Reference no: EM131917319

Question: Compulsory Retirement

In late 2007, the European Court of Justice ruled that the European Framework Directive on Equal Treatment, which prohibits unjustified age discrimination in the workplace, applied to national laws requiring age-based compulsory retirement. The case challenged a Spanish law permitting employers to impose a compulsory retirement age. Although the Court held the Directive applied to the Spanish law, it nevertheless ruled that the Spanish legislation was a lawful, appropriate means of achieving a legitimate government aim. The law had been passed during a period of high unemployment in Spain and was intended to further a national policy for a better distribution of work between generations. In the United States, the Age Discrimination in Employment Act (ADEA) prohibits discrimination on the basis of age against individuals who are 40 or older. It applies to decisions to hire or fire, as well as to discriminatory compensation or other terms or conditions of employment. Interestingly, a narrow exception allows universities to require retirement of tenured faculty who reach the age of 70. The ADEA specifically applies to American citizens employed overseas by American companies.

Questions

1. A U.S. corporation operates a branch in Spain. Consistent with Spanish law, it adopts a compulsory retirement age of 62. Is this a violation of the ADEA?

2. Which policy do you favor-the Spanish or the American approach to compulsory retirement? Why? Is this an issue over which countries should be allowed to differ?