The European Court of Justice (“ECJ”) has recently held that national rules establishing compulsory retirement provisions do fall within the ambit of the Equal Treatment Directive. It is therefore for national courts to determine whether such provisions can be objectively and reasonably justified on the basis that they achieve a legitimate aim.
This judgment from the ECJ forms part of the ongoing challenge by The National Council on Ageing (referred to as the Heyday litigation) to the compulsory retirement age of 65 introduced by the Employment Equality (Age) Regulations 2006 which came into force on 1st October 2006. Although age discrimination is unlawful under the Regulations exceptions do apply, for both direct and indirect age discrimination, if it can be shown that the less favourable treatment was a proportionate means of achieving a legitimate aim. Specifically, Regulation 30 allows for employees to be dismissed by reason of retirement when they reach the employer’s normal retirement age or, where no such normal retirement age exists, at the age of 65.
The National Council on Ageing, operating as Heyday, is seeking to challenge the legality of these Regulations and has an initiated a Judicial Review in the High Court. In the meantime, all other age discrimination litigation relating to the default retirement age has been stayed pending the outcome of this case. In the course of the Judicial Review process various questions were raised over how the Equal Treatment Framework Directive should be interpreted and implemented, and whether the Regulations comply, and accordingly the High Court turned to the ECJ for a preliminary ruling on these points.
The main points of the ECJ’s ruling are:
- The Equal Treatment Framework Directive serves to establish a general framework for equal treatment in employment and occupation and the compulsory retirement provisions contained in the Employment Equality (Age) Regulations do fall within the scope of the Directive.
- There is no requirement for national legislation to set out an exhaustive list of the different types of treatment which can be treated as falling outside of the principle of age discrimination on the basis that they achieve a legitimate aim. It is for national courts to decide, allowing for a certain level of discretion in respect of social policy issues, whether the provisions of the Employment Equality (Age) Regulations 2006 satisfy a legitimate aim in accordance with Article 6 of the Directive and whether the means used were appropriate and necessary to achieve that aim.
- There is no practical difference between the test for justification of indirect and direct discrimination. In the Directive only the justification for direct discrimination includes a requirement for reasonableness; however the ECJ ruled that, in practical terms, this was of no significance as “it is inconceivable that a difference in treatment could be justified by a legitimate aim, achieved by appropriate and proportionate means, but that the justification would not be reasonable.”
The outcome of this ruling is that the case will now return to the High Court for judgment. The Employment Equality (Age) Regulations 2006 are effective and do fall within the scope of the European Directive. It is now for the High Court to determine whether, and to what extent, a provision allowing employees to be dismissed once they reach retirement age is justified by legitimate aims and to what extent it can be considered an appropriate and necessary means of achieving such an aim.
The ECJ did warn that member states will face a “burden of establishing to a high standard of proof the legitimacy of the aim relied on as justification.” However, whether or not the UK Government can achieve this high standard to justify its default retirement age of 65 is yet to be seen.