Now that the government has removed the automatic exemption from age discrimination law that used to apply to compulsory retirement at the age of 65, employers are having to decide whether to maintain a compulsory retirement age. This is a difficult decision because forcing employees to retire at a particular age amounts to discrimination and is therefore unlawful unless it can be justified as a “proportionate means of achieving a legitimate aim”.
Some commentators have welcomed the recent decision of the Court of Justice of the European Community (CJEU) in the case of Fuchs and KÖhler v Land Hessen on the basis that it indicates that a compulsory retirement age can be justified. Unfortunately, the facts of that case, and the reasoning adopted by the Court, are such that the case does not provide much reassurance for employers in the UK – particularly private sector employers.
The Court held that all the following were legitimate aims potentially justifying compulsory retirement: establishing a workforce with a balance of employee ages, planning staff departures, creating opportunities for promotion and preventing legal disputes with older employees about their continued fitness for service. This is the first time that avoiding disputes about fitness for work has been cited at the European Court, although it was relied upon by the UK Court of Appeal in the Seldon case.
However, having a legitimate aim is only a starting point: the difficulty is persuading a Court that using age-based retirement is a proportionate way of achieving the aim. The CJEU has accepted that retirement was proportionate in some other cases, but they all involved individuals with substantial occupational pensions in cases where the retirement age was fixed by the government or was the outcome of collective negotiation with the unions.
These features are often absent in the UK, so this case law suggests it will be harder for a private sector employer to justify a retirement age. The UK courts are likely to be slow to accept that a retirement age is the most appropriate and proportionate means of providing decent promotion opportunities, or of achieving a balance of employee ages, or of avoiding disputes about fitness for work. The chances of success would be highest in a case where the retirement age was the product of a union agreement, where it is applied to employees with substantial occupational pension entitlements and where the employer could show that younger people were finding it difficult to get opportunities to work for that employer. Even then, the likelihood is that a retirement age could only be justified for certain categories of employees rather than the whole workforce.
Fuchs and KÖhler v Land Hesen, CSEU, 21 July 2011.