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The Central Customs and Tax Administration found guilty of age discrimination

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

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Age was a factor in the Central Customs and Tax Administration’s selection of employees for relocation to a new office. This was established by the Copenhagen City Court in a precedent-setting case.

It constituted discrimination when the Central Customs and Tax Administration relocated five senior employees from its office in the south-eastern part of Denmark to a new office in the western-most part of the country. This was established by the Copenhagen City Court in the first case in which an employer is found guilty of age discrimination in a dismissal case.

Five employees brought a claim against the Tax Administration after being selected for relocation following a major restructuring exercise. They were all aged 50+ and had been employed for a long time. The Tax Administration was ordered to pay extraordinarily high compensation awards of between 12 and 18 months' pay, among other things because of their long service.

The origin of the case was the Tax Administration's establishment in 2006 of five new regional offices in Denmark, including one in the western-most part of Denmark. The new jobs could not be filled by new employees and the Tax Administration therefore decided to relocate employees to the new offices.

Selection criteria

The Tax Administration set out a number of principles before selecting the employees to be relocated. The principles were founded on the criteria that the employees in question would be those "who worked specifically with the relevant areas", as it said in the guidelines.

Local management was asked to select 11 of its 178 employees for relocation to the new office in the western-most part of Denmark and shortlisted 36 employees who had spent between 0.4 and 117.9% of their working time in 2005 on the areas that would transfer to the new office.

Even so, the Court found that the principles collided with the Danish Anti-Discrimination Act. In one department, eight out of 13 employees were selected for relocation. And all of those eight employees were aged 50 or more, while four of those who would remain were in their 40s.

The case ended up in court because five of the eight employees were dismissed for refusing to accept the decision. The trade union argued that the selection of the employees was based on their age and claimed 18 months' pay under the Danish Anti-Discrimination Act.

Two issues were particularly important in this case: statistics on the age distribution in the regional office in general and specifically of the employees selected for relocation, and the circumstances of the selection process.

"A wrong concept"

It turned out that the average age in the regional office was 50.6. However, the average age of the shortlisted employees was 53.5. And the employees selected for relocation were between 50 and 64, with an average of 56.4.

In addition to the age gap between those selected for relocation and those remaining, three of the plaintiffs stated that relocation interviews had been organised according to age; the oldest employees first, then the youngest.

They further stated that when one of the local managers had been confronted with the fact that age is an illegal criteria in a dismissal situation, she had admitted that the selection process was based on "a wrong concept".

The local managers, though, did not recognise the statements and denied that age had been a factor and that the employees had intentionally been interviewed according to age.

The Tax Administration failed to discharge the burden of proof

The case was decided by three judges due to its precedent-setting nature. They decided that there was reason to presume that age had been a factor in the selection criteria.

The decision was based on the age distribution statistics in the department where the majority of the affected employees worked. The judges gave weight to the statements that employees had been interviewed according to age and the comment that the selection process was based on "a wrong concept".

The Tax Administration, on its part, failed to disprove discrimination. For one thing, the Court noted that it was not clear what employee data the local manager had used in the selection process. Also, the Court was not convinced that the selection of employees had been based only on the shortlist of 36 employees, among other things because the shortlist did not mention their duties.

On those grounds, the Court held that the regional office had violated the Danish Anti-Discrimination Act when it selected the five employees for relocation. When determining the award level, the Court gave weight to a number of factors, including length of service and the fact that the relocation of employees to the new office amounted to a dismissal.

One employee, who had been employed for 40 years, was awarded 18 months' pay. Two employees, who had been employed for 31 and 32 years, respectively, were awarded about 14 months' pay, while two others, who had been employed for 26 and 28 years, were awarded about 12 months' pay.

The judgment has been appealed to the High Court.

In Norrbom Vinding's view, the case is interesting because it is the first instance of an employer being found guilty of age discrimination in a dismissal situation. Norrbom Vinding also notes that the case shows