EUROPE - A judgement from the European Court of Justice (ECJ) has been hailed a victory for employers providing pension benefits - but a defeat for workers over retirement age.
It comes after Félix Palacios de la Villa’s claims against Cortefiel Servicios SA were rejected by the ECJ.
The Palacios de la Villa case had disputed a Spanish employer’s right to enforce a compulsory retirement age which would avoid further pension contribution and accrual.
Commenting on the case, Rachel Dineley, employment partner and head of national diversity and discrimination said: “The ECJ is clearly of the view that the imposition of a retirement age is objectively justifiable, in particular where it is linked to the provision of a pension.”
Dineley said she would have been surprised if ECJ had taken a different approach.
Judith Donnelly, managing associate at Linklaters LLP, said: “Many employers who, prior to the age discrimination laws being implemented in the UK, allowed workers to continue to work beyond age 65, now refuse to do so because the cost of providing them with additional pension accrual and continued life assurance is too high.”
Donnelly added: “The directive is therefore ironically having the unintended consequence of making it more difficult for many workers over age 65 to remain in employment.”
This case may now also impact on Age Concern and lobby group Heydey’s campaign to challenge the national default retirement age of 65 set by the UK government in the Employment Equality (Age) Regulations 2006, and is currently awaiting trial.
However, Donnelly pointed out the difference between the two cases: “In the Palacios de la Villa case, the ECJ allowed the compulsory retirement age as an appropriate means of achieving a legitimate aim - promoting full employment in the younger generation of workers by facilitating access to the labour market.”
She continued: “It therefore remains to be seen whether the UK Government is able to justify allowing employers to compulsorily retire employees at age 65 against the background of the UK employment market - although certainly the judgment is encouraging for the government and bad news for Heyday.”
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