German law on forced retirement is justified, says ECJ

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.

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.

Gisela Rosenbladt worked as a cleaner for an army barracks for 39 years. Since 1994 she was employed by a private firm, Oellerking. A collective agreement was in place in the commercial cleaning sector allowing for compulsory retirement when workers reached 65 or when they became entitled to a pension.

When Rosenbladt turned 65 she told her employer that she wanted to keep her 10 hour a week cleaning job, but her contract ended as the company had planned. She was re-employed by the company while her case was heard.

The German Government said that its laws were entirely consistent with the Directive's demands that any forced retirement be justified.

"The lawfulness of clauses on automatic termination of employment contracts of employees who have reached retirement age ... is the reflection of a political and social consensus which has endured for many years in Germany," said the ECJ ruling, outlining the German Government's argument. "That consensus is based primarily on the notion of sharing employment between the generations. The termination of the employment contracts of those employees directly benefits young workers by making it easier for them to find work, which is otherwise difficult at a time of chronic unemployment."

"The rights of older workers are, moreover, adequately protected as most of them wish to stop working as soon as they are able to retire, and the pension they receive serves as a replacement income once they lose their salary. The automatic termination of employment contracts also has the advantage of not requiring employers to dismiss employees on the ground that they are no longer capable of working, which may be humiliating for those who have reached an advanced age," said the ruling's outline of the German Government's case.

The ECJ said that "it does not appear unreasonable" for the German Government to adopt the policy that is in place, and that it was justified.

"[The policy] may be justified in the context of a national policy seeking to promote better access to employment, by means of better distribution of work between the generations, and, aims of that kind must, in principle, be considered to justify ‘objectively and reasonably’, ‘within the context of national law’, ... a difference in treatment on the ground of age," said the ruling. "Objectives such as those described by the referring court are ‘legitimate’ within the meaning 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.

"By guaranteeing workers a certain stability of employment and, in the long term, the promise of foreseeable retirement, while offering employers a certain flexibility in the management of their staff, the clause on automatic termination of employment contracts is thus the reflection of a balance between diverging but legitimate interests, against a complex background of employment relationships closely linked to political choices in the area of retirement and employment," it said.

"In the light of the wide discretion granted to the social partners at national level in choosing not only to pursue a given aim in the area of social policy, but also in defining measures to implement it, it does not appear unreasonable for the social partners to take the view that [the law] may be appropriate for achieving the aims set out above," said the ruling.

The ECJ recognised that, especially for part time cleaning workers, a policy of automatic retirement can cause significant hardship. 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."

The German law was justified and the actions taken under it proportionate, the Court ruled.

The ECJ had previously ruled that other national compulsory retirement schemes were legitimate. In 2009 it said that the UK could have a forced retirement law as long as it met legitimate social policy objectives. Heyday, part of charity Age Concern, had claimed that the UK's Employment Equality (Age) Regulations were a breach of the Equal Treatment Directive.

The ECJ said that a retirement law could comply with the Directive, but left it to the UK High Court to decide if the Regulations themselves complied.

The High Court ruled that the Regulations were justified, but it said that it came to that conclusion only because the Government had pledged to review the law. It said that compulsory retirement at the age of 65 was discriminatory against many people who were able and willing to continue work.