Key barrister explains issues in EU and Uk age discrimination battles

In 2000 the EU introduced a directive that, among other things, prohibits discrimination on the grounds of age in employment and occupation. An EU 'directive’ has to be implemented in the national legislation of each member state within a given period time. The UK left it as late as possible before introducing its interpretation of this directive as the Employment Equality Age Regulations 2006 on 1 October 2007.
Unusually, the EU directive gave scope for age discrimination to be justified in some situations. This means an employer can dismiss an employee because he has reached a particular age, if the circumstances justify that decision. Part of the preamble to Directive 2000/78 suggests that states can maintain national retirement ages. Nevertheless, if the employer dismisses an employee because the latter has reached a 'retirement age’, the directive requires the employer should justify the decision to dismiss.
Most member states have implemented the legislation in a way that does not entrench forced retirement. Only a handful of EU countries permit compulsory retirement without justification having to be provided by the employer, and most of these countries will only allow this if the employee has met the conditions for entitlement to a state pension. In the UK and Ireland, however, no such link is required between entitlement to pension and compulsory retirement. A person can therefore be forced to retire without having a sufficient pension. This particularly applies to women in the UK who may not have built up all the national insurance contributions needed to be entitled to a full state pension. Only one in four women will get the full state pension on retirement.

Justification on economic grounds
The member states that have opted for forced retirement when the conditions for pension entitlement are satisfied have explicitly linked discrimination against those of a certain age (generally over 65) with an economic aim, namely the provision of the most stable form of economic activity (employment) to younger age groups. Generally, there is no link made between age and declining competence, although the UK seeks to argue that this may be a factor that would justify its own choice of forced retirement age. Managers therefore cannot point to such legislation as indicating it is generally accepted that forced retirement is a good thing which needs no further justification.
In Case C-411/05 Félix Palacios de la Villa v Cortefiel Servicios SA (judgment of the Grand Chamber, 16 October 2007) the applicant was born in 1940. He worked for the employer from 1981. In 2005 the employer notified him of the automatic termination of his contract of employment on the ground that he had reached the compulsory retiring age provided for in a collective agreement endorsed by national law.
The applicant sued for the dismissal to be declared null and void on the ground that it was in breach of his right not to be discriminated against on the ground of age. The European Court of Justice (ECJ) was asked whether the principle of equal treatment, which prohibited any discrimination whatsoever on the grounds of age, precluded a national law under which compulsory retirement clauses contained in collective agreements were lawful.
The ECJ ruled that the prohibition on any age discrimination had to be interpreted as not precluding such national legislation. A major factor in the Court’s decision was that the worker was not being placed in an economically precarious position by being forced to retire, as this could only happen when the conditions of entitlement to a retirement pension have been fulfilled. If those conditions were not fulfilled, no compulsory retirement could take place.
The fact that Spain uses the collective agreement method of regulating labour relations meant that there was considerable flexibility that allowed the conditions of the specific job in question to be taken into account. The collective agreement, although based on age, was objectively and reasonably justified in the context of national law by a legitimate aim relating to employment policy and the labour market, and the means put in place to achieve that aim of public interest did not appear to be inappropriate and unnecessary for the purpose.
The ECJ noted that in Spain the law in question had been adopted at the insistence of the social partners (employers and trade unions) 'as part of a national policy seeking to promote better access to employment, by means of better distribution of work between the generations’. The compulsory retirement of workers who have reached a certain age was introduced into Spanish legislation in the course of 1980. It was brought in against an economic background characterised by high unemployment, in order to create in the context of national employment policy, opportunities on the labour market for persons seeking employment. The Spanish law permitted collective agreements to include forced retirements only if they expressly included aims which were consistent with the national employment objectives. The objective of increasing employment for certain categories of employee was seen as in principle capable of justifying legislation as long as it was a proportionate means of achieving the aim in question. The Court noted in the context of the Spanish law that the social partners and member states have a wide margin of discretion in the definition of the means adopted to pursue a social aim.
When the Palacios judgment came out, some commentators in the common law countries took the view that it meant that any law permitting any form of compulsory retirement would withstand scrutiny. Gordon Lishman, director general of Age Concern England [http://www.ageconcern.org.uk] commented shortly after the judgment “There are significant distinctions between the way mandatory retirement ages are applied in UK law and the case of Felix Palacios.” It does not take much thought to see that this is correct. Countries, such as the UK, that have opted for a blanket exclusion of anti-discrimination measures in the case of retirement dismissals are in a different situation to those, such as Spain, that require either agreement between social partners over the treatment of retirement in a sector, or justification by the employer. It will be very much more difficult for such countries like the UK to justify their laws.

Justification on age alone
In what has become known as the 'Heyday case’, a challenge has been made to the UK’s law that permits an employer to dismiss an employee on the grounds the employee has reached 65 without being subject to legal scrutiny for that decision. It is a blanket rule that does not have the flexibility of the Spanish law, as it does not require for any social protection to be in place for the dismissed employee, and does not require the employer to justify the decision to dismiss.
Heyday, which is bringing the case against the UK government, is a not-for-profit membership organisation developed by Age Concern for all people who are thinking about, planning for or in retirement. Its director, Ailsa Ogilvie, stated: “We hope our legal challenge will result in the regulations relating to mandatory retirement ages being found to be unlawful. Forcing an ageing workforce to retire on grounds of age alone is discriminatory, absurd and we think contrary to European law. People’s ability to work should be based on their skills, not their birth certificate.”
The case has already had a significant impact. The president of the Employment Tribunals in England and Wales made an order in November to put a stay on all relevant proceedings alleging retirement discrimination until the ECJ had made a decision on the Heyday challenge. Alisa continues: “The hearing will not be until later this year or in 2009, which means that people have a long wait ahead of them before they will find out if their appeal to carry on working is successful.” In most European Union states a manager contemplating dismissing a person will have to justify that decision. If the decision is based on the person’s age, then the manager will have to consider a difficult test. The justification of direct discrimination based on age is so difficult to satisfy that it can only be met if there are weighty reasons that objectively and reasonably justify the dismissal. If there is another way in which the same objectives could be reached without dismissal, it is likely that the dismissal will be an act of unlawful age discrimination. One of the issues that the Court of Justice will consider in the Heyday case is precisely what the standard for justification of this unusual form of discrimination is to be in all the EU states.
In reaching that decision the ECJ will be aware that Europe is rapidly reaching the situation where the numbers of older workers will outnumber those entering the labour force. UK national statistics show there were more people over the age of 65 than there were under the age of 16 last year – the first time since records began. Against this demographic shift, a law that permits managers to discriminate on the grounds of old age with impunity is unlikely to be found to be proportionate to anything but the most extreme economic circumstances. Even the UK government has recognised the changes in population structure are against the maintenance of a mandatory retirement age. It has undertaken to review the alleged need for forced retirement in 2011. Employers in the UK, faced with the uncertainty of the Heyday challenge, are being advised to consider whether they need to use forced retirement. Many have concluded that they do not need to use it at all.

Declan O’Dempsey specialises in sensitive and difficult employment, discrimination, public and regulatory law in the UK and Europe. He has been involved in the Heyday case since 2006. E-mail: dod@Cloisters.com

For more on the Heyday case:http://www.cloisters.com/info_case_profile.php?caseID=259&returl=info_cases.php%3F%26amp%3Binfokeyword%3D

For more on the Palacios case: http://curia.europa.eu/jurisp/cgi-bin/gettext.pl?where=&lang=en&num=79928983C19050411&doc=T&ouvert=T&seance=ARRET