In Hörnfeldt v Posten Meddelande the European Court has decided that the compulsory retirement age of 67 in Sweden is not a breach of age discrimination law, despite the fact that the rule operates without taking account of any retirement pension.
The case was brought by a postal worker who had worked part-time for much of his career, and as a result had not built up what he regarded as sufficient pension benefits. Swedish law allows an employer to terminate an employee’s contract on the sole ground that the employee has reached 67. He wanted to work on after 67 in order to boost his pension.
The Court accepted the Swedish Government’s justifications for their policy, based on familiar arguments such as being able to retire employees with dignity; allowing access to jobs for younger workers and adapting to demographic developments. It was also significant that the rule was introduced in order to allow employees to work beyond the state pension age of 65 (or even beyond 67, if they were given fixed-term extensions by their employers), thereby increasing the amount of their earnings-related pensions.
The decision can be seen as further encouragement from the European Court for the use of a default retirement age by employers, although the courts here are likely to dissect the justifications put forward by employers more assiduously than in this case. It is also worth noting that although the Court did not regard it as essential for the compulsory retirement rule itself to take into account replacement income, they did comment on the fact the retirement pension in Sweden comprises both earnings-related and guaranteed elements and can be boosted by housing and old-age benefits. The contrast between retirement provision in the UK and in the rest of continental Europe remains as stark as ever and may still come into the equation where employers seek to justify compulsory retirement ages here based on European case-law.