The ECJ has given judgment in The Incorporated Trustees of the National Council on Ageing (Age Concern) v Secretary of State for Business, Enterprise and Regulatory Reform (C-388/07) - known as "Heyday". The ECJ confirmed that mandatory retirement provisions fall within the scope of the EC Equal Treatment Framework Directive (2000/78). Therefore it is necessary for the UK’s retirement age of 65 to comply with the Directive.
The Directive allows member states to justify rules which would otherwise be direct age discrimination. In principle, the compulsory retirement age of 65 can fall within the exception in the Directive. In order to do so it must be objectively and reasonably justified by a legitimate aim relating to social policy, and the means of achieving this aim must be appropriate and necessary.
The question of whether the UK’s retirement age of 65 is actually justified under this test was not referred to the ECJ and remains unanswered. The case will therefore have to return to the High Court for a decision on whether the compulsory retirement provisions are objectively justified.
In more detail...
In April 2006, the UK implemented the Equal Treatment Framework Directive (the Directive) by introducing the Employment Equality (Age) Regulations 2006. Shortly afterwards, Age Concern - through its campaigning arm Heyday - applied to the High Court seeking a judicial review of the Regulations and a declaration that parts of them are ultra vires in that they fail to give effect to the UK’s obligations under the Directive. The focus of the challenge is the effect of Regulation 30 of the Age Regulations, which provides that employees aged 65 or over cannot claim that their dismissal is unlawful age discrimination where the reason for dismissal is retirement.
The High Court stayed the judicial review proceedings and referred certain questions to the ECJ for a preliminary ruling. The three main questions were:
1. Does the scope of the Directive extend to national rules which permit employers to dismiss employee aged 65 or over by reason of retirement?
In the earlier case of Palacios de la Villa v Cortefiel Servicios SA [2007] IRLR 989, the ECJ ruled that national retirement rules do fall within the scope of the Directive. The ECJ has now confirmed this position in Heyday.
2. Does Article 6(1) of the Directive permit member states to introduce legislation providing that a difference of treatment on grounds of age does not constitute discrimination if it is determined to be a proportionate means of achieving a legitimate aim, or does Article 6(1) require member states to define the kinds of differences of treatment which may be so justified, by a list or other measure which is similar in form and content to Article 6(1)?
Age Concern’s argument here was the test for justification under the Age Regulations was not specific enough. Whereas Article 6(1) of the Directive sets out specific examples of what constitutes justification, reg.3 of the Age Regulations gives a generalised definition of justification - and in particular makes no distinction between justification for direct and indirect discrimination.
The ECJ said that Article 6(1) does not mean that national legislation has to set out a precise list of aims that can justify age discrimination. However, the ECJ emphasised that the measure in question "must be justified by legitimate social policy objectives, such as those related to employment policy, the labour market or vocational training". It is for the national court to determine: (a) whether the legislation at issue is consonant with such a legitimate aim; and (b) whether the UK government could legitimately consider, taking into account its discretion in matters of social policy, that the means chosen were appropriate and necessary to acheive that aim.
The ECJ stressed that, while member states have a 'broad discretion' in choosing the means for achieving their social policy, that discretion "cannot have the effect of frustrating the implementation of the principle of non-discrimination on grounds of age". In particular, it is not sufficient to point to "mere generalisations" concerning the capacity of a measure to contribute to employment policy, labour market or vocational training objectives.
3. Is there any, and if so what, significant practical difference between the test of justification set out in Article 2(2) of the Directive in relation indirect discrimination, and the test for justification set out in relation to direct age discrimination at Article 6(1)?
Age Concern argued that any justification for direct discrimination must be subject to a high degree of scrutiny, and that Article 6(1) reflects this by using the combined description of “objective and reasonable” in relation to measures that may be justified.
The ECJ said that no particular significance should be attached to the difference in the wording between Articles 2 and 6. It is for the High Court to decide whether the compulsory retirement provisions are objectively and reasonably justified by a legitimate aim - such as employment policy or labour market or vocational training objectives - and whether the means of achieving that aim are appropriate and necessary. However, the ECJ did add that the Directive imposes on a member state "the burden of establishing to a high standard of proof" the legitimacy of the aim relied on as a justification.
What happens next?
This case has so far merely been dealing with whether, in principle, the applicable EU law allowed the UK government to implement a compulsory retirement age. The retirement age must still be justified in order to be covered by the exception. That issue was not before the ECJ.
Assuming the Age Concern challenge will now continue following the ECJ’s decision, the question of justification will now fall to be considered by the High Court. Whatever the result - which is far from certain - there are likely to be subsequent appeals to the Court of Appeal and then the House of Lords. Uncertainty over the legality of compulsory retirement will therefore continue for some time yet.
In the Palacios case, the ECJ did uphold a retirement age of 65 in Spain but the facts of the case were rather different from the UK situation and so that ruling does not determine the issue.
In the meantime, employers who wish to continue using a compulsory retirement age may continue to do so. But they should be aware that, if the mandatory retirement age ultimately turns out to be unlawful, they will risk unfair dismissal and age discrimination claims for forcing workers to retire.
Several ET claims by employees contesting their enforced retirement are currently stayed pending the result of the Heyday case. Any further claims of this nature brought from now on are likely to be similarly stayed. The government is is any event committed to reviewing the current legal position on retirement under the Age Regulations in 2011.
Click here for a copy of the ECJ's judgment.
Click here for a copy of the Advocate General's Opinion.
Click here for a summary of the High Court decision which followed this case.