The Judgment delivered by the European Court of Justice last week in a case known as the "Heydey challenge*" to the UK's mandatory retirement age of 65, may provide some clarification for Irish employers on the legality of compulsory retirement clauses in this jurisdiction.
There had been concern that such clauses might be in breach of EU law on age discrimination, following a decision of the ECJ in October 2007 in the case of Palacios de la Villa –v- Cortefiel Servicios SA, notwithstanding the fact that domestic law gives Irish employers discretion in fixing compulsory retirement ages. In the Palacios case, the ECJ held that compulsory retirement clauses were discriminatory on grounds of age, but could be justified objectively and reasonably by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, provided that the means of achieving that aim are proportionate.
The ECJ confirmed in the Heydey decision, that national rules which permit employers to dismiss employees aged 65 or over by reason of retirement are subject to age discrimination law, but can be justified if they have aims, of a public interest nature linked to employment policy, the labour market or vocational training. This decision, which follows both the Advocate General's opinion in the case delivered in September 2008, and Palacios, may be interpreted in the Irish context as meaning that Irish employers are entitled to fix compulsory retirement ages, pursuant to the provisions in the Employment Equality Acts, 1998-2008, but should be in a position to objectively justify such clauses to avoid age discrimination. The ECJ further confirmed that it is for national courts to decide whether or not the retirement of workers (at age 65 in the case of the UK) is justified by a legitimate aim and whether the means of achieving that aim are appropriate and necessary.
Application of objective justification test by the High Court
When this issue came before the High Court in July 2008 Mr. Justice McKechnie applied the objective justification test referred to in the EU Framework Employment Directive and in the Palacios case, and dismissed the claim of an Assistant Garda Commissioner**, that the retirement age of 60 for his rank was discriminatory. In that case, the State argued that lowering the retirement age from 65 to 60 was necessary to ensure that talented young people could move through Garda ranks. It also claimed that restoring the retirement age to 65 would create a blockage at senior level. Mr. Justice McKechnie found the Assistant Garda Commissioner had been treated less favourably but found that the State had satisfied the objective justification test including the provision that any measures taken were proportionate.
Business impact of "Heydey"
The decision of the ECJ should reassure employers that they can rely on mandatory retirement clauses, subject to the qualification that they should be in a position to justify them objectively by reference to legitimate aims related to employment policy, the labour market or vocational training.
The Assistant Garda Commissioner case gives us some judicial guidance on the High Court's view of the type of issues which will satisfy the "objective justification" test.
* The Incorporated Trustees of the National Council on Ageing (Age Concern England –v- Secretary of State for Business, Enterprise and Regulatory Reform – Case C-388/07. Judgment of European Court of Justice, delivered on the 5th March 2009.
**Donnellan –v- The Minister for Justice Equality and Law Reform
The High Court, July 27th 2008