Friday 6 July 2012

CJEU Upholds Swedish Retirement Age of 67

[Thanks to Dr John McMullen of Wrigleys Solicitors LLP for preparing this case summary]

Can a national law provide for retirement of employees at the age of 67 without taking into account the level of the retirement pension available to the person concerned?

Yes, says the CJEU in Hörnfeldt v Posten Meddelande AB.

Swedish law provides for the so called "67 year rule". Under that rule every employee enjoys an unconditional right to work until the last day of the month of his or her 67th birthday on which date the employment contract can be terminated. Pensions in Sweden are based on career average earnings. Mr Hörnfeldt worked for the Postverket (postal services agency) for various periods on fractional contracts and, when retired, he had an inadequate pension.

Mr Hörnfeldt maintained that if he had been allowed to work for 2 or 3 years longer his retirement pension would be significantly increased. Therefore, he argued, an exception to the 67 year rule ought to be allowed in respect of workers who, like him, wish to continue to work.

The court ruled against him. The 67 year rule was not a mandatory scheme of automatic retirement. It simply laid down the conditions under which an employer could derogate from the principle of age discrimination by giving notice to workers aged 67. Nothing would prevent a worker and an employer entering into a new fixed term contract and finally, those persons whose pension was low could receive other support benefits.

Accordingly, the Equal Treatment Directive did not preclude national law from allowing an employer to terminate an employee's employment contract on the sole ground that he had reached the age of 67, notwithstanding that it did not take into account the level of the retirement pension which the person concerned would receive. Of course this is subject to the proviso that the retirement age must be justifiable. That means it must be objectively and reasonably justified by a legitimate aim relating to employment policy and labour market policy and constitutes an appropriate and necessary means by which to achieve that aim.

At a time when the abolition of the UK default retirement age still remains controversial, this case is highly relevant to the debate.

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