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Israel: Supreme Court: Mandatory Early Retirement Constitutes Prohibited Age-Based Discrimination

(Oct. 10, 2012) On August 27, 2012, <?Israel's Supreme Court, sitting as a High Court of Justice in an extended bench of seven justices, voided an order issued by the Prisons Authority (PA) that authorized compulsory mandatory early retirement for PA employees. According to the order, all PA employees, without any distinction based either on individual or job requirement criteria, would be forced to retire at age 57, but could be permitted to continue their employment upon special approval on a yearly basis for up to three years in total or until the age of 60. (H.C.1268/09 Lea Zozal v. Commissioner of the Prisons Authority (decision rendered on Aug. 27, 2012) [in Hebrew], STATE OF ISRAEL: THE JUDICIAL AUTHORITY.)

The early retirement age authorized by the Retirement Age Law, 5764-2004 for PA employees hired before 2003, as well as for Police Authority employees hired in the same period?, differs from the general mandatory retirement age in Israel of 67 that is provided by that Law. The Law also accords employees the option to voluntarily retire after age 60, subject to appropriate deductions from their pensions. (Retirement Age Law, 5764-2004 [in Hebrew], SEFER HAHUKIM (SH) 5764 No. 1919 p. 46, as amended; an up-to-date version is available in the NEVO LEGAL DATABASE [in Hebrew, by subscription] (last visited Oct. 9, 2012).)

The petitioner in the case, an attorney with the PA service, was hired by the PA in 1986. She argued that her right to equal opportunity was violated by her forced retirement at age 57, ten years before the mandatory age of retirement for any other civil service attorney. She further alleged that by retiring at age 57, after 23 years of employment at the PA, her retirement pension would be reduced to 59% of her salary, as compared with the maximum rate of 70% to which she would be entitled should she retire at age 67, an amount that would provide her with a decent standard of living in old age. In addition to being forced to retire, she alleged that her request to continue employment at the PA was similarly rejected based on her age. (H.C. 1268/09, supra.)

In responding to the petitioner, the PA argued that it did not impose a uniform retirement age, but rather evaluated each case individually and that age was only one factor in the determination of when to compel retirement. The PA further noted that the early retirement imposed on PA employees reflected its consideration for the additional stress and overtime that was required from its employees due to “their interaction with a criminal population.” (Id. ¶ 9.)

The PA admitted that one of the considerations for compelling the petitioner to retire was compliance with a plan to terminate the type of position that she had held. The PA argued that this position “necessitated higher pay, imposed a significant burden on the PA’s payroll budget, and caused organizational problems that required the position’s cancellation.” (Id. ¶ 10.) According to the PA plan, the type of position held by the petitioner would no longer be offered starting in 2000 and was to be terminated by forcing employees who had reached retirement age (57) to leave the service by 2008. (Id.)

In accepting the petition, the Court determined that provisions in the Retirement Age Law, 5764-2004 that removed the difference in retirement age between PA employees and Police Authority employees hired after 2003 and that of other employees greatly weakened or even negated the PA rationale of the unique nature of the PA service as a basis for compulsory early retirement for employees hired prior to that year. The Court further held that the PA had not indicated any relevant grounds for imposing a mandatory retirement age earlier than that of the retirement age that generally applies under the Retirement Age Law, 5764-2004. (Id. ¶ 26.)

Even if the compulsory early retirement were deemed legal, the Court added, the PA’s decision to reject the petitioner’s request for continued employment was unlawful. The petitioner argued that the PA’s claim that the rejection was based on reorganization needs that required the elimination of her higher-grade position was merely a cover for age-based discrimination. According to the Court, even if it accepted the PA’s contention that the rejection was based on organizational needs, it could not accept that the reorganization could be the sole basis for rejecting the petitioner’s request for continuation of employment. (Id. ¶¶ 28-30.)

Based on these determinations, the Court voided the order with regard to PA employees who were serving in professional, administrative, and leadership roles, with effect from 12 months after the Court decision, to enable the PA to adopt new arrangements that would abide by the principle of equality. The Court also voided the PA decision to compel the petitioner to retire and ordered her return to work at the same grade and salary as existed on the day of her retirement, subject to the PA’s prerogative to determine her placement at a position in accordance with its needs. (Id. ¶ 31.)