Age Condition may not exclude Redundancy Pay

By judgment of 26 September 2013, the European Court of Justice has established that it is contrary to the Employment Equality Directive to refuse to pay out redundancy pay in case of elimination of a job position for civil servants who have reached 65 years of age.

If a civil servant is dismissed due to an elimination of his position, he will retain his salary for three years in return for being available for another suitable position. However, no redundancy pay will be paid out if the civil servant has reached 65, irrespective of whether the civil servant had planned to stay in the labour market and actually is available for another suitable position.

By judgment of 24 August 2009, the Danish Eastern High Court found that the age limit of 65 of the Danish Public Servants Act was lawful. In connection with the proceedings, the Danish Supreme Court referred the question to the European Court of Justice.

Initially, the European Court of Justice established that the present provision - which excludes redundancy pay upon reaching 65 - implies an unequal treatment due to age.

Thereafter, the European Court of Justice was to consider whether the discrimination was legitimate under Article 6(2), which stipulates that the government may determine that fixed age limits for access to occupation-related social security schemes do not constitute an act of age discrimination in so far as they do not result in gender discrimination. However, the European Court of Justice stated that redundancy pay neither comprised old age benefits nor disability benefits and, consequently, that Article 6(2) was not applicable in the present case.

Thereafter, the European Court of Justice was to consider whether the discrimination was legitimate under Article 6(1), which stipulates that the government may allow age dis-crimination if it is objectively and reasonably founded in a legitimate purpose and if the means chosen are appropriate and necessary.

The European Court of Justice found that the provision exceeded what was necessary in that it automatically excluded civil servants from their right to redundancy pay if they had reached 65.

As such, the judgment of the European Court of Justice is in compliance with the Advocate General's statement, which we mentioned in our Newsletter of April 2013.

The judgment shows that the Employment Equality Directive's prohibition against age discrimination prevents the upholding of the rule in the Danish Public Servants Act which automatically excludes redundancy pay when the civil servant has reached 65.

The case will now be sent back to the Supreme Court who will consider the specific case. The hearing of the case has been fixed for 5 February 2014.

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