The Supreme Court has held that a mandatory retirement age is capable of justification and therefore not discriminatory on grounds of age if:

  1. The legitimate aim or aims of setting the age are connected to social policies, such as those related to employment policy, the labour market or vocational training. The aims must be of a public interest nature rather than for reasons particular to the employer’s situation, such as cost reduction or improving competitiveness.  The aims which the European Court has been ready to accept for this purpose so far fall within two categories –
    1. ‘inter-generational fairness’ which can mean a range of things such as facilitating access to employment by young people, enabling older people to remain in the workforce, sharing limited opportunities to work in a particular profession fairly between the generations, and promoting diversity and the interchange of  ideas between older and younger workers; and
    2. ‘dignity’, such as avoiding the need to dismiss older workers on the grounds of incapacity or underperformance, or avoiding the need for costly and divisive disputes about incapacity or underperformance, thus preserving the workers’ dignity and avoiding humiliation;
  2. The legitimate aim applies to the particular circumstances of the employment concerned (such as recruiting young people to achieve a balanced workforce unless the problem of the business concerned is retaining older workers and it has no problem recruiting young staff); and
  3. The means chosen to achieve the aim must be shown to be both ‘appropriate and necessary’ as well as proportionate.  The means must be effective to meet the aim and there must be no other, less discriminatory, means of doing it.

What does this mean?

Employers will only be able to set the age at which their staff retire if they can prove there is a strong justification, founded on legitimate social policy aims, for doing so.

What should employers do?

The safest course is likely to be to have no set retirement age and to manage older workers.  Employers who do decide to enforce a mandatory retirement age should take specific legal advice to ensure they have good justification for having a retirement age at all and for the age chosen.