Is it legal for employers to retire workers at 65?

Heyday, which is part of the charity Age Concern, has challenged the government in court that it is against European law to force employees to retire at 65.  Under current law, providing an employer has allowed an employee to formally request to continue working and has followed the duty to consult obligations in the Age Discrimination Regulations, they can dismiss an employee on their 65th birthday without any redundancy payment.

 The High Court sent the case to the European Court of Justice (ECJ) for clarification of the law.  However, the ECJ has caused confusion by its judgement that the retirement age complies with legislation, providing that it has a ‘legitimate aim relating to employment and social policy’.

 Now the High Court will have to decide whether the government’s aims for a retirement age of 65 reflected a legitimate aim and was a ‘proportionate means to achieve a legitimate social policy objective related to employment policy, the labour market or vocational training".

 Business reasons do not fall within this definition as the ECJ ruling said that ‘legitimate aims’ are different from ‘purely individual reasons particular to the employer’s situation, such as cost reduction or improving competitiveness’, although it admitted a national rule may recognize a ‘certain degree of flexibility for employers’. In any event, an employer’s circumstances cannot be used to justify age discrimination. The ECJ also said the government must prove to a high standard why a forced retirement age is needed. 

The government has said that the existing law will be looked at again, and could be relaxed in 2011. So we will wait and see what the outcome of the High Court’s next judgement is and whether the government proposes to dilute the effects of the legislation.

Fiona Hume can provide more information on this and other employment issues.

April 2009