ECJ rulings on retirement age and discrimination law
Two recent cases at the European Court of Justice (ECJ) raised the issue of retirement in relation to age and gender discrimination. In the first case, the ECJ ruled that there can be justifiable reasons for dismissing workers on account of their age and that this would not necessarily infringe EU law. In the second case, the court ruled that different pension ages based on gender and length of service violates the principle of equal treatment.
Age discrimination legislation
Age discrimination is contrary to EU law, as stipulated by Council Directive 2000/78/EC of 27 November 2000, which establishes a general framework for equal treatment in employment and occupation. Both direct and indirect discrimination are unlawful. However, in relation to age discrimination, Article 6 (128Kb PDF) of the directive permits a justification for discrimination, where, in the context of national law, it is ‘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’.
A case recently heard at the European Court of Justice (ECJ) concerns the extent to which this justification permits an employer to treat workers differently, purely on the grounds of their age. A second case, in contrast, considers the limitations of different treatment. The decisions are important because they demonstrate that, while employers can justify age discrimination where they can show that it meets a specific employment objective, a positive decision to favour retiring employees, on grounds concerning age, will infringe EU Treaty provisions on equal treatment.
Justification for dismissals on grounds of age
The first case concerned the Incorporated Trustees of the National Council on Ageing (Age Concern England) v Secretary of State for Business, Enterprise and Regulatory Reform (Case C-388/07), on which the ECJ gave its judgment on 5 March 2009. The case addressed the issue of the UK’s transposition legislation, which specifically permits employers to dismiss their employees at the age of 65 years without such treatment being regarded as discriminatory. The National Council on Ageing (NCoA), a UK charity promoting the well-being of older people, challenged the legality of the UK legislation as being contrary to Council Directive 2000/78/EC, arguing that the country’s legislation had failed to specify the kinds of differences in treatment that would be justified under an Article 6 exemption.
However, the ECJ ruled against the NCoA, stating that there was no requirement to specify these differences in the national law. Provided that the national courts in the Member States determined that the legislation at issue was consistent with a legitimate aim, as highlighted in Article 6, and that the means chosen were appropriate and necessary to achieve that aim, the law was deemed to be in compliance with the EU directive.
Infringement of equal treatment principle
The second case concerned the Commission v Greece (Case C-559/07), on which the ECJ issued its ruling on 26 March 2009. The case raised the issue of the provisions of the Greek Civil and Military Pensions Code. The latter stipulates differences between male and female workers with regard to pensionable age and minimum length of service. The differences seek to address the disadvantages faced by female workers, who, as a result of their social roles, generally had fewer years of paid employment. The ECJ noted that Article 141 of the EC Treaty prohibits discrimination with regard to pay. It held that, since the Greek pension scheme is based on an employment record and is not a social security scheme, it should be regarded as pay since it applies to a wide and varied group of workers and is calculated on the basis of length of service and final salary.
The ECJ considered that, because the pension is regarded as pay, it would be contrary to the principle of equal treatment to impose rules that differ on the grounds of the worker’s gender. The ECJ went on to highlight that its ruling did not mean that Member States could not introduce positive action measures to offset labour market disadvantage, but that it did not view the pension measures under investigation to be of the nature for offsetting such disadvantage.
Following from the Commission v Greece case, the Greek government is now obliged to raise the age of female workers claiming entitlement to an occupational pension so that it is equal to that of male workers.
Age discrimination is a fairly new concept under EU law and it has been at issue in only a small number of cases. However, as labour markets become tighter, it is possible that more employers will begin to argue that the dismissal of older workers is justifiable on the grounds of opening up opportunities for the employment of younger workers. This therefore makes the principle of non-discrimination on the grounds of age weaker. Similarly, the refusal of the ECJ to allow positive measures in relation to retirement and the retirement pension, where a disadvantage was not seen to have been offset, is disappointing, given that women unquestionably do have shorter service as a result of their specific social role.
Sonia McKay, Working Lives Research Institute