The European Court of Justice has decided that the UK's retirement age of 65 is not necessarily in breach of EU law. However, that is not the end of the matter because the case must now return to the UK Court to decide if the UK's compulsory retirement age of 65 can be justified. This will require the High Court to assess if the retirement age pursues a legitimate aim (such as social policy objectives), and whether the means to achieve such an aim, i.e. a blanket mandatory retirement age of 65, is proportionate in achieving that aim.

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What did the European Court of Justice say?

Broadly, the European Court of Justice (“ECJ”) has agreed with the Advocate General's opinion on which we reported in our alert of 26 September 2008. As we set out in that alert, in 2007, Heyday brought a claim in the High Court against the UK Government that the national default retirement age of 65 under the Employment Equality (Age) Regulations 2006 was incompatible with EU law. The High Court referred to the ECJ certain questions regarding the lawfulness or otherwise of the Age Regulations.

The ECJ ruled that Regulation 30 of the Age Regulations, which permits employers to dismiss employees age 65 and over by reason of retirement, was directly discriminatory on the grounds of age but might be capable of being objectively justified in accordance with the test laid down by the Directive; namely if it pursues a legitimate aim and if the means of achieving that aim are appropriate and necessary.

The ECJ ruled that it is for the national court (i.e. the High Court) to ascertain if Regulation 30 is justifiable by reference to a legitimate aim - here legitimate social policy objectives, such as those related to employment policy, labour market or vocational training. However, there is no need for domestic regulations to illustrate the type of treatment which may be justified by way of a specific list. It is also for the national court to ascertain whether the means of achieving that aim are appropriate and necessary. In that connection, the ECJ said that when choosing means capable of achieving their social policy objectives, Member States enjoy broad discretion. Notwithstanding this, the ECJ emphasized that the UK Government will have the burden of establishing, to a high standard of proof, the legitimacy of the aim pursued.

What does this decision mean for employers?

The High Court must now decide whether the UK’s mandatory retirement age of 65 is objectively justified. This will involve considering whether Regulation 30 does indeed pursue a legitimate aim which is proportionate. The UK Government has argued that Regulation 30 is justified on the basis that it helps workforce planning as it provides a target age for retirement; it also reduces the risk of blocking the promotion of younger workers and encourages workers to plan for their retirement. Assuming that the aim is indeed legitimate, the Court will have to decide whether the means to achieve such an aim, i.e. a blanket mandatory retirement age of 65, is proportionate in achieving that aim.

Commentators have reported that the High Court will prioritise the hearing of this case on the basis that it is of exceptional importance. This will please many employees who have made claims for unfair dismissal and age discrimination as a result of having been forced to retire at 65; it is estimated that there are around 800 Employment Tribunal cases which have been stayed pending the outcome of the Heyday decision.

The Heyday decision aside, it is worth noting that the Government will be reviewing the default retirement age in 2011 and it is rumoured that it may be raised to 68, to bring it in line with the State Pension age which will rise to 68 between 2024 and 2046.

For further commentary on this case, see our previous alert (Advocate General’s Opinion in Heyday’s challenge to the Age Regulations).