I have seen lots of reports about a recent decision of the European Court of Justice regarding age discrimination. What did the ECJ decide?

March 30, 2009

What is the basis of the Age Concern challenge?

In 2006, the Employment Equality (Age) Regulations came into force. Age Concern, under the title of Heyday, brought an action in the High Court in respect of the regulations, applying for a ruling that they were unlawful. Age Concern argued:

(i) that the regulations ought not to contain the provision that continues to allow employers to retire employees at age 65, arguing that this breaches the European Commission’s Equal Treatment Directive;

(ii) that the extent to which the regulations allow direct age discrimination to be justified by employers is far too wide and that they ought to have specified particular circumstances in which direct discrimination is justified.

Certain questions were referred to the European Court of Justice by the High Court.

What did the European Court of Justice decide about compulsory retirement?

The ECJ held that legislation allowing compulsory retirement is potentially permitted – but on condition that such an exemption from age discrimination can be justified by the UK Government.

The ECJ had already held, in a Spanish case, that compulsory retirement could be justified by the Spanish Government. The Spanish justification for a compulsory retirement age related to attempts to control unemployment.

It is important to note that the ECJ decision does not answer the crucial question of whether or not the default retirement age of 65 is lawful. The High Court will have to decide this question. The decision is likely to be made later this year. It is not known what the outcome will be. The UK’s justification for maintaining a default retirement age is, however, different from that of the Spanish Government; rather than relying on controlling unemployment, the UK Government is relying on meeting the concerns of employers regarding workforce planning and avoiding a negative impact on employers’ provision of work-related benefits and pensions. The concern is that the cost of providing pensions and other benefits to all employees indefinitely, beyond the age of 65, might discourage some employers from continuing to provide these.

What did the ECJ decide about direct discrimination on the grounds of age?

The regulations permit direct age discrimination if it is “a proportionate means of achieving a legitimate aim”.

The ECJ held that there was no need for types of permissible age discrimination to be listed specifically in the legislation. It held, however, that social policy reasons were required to justify direct discrimination, not merely an employer’s business reasons. It was noted that it was for member states, not employers, to justify direct discrimination. The High Court will also have to decide what effect this judgment has on the regulations.

What happens next?

The High Court will decide on whether the compulsory retirement age is justified and whether the part of the regulations permitting direct discrimination to be justified is compatible with European law.

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