anticipated.

* The Incorporated Trustees of the National Council on Ageing (Age Concern England) v Secretary of State for Business, Enterprise and Regulatory Reform