Can my employer force me to retire and dismiss me when I turn 65?
Although retirement has always been one of the recognised grounds for termination of an employment contract in accordance with the relevant provision of the Workers' Statute, the legal position has shifted — from compulsory retirement clauses in collective bargaining agreements being considered null and void, to such clauses being permissible under certain conditions.
Written by Josep Conesa
Employment and insolvency lawyer
Until 2018, the prevailing interpretation was that:
"Any clauses in collective bargaining agreements that allow for the termination of an employment contract on the grounds that the employee has reached the ordinary retirement age set out in Social Security legislation shall be deemed null and void, regardless of the scope or extent of such clauses."
The Tenth Additional Provision of the Workers' Statute now opens the door to collective bargaining agreement clauses linked to the attainment of the ordinary retirement age.
This provision was introduced by Royal Decree-Law 28/2018 of 28 December and came into force on 1 January 2019. As of the date of writing, the Supreme Court has not yet issued case law on the matter, but we anticipate diverging views among employment tribunals and the High Courts of Justice. Indeed, there is a substantial body of case law predating the most recent reform.
REQUIREMENTS FOR COMPULSORY RETIREMENT:
The Workers' Statute provides that collective bargaining agreements may include clauses allowing for the termination of an employment contract once the employee reaches the statutory retirement age set out in Social Security legislation, provided the following requirements are met:
a) The employee whose employment contract is being terminated must satisfy the conditions set out in Social Security legislation to be entitled to 100% of the standard contributory retirement pension.
b) The measure must be linked to coherent employment policy objectives set out in the collective bargaining agreement, such as:
- improving employment stability by converting fixed-term contracts into permanent ones,
- hiring new employees,
- generational renewal,
- any other measures aimed at promoting quality employment.
How will the courts interpret this new legislation?
It remains to be seen how the courts will rule on this matter.
In 2019, the Court of Justice of the EU (CJEU) held that national legislation providing for the automatic termination of employment contracts for pilots employed by a company engaged in national security-related activities upon reaching the age of 60 is neither discriminatory nor contrary to EU law. Although the mandatory retirement age for commercial airline pilots is 65, the lower age limit is fully justified on grounds of national security and air traffic safety, as those pilots must operate under more demanding or extreme conditions. It is undeniable that the physical capacities required for such roles decline with age.
View the Court of Justice of the EU (CJEU) ruling here
The employment tribunal No. 2 of Palencia, ruling 219/2019 of 22 July 2019, Case No. 235/2019 also upheld the exception for lack of cause of action on the grounds that no dismissal had taken place, where the company had terminated the employment contract in accordance with the mandatory retirement clauses of the collective bargaining agreement for the Road Freight Transport Sector in the province of Palencia.
View the ruling of Employment Court No. 2 of Palencia.
CONCLUSIONS:
In our view, unilateral compulsory retirement by the company is currently permissible, provided that the relevant provisions are properly agreed upon and clearly drafted in the collective bargaining agreement, and that the company carefully verifies that all applicable requirements are met before proceeding with such a termination.
The collective bargaining process and the drafting of collective agreements is a highly fact-specific and sensitive area of law.
If you would like advice on this topic, please get in touch with us
