Legal Updates 2007 - Retirement Age

Employment Law – Retirement Age – National and European Law

 

According to the Advocate General of the European Court of Justice (“ECJ”), national laws which force people to retire at an age set outLe in collective agreements do not breach European law. The Advocate General, Jan Mazak, was giving his opinion in the case of Felix Palacios de la Villa v Courtefiel Servicios SA. It was challenged that the compulsory retirement age at 65 was a breach of EU age discrimination rules.

 

The Spanish Government referred the case to the ECJ for a ruling. Mr Mazak's opinion is extremely significant, particularly as the ECJ generally follows the advice given by its Advocate Generals.

 

The Advocate General's opinion is that the European Equality Directive does not outlaw mandatory retirement ages. He considered the preamble to the directive, which explains that the directive shall be without prejudice to national provisions laying down retirement ages.

 

"The Advocate General has taken a very straightforward view that this means what it says and he goes even further in saying that, even if the ECJ doesn't agree with him and decides that national retirement ages are age discriminatory, it is still possible for member states to justify them 'if it serves a legitimate public interest aim in employment and labour market policy'. While the Spanish case involves collective agreements, the Advocate General doesn't deal with it in those terms. He simply takes the broad view that the directive allows member states to set retirement ages".

 

The Advocate General also criticises, but doesn't revoke, the case of Mangold. In that case, the ECJ gave a general pronouncement that no member state must be allowed to discriminate on any of the prohibited grounds. His argument was that member states enjoy broad discretion in their choice of the measure capable of obtaining their objective in the field of social and employment policy. The broad principle to be interpreted from this is that the directive does not outlaw mandatory retirement ages. The Spanish case is particularly relevant to the UK because the Government has controversially kept the mandatory 65 retirement age in the Age Discrimination Regulations (“the Regulations”). The Regulations came into force last year.

 

"The result is lawyers have been advising employers that it is a bad idea to keep employees past 65. The effect of the Regulations is that if an employer retires its employees at its standard retirement age of 65 and follows the statutory process, those over 65 don't have rights to bring a claim for age discrimination or unfair dismissal. However, if the employer retires some people at 65 and lets others work until they are 72, it can no longer argue that it has a standard retirement age and so older employees retain their legal rights. That has still to be tested but it appears the Regulations are having completely the opposite effect to the intended one of allowing people to work longer to plan for their retirement".

 

It is expected that whilst employee groups argue that compulsory retirement undermines the purpose of age discrimination legislation, the Advocate General's opinion will be welcomed by the business community. Businesses argue that they need to be able to manage workplace succession by planning for retirement and replacement of staff. The Government has promised to review the Regulations after five years, however, if the ECJ upholds the Advocate General's opinion in the Spanish case, it will have the consequence of being less likely to change them.

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© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.