Default retirement age of 65 is lawful

Background
In March 2009, we sent an Insight reporting that the European Court of Justice (ECJ) had released its judgment in the Incorporated Trustees of the National Council for Ageing (Age Concern England) v Secretary of State for Business, Enterprise and Regulatory Reform, Case C-388/07 (Heyday case). In the judgment, the ECJ decided that national rules on retirement within the Employment Equality (Age) Regulations 2006 (the 2006 Regulations) were subject to age discrimination law. However, a UK rule which permitted employers to dismiss employees aged 65 (or over) for retirement may be justified in principle.

The High Court was asked to rule on whether the relevant parts of the 2006 Regulations, properly implement European Union (EU) law. It had also to decide whether the rule allowing dismissal at the default retirement age (DRA) of 65 could be objectively and reasonably justified.

The High Court has recently considered the matter and has decided that the DRA of 65 is lawful in English law.

High Court judgment
The 2006 Regulations were intended to implement Directive 2000/78 (the Directive) into English law. The claimants in this case, argued that the Government had incorrectly introduced a DRA because it was unlawful under EU and English anti-age discrimination laws. They maintained that regulations 3 and 30 of the 2006 Regulations amounted to unlawful discrimination as they allowed an employer to dismiss an employee on the grounds of retirement at age 65. (This was as an exception to anti-age discrimination laws.)

The Government responded that it could objectively justify the DRA and the age discrimination it entailed on the grounds of social policy. This was because the Government had an appropriate discretionary area of judgement broad enough to permit it to make relevant social policy choices. The promotion of Regulations 3 and 30 and the concept of a DRA were lawful as a means of maintaining confidence in the labour market and as a social policy objective.

In agreeing with the Government’s view, the High Court stated that Regulation 30 was lawful because the Government was entitled make derogations from the principle of non-discrimination on the grounds of age. This was so long as the derogations were in accordance with the Directive. Provisions for a generalised DRA appeared to be the kind of arrangements that could be justified under the Directive.

Comment
In 2007, the President of the Employment Tribunals issued a practice direction staying all current and future tribunal claims which concerned the UK's mandatory retirement age pending the outcome of the Heyday case. There are an estimated 800 claims that have been stayed. The High Court decision will mean that the many cases which were put on hold will now be heard; 'though many claimants will want to withdraw their claims following the High Court’s decision.

This decision does not mean that employers must dismiss workers at 65 or above. Employers are free to keep workers on in employment after 65. However, if they do so they may subsequently dismiss them on retirement grounds without liability for unfair dismissal and without compensation to the employee. Employers taking this course of action are reminded that they are required to give a minimum period of notice of an intended decision to retire employees aged 65 or above and they must listen to any representations made by the employee against such a compulsory retirement. Also, they need to be sure they are not in breach of any contractual provision.

The Government has recently announced its plans to accelerate its review of the default retirement age and to introduce legislation with a view to scrapping mandatory retirement for the majority of employees by 2010 rather than 2011 as originally promised. The CBI has already commented that the DRA helps employers to plan ahead with more confidence. On the other hand, Mr Justice Blake said in his Heyday judgment that the case for raising the mandatory retirement age “would seem to be compelling.”