The ECJ has given an important ruling in the case of Rosenblatt v Oellerking, which will be of interest to UK employers who wish to retain a compulsory retirement age after the abolition of the default retirement age on 1 October 2011. The case concerns a German provision for employment contracts to terminate automatically on the employee’s 65th birthday, so long as the employee is entitled to a state pension and the automatic termination is provided for by collective agreement. The ECJ held that, while this amounted to direct age discrimination, it was justified and therefore not unlawful. In considering objective justification a number of legitimate aims were identified, namely the facilitation of the employment of young people, enabling the employer to plan recruitment and allowing good management of a firm’s personnel. The fact the provision was collectively negotiated helped to persuade the ECJ that it was a proportionate means of achieving those aims, as was the fact that the retirement age was tied in with entitlement to state pension, ensuring that the employee had an alternative source of income.
This decision is the latest in a line of cases in which the ECJ has displayed a markedly accepting approach to the idea of compulsory retirement - an encouraging sign for those employers planning to retain a compulsory contractual retirement age. The existence of the default retirement age means there have been few cases on retirement to date and such European case law provides guidance which employers may be able to rely upon before UK tribunals, if necessary, after 1 October 2011.