Retirement Age – Heyday challenge

Dated:

High Court to Decide on legality of the Retirement Age as European Court of Justice (ECJ) rules that it is not necessarily discriminatory.


Following the challenge brought by Heyday (Age Concern) (Age Concern v Secretary of State for Business Enterprise and Regulatory Reform) the European Court of Justice ruled on 5 March 2009 that the UK’s Default Retirement Age (DRA), which effectively forces many employees to retire at the age of 65, does not breach European Law so long as it is capable of being justified as "a proportionate means of achieving a legitimate aim". However, it has been left to the High Court to decide whether it is in fact "justified".

Under the Employment Equality (Age) Regulations 2006 an employee who has reached the employer’s Normal Retirement Age (NRA) or the DRA (if there is no NRA), can be dismissed by reason of retirement. In that case, assuming the correct procedure has been followed:

  • the employee cannot claim for unfair dismissal
  • the employee cannot claim for age discrimination
  • He/she will have no right to a redundancy payment

Furthermore, older job applicants could also be lawfully refused a position if they have reached the NRA or DRA. It is likely that in many cases employers will use retirement as a means of dismissing older employees in order to avoid employment law claims.

Age Concern challenged this law; arguing that it is discriminatory and contrary to the EC Equal Treatment Framework Directive in that it allows older workers to be treated less favourably than their younger colleagues. Following an application for Judicial Review from Heyday, the High Court referred to the ECJ to decide on this issue.

The ECJ ruled that the current UK Law is not in conflict with the Directive so long as it is capable of being justified for reasons of social policy and public interest. The ECJ left it to the High Court to decide if the DRA could be justified. Both sides have claimed victory following the ECJ ruling. On the face of it, the decision appears to be a blow to the hopes of Age Concern - who had hoped that the ECJ would rule that the UK law was in conflict with the EU Directive. However, it is less than clear that the High Court will decide that the current law is justified and the Heyday could still have cause to celebrate.

The High Court may decide that, taking into account the current economic climate and rising unemployment, it is in the interests of social policy to keep the retirement age as it is so that more jobs are available to younger people. Alternatively, it is conceivable that the High Court will decide that the current low value of pensions and investments means that many people who have reached retirement age still need to work in order to have a reasonable standard of living and on that basis it may be against the public interest to force them to retire.

The ECJ did clarify some points of law in answer to questions made by the parties in the case. It said:

  • The member state (i.e. the UK) does not have to set out a list of circumstances where discrimination may be justified;
  • Circumstances where discrimination is justified must fulfil social policy objectives, not the circumstances of employers, such as cost reduction/competitiveness; and
  • There is no critical difference in the justification required for direct or indirect discrimination

As yet the UK Law has not changed. Contrary to some press reports, the matter has not been settled and Heyday could still be successful. The High Court will now have to make the final decision on whether forcing people to retire at age 65 is objectively justified for reasons of social policy.




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