Even before the Age Regulations came into force, Heyday issued a High Court challenge to the provisions which allow mandatory retirement at age 65. The High Court promptly referred the matter to the European Court of Justice (ECJ).
In particular, the ECJ was asked to consider:
- whether national rules which permit employers to dismiss employees aged 65 or over by reason of retirement are permitted and whether this extends to rules introduced after the introduction of the Directive;
- if legislation setting out the test for justification of direct age discrimination is required to list the possible legitimate aims; and
- is there any significant practical difference between the test for justification in relation to direct and indirect discrimination?
The relevant Directive is expressly stated to be 'without prejudice to national provisions laying down retirement ages'. Prior to the introduction of the Age Regulations, the UK did not have a national retirement age, just a national state pension age. As such, Heyday argued that it was contrary to the terms of the Directive to create a national default retirement age after the Directive was agreed in 2000.
Rejecting Heyday's arguments, the ECJ has concluded that the provisions of the UK age discrimination legislation governing retirement dismissals can be compatible with the Directive, provided they are objectively and reasonably justified. Now that the ECJ has confirmed that the default retirement age falls within the ambit of the Directive, it has left it open for consideration of whether the default retirement age provisions are in fact justifiable. This will be for the English High Court to determine.
On the question of whether the implementing legislation in individual member states should list every possible legitimate aim that may be justified in order to comply with the Directive, the ECJ concluded that this is not required. This has got to be the right answer; EU directives leave implementation to the discretion of individual member states, and there was no suggestion in the Directive on age that every single type of age discrimination should be listed.
However, the ECJ said that the aims which may be 'legitimate' for the purposes of justifying direct age discrimination are social policy objectives, such as those related to employment policy, the labour market or vocational training. By their public interest nature, those legitimate aims are distinguishable from purely individual reasons particular to an employer's situation, such as cost reduction or improving competitiveness. These are unlikely to be considered legitimate unless they can be brought within a broader social policy objective.
Furthermore, the ECJ found that mere assertions concerning the capacity of a specific measure to contribute to employment policy, labour market or vocational training objectives are not enough to show that the aim is justified. There must be an evidential basis to support it. It is this aspect of the ruling that may prove to be of most significance in this case.
Finally, as to whether there is a difference in the test required for objectively justifying direct as compared with indirect age discrimination, the ECJ agrees with the UK Government that there is no practical difference between the tests.
What does this mean?
The points decided by the ECJ, are on preliminary points. The ECJ does not address the substantive question as to whether the UK's default retirement age is justifiable, nor was it asked to. Instead, the ECJ is confirming that the UK retirement provisions are within the scope of the Directive and, as such, are potentially age discriminatory subject to being justified. The UK Government will have the burden of proving within the UK's own courts the legitimacy of the aim(s) relied on as justification for the default retirement age.
The Spanish Government, faced with a similar challenge, did justify the principle of a fixed retirement age, but they had a wealth of evidence on their side, with years of employee participation to point to. Furthermore, the stated aim of the Spanish Government to promote employment is different to the aim stated by the UK Government in the July 2005 Coming of Age consultation document, which was workforce planning and to avoid adverse impact on pensions and other benefits.
Whether the UK national default retirement age, and the accompanying provisions making retirement a potentially fair reason for dismissal, can be objectively justified as a proportionate means of achieving a legitimate social policy aim remains to be determined by the High Court.
Identifying a legitimate social policy aim is likely to be a relatively easy hurdle for the UK Government to overcome. It is showing that the means adopted (the default retirement age of 65) was a "proportionate" means to achieve the aim which is a more difficult hurdle. While it is likely to be able to make a compelling case for setting an age at which retiring employees is acceptable, when balanced against the Government's stated aims of encouraging employees to work for longer, the cut-off point of 65 appears increasingly arbitrary. Six months ago mandatory retirement ages were scrapped for civil servants, leaving the Government accused of double standards. Age Concern and Help the Aged are now calling on the UK Government to scrap the default retirement age immediately‚ by-passing the need to return the case to the High Court. We await the next chapter with interest!