Article Details

Publication:   Workplace Law website  
Date:              17 October 2007

The European Union's top court has ruled mandatory retirement ages are legal in member states, in a judgment that will have wide-ranging implications for the 27-member bloc's aging workforce.

The European Court of Justice said, though age discrimination is illegal, compulsory retirement at a certain age may be appropriate where there is a legitimate aim of promoting full employment and where they are entitled to a full pension.

E.U. nations are facing rising pension and healthcare costs as its population ages and birth rates decline. The current average retirement age in the E.U. is 58. Policymakers hope to raise this level to 63.

The case was brought by Spaniard Felix Palacios de la Villa, whose employer terminated his contract of employment a few months after 65th birthday under the terms of his union's collective agreement.

The court found that the Spanish laws were adopted at the instigation of unions as part of a national policy to distribute work between older and younger generations and as such are compatible with E.U. rules.

Workplace Law asked Andrew Clarke QC, top employment barrister from Littleton Chambers, how he thought the ruling would affect employers in the UK. He said:
“I doubt that individual employers will be concerned with the macro-economic justification issues. That will be for the UK government (and other governments) when seeking to justify their particular scheme for (or permitting) compulsory retirement at a specific age.” On the implications of the ruling on the pending ‘Heyday’ case where the organisation is trying to overturn the Government’s legislation on forced retirement, he added: “This ruling must make chances of success in the Heyday challenge more remote. The one feature of the Spanish scheme not necessarily replicated in the English scheme is the link to the concept of financial security. It was said that it was important that the individual would be in receipt of retirement pension after his employment ended. "In the UK the retirement provisions in the Regulations were not expressly linked to the availability of a retirement pension, and this may be an area which requires further consideration. Of course, this may have implications for any proposals to raise the age for receipt of state pensions.

“What this case does do is show that even if the Heyday challenge were to succeed on such a basis as set out above, the UK government would be able to structure similar proposals which would meet the ECJ requirements.”