Mandatory Retirement: Changing Modern Perspectives?

1. Mandatory Retirement:Changing Modern Perspectives? Eilat, 28 March 2014 Professor Alan C. Neal

2. Nothing Like a Good Stereotype! Phase 1: Education in youth Phase 2: Uninterrupted working life Phase 3: Well-earned retirement

3. Not Such a New Debate Particularly in the wake of the American developments in this field – with the eventual outlawing of mandatory retirement (subject to limited exceptions) in 1986. The research and much of the literature featured economists evaluating the “business case” for mandatory retirement, and social/behavioural scientists looking at (usually early) retirement choices.

4. Not Such a New Debate “Mandatory retirement is a personnel policy adopted by firms to remove older employees from their workforce.” Barker & Clark (1980)

5. Not Such a New Debate • Perceived negative relationship between age and productivity • Greater costs connected with older workers • Limits to flexibility, stemming from work rules, seniority, and pay scales

6. Not Such a New Debate Mandatory retirement viewed as: “...part of a long-term contract between a firm and its workers that alters the age-productivity profile through on-the-job training and also changes the life-cycle pattern of compensation.” Lazear (1979), Lapp (1980)

7. Implicit/Explicit Assumptions • Older workers become and are less productive • Older workers become and are less physically capable of performing tasks • Older workers are occupying positions which could be opened up to younger entrants

8. Implicit/Explicit Assumptions • Older workers are more expensive to employ • Older workers are less open to demands for increasing flexibility in working patterns • Older workers are less geographically mobile

9. Linkage with other Features • State-funded pensions (qualifying age) • Occupational pensions (length of service) • Public sector “package” benefits • Public health services

10. More Recent Trends • Increasing longevity • Improved health care • Technological advances improving quality of work • Perceived psychological “need” to work • “Active ageing” agenda

11. More Recent Trends • Growth in female participation rates • Growth in part-time working – especially on the parts of male workers • Development of job-sharing, home-working, tele-working, and other (sometimes highly innovative) flexible forms of work

12. More Recent Trends • Pressures to cut public budgets in the aftermath of the 2007/8 crisis & recession • Increasing public health and social services costs in relation to the rapidly expanding ageing population • Unsustainability of established structures for providing pensions in old age

13. The European Union Approach: Mandatory Retirement in the Framework of Discrimination Law

14. The European Union Approach The issue of “age” treated in a general framework for “equal treatment”: Council Directive 2000/78/EC establishing a general framework for equal treatment in employment and occupation BUT with limitations...

15. The European Union Approach (14) This Directive shall be without prejudice to national provisions laying down retirement ages. (25) ...differences in treatment in connection with age may be justified under certain circumstances and therefore require specific provisions which may vary in accordance with the situation in Member States... (Directive 2000/78/EC, Preamble)

16. The European Union Approach Article 1 – Purpose The purpose of this Directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation, as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment.

17. The European Union Approach Article 2 – Concept of discrimination (1) For the purposes of this Directive, the ‘principle of equal treatment’ shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in Article 1.

18. The European Union Approach Article 2 – Concept of discrimination “Direct” and “indirect” discrimination [Article 2(2)] “Harassment” [Article 2(3)] “Instructions to discriminate” [Article 2(4)]

19. The European Union Approach Article 3 – Scope (3) This Directive does not apply to payment of any kind made by state schemes or similar, including state social security or social protection schemes.

20. The European Union Approach Article 6 – Justification of differences of treatment on grounds of age (1) Notwithstanding Article 2(2), Member States may provide that 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.

21. The European Union Approach Article 6 – Justification of differences of treatment on grounds of age Such differences of treatment may include: (a) the setting of special conditions on access to employment and vocational training, employemnt and occupation, including dismissal and remuneration conditions, for young people, older workers and persons with caring responsibilities in order to promote their vocational integration or ensure their protection;

22. The European Union Approach Article 6 – Justification of differences of treatment on grounds of age Such differences of treatment may include: (b) the fixing of minimum conditions of age, professional experience or seniority in service for access to employment or to certain advantages linked to employment;

23. The European Union Approach Article 6 – Justification of differences of treatment on grounds of age Such differences of treatment may include: (c) the fixing of a maximum age for recruitment which is based on the training requirements of the post in question or the need for a reasonable period of employment before retirement.

24. The European Union Approach Article 6 – Justification of differences of treatment on grounds of age (2) Notwithstanding Article 2(2), Member States may provide that the fixing for occupational social security schemes of ages for admission or entitlement to retirement or invalidity benefits, including the fixing under those schemes of different ages for employees or groups or categories of employees, and the use, in the context of such schemes, of age criteria in actuarial calculations, does not constitute discrimination on the grounds of age, provided this does not result in discrimination on the grounds of sex.

25. The European Union Approach: Developing Jurisprudence of the Court of Justice of the EU

26. Case C-144/05, Mangold Laying down the general proposition that: “...the Member States and, where appropriate, the social partners at national level enjoy broad discretion in their choice, not only to pursue a particular aim in the field of social and employment policy, but also in the definition of measures capable of achieving it.”

27. Case C-411/05, Palacios de la Villa Compulsory retirement age of 65 (as long as entitled to a retirement pension at the end of the working life), implemented by collective agreement with backing of Spanish legislation. Justifiable as a legitimate aim in national employment policy, consisting in “the promotion of full employment by facilitating access to the labour market”.

