An end to compulsory retirement at 70 years

It is no longer legal to enter into an employee agreement on compulsory retirement at age 70.

By Mads Bernstorn

It has long been against the law to discriminate against employees on the labor market due to disability, race, sexuality, religion, and age, etc., but until 1 January 2016, it was still possible to agree on compulsory retirement specifically at age 70 or above – as part of the employment relationship.

That means that compulsory age retirement in the employment contract was an exception to the general prohibition of age discrimination. Agreements that stated that the employee should resign at any age lower than 70, however, remained illegal.

Thus, it constitutes age discrimination if an employer fails to hire an employee or terminates an employee because the employer believes that the employee is too young or too old.

But effective 1 January 2016, the Discrimination Act has been amended so that it is no longer possible to agree on an employee’s forced retirement when he or she turns 70. The purpose of the amendment is to remove obstacles preventing older employees from remaining in the labour market.

Existing individual agreements are also covered by the law; thus such agreements have been invalid since 1 January 2016 when the amendment came into force.

Provisions on compulsory retirement at 70 years in collective bargaining agreements remain valid after 1 January 2016 if the collective agreement is concluded before that date. In other words, the law does not interfere with existing collective bargaining agreements. Rules on compulsory retirement at 70 years in collective bargaining agreements are only valid until the date on which the collective bargaining agreement may be terminated.

In some professions, a defined number of objective criteria must be met in order for the profession to be carried out, for example in terms of speed, vision, skills, etc. In such cases, the employer will provide an objective test to assess whether or not the criteria are met. On that basis, the employer may terminate employees, regardless of their age.

Employers who have included a compulsory retirement at 70 years (or lower) in the employment contract must remember that the Employment Contract Act requires that employees must be given a written notice within one month after a change in the employment agreement has entered into force.

It is generally assumed that the provisions of the Discrimination Act also includes “real CEOs.” Terms of compulsory retirement at 70 years (or earlier) probably cannot be enforced against CEOs.