In this Spanish case Mr Palacios de la Villa was informed that his employment would be automatically terminated on the grounds that he had reached the compulsory retirement age provided under a relevant collective agreement, derived from national provisions. The agreement allowed for compulsory retirement at the age of 65, the same as the new default retirement age in the UK. Mr Palacios de la Villa claimed that his employer’s requirement that he retire was a breach of his fundamental rights and was discriminatory on the grounds of his age.

The Spanish Courts referred the case to the European Court of Justice to see if Article 2 of the EU Equal Treatment Framework Directive (designed to combat discrimination on the grounds of religion or belief, disability, sexual orientation and age in the employment context) applied in this case. Article 2(1) states that there shall be no direct or indirect discrimination whatsoever on any grounds. Initially, the Advocate General said that the Directive did not apply since it was expressed as being “without prejudice to national provisions laying down retirement ages”. The Court did not agree with this reasoning. It therefore went on to consider the case in light of Article 6(1) of the Directive which states that differences in treatment are permitted if they are objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.

The Court held that the measure was objectively and reasonably justified in the context of Spanish law. The compulsory retirement age had been originally imposed in 1980. At that time unemployment was high and the aim was to promote greater opportunities for employment. Although compulsory retirement ages were made unlawful in Spain in 2001 collective agreements created after July 2005 could provide for compulsory retirement so long as the objectives for doing so were consistent with employment policy (e.g. to sustain employment or to recruit new workers) and the objectives were clearly set out in the agreement. In addition a worker has to be allowed to work beyond retirement age if they need to meet conditions to enable them to receive retirement benefits.