In a recent preliminary ruling, the European Court of Justice established that private persons and companies are subject to a prohibition against discrimination due to age based on both a principle of EU law as well as an obligation under a directive. This principle cannot be departed from with reference to a private person's legitimate expectations to rely on the wording of national legislation.

Under the previous exemption provision of section 2a of the Salaried Employees Act, an employee would forfeit the right to severance pay if the employee was entitled to retirement pension under a pension scheme agreed with the employer if the employee had joined the scheme before turning 50.

The exemption provision of section 2a of the Salaried Employees Act was deleted as a consequence of the European Court of Justice's ruling in the Ole Andersen case in October 2010 when the Court ruled that section 2a (3) of the Salaried Employees Act was too extensive compared to the underlying directive and contrary to EU legislation.  

THE NEW LEGAL ACTION

The action before the European Court of Justice concerned an employee, who was dismissed at the age of 60 and agreed on a severance agreement with the employer.

The employee has been employed for almost 25 years and he was therefore entitled to a severance pay of three months' salary. However, the employee was covered by the exemption provision of section 2a (3) of the Salaried Employees Act then in force as he was also entitled to retirement pension from the employer. The employer did therefore not pay the severance pay to the employee.

Subsequently, the employee obtained employment with another company, and he then brought legal action against his former employer claiming severance pay and compensation under the Anti-Discrimination Act's prohibition against discrimination due to age.

Referring to the Ole Andersen ruling, the Maritime and Commercial High Court found that the employee was entitled to severance pay under the Salaried Employees Act, but that the employee was not entitled to compensation under the Anti-Discrimination Act.

The action was appealed to the Supreme Court and the question was whether it was possible not to use a clear and unambiguous rule such as section 2a (3) of the Salaried Employees Act or to construe this rules contrary to Danish case law with reference to a principle of EU law, which prohibits discrimination, or whether the company's legitimate expectation of the state of law would prevent this.

The Supreme Court felt induced to present the following questions to the European Court of Justice:

  • Whether the general principle concerning prohibition against discrimination due to age precludes a scheme as the one in the previous section 2a (3) of the Salaried Employees Act; and
  • Whether the general principle concerning prohibition against discrimination due to age must give way to the principle on protection of a private person's general expectation that it is possible to rely on the wording of national legislation (principle concerning due process of law).

THE PRINCIPLE CONCERNING PROHIBITION AGAINST DISCRIMINATION DUE TO AGE IN A DISPUTE BETWEEN PRIVATE PERSONS

The difference between this case and other cases concerning the previous provision is that in this case, the dispute is between two private persons who can generally not rely directly on EU directives. Previously, the European Court of Justice established that an unwritten principle of EU law applies concerning prohibition against discrimination due to age, which also directly covers private persons.

The European Court of Justice's response to the first question was that the general principle concerning prohibition against discrimination due to age - also as to disputes between private persons - contains a prohibition against a scheme as the prohibition applying under section 2a (3) of the Salaried Employees Act.

CONSTRUCTION IN CONFORMITY WITH EU LAW

The European Court of Justice started its second response by stating that in cases between private persons, it is the responsibility of the national courts to ensure the legal protection of its citizens under EU law.

The national courts must also construe national provisions to the widest extent possible in the light of the directive and its objective, also called construction in conformity with EU law.

In connection with the presentation before the European Court of Justice, the Supreme Court stated that it was not possible to construe the national provision in conformity with EU law as it had been construed in such a way according to applicable Danish law that this made construction in conformity with EU law impossible. The European Court of Justice stated that if this was the case, the national courts would be obligated to change a firm construction or refrain from applying the provision if this was the only way to ensure the full effect of EU law.

 

LEGITIMATE EXPECTATIONS

As regards legitimate expectations, the European Court of Justice stated that a national court cannot continue applying a national provision, which is contrary to EU law on the grounds that a private person should be able to rely on the wording of national legislation.

CLAIM FOR COMPENSATION AGAINST DENMARK

The European Court of Justice also found that the possibility for the private employer to make a claim for compensation against the state on the grounds that the person had been subject to discrimination contrary to an EU directive could not change the obligation to construe in conformity with EU law or not to apply the provision.

The European Court of Justice therefore found that the Supreme Court is not entitled to set aside the principle concerning prohibition against discrimination with reference to the principle concerning due process of law, the principle concerning the company's legitimate expectation that it can rely on the wording of national legislation or the possibility of the employee to claim compensation from the state.

COMMENTS

According to the European Court of Justice's decision, the national courts are obligated to construe national provisions in conformity with EU law and even to set aside national rules if construction is not possible.

This obligation cannot be set aside in consideration of the principle concerning due process of law or the principle concerning protection of the legitimate expectation.

It is noted that the ruling may be construed to the effect that the European Court of Justice's case law confers a direct horizontal effect on EU directive 2000/78 on equal treatment in employment and occupation between private person by establishing that the directive's obligations apply to all authorities in a member state - also the courts - and by establishing that the directive's provisions specifically reflect a principle of EU law.

It will be interesting to read the Supreme Court's ruling and to follow how the European Court of Justice's rulings will affect future cases concerning discrimination, and whether directive 2000/78 will be relied upon directly in the future cases between private employees and employers.

contacts

Finn Schwarz

Managing Partner

Christian Traberg Bennetzen

Attorney