Compass Group plc v Ayodele UKEAT/0484/10

An employer’s policy of never granting requests to extend an employee’s retirement date was in breach of Schedule 6 of the Employment Equality (Age) Regulations 2006.  The duty to consider procedure in Schedule 6 requires the employer to consider in good faith an employee’s request to work beyond retirement and its failure to do so made the dismissal unfair.  Refusing such requests will not mean that the dismissal will be unfair, but the process should not be conducted without genuine consideration of the request. 

At the first meeting the HR department made it clear to Mr Ayodele that it was company policy to retire people at 65 with no exception and his request was refused so he appealed.  At the appeal meeting the original decision was confirmed.  He then brought a claim for unfair dismissal because of the rigid application of the Company’s policy.  Mr Ayodele was found to have been unfairly dismissed and awarded 2 years’ loss of earnings to reflect the period of extension which he had been denied.   

Compass appealed to the Employment Appeal Tribunal on the issue of both liability and quantum and it was unsuccessful on both appeals.  The EAT held it was contrary to the letter and spirit of the legislation for an employer to simply sit through a meeting with a closed mind.  The “good faith” duty is one where an employer is obliged to consider genuinely accepting the request.  

Key point:  This case will be important for employers with employees currently under a notice of intended retirement who still have the right to submit a request under Schedule 6.  The default retirement age of 65 is being phased out at the end of September 2011.

- Can a compulsory retirement age be justified?

Fuchs and Köhler v Land Hessen (C-159/10 and C-160/10)

In this case the European Court of Justice held that a provision in German law of stipulating a retirement age of 65 for permanent civil servants did not breach the EU Equal Treatment Framework Directive if it had the aim of establishing a balanced age structure in order to encourage the recruitment and promotion of young people, improve personnel management and avoid performance disputes with older workers and allowed that aim to be achieved by appropriate and necessary means.  The Court stated that Member States were entitled to take cost considerations into account when setting social policy objectives but the cost saving cannot on its own constitute a legitimate aim.  The Court added that in determining whether compulsory retirement at 65 was appropriate and necessary it was for the national courts to determine the value of the evidence adduced. 

It was for national authorities to find the right balance between the interests of different age groups provided they did not go beyond what was legitimate and necessary to achieve their aim.  In this case it was relevant that the number of prosecutor’s posts was limited, that the claimants could retire on 72% of their salary, had the possibility of working until 68 if it was in the interests of the Civil Service to do so and they could continue to work in a role which had no age limit namely as a legal adviser.  These indicated that the compulsory retirement age did not go beyond what was necessary to achieve the legitimate aims.   

Key point:  For employers who are considering retaining a compulsory retirement age with specific aims in mind, a tall hurdle remains that age based retirement is a proportionate way of achieving those aims.  Showing that compulsory retirement is an appropriate and necessary way of achieving the aims is more difficult and will depend on the tribunal’s assessment of all the circumstances at the time.