Heyday age discrimination case: Where next for retirement law?

Has the advocate-general’s decision called time on Heyday’s retirement age challenge?

The UK’s controversial mandatory retirement age was back in the headlines last week when the European Court of Justice’s (ECJ) advocate-general passed his judgment on the Heyday case. But what exactly does it all mean, and where does it leave UK employers?

The current law

Since 1 October 2006, when the Employment Equality (Age) Regulations came into force, the UK’s default retirement age has been 65 for both men and women. This means employers can legally tell staff to leave on any date after their 65th birthday for no reason other than their age. However, employees have the right to request to continue working, and employers have a duty to consider such requests.

The challenge

Heyday, a spin-off of the charity Age Concern, objected to this situation from the outset, claiming it amounted to age discrimination. Heyday took its challenge through the UK legal system, and reached the High Court in December 2006.

There it argued that people aged 65 or over were given “second-class status”, as they could be retired without explanation, while people under 65 had to be given sound grounds for dismissal. The government countered that people aged 65 or older were “not in comparison” with younger people, as they received a state pension.

The judge ruled that the case should be referred to the ECJ as it hinged on whether the UK’s regulations correctly implemented an EU Framework Directive from 2000.

The advocate-general’s opinion

Last week, in a precursor to the main hearing, the ECJ advocate-general gave his opinion. Although not binding, it is generally seen as a good indication of the ECJ’s decision.

The 8,000-word opinion concluded: “A rule which permits employers to dismiss employees aged 65 or over if the reason for dismissal is retirement, can in principle be justified under Article 6(1) of Directive 2000/78 if that rule is objectively and reasonably justified in the context of national law by a legitimate aim relating to employment policy and the labour market”

This suggests that the UK’s compulsory retirement age does not automatically fall foul of EU law. However, it leaves the government needing to prove that it can be justified as an employment policy. The government has previously argued that the mandatory retirement age is necessary to ensure flexibility in the workforce and allow businesses to make succession plans.

Legal verdict

Audrey Williams, head of discrimination law and diversity at law firm Eversheds, said: “Contrary to suggestions in some quarters, the Heyday challenge to the default retirement age has not been thrown out. Some of the advocate-general’s observations do, however, suggest that Age Concern may not find it easy to persuade the High Court to overthrow the default retirement age.”

Heyday’s reaction

Gordon Lishman, director general of Age Concern, said: “This is a set back, but it is not a disaster. The advocate-general’s opinion confirms that the EU Directive requires age discrimination to be justified. It is now up to the UK government to prove to the High Court that its social and employment policies are important enough to justify kicking people out of work at 65.”

Employer view

Organisations largely backed the advocate-general’s verdict. Katja Hall, director of employment at the CBI, said it was “a sensible and fair approach”.

She added: “Employees already have the right to request postponement of retirement – and this right is working well. Our surveys show that just over 30% of employees requested postponed retirement in the last year, and more than 80% of these were granted.”

Employee view

Unions were furious. TUC general secretary Brendan Barber said: “The recommendation of the advocate-general will be hugely disappointing for the many employees who want to, or need to, continue to work beyond retirement age. It makes no sense that we have laws in the UK that aim to remove age discrimination, but include a get-out clause for employers who want to kick people out when they reach 65.”

What happens next

A full hearing will take place at the ECJ later this year or in early 2009, then a judgment will be passed on whether the compulsory retirement age conflicts with EU law. The case will then return to the UK, where the High Court will make the final ruling on whether the mandatory retirement age can remain. This final decision could be up to three years away.

What it all means for employers

In three words, the uncertainty continues. Heyday has spent 18 months encouraging people forced to retire since 1 October 2006 to lodge claims and, according to the Employment Tribunal Service in July, about 260 cases in England, Scotland and Wales were on hold. If the final verdict does go against the government, all 260 ‘stayed’ cases – and thousands of fresh ones – could be heard in domestic employment tribunals across the land. Heyday claims that up to 25,000 people are retired against their will each year.

And just to add to the confusion, the government has separately agreed to review the mandatory retirement age in 2011.

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