The Solicitor - The FindLaw UK Life, Family and Workplace Law Blog

Default retirement age abolished, but employers may have 'wriggle room'

Just when we thought our jobs might be safe even into our twilight years, a recent ruling by the European Court of Justice means that employers may now be able to force workers to retire at 65 as long as their decisions are "justified on costs grounds".

The case at the ECJ involved a German State Prosecutor, Gerhard Fuchs, who wanted to continue working past 65 while his employer, the German State of Hessen, wanted to force him to retire as part of their cost-saving initiatives.

The ECJ ruled in favour of the employer, meaning that a precedent has now been set and British companies may attempt to use "cost justification" as a defence for forcing older workers to retire.

The default retirement age (DRA), which allowed employers to let go of their employees after the age of 65, was only abolished earlier this year with the practice being completely phased out by October.

Chris Ball, the Chief Executive of the Age and Employment Network, believes the ruling undermines the message sent out with the abolishment of the DRA.

He said: "Even though the UK government has now abolished the DRA which gave employers the right to retire their employees when they reached the age of 65, the ECJ has just handed down a decision which may provide employers with wriggle room on possible objective justifications for compulsory retirements.

"Considering the case, the ECJ decided that a German law requiring state prosecutors to retire at 65 on a generous pension was justified - subject to some exceptions. The ruling also appears to hold that a retirement age can potentially be justified to encourage the promotion of a younger workforce. But more controversially, it suggests it is legitimate to retire older workers to prevent possible disputes concerning employees' fitness to work beyond a certain age.

"This could encourage more employers to seek to establish employer-justified retirement ages than have done previously. And more worryingly, it could open the door for employers to put forward questionable arguments about the fitness of older workers as a reason to retire them off early."

The ECJ case is not a blanket ruling and so if an employer were to retire an older worker citing cost justification, they would have to tread carefully as all relevant facts would be considered in each case.

Related links:
Read more on the story (PensionCalculator.org)
Read about age discrimination at work (FindLaw)
Find local employment solicitors throughout the UK (FindLaw)