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Compulsory retirement at 65 was legal

June 2012 - Employment. Legal Developments by Norrbom Vinding Law Firm, member of ius laboris.

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Discrimination - Anti-Discrimination Act
The Danish Western High Court recently ruled in a case concerning whether the former provision in section ‎‎5a(4) of the Danish Anti-Discrimination Act was contrary to the EU law principle of non-discrimination on ‎grounds of age. The Court held that there was no basis for setting aside the former provision.‎
 
The case concerned an employee of a private enterprise whose employment contract – which was based ‎on a standard employment contract agreed by the employer and the Union of Clerical and Commercial ‎Employees in Denmark (“HK”) – included a provision that the contract would terminate automatically ‎without further notice when the employee reached the statutory retirement age.
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When the employee realised that the employer intended to enforce this contractual provision in ‎connection with the employee turning 65 in June 2007, the employee sued the employer, arguing that ‎the contractual provision constituted age discrimination and that the exception provided for in section ‎‎5a(4) of the Danish Anti-Discrimination Act (which permitted employers and employees to agree a ‎mandatory retirement age of 65 in individual and collective agreements) was in conflict with the EU law ‎principle of non-discrimination on grounds of age.‎
 
The employer, on the other hand, argued that the EU law principle of non-discrimination on grounds of ‎age is based on a directive – the Employment Framework Directive – which is not directly applicable to ‎private employers. In addition, the employer submitted that the former provision in section 5a(4) of the ‎Danish Anti-Discrimination Act satisfies the conditions of the Employment Framework Directive.‎
 
The Court established first of all that the EU Court has ruled on several occasions that the principle of ‎non-discrimination on grounds of age is a general principle of EU law and that it may therefore be relied ‎upon in the relationship between two parties.‎
 
The Court then noted that the EU Court has clarified on several occasions that the member states have ‎wide discretion in the choice of not just which particular purpose they wish to pursue in the field of ‎social policy and employment, but also in the choice of which measures they believe may achieve such ‎purpose.‎
 
The Court further noted that the EU Court has also established on a number of occasions that contractual ‎provisions concerning automatic termination of employment for employees reaching the statutory ‎retirement age may be deemed to be objectively and reasonably justified by a legitimate aim. The Court ‎referred in this connection to the employer’s statement that its wish to set and enforce a provision ‎about compulsory retirement at the statutory retirement age was based on the company’s wish to ‎ensure that workforce was renewed on a continuous basis and to facilitate manpower planning.‎
 
Having regard to those grounds, among other things, the Court held that the former section 5a(4) of the ‎Danish Anti-Discrimination Act served a legitimate employment and social policy purpose in respecting ‎the agreements made by the social partners and, in addition, that it served to promote generational ‎fairness in the labour market, secure predictability for employers and employees alike and provide ‎employees with a dignified end to a long work life.‎
 
Finally, the Court noted that the company’s compulsory retirement age corresponded to the then ‎statutory retirement age and that the provision did not prevent the employee from obtaining new ‎employment with another employer.
 
Accordingly, the setting and enforcing of the compulsory ‎retirement age was not held to go beyond what was necessary to achieve the purpose being pursued.‎
On those grounds, the Court ruled in favour of the employer.‎
 
Norrbom Vinding notes:
  • that with this ruling it is established that the former provision of section 5a(4) of the Danish ‎Anti-Discrimination Act concerning the right to set a compulsory retirement age of 65 in an ‎individual or collective agreement does not conflict with the EU law principle of non-‎discrimination on grounds of age;‎

  • that, on this basis, it may be concluded that also the current provision of section 5a(4) of the ‎Danish Anti-Discrimination Act (which permits a compulsory retirement age of 70 in individual ‎and collective agreements) must be deemed to meet EU law requirements in terms of the ‎principle of non-discrimination on grounds of age; and

  • that, in addition, the Danish Western High Court has endorsed the most recent decisions of the ‎EU Court which hold that the principle of non-discrimination on grounds of age is a general EU ‎law principle which is therefore also applicable to private employers.‎
It should be noted that the plaintiff may yet appeal the judgment to the Danish Supreme Court. ‎Norrbom Vinding, who represented the employer before the Danish High Court, will follow closely and ‎comment on any developments in the matter.‎
 
The above does not constitute legal advice and should not be relied upon as such
For more information please visit www.norrbomvinding.com