Age discrimination: ECJ rules Swedish default retirement age of 67 to be lawful

Hörnfeldt v Posten Meddelande AB Case C-141/11 ECJ

age discrimination | default retirement age | pension

The European Court of Justice (ECJ) has upheld the Swedish law that allows an employer to terminate an employee's contract of employment on the sole ground that he or she has reached the age of 67, taking no account of the pension that the employee will receive. 

Swedish law provides that "an employee has the right to remain in his employment until the end of the month in which he reaches the age of 67". The legislation goes on to say that "[if] an employer wishes an employee to leave his employment at the end of the month in which he reaches the age of 67, the employer must give the employee at least one month's written notice". This "67-year rule" effectively allows every employee to enjoy an unconditional right to work until the last day of the month of his or her 67th birthday, when the employment contract may be terminated without constituting a dismissal. 

Mr Hörnfeldt, who worked for a postal service agency, reached 67 on 15 May 2009 and his employment was terminated at the end of May in accordance with the 67-year rule. From his start date in 1989 until his retirement, Mr Hörnfeldt only ever worked part time. On his retirement, he did not have enough to live on because the Swedish retirement pension is based on income received over the whole of a career. 

In the Swedish district court, Mr Hörnfeldt sought to have his compulsory retirement annulled, on the basis that the 67-year rule constitutes age discrimination. The national court asked the ECJ whether or not the Equal Treatment Framework Directive (2000/78/EC) precludes a national measure that allows an employer to terminate an employee's contract of employment on the sole ground that he or she has reached the age of 67 and that does not take account of the pension that the employee will receive. 

The key question for the ECJ was whether or not the 67-year rule is justified by a legitimate aim (including legitimate employment, labour market and vocational training policy objectives) and whether or not the means put in place to achieve that aim are appropriate and necessary. 

The ECJ started by stressing that it is not decisive that Swedish law does not state clearly the aim pursued by the 67-year rule in setting the age limit for workers at 67. A lack of precision in the national legislation in the aim pursued does not automatically exclude the possibility that the rule may be justified. 

The Swedish Government argued that the 67-year rule seeks to:

• avoid termination of employment contracts in situations that are humiliating for workers by reason of their advanced age;
• enable pension regimes to be adjusted on the basis of the principle that income received over the full course of a career must be taken into account;
• reduce obstacles for those who wish to work beyond their 65th birthday;
• adapt to demographic developments and anticipate the risk of labour shortages;
• establish a right, and not an obligation, to work until the age of 67, in the sense that an employment relationship may continue beyond the age of 65; and
• make it easier for young people to enter the labour market. 

After accepting that the Swedish Government's objectives are, in principle, legitimate, the ECJ went on to consider whether or not they are appropriate and necessary in the context of the national law. The ECJ pointed out that the 67-year rule:

• makes it possible for the social partners to make use, by means of individual contracts or collective agreements, of the mechanism of automatic termination of employment contracts only from the age of 67;
• does not have the automatic effect of forcing individuals to withdraw definitively from the labour market, but only lays down the conditions under which an employer may derogate from the prohibition of discrimination on ground of age and terminate the employment contract of an employee on the ground that he or she has reached the age of 67; and
• is not based solely on the fact that a specific age (which is higher than the age at which a retirement pension may be drawn) has been reached, but also takes account of the fact that the worker is entitled to a replacement income in the form of a retirement pension. 

The ECJ concluded that, in light of all these factors, it cannot be argued that the Equal Treatment Framework Directive precludes a national measure, that allows an employer to terminate an employee's contract of employment on the sole ground that the employee has reached the age of 67 and that does not take account of the pension that the employee will receive. 

Additional resources

• Line manager briefing on retirement This line manager briefing looks at the law and best practice on retirement after the abolition of the default retirement age on 6 April 2011. 
• Retirement policy and procedure Use this model policy to deal with the retirement of employees to whom the default retirement age does not apply. 

Case transcript of Hörnfeldt v Posten Meddelande AB (on the ECJ website)