ECJ upholds Swedish compulsory retirement age of 67

Hörnfeldt v Posten Meddelande AB C 141/11

Facts

This case was a referral from the Swedish courts to the European Court of Justice ("ECJ") in order to establish whether a compulsory retirement age of 67 was contrary to the Equal Treatment Framework Directive ("the Directive"), introduced to combat discrimination in employment.

Mr Hörnfeldt worked for the Swedish postal service for twenty years until his employment was terminated at the end of the month in which he reached age 67, in accordance with the Swedish national retirement age (the 67-year rule). The 67-year rule forms part of Swedish employment law and provides that all employees in Sweden have an unconditional right to work until the age of 67, but their employment can then be terminated at the end of the month in which they reach 67 if their employer gives them at least one month's written notice.

In Sweden, the amount of an employee's retirement pension is based on the amount of income earned over the whole of their working career. Mr Hörnfeldt had worked part-time and was therefore concerned that his pension provision would be insufficient. He brought proceedings seeking an annulment of the termination of his employment contract on the grounds that the 67-year rule constituted unlawful age discrimination, hoping that he could work for a further two or three years in order to increase his pension income.

Decision

The ECJ held that the Swedish retirement law was not contrary to the Directive. It found that this law was an appropriate and necessary means of achieving the legitimate aims identified. These aims included:

  • Increasing the amount of future retirement pension by allowing employees to work after the age of 65 (the age of eligibility to draw the pension).
  • Avoiding the termination of employment contracts in situations which are humiliating for workers by reason of their advanced age.
  • Reducing obstacles for those who wish to work beyond their 65th birthday.
  • Having a compulsory retirement age makes it easier for younger people to enter the labour market.

Previously established principles were taken into account to consider whether the means to achieve these legitimate aims were appropriate and necessary. Firstly, the ECJ noted, compulsory retirement ages were widely used by many member states in order to achieve a balance between political, economic, social, demographic and/or budgetary considerations. Secondary, member states have a broad discretion to find the right balance between different interests involved.

The ECJ did also consider whether the hardship alleged in relation to Mr Hörnfeldt's pension entitlement precluded this 67-year rule from complying with the Directive. It held, though, that it was not necessary for the 67-year rule to take into account the level of retirement pension affected employees would receive.

Comment

Unlike Sweden, the UK has, of course, recently abolished its statutory default retirement age of 65. This case, by confirming the legitimacy of a compulsory retirement age, is indicative of the ECJ applying a less strict interpretation of the terms of the Directive than either the UK government or the courts. Although employers who have retained - or introduced - contractual retirement ages can look to this decision as useful guidance for what can be justified as legitimate aims for such retirement ages, this more restrictive regime within the UK may mean these are not as readily accepted by employment tribunals as the ECJ.