Court rules that forced retirement at 65 is legal.

In 2006 the government introduced the default retirement age rules. These rules enable employers, subject to following a set procedure, to force their employees to retire at 65 years old. So long as the employer follows the procedure correctly there will be no obligation to pay the employee any redundancy payment. The employee can be forced to retire against his or her wishes, and so long as the employer has followed the right procedure, will not be able to claim unfair dismissal.

The European Court of Justice ruled that the Default Retirement Age would be illegal unless it was “justified by legitimate social policy objectives, such as those related to employment policy, the labour market or vocational training achieved by appropriate and necessary means”.

A challenge to the regulations was brought in the High Court by Age UK (formerly known as Age Concern and help the Aged).

The High Court has recently given its ruling on the challenge to the retirement regulations. The court has upheld the regulations, and was satisfied that the UK government had proved that the regulations were justified and were a proportionate means of achieving the legitimate social policy aims. The judge noted that the government had been entitled to draft the regulations in the way it had done, that they did not lack clarity, and that it had legitimate social concerns “in protecting the integrity of the labour market”. The judge ruled that the fact that these aims were very broad did not mean they lacked clarity and certainty. The judge also considered the fact that in the preliminary consultation process which preceded the regulations, that most of the people and organisations that responded supported a default retirement at 65 years, that no one was making a case for retirement at 68 years, and that the proposal of retirement at 70 years had little support.

However, while upholding the regulations, the judge said that there was a |”compelling case” for a change in the law. The judge indicated that if the default age of 65 years had been introduced in 2009 (as opposed to 2006) he would not have found it proportionate. The challenge to the regulations, however, had to be judged as at the date the challenge began, i.e. in 2006.

The Government has announced that it is bringing forward a review of the default retirement age. The review is due to take place in 2010. The judge stated that he “cannot presently see how 65 could remain as the default retirement age after the review”.

In view of the fact that the state pension age must rise in the near future, it will make obvious practical sense for the Government to raise the default retirement age to meet the expected raise in state pension age. Frankly, with the growing population of the UK, with an increasing average age, and increasing life expectancy, it is simply not economically feasible to retain a default retirement age of 65; it must increase. However, we are of the view (contentious as it is) that in the current recession it must make sense that the default retirement age is not increased, or dispensed with altogether. Any decision to do so will restrict the opportunities available to young people, and school leavers to join the UK workforce, increasing the possibility that many will be unemployed for a long time.

The immediate outcome of this decision of the High Court is that some 260 cases pending in the Employment Tribunals are likely to be dismissed. These cases involved pensioners that had been seeking compensation for age discrimination after having been forced to retire at 65 years. In the short and medium term many businesses will feel relieved that they can proceed with expected retirements under the current default retirement rules. In the longer term the law will have to change, as we will all need to work longer to pay for our pensions, and healthcare needs.

If you need any further advice and help on the issues raised in this article please do not hesitate to contact us.