The European Court’s recent Ruling of the National Default Retirement Age – and what it really means

By Joyce Glasser - 23/06/2009

As Mature Times readers were beginning to experience first hand the humiliating, frustrating and incapacitating effects of the National Default Retirement Age, in March, the European Court of Justice (ECJ) handed down its judgment on Age Concern’s challenge to that provision in the Employment Equality [Age] Regulations 2006 (‘The Age Regulations’).  But what does it all mean in practice? Joyce Glasser looks at the fine print.

To summarise briefly, under a provision recommended by the CBI (The Confederation of British Industry) and adopted by the then Department of Trade and Industry (DTI) in 2004, employers are allowed to dismiss any employee on his or her 65 birthday provided they follow the statutory procedure for so doing and give ‘retirement’ as the reason for the dismissal.  An employee need only receive a letter six months before the 65th birthday (or a date thereafter if the employee is over 65) and be given the opportunity to file a request to work longer.  This request must be considered by the employer, but need not be considered in good faith!  If the request is refused, the employee cannot appeal and no (real) reasons for the employer’s decision have to be provided.

Age Concern did not actually ask the ECJ whether the default retirement age was lawful under European law, but instead, asked five fundamental questions pertaining to the interpretation of the Directive and the way in which the then DTI adopted the Directive into our current Age Regulations (AR).These points are too technical to examine in the space of this article.

The purpose of this article is to correct the widespread claim that the Government won, and Age Concern’s judicial review was defeated.

The first three questions, which were related to the scope of the Directive, and the retrospective implementation of the Government’s 

retirement policy, were answered together by the Court.   The 

Government did have the right to adopt national rules which permit employers to dismiss employees aged 65 and over, even if the rules were brought into force after the Directive, making it retrospective.  However, contrary to the Government’s arguments and belief, the Court held that the scope of the Directive extends to those national rules. Therefore, since Regulation 30 does impose less favourable treatment on older workers it is a derogation or departure from the principle of the Directive, the aim of which is to eradicate discrimination on the basis of age.  Because it is derogation, it has to be justified by a legitimate aim.

’Legitimate Aims’ must be related to Social Policy Objectives

Directive article 6(1) provides that such differences of treatment may be permissible if they are ‘objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.’

The fourth and fifth questions relate to article 6 (1). Question four asks whether that article requires member states to define the kinds of differences of treatment which may be justified by a list similar to the one in the Directive’s 6(1). The Age Regulations do not include such a list. As such, they suggest that for the employer, the justifications for the derogation are endless.  While it was disappointing that the Court ruled no such list was required, the Court then made a key statement regarding the nature of the legitimate aims. Article 6(1) ‘offers the option to derogate only in respect of measures justified by legitimate social policy objectives, such as those related to employment policy, the labour market or vocational training.

While not requiring a list, the ECJ did limit the scope of employers to invent endless justifications from cost, competition, or other individual corporate preferences.  It now seems inevitable that the justification will have to one of public interest, possibly tied in with an established socio-economic policy.  It has always been the UK’s policy to encourage older workers to work, and remain in work.

‘Mere Generalisations are not enough’

Moreover, the Court held that ‘mere generalisations’ concerning the capacity of a specific measure to contribute to employment policy, labour market or vocational training objectives, are not enough to show that the aim of that measure is capable of justifying derogation from that principle.  Nor do they constitute evidence on the basis of which it could reasonably be considered that means chosen are suitable for achieving that aim.

It is now for the UK’s National (Administrative) Court to determine whether the Government’s justification (i.e. workforce planning and the smooth functioning of pensions systems) can be considered legitimate social policy objectives, particularly when the Government’s evidence is so flimsy and disproportionate.  The Government based its justification of workforce planning and pensions systems on representations from interested parties in committee sessions and in various consultation exercises which are far from comprehensive or reliable. In fact, when the Government published the draft Regulations, it published a mandatory Regulatory Impact Assessment (July 2005) that showed clearly that economically and socially, the UK was better off without a fixed national retirement age.

The National Court will also have to consider whether the means chosen by the Government (and employers) for achieving the aim are reasonable and objective.  The means in this case (for achieving the legitimate aim of workforce planning and pension systems) is the National Default Retirement Age.  Since the ECJ has ruled out the use of ‘mere generalisations’ to prove that the means are necessary it seems highly unlikely the Government will be able to satisfy the national court, particularly, based on a new requirement: that of a ‘high standard’ of proof.

ECJ Rules there must be a High Standard of Proof

Question five asks whether the Age Regulations  are correct in making the test for direct and indirect discrimination is the same.  It should be noted here that in no form of discrimination (sexual orientation, race, religion, disability etc) other than age, can direct discrimination be justified. The ECJ ruled here, for the first time, that in any test under the Age Regulations, the burden of proof must be ‘to a high standard’ in establishing the legitimacy of the aim relied on as a justification.  It is difficult to see how such a high standard of proof can be met by the Government or ordinary employers.

Conclusion

How the National Court and future tribunals interpret and process the ECJ’s judgment will not become apparent overnight and will take time to determine. However, contrary to many reports in newspapers and journals, the ECJ’s ruling has offered promise to the cause of Age Concern and the freedom of all older people to take control of their working lives.  

Michael Rubenstein, editor of the Equal Opportunities Review, conjectures that if the National Court hold that the Age Regulations have not been correctly implemented, it is likely the Government will appeal to the Court of Appeal.  If this scenario occurs, nothing will change for older workers before the end of 2010.   The statutory review of the National Default Retirement Age – which many expect will phase out the default retirement age – is scheduled to take place late in 2011.

Joyce Glasser

I am indebted to Declan O’Dempsey of Cloisters Chambers which represented Age Concern at the ECJ, Michael Rubenstein, editor of the Equal Opportunities Review, and Gay Moon, of the Equality and Diversity Forum for their assistance.