Compulsory retirement is when an employer forces an employee into retirement by either;
- persuading an employee to retire; or
- treats an employee in such a way that they are ultimately forced to retire; or
- simply terminates their employment because of reaching an agreed or some other ‘retirement age’
Compulsory retirement is illegal in Australia. Therefore, an employer must not terminate the employment of an employee because they are ‘too old’ - nor can employers ask employees to sign an agreement that they will retire upon reaching a certain age.
Under the Fair Work Act 2009 [FWA], compulsory retirement would constitute unfair dismissal if the employee’s age was the only or a predominant reason for the employee being forced to retire. The FWA also prohibits an employer taking “adverse action” against an employee, which includes refusing to employ someone, injuring them in their employment or altering their position to their prejudice, on the basis of age. In other words, an employer in general, cannot force an employee to retire at a certain age.
It would also constitute unlawful discrimination under federal and state anti-discrimination laws – unless the employee can no longer perform the inherent requirements of the position.
And that was the question the Full Bench of the High Court of Australia was asked to determine in the matter between Qantas and one of its pilots, Captain Christie.
Qantas Airways Ltd v Christie  HCA 18
In the Christie case the High Court was tasked to consider the legal implications when, due to safety and security considerations, age-discrimination and employment law clash.
The International Civil Aviation Organisation [ICAO] is a specialised agency of the United Nations. ICAO works with its 193 member countries to reach consensus on international civil aviation Standards and Recommended Practices and Policies in support of a safe, efficient and secure civil aviation sector. These standards and policies are used by the member countries to ensure that their local civil aviation operations and regulations conform to global norms. Currently, ICAO’s limitations of privileges of pilots of an aircraft engaged in international commercial air transport operations is age 65 – this is known as the Rule of 65. In Captain Christie’s time, the restriction was 60 years of age.
Captain Christie was appointed by Qantas as a pilot by a letter of appointment dated 30 April 1986. The letter provided for termination by notice, but made no reference to retirement, although it was then the practice for pilots to retire no later than their 55th birthday. The letter, importantly, stated that Captain Christie was employed ‘for duty as required by the Company in any part of the world’.
In an agreement in 1991 between Qantas and the pilots it was agreed that ‘a pilot may elect to extend his employment beyond the normal retirement date on a year by year basis up to but not beyond the date of his 60th birthday.’
Immediately prior to his 60th birthday, Captain Christie wrote a letter to Qantas expressing his desire to extend his employment beyond his 60th birthday and indicating a willingness to ‘bid around the overseas restrictions’. The ‘bidding system’ is in integral part of the Qantas administrative machinery by which it organises pilot rosters. Captain Christie’s argument was that because he was very senior in the company, he was able to ‘use the mechanisms in the bidding system’ to avoid the Rule of 60 in overseas jurisdictions.
Captain Christie received a letter in reply from Qantas reiterating its policy of pilots retiring at age 60 due to safety and operational requirements. The letter explained that it was therefore necessary for Captain Christie’s retirement to take effect on 21 September 1994, and his employment was terminated by Qantas on that date.
Captain Christie applied to the Industrial Relations Court (now the Fair Work Commission) for a declaration that Qantas had contravened s170DF(1)(f) of the Industrial Relations Act 1988 (Cth) (the Act) by terminating his employment because of age (i.e. unlawful age discrimination). He sought orders under s170EE of the Act requiring reinstatement and payment of compensation.
Qantas maintained that it did not terminate Captain Christie’s employment; rather it came to an end with the effluxion of time on the grounds that Captain Christie cannot fulfil the inherent requirements of the position as a pilot.
The issue before the High Court was whether or not Captain Christie, by using his seniority to “bid around the overseas restrictions”, met the inherent requirements of the position as an international pilot with Qantas?
In a majority decision of the Full Bench, 4 to 1, the High Court found that the termination of Capt. Christie’s employment was lawful. In other words, it did not equate to the unlawful compulsory retirement. Here is a short summary of what each Justice had to say:
Brennan CJ determined that the bidding system was in integral part of the Qantas administrative machinery by which it organised its services. He said that the system was not discriminatory in design or operation. Brennan CJ held that the ability to participate effectively in the system equally with other pilots of similar seniority was an inherent requirement of Captain Christie’s position. After he reached age 60, Captain Christie’s participation in the bidding system could not be equal and it would skew the equitable operation of the system. Brennan CJ therefore found that termination of Captain Christie’s employment was not unlawful.
In her judgement, Gaudron J maintained that if employment comes to an end at an age stipulated by an employer, it will ordinarily be inferred that age was the reason for it so doing. She supposed that it may be, however, that age is ‘the occasion’ and not ‘the reason’ for terminating employment. Gaudron J argued that although Captain Christie’s employment came to an end on his 60th birthday, it did not come to an end for that reason, but in terms of s170DE(1), for a ‘valid reason… based on the operational requirements of the [Qantas] undertaking.’
According to McHugh J there were two questions to be addressed in this matter:
- whether an employer has terminated employment “for reason” of age, where it was a term of the employment that the employee would retire at a specified age and the employer has refused to continue the employment past that age
- whether the age of an employee can constitute an ‘inherent requirement’ within the meaning of s170CK(3) and therefore constitute a non-discriminatory basis for dismissal
McHugh J maintains that Qantas did not terminate Captain Christie’s employment; rather it came to an end by the effluxion of time. It was therefore not terminated for any reason; therefore, it was not terminated for reason of age. McHugh deemed age an “inherent requirement of the position” within the meaning of s 170DR(2) of the Act. He therefore held that Qantas was entitled to terminate Captain Christie’s employment when he reached the age of 60 even if the contract of employment did not end by effluxion of time.
Gummow J held that the Act is concerned with termination of employment for reasons unconnected with a previously fixed term or duration of employment. He held that there is no prohibition upon entry into contracts providing for employment over a specified period. Gummow J went further to state that the question of whether Captain Christie’s employment was terminated on his 60th birthday was irrelevant; the termination did not contravene the discrimination provision in s170DF of the Act.
Kirby J dissented with the majority and delivered a minority decision. Kirby J surmised that remedial legislation, designed to achieve the high public purpose of upholding equal opportunity, should be construed beneficially and not narrowly.
Kirby J held that the employer’s intention regarding discrimination is irrelevant. The legislation is fundamentally designed to achieve social change by the removal of artificial stereotypes. Unless otherwise excused, it requires in effect, the assessment of an employee’s capacities upon that employee’s individual merits. Requiring this approach has a price. In part, that price is economic, involving various adjustments to accommodate the needs of particular employees. In part, the cost may involve a challenge to the political moral or other biases of the employer. The Parliament must be taken to have accepted that, to conform to the Australia’s international obligations and to achieve the objectives which they set, such costs must be borne unless the employer is exempted or excused. Kirby J therefore found that the termination of employment was unlawful because it was done for the reason of age in breach of anti-discrimination legislation.
What the Christie decision shows is that the reference to “inherent” requirements invites attention to what are the characteristic or essential requirements of the employment as opposed to those requirements that might be described as peripherals.
It also confirmed that when an employer relies upon an employee’s incapacity to perform the inherent requirements of his position or role, it is the substantive position or role of the employee that must be considered and not some modified, restricted duties or temporary alternative position.
If you have further questions, please contact Philip van den Heever at email@example.com.
This is not legal advice.