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Forced retirement due to age can be justified, rules ECJ

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A UK law which allows companies to force people to retire at 65 or at that company's specified retirement age does not necessarily breach European Union laws, the EU's highest court said today.

The European Court of Justice (ECJ) rejected claims by Heyday, a part of ageing charity Age Concern, that the UK's law breached EU equality regulations.

The ECJ said that the UK can have a law forcing retirement as long as it helps to meet a social policy objective related to employment. It said it was up to the UK's High Court to decide if the law did support a social policy objective.

Employment law expert Selwyn Blyth of Pinsent Masons, the law firm behind OUT-LAW.COM, said the Government was likely to win that argument in the High Court.

"The Government has always said that this is about ensuring that employers can plan for the future, that they can rely on people leaving the labour market at a certain time," said Blyth. "The Government has always had a social policy argument behind the law, and I think that will be seen as a legitimate aim in the eyes of the ECJ."

The Employment Equality (Age) Regulations came into force in October 2006 and were immediately challenged by Heyday, which said that the law incorrectly implemented EU law and that it denied people over 65 their right to work.

The Government has said that the law does not breach equality rules and that it will monitor its impact and review it in 2011. The law does not force retirement at 65 but it does allow employers to do so.

The ECJ said that this is permissible, as long as the aim of the law was the achievement of wider social objectives and not just giving businesses the opportunity to cut costs.

"[The Equal Treatment Directive] gives Member States the option to provide, within the context of national law, for certain kinds of differences in treatment on grounds of age if they are ‘objectively and reasonably’ justified by a legitimate aim, such as employment policy, or labour market or vocational training objectives, and if the means of achieving that aim are appropriate and necessary," the ruling said.

The Court said it was apparent from the Directive "that the aims which may be considered ‘legitimate’ […] are social policy objectives, such as those related to employment policy, the labour market or vocational training."

"By their public interest nature, those legitimate aims are distinguishable from purely individual reasons particular to the employer’s situation, such as cost reduction or improving competitiveness, although it cannot be ruled out that a national rule may recognise, in the pursuit of those legitimate aims, a certain degree of flexibility for employers," said the Court.

The ECJ said that the High Court must ascertain, first, whether the UK legislation reflects such a legitimate aim and, second, whether the means chosen were appropriate and necessary to achieve it.

Blyth said that the High Court will have to decide not only whether the Government's succession-planning argument is a good enough policy aim, but also if the retirement age law is the best way to pursue that aim.

"The law allows direct discrimination on grounds of age, which is very unusual in discrimination law, but the law has to be the least discriminatory thing possible to achieve that aim, so the High Court will look at whether there is something other than the retirement age that could do that," he said.

"And it is hard to think of something else that would. People might argue it should be 68 rather than 65, but the Government could argue that it is 65 because that is when the state pension is there to cushion people who are now out of work," said Blyth.

Age Concern and Help The Aged have said that they now want the Government to drop the High Court case and remove the retirement age from the law.

"We still have a very strong chance of winning in the British Courts," said Gordon Lishman, director general of Age Concern. "The ECJ has said the Government must prove to a high standard why forced retirement ages are needed, and those reasons must be based on social or labour market needs, not the interests of employers."

"The Government’s position is increasingly contradictory. Only last week ministers criticised the ‘grey ceiling’ which stops people working beyond the age of 65. Yet, they continue to consign millions of willing and able older workers to the scrapheap by maintaining the very barrier which prevents them from extending their working lives. It is time for ministers to find the courage of their convictions and abolish the default retirement age without further delay," he said.

See:

Copyright © 2009, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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