28. Case C-411/05, Palacios de la Villa Offering the further general proposition that: “...the competent authorities at national, regional or sectoral level must have the possibility available of altering the means used to attain a legitimate aim of public interest, for example by adapting them to changing circumstances in the employment situation in the Member State concerned.”

29. Case C-388/07, Age Concern Regulations provided freedom for an employer to dismiss at age 65, so long as any request by a worker to continue working had been “considered”. In principle, capable of objective justification, BUT emphasised burden on Member States to establish to a high standard of proof the legitimacy of the aim relied on as a justification (notwithstanding broad discretion in area of national employment policy).

30. Case C-341/08, Petersen Upper age limit of 68 for dentists providing public care under German health insurance system, after which they lost authorisation to continue practice. “Protection of public health” could constitute a legitimate aim, but not made out on the facts. Possible to justify objectively on basis of need to maintain equitable balance between older and younger dentists and keep open career progression paths – a matter for the national court to determine.

31. Case C-45/09, Rosenbladt German national laws enabling collective agreements to fix a mandatory retirement age of 65. Provisions intended “to give priority to appropriate and foreseeable planning of personnel and recruitment management over the interest of employees in maintaining their financial position” and “to facilitate employment for young people, planning recruitment and allowing good management of a business’s personnel, in a balanced manner according to age” could be legitimate objectives within Article 6.

32. Case C-447/09, Prigge Mandatory retirement age of 60 imposed through collective agreement in Germany upon airline pilots “in the interests of public safety”. This instrument was not “necessary” for public security and protection of health, when national and international legislation fixes that age at 65. Furthermore, “air traffic safety” does not constitute a “legitimate aim” within the meaning of Art. 6(1).

33. Case C-159/10 & C-160/10, Fuchs & Köhler Establishment of normal (conventional) retirement age of 65 for prosecutors in the German Land Hessen. While setting a retirement age does prima facie constitute a legitimate aim in the public interest, the argument put forward in relation to the particular measure was not shown to establish justification on that basis.

34. Case C-286/12, Commission v Hungary Legislation introduced to lower retirement age for judges, prosecutors and notaries from 70 to 62. Possible to argue “standardisation of rules on retirement for all persons” as potential objective justification, but not found “necessary” as means of achieving that aim in this case. Attempted justification of “facilitating the entry of young professionals” was similarly rejected as not being “appropriate” for that purpose.

35. Changing Perspectives?:Mandatory Retirement vs. Active Ageing & “Elder Work”

36. Attitudes to Work and Ageing “…a person’s employment is usually one of the most important things in his or her life. It gives not only a livelihood but an occupation, an identity and a sense of self-esteem…” (Lord Hoffmann, Johnson v Unisys [2001])

37. Attitudes to Work and Ageing “…age is not ‘binary’ in nature (man or woman, black or white, gay or straight) but a continuum which changes over time … This means that younger people will eventually benefit from a provision which favours older employees, such as an incremental pay scale, but older employees will already have benefitted from a provision which favours younger people, such as a mandatory retirement age.” (Lady Hale, Seldon [2012])

38. A Basic Proposition Mandatory retirement arrangements do not “just exist” – they are a conscious policy choice made for particular ends. They give rise to differential treatment between groups of workers. As such, they call for justification, which should be explicit.

39. Posing the Question Mandatory retirement arrangements may be introduced at different levels – e.g. national (the legislator), sectoral (social partners), and enterprise. Is there a case for making differing requirements in relation to establishing “justification” as between these levels?

40. Posing the Question Where mandatory retirement arrangements have already been operating, should there be any requirement to “re-visit” them in order to ensure that a historical “justification” continues to be valid in modern circumstances? If so, when should such a reappraisal be undertaken, and should there be a further “on-going” requirement for this to take place?

41. Posing the Question Should there be a requirement to consider the impact of a “blanket” mandatory retirement provision on the personal circumstances of each of the individual workers who may be subject to it? If so, how far should this extend – every worker potentially affected, workers known to be subject to “special circumstances” (however defined), workers who can make a “special case”, etc?

42. Posing the Question Should it be open to an employer to deviate from an established mandatory retirement arrangement – e.g. in order to retain a particular skill-set (corporate memory, etc.)? If so, what should be the nature and standard of the “justification” to be established in order to permit this?

43. Posing the Question How should persons who have been subject to mandatory retirement be treated subsequently? Is there a case for establishing a separate category within labour law for such persons – e.g. employed but only entitled to a limited range of employment protections (and, if so, how to determine which rights are to be retained)?

44. Posing the Question Is there any justification for taking into account the financial/economic standing of the worker either in the context of applying a regime of mandatory retirement or in the post-retirement treatment of that person? Should the availability (and size) of a State or occupational pension be a factor? Might this include family or similar obligations?

45. All the World’s a Stage.. Last scene of all, That ends this strange eventful history, Is second childishness and mere oblivion, Sans teeth, sans eyes, sans taste, sans everything. William Shakespeare, As You Like It (Act II, Scene VII)

46. Mandatory Retirement:Changing Modern Perspectives? Eilat, 28 March 2014 Professor Alan C. Neal