Employment Law – European Community – Equality of Treatment - Retirement Age – Termination of Contract of Employment - Dismissal – Age Discrimination

The case of Palacios de la Villa v Cortefiel Servicios SA (Case C-411/05) [2007], concerned a determination by the court on issues relating to equality of treatment in employment across the European Community, specifically relating to retirement age. The applicant in this case, who was born in 1940, worked for the respondent employer from 1981.

In 2005, the employer notified him of the automatic termination of his contract of employment. His employment was to be terminated on the ground that he had reached the compulsory retiring age. This retirement age was provided for in the collective agreement made pursuant to the relevant national law.

The applicant, who took the view that the notification amounted to dismissal, brought an action before the national court. The applicant requested that the termination be declared null and void on the ground that it was in breach of his fundamental rights, particularly his right not to be discriminated against on the ground of age. He supported his position by arguing that the termination was based solely on the fact that he had reached the age of 65.

The national court had serious doubts as to whether the national law complied with European Community law. Accordingly, the proceedings were stayed in order to refer certain questions to the European Court of Justice for a preliminary ruling. The court asked the question:

“Whether the principle of equal treatment, which prohibited any discrimination whatsoever on the grounds of age and was laid down in Article 13 of the EC Treaty and Article 2(1) of Council Directive (EC) 2000/78 (Establishing a general framework for equal treatment in employment and occupation), precluded a national law pursuant to which compulsory retirement clauses contained in collective agreements were lawful, where such clauses provided as sole requirements that workers had to have reached normal retirement age and had to have fulfilled the conditions set out in the social security legislation of the member state concerned for entitlement to a retirement pension under its contribution regime”.

The Court held that the prohibition on any discrimination on grounds of age, as implemented by Directive 2000/78, had to be interpreted as not precluding national legislation, pursuant to which compulsory retirement clauses contained in collective agreements were lawful. This would only apply where such clauses provided as sole requirements that workers had to have reached retirement age, set at 65 by national law, and had to have fulfilled the conditions set out in the social security legislation for entitlement to a retirement pension under their contribution regime, where:

§   Firstly, the measure, although based on age, was objectively and reasonably justified in the context of national law by a legitimate aim relating to employment policy and the labour market; and

§   Secondly, the means put in place to achieve that aim of public interest did not appear to be inappropriate and unnecessary for the purpose.

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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.