In a Supreme Court case concerning lapse of redundancy pay to public servants having reached the age of 65, the Advocate-General of the European Court of Justice has stated that the age limit of section 32 of the Public Servants Act is contrary to the prohibition against discrimination due to age.

Facts

The case concerns a public servant, whose employment was terminated in May 2006 for expiry by the end of December 2006 at which time the public servant had reached the age of 66. The reason for the elimination of the position was reorganisation. The public servant did not wish to retire, but was interested in another position if possible.

With reference to section 32 of the Public Servants Act, the employer rejected paying redundancy pay to the public servant, as he had reached the age of 65 at the time of the termination of the employment and was therefore entitled, but not obligated, to public service pension and full state pension.

The public servant was of the opinion that the rejection of redundancy pay reflected discrimination due to age, and he therefore commenced legal proceedings against the employer before the Eastern High Court, which found in favour of the employer. The public servant filed an appeal against the ruling with the Supreme Court, which decided to present the question to the Advocate-General of the European Court of Justice for the purpose of clarifying whether section 32 of the Public Servants Act is contrary to the prohibition against discrimination due to age of the Anti-Discrimination Act.

Legal basis

The Anti-Discrimination Act (implementing Directive 2000/78) prohibits indirect discrimination due to age, unless the discrimination is objectively justified by a legitimate purpose. Further, the Act does not prevent fixing of age limits in relation to occupational social security schemes, see section 6a of the Act and article 6 (2) of the Directive.

The redundancy pay in question appears from section 32 of the Act. According to this section, a public servant is entitled to redundancy pay for three years if he/she has been dismissed due to changes in the organisation or elimination of a position. However, redundancy pay is not granted in those situations where the public servant is employed in another position, or if he/she has reached the age of 65. Until now, it has been the opinion of Local Government Denmark and the Danish parliament that the age criterion of section 32 of the Act was legitimate under article 6 (2) of the Directive. 6, stk. 2.

Statement of the Advocate-General

The Advocate-General submitted a reasoned proposal for a decision in the specific case, which was to be presented to the European Court of Justice.

It appears from the statement that the general age limit of 65 years of section 32 of the Act in relation to payment of redundancy pay is contrary to the prohibition against discrimination due to age. It further appears from the statement that the derogation provision of article 6(2) of the Directive concerning fixing of age limits only applies to occupational social security schemes concerning retirement pension and disability allowance, and it does therefore not include all kinds of occupational social security schemes. The Advocate-General concludes that the redundancy pay under section 32 of the Act is not covered by the derogation provision.

Further, the Advocate-General is of the opinion that the arrangement of section 32 of the Act exceeds what is necessary in order to achieve the objective, being that redundancy pay is only paid to public servants who remain available for new positions. The courts have not reviewed whether the public servant wishes to retire or remain available for a new position. The arrangement therefore automatically releases the employer from the obligation to pay redundancy pay as soon as the public servant has reached the age of 65. It is the opinion of the Advocate-General that a specific review may be arranged in such a way that it involves no disproportionate burdens on the public authorities.

The Advocate-General's proposal for the European Court of Justice's ruling in the case is that the prohibition against age discrimination and the derogation provision of article 6 (2) of the Directive prevent that redundancy pay may be granted to public servants who are entitled to retirement upon dismissal without taking into consideration whether the public servant in question actually wishes to receive pension or wishes to remain available for a new position.

Comments

The Advocate-General's statement is in no way binding on the European Court of Justice when deciding on the case. There may therefore be differences in the content of the statement of the Advocate-General and the ruling.

The statement may be seen as an extension of the ruling of the European Court of Justice of 12 October 2010, case C-499/08, which resulted in the ruling of the Western High Court of 2 October 2011 stating that the rejection to pay severance pay under section 2a of the Salaried Employees Act solely with the reference that the salaried employee was entitled to retirement pension from the municipality at the time of dismissal constituted discrimination due to age under the Anti-Discrimination Act.

It is therefore probable that the statement of the Advocate-General will follow the European Court of Justice.

Horten is awaiting the decision of the European Court of Justice, and we will notify you as soon as the decision is available.

The content of this Newsletter is not, and should not replace, legal advice.

contact

Finn Schwarz

Managing Partner