News

The High Court has ruled that the UK's default retirement age (DRA) of 65 is lawful and does not contravene European law.

Implications

The decision ends a period of uncertainty for employers over the DRA. It means that employers can compulsory retire employees at 65 (provided they follow the correct procedures in the Employment Equality (Age) Regulations) knowing that the employee cannot challenge that decision as being either an unfair dismissal or discriminatory on the grounds of age.

However this certainty is unlikely to last for very much longer, given that the government will be reviewing the DRA next year (see Howes Percival Newsflash 14 July 2009). Interestingly the High Court commented that in their view, they did not see how the DRA could remain at 65 after the review.

Details

The High Court was ruling in the case of R (on the Application of Age UK) v Secretary of State for Business, Innovation and Skills (commonly known as the 'Heyday case'). The case has a long history. Originally it began life in the High Court as a challenge by Age Concern that the UK's Employment Equality (Age) Regulations 2006 (the 'Age Regulations') do not properly implement European law on age discrimination. The High Court then referred certain questions about the legal basis of the challenge to the European Court of Justice (ECJ). The ECJ gave their decision in March 2009 (See Howes Percival Newsflash 5 March 2009), that in principle the UK's DRA of 65 is capable of being justified under European law but it is for the national courts (i.e. the UK's High Court) to determine whether or not the DRA can in fact be objectively justified. The ECJ ruled that when considering whether the DRA can be so justified it must be by reference to evidence and not "mere generalisations". This decision therefore was the High Court's ruling on whether the UK government could justify a DRA of 65.

The High Court heard evidence from the government as to the legislative background to drafting the Age Regulations and in particular the decision to set a DRA of 65. It noted that four public consultations on the Regulations were undertaken by the government, as well as two independent studies it commissioned to examine the issue of retirement. The High Court concluded that the government "had proved to a high standard" that the DRA was based on social policy aims such as securing the integrity of the labour market and its short term competitiveness. The government had not adopted the DRA on the basis of "generalised assumptions" about people over 65.

The High Court then had to decide whether the government could justify having set the DRA at 65 (as opposed to a higher age). The High Court took into account that the age of 65 was commonly used as a retirement age both in the UK and other European countries and there was little support in the public consultations for a DRA of 68 or 70. It therefore ruled that the government could justify setting the DRA at 65.

However the High Court acknowledged the evidence against retaining a DRA of 65 and commented that if the DRA had been adopted for the first time in 2009 (rather than 2006) or the government had not brought forward its review to 2010, the Court would have held that the government could not justify the DRA being at 65.

The High Court also dismissed a challenge to the lawfulness of Regulation 3 of the Age Regulations, which allow employers to objectively justify direct age discrimination.

The many unfair dismissal claims brought by employees over the age of 65 which have been stayed by Employment Tribunals are now likely to fail and be dismissed.