EU Court - forced retirement lawful

Posted on: 19 October 2010 by Allan McLachlan

An important decision relating to compulsory retirement has been handed down by the European Court of Justice (ECJ) in Luxembourg.

European Court of Justice

They have ruled that a German law forcing workers to retire at 65, or when they begin receiving a pension, is not in breach of EU age discrimination laws.

Gisela Rosenbladt worked as a barracks cleaner for 39 years. When she reached 65, her employer gave her notice of the termination of her contract. Ms Rosenbladt brought an action before the Arbeitsgericht Hamburg (Hamburg Labour Court), claiming that the termination of her employment contract constituted discrimination on grounds of age.

German law allows employers to adopt clauses forcing retirement at a particular age if a collective agreement on the issue is in place between employers and unions.

The EU's Equal Treatement Directive demands that countries pass and enforce laws making discrimination on grounds of age, sex, disability and other criteria illegal.The Directive contains an exemption for cases relating to age that countries can use to allow for compulsory retirement policies.

"Differences of treatment on grounds of age shall not constitute discrimination, if, within the context of national law, they are objectively and reasonably justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary," said Article 6 of the Directive.

The ECJ said that the law was justifiable in part because its application to the commercial cleaning sector was the product of negotiation between unions and businesses.

The ECJ recognised that a policy of automatic retirement can cause significant hardship, especially for part time cleaning workers. But it said that because those workers could still work, either for the same or another company, the law was a fair balance.

"A worker in [Rosenbladt's] position continues to enjoy protection from discrimination on grounds of age under [German employment law]," the ruling said. "[The law] prevents a person in Mrs Rosenbladt’s position, after termination of her employment contract on the ground that she has reached retirement age, from being refused employment, either by her former employer or by a third party, on a ground related to her age."

This ruling will have a major knock-on effect for employers looking to justify a compulsory retirement age when the default retirement age is abolished in the UK this time next year.

It also coincides with a government consultation on the abolition of the default retirement age, which closes tomorrow (Wednesday October 20).

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Working past the default retirement age

The Chancellor's spending review is likely to have a weighty impact on UK employment, leaving many young people and graduates without work. While many older workers have had full and rewarding careers is it right to ask them to step aside at 65 and let the new blood through? Those leaving work can expect to live a further 30 years in retirement on diminished pension pots - so how are they supposed to live?

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