Employers are facing a period of uncertainty over when they can retire staff after the High Court referred a landmark age discrimination challenge to the European Court of Justice (ECJ).
The case was brought against the government by Heyday, an organisation backed by Age Concern, which is arguing that the inclusion of a default retirement age of 65 years in the Employment Equality (Age) Regulations 2006, which took effect in October 2006, goes against an EU Directive.
This original directive was aimed at establishing a general framework for equal treatment in employment and occupation, and does not specify the need for a default retirement age. Heyday is arguing that forcing employees to retire at age 65 is discriminatory.
The ECJ is expected to take up to 18 months to make a decision on the case. Although the government has said that it will review the default retirement age in 2011, if it is found to have implemented the European directive incorrectly, the statutory retirement age could be withdrawn within two years.
In the interim, public sector employers are at risk of legal claim from employees who are able to argue that, because their employer is an emanation of the state, they may be considered to be bound by the true intent of any EU directive if the UK government’s interpretation fails to comply with this.
However, Bob Mecrate-Butcher, a partner at law firm Pinsent Masons, said any claims put forward by public sector employees are likely to be put on hold until the ECJ makes a decision. “It may be that the safest course of action for [public sector employers] will be not to rely on the national default retirement age and to give reasons if they are not going to allow someone to continue to work beyond [the organisation’s] retirement age.”
He advised private sector employers to closely follow the case, but added that they cannot be sued if they follow UK law.
Sam Mercer, director of the Employers Forum on Age, said the body was of the view that the default retirement age is not sustainable and employers should be working towards managing without one. “The fact that some employers can manage without [a retirement age] undermines the arguments other employers may make about the need for [one, such as] for manpower planning.”
Some lawyers believe the ECJ is unlikely to rule in favour of Heyday, but are advising employers to exercise caution. Cathy Morrison, an employment solicitor at Laytons Solicitors, said: “It would be surprising if the ECJ makes a declaration in favour of Heyday given the past reluctance of the ECJ to interfere with the government implementation of European Directives. [However,] there is always the possibility that the ECJ shall run with Heyday’s arguments and employers need to be prepared for this.”