In a bulletin from its London Office, Aon Consulting notes that an “Advocate-General at the European Court of Justice today rejected Age Concern’s claim that forcing people to retire at or after 65 without compensation breaches EU equality legislation.”
Aon said the rejection of the legal challenge to mandatory retirement ages means that “European member states are able to apply national laws with regard to fixing retirement ages providing this policy can be objectively justified in the context of national law.
“Employers will no doubt be hugely relieved,” Aon continued, “as the decision gives them at least three years breathing space. Businesses should be able to continue their current employment policies towards older workers until at least 2011, when the British government is due to review the default retirement age.”
The bulletin did indicate that the “Advocate General’s opinion is not binding on the European Court of Justice (ECJ), and a final judgment will not be made for a number of months.” However, Aon noted, “this decision will give employers time to consider their approach to providing benefits for employees who continue working into older age. This applies particularly to those benefits where the incidence of claims (and therefore costs to employers) increases with age: for example, healthcare and long-term disability benefits.”
Matthew Lawrence, risk consultant at Aon Consulting, commented: “This is good news for business. Today’s decision removes one potential minefield from businesses stacked in-tray of employment issues. If the ECJ endorses the opinion offered by the Advocate General, this would no doubt be welcomed by employers who have in recent times had to contend with a number of complex legislative issues relating to pension and other employee benefits.”
He cautioned, however, that “proper consideration will need to be given to the wording used in the Advocate General’s opinion, particularly if it is endorsed by the ECJ, as there still appears to be scope for individuals to challenge the British Government’s justification of having a law that enables employers to force employees to retire at 65 or over.
“Furthermore, this is likely to be a relatively short respite if, as expected, the default retirement age is either increased or removed completely when it is reviewed by the British Government in 2011.”
Lawrence advised employers to “continue to review and update their policies and procedures to ensure they continue to obtain maximum value from their benefits spend whilst at the same time minimizing their exposure to litigation.”
Source: Aon Consulting – www.aon.com
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