In the recent case of Rosenbladt v Ollerking Gebaudereinigungsges mbH the European Court of Justice ("ECJ") has held that a German law allowing for compulsory retirement of workers entitled to a pension, if agreed as part of a collective agreement, is, on the face of it, age discrimination. However, on the particular facts of this case, age discrimination could be justified.

The Claimant, Ms Rosenbladt, was employed as a part-time cleaner for 39 years. She was told that her contract would terminate when she reached her retirement age of 65 in line with a collective agreement. She informed her employers that she wanted to continue working and issued a claim for unlawful termination of her contract on the grounds of age discrimination. Ms Rosenbladt claimed that the collective agreement, which provided for retirement at age 65, could not be justified. Such collective agreements were permitted under German law.

The Equal Treatment Framework Directive governs the prohibition of discrimination on grounds of age across the EU and forms the basis of the age discrimination laws now enshrined in the Equality Act in the UK. However, the Directive does permit age discrimination to take place if it is "objectively justified", meaning that the discrimination has a legitimate and reasonable aim, and if it is "proportionate", i.e. no more than necessary to achieve that aim.

The Hamburg Labour Court referred the issue to the ECJ and asked them to rule on whether German legislation that permitted collective agreements (as well as the parties to an individual contract of employment) to provide for the automatic termination of an employment relationship upon reaching a specific fixed age (in this case: 65) contravened the prohibition of age discrimination laid down in the Equal Treatment Framework Directive.

The ECJ decided that the German government's aim in allowing compulsory retirement ages to be agreed under collective agreements or in individual contracts was reflection of a political and social consensus which has endured for many years in Germany. This is based primarily on the notion of sharing employment between the generations so that:

  • younger workers were benefited by making it easier for them to find work during a time of chronic unemployment;
  • older workers were protected, as most of them wish to stop working as soon as they are able to retire and the pension they receive serves as a replacement income once they loose their salary; and
  • the dismissal of employees who were no longer capable of fulfilling their role is avoided.

The ECJ also believed that the German legislation was proportionate, because the collective agreement could only be valid if the workers concerned where entitled to a pension. Furthermore, crucially, the legislation did not provide for a "blanket" retirement but left it up to employers and employees to decide whether they wished to agree to compulsory retirement.

This differs from the UK, which currently has a "blanket" default retirement age of 65 for all employees. However, the government has announced its intention to abolish the default retirement age in October 2011 and so the Rosenbladt case may be of potential assistance to employers wanting to justify compulsory retirement after that time.