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Contractual retirement age

January 2009 - Employment. Legal Developments by Norrbom Vinding Law Firm, member of ius laboris.

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03-01-2008 - As previously reported on this website, the minimum compulsory retirement age under the Danish Anti-Discrimination Act has risen from 65 to 70 with effect from 1 January 2008. This change will affect not only employment contracts signed after 1 January 2008, but also existing employment relationships.

One consequence of the change is that contractual provisions for compulsory retirement before the age of 70 have become invalid. Thus, employers wishing to maintain such provisions will need to amend their employment contracts. In practice, this can be done by issuing a written amendment to each contract.

Some observers take the view that such an amendment only needs to be notified to the individual employees on or before 31 January 2008 by virtue of the principle in the Danish Statement of Employment Particulars Act that changes must be communicated in writing to the individual employees within one month after the implementation of the change. It is indeed correct that employers cannot be required to pay compensation for breach of that Act if the change has been notified to the individual employees within one month after its implementation.

But employers cannot eliminate the risk of employees claiming that a change implemented on 1 January 2008 or later constitutes a substantial change to the terms and conditions unless the change has been implemented on or before 31 December 2007.

So, to avoid doubt, an increase in the contractual retirement age which was implemented before 1 January 2008 cannot be considered a substantial change to the terms and conditions - and, thus, individual employees cannot require contractual notice of such a change. This general rule, however, is subject to the modification that individual employees may have so favourable terms and conditions with regard to compulsory retirement at a specified age as to render an increase from, for instance, age 65 to 70 a substantial change to the terms and conditions.

Last but not least, employers should consider the implications which changing the compulsory retirement age will often have on pension schemes, health care insurance and other benefits arrangements.

Yvonne Frederiksen

This information does not constitute legal advice and should not be relied upon as such

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