Summary and Implications
Last week, the Court of Justice of the European Union (the ECJ) delivered an important, employer-favourable, decision on compulsory retirement ages. If, following the abolition of the UK’s default retirement age, you plan to retain or adopt internal retirement ages, you would benefit from understanding the main principles to emerge from recent case law on this topic, culminating in the ECJ’s guidance in the case of Fuchs v Land Hassen. In brief:
- You need to identify the specific aims which underline your decision to adopt an internal retirement age. You may rely on more than one legitimate aim, take into account budgetary constraints (as part of your basket of aims), and keep your retirement age even if your underlying aims change;
- You must have good evidence to show that your decision to adopt a compulsory retirement age is proportionate. In Euro-speak this means that your decision must be the least discriminatory route open to you to achieve your legitimate aims. You will be expected to have verifiable data or reliable forecasts to support your decision;
- You will have to justify your position in relation to all groups of employees within your organisation. Therefore, you should consider carefully whether your aims and means apply equally across the board. For example, you may need to retire operational staff for health and safety reasons, but these may not justify retiring clerical staff at the same age.
For a transcript of the decision in Fuchs v Land Hassen, click here
The decision in Compass Group v Ayodele, can be seen here
Tribunals have recognised a wide range of potentially legitimate aims for adopting an internal retirement age: we expect at least some of these to apply to you
Many of the aims tribunals have recognised to date as legitimate have been approved by the ECJ in Fuchs. In particular, you may be able to rely on one or more of the following aims:
- The creation of a balanced age structure (this can include a variety of secondary aims, such as the need to provide younger employees with greater experience);
- Early planning of staff turnover;
- Affording younger employees opportunities for promotion;
- Prevention of disputes about age-related decline in performance;
- Maintenance of a congenial and supportive workplace culture by limiting performance management;
- Budgetary constraints (where they either underlie other legitimate aims or form part of a ‘package’ of aims);
- A desire to achieve greater diversity within the workforce (not only in relation to age but also gender and race, for example);
- Reasons relating to health and safety (this may include decline in physical or mental performance due to age).
Proportionality requires you to have good evidence which shows that compulsory retirement is the least discriminatory route to meet your legitimate aims
If you were to face an age discrimination claim, you would be held to a “high standard of proof”. Effectively, you will have to convince a tribunal that your choice of a compulsory retirement age is the least discriminatory manner of achieving your specific legitimate aims. In many instances it will be your decision to adopt a compulsory retirement age in the first place which will be challenged, not necessarily the particular age you have chosen.
An employment tribunal will expect to see hard, probative evidence that supports your decision. This may include existing and verifiable data (e.g. the number of employees of a particular race or sex which fall within specific age bands; evidence that your employees do not retire voluntarily and evidence that you suffer from lack of diversity and lose younger employees due to lack of movement at the ‘older end’ of your workforce).
You may be able to rely on evidence based on forecasts, but this must not be rooted on age-based assumptions (e.g. the over 50 are too slow to adapt to change or adopt new methods of working).
If your legitimate aim is based on health and safety concerns, and you can carry out health and fitness assessments on an individual basis, you may be unable to justify a compulsory retirement policy that does not allow for any exceptions based on actual performance and health abilities. There are other factors which will help you establish proportionality. These include:
- The availability of other sources of income for the employee (e.g. a reasonable pension);
- The workforce agreement to the operation of a compulsory retirement age (e.g. through an agreement signed with employee representatives); and
- The availability of alternative options for employees, e.g. an opportunity to take another role within the organisation or to continue working for a limited period of time to complete a task.
Policy v practice
The EAT has recently confirmed that employers who are “asked to consider” an employee’s request to work beyond retirement (under the now defunct default retirement age) must do so in good faith and with an open mind. It is possible that tribunals will have a similar expectation from employers who operate internal retirement ages. The safe route is to keep an open mind and consider each individual request on its merits.