European Court of Justice ruling allows age discrimination on mandatory retirement ages

Older workers have suffered a blow as the European Court of Justice (ECJ) ruled in favour of national ­mandatory retirement ages.

In Felix Palacios v Cortefiel Servicios SA, Felix Palacios de la Villa challenged Spanish legislation that permitted his employer to retire him at 65 against his will.

The Spanish court referred the matter to the ECJ, to establish whether mandatory retirement ages are inconsistent with the Equal Treatment Directive, under which the European Union prevents its member states from discriminating against employees.


The ECJ found that mandatory retirement ages are discriminatory – the directive allows states to impose them anyway, provided they can justify them in the ­context of employment policy and labour market objectives. The ECJ accepted evidence supporting the social policy background to the Spanish legislation. It seemed to accept that a mandatory retirement age was in keeping with the Spanish government’s aim of promoting employment and creating labour opportunities across different age groups. It also said that the Spanish system of pension benefits provided adequate financial compensation for retired workers.

In the UK, the Employment Equality (Age) Regulations 2006 adopt a similar approach, allowing employers to set mandatory retirement ages. As long as the age limit is justified, or if it is set at 65 or over, the employer need only follow a relatively straightforward interview process with the employee (in which he or she may ask to be allowed to work longer) before being able to retire them against their will.

UK challenge

Campaigners in the UK have challenged this aspect of the regulations as being discriminatory – a High Court challenge by lobby group Heyday was put on hold pending the result of the Palacios case.

Their message is simple: forcing people to retire denies them the right to work – a right everyone should have, regardless of age. The government’s response, along with the ECJ’s, appears to be that this is absolutely right but only so far as is acceptable in the context of the government’s policy aims and objectives.


Is it right to outlaw discrimination on the one hand, but then expressly permit it in the scenario that hits older staff hardest? Would it be right to ban discrimination against disabled people, but to allow employers to dismiss them automatically once their level of disability reaches a certain point?

The answer must be, of course, that the regulations do not sufficiently protect older staff, and so do not seem to outlaw discrimination. We will wait and see how the UK government justifies its policy, but we can expect it to be along the lines of promoting certainty for employers and regulating labour flow. This is all very well, but is of little help for staff aged 65 or over who do not want, or cannot afford, to give up work.

The regulations go some way to cover older staff, but the government has striven to take account of employers’ desire to keep control of the make-up of their workforces in terms of age. Arguably, the regulations do not offer the same level of protection as the Disability Discrimination Act for disabled staff, for example, or the Employment Equality (Sexual Orientation) Regulations offer gays and lesbians.

The government has scheduled a review of the mandatory retirement age in 2011. We’ll have to wait and see whether it grasps the nettle and abolishes the last great barrier to equality across the age ranges.

James Baker, solicitor, MacFarlanes

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