ECJ rules that Swedish ’67-year rule’ is justified retirement age

Throughout Europe and indeed in the UK the issue of the abolition of the national retirement age has been controversial.

The recent case of Torsten Hörnfeldt v Posten Meddelande AB  C 141/11 is a highly relevant and interesting addition to the debate. On 21 March 2011 the Swedish Södertörns Tingsrätt (“Tingsrätt”) referred the case of Torsten Hörnfeldt v Posten Meddelande AB to the Court of Justice of the European Union (“ECJ”) and requested that the ECJ answered questions concerning the interpretation of a national rule called the ‘67-year rule’. The so called 67-year rule allows Swedish employers to terminate the employment contract of their employees on the last day of the month of their 67th birthday.

As pensions in Sweden are based on career average earnings, being allowed to work an extra couple of years can significantly increase an individual’s final pension. Mr Hörnfeldt worked for the Swedish postal service agency (“Postverket”).He wished to continue working to improve his pension entitlement but the Postverket decided to terminate his contract based on the 67-year rule. He argued that there should be an exception to the automatic retirement age under the 67-year rule for workers who wish to continue working past the age of 67 and that the rule was discriminatory on grounds of age.

The Tingsrätt referred the following questions to the ECJ:

  • Can a national rule which gives rise to a difference of treatment on grounds of age be legitimate even if it is not possible to determine clearly from the context in which the rule has come into being or from other information what aim or purpose the rule is intended to serve?
  • Does a national retirement provision such as the 67-year rule, to which there is no exception and which does not take account of factors such as the pension which an individual may ultimately receive, go beyond what is appropriate and necessary in order to achieve the aim pursued?

On the 5 July 2012 the ECJ ruled against Mr Hörnfeldt. The ECJ considered that the usual legitimate aims invoked in support of a fixed retirement age were valid and added to its decision the fact that the 67-year rule was not a mandatory requirement on employers to terminate an employee’s employment contract but instead gave employers a right to derogate from the principle of age discrimination.

The ECJ also confirmed that national laws could provide for the specific retirement of employees. Indeed compulsory retirement ages are widely used by employers across Europe in order to achieve a balance between political, economic, social and demographic considerations. The Swedish government had argued that the 67 year-rule established a right to work until the age of 67 and the rule was justified on the ground that it frees up posts and therefore enables younger workers to enter the labour market,

The ECJ held, that the reason the difference of treatment on grounds of age under the 67-year rule should not be considered discriminatory was that it was justified by a legitimate underlying aim and the means put in place to achieve that aim were appropriate and necessary. In addition as there was welfare support benefits in place for those with low pensions the forced retirement could be considered a proportionate means to achieve the aim pursued.

This decision will be of interest to employers in the UK who seek to put in place retirement ages in their organizations. The usual grounds that a fixed retirement age allows for career planning, avoids humiliating dismissals and allows to plan for labour shortages have been held to be  legitimate aims in the UK (see in particular the case of Seldon)  However, demonstrating that such aims are appropriate and necessary (or a ‘proportionate means’ under the Equality Act) to achieve the employer’s aim is not clear cut and this case assists in assessing how the ECJ approaches the issue of legitimate aims and proportionality.

For advice as to contractual retirement ages and age discrimination in your organization, please contact the Employment Team.

The material contained in this article is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

© , August 2012

Please contact:

Emmanuelle Ries - Partner

DD +44 (0)20 7553 9938

View profile »