Age Discrimination - Compulsory Retirement

Date online: 28/02/2011

The Government has announced its intention to abolish, by 1 October 2011, the Default Retirement Age (DRA) of 65 contained in the Employment Equality (Age) Regulations 2006 and is currently carrying out a consultation process on how best to achieve its aim.

A preliminary ruling of the European Court of Justice (ECJ) regarding a case before the German courts (Rosenbladt v Oellerking Gebäudereinigungsges mbH) sheds some light on the issues to be taken into account when determining whether or not automatic termination of employment at a set age can be objectively and reasonably justified.

Mrs Rosenbladt had worked for 39 years as a cleaner at a barracks in Hamburg-Blankenese. In line with a collective agreement for employees in the commercial cleaning sector, her contract of employment provided that her employment would automatically terminate at the end of the calendar month in which she could claim a retirement pension or, at the latest, at the end of the month in which she reached the age of 65. Mrs Rosenbladt wished to continue working, however. She claimed that the imposition of the age limit could not be justified under the Equal Treatment Directive and her employment contract was therefore unlawful as it constituted discrimination on the grounds of age. The German court sought clarification of the Directive in order to be able to reach its decision.

The ECJ concluded that collective agreements which provide for the automatic termination of an employee’s contract of employment when he or she becomes eligible for a pension or reaches a set age do amount to age discrimination. Their use may be justified, however, where such agreements are an appropriate and necessary means of achieving a legitimate social aim relating to employment policy.

The ECJ took account of evidence from the German Government justifying collective agreements on automatic termination as such clauses reflect ‘a political and social consensus which has endured for many years in Germany. That consensus is based primarily on the notion of sharing employment between the generations’. The ECJ held that the measure did not go beyond what was appropriate and necessary to achieve the aims pursued, given the wide discretion granted to Member States in the area of social policy and development.

Whilst automatic termination of their employment contracts at age 65 may result in financial hardship to those in the cleaning sector, they would be in receipt of replacement income in the form of the state pension and the effect on those workers had to be weighed against the benefits derived from the measure by society as a whole. The ECJ took into account that German employment law does not prevent a person who is eligible for a pension from continuing to work and such a worker is protected under age discrimination law, which prevents someone in Mrs Rosengladt’s position from being refused employment, whether by her former employer or by a third party, on a ground related to her age. When it is the result of an agreement reached by collective consultation, a clause on the automatic termination of employment contracts is not precluded, provided the national law does not deprive employees who have reached retirement age of protection from discrimination because of their age.

In the UK, any employer wishing to retain a contractual retirement age of 65 if/when the DRA is abolished will need to show that doing so can be objectively justified. This may be difficult to do once the Government has abandoned a mandatory retirement age it previously sought to justify on the ground that this was necessary in order to fulfil legitimate aims connected with social and employment policy.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

Molesworths Bright Clegg is a firm of solicitors established in the United Kingdom and is registered with theSolicitors Regulation Authority.

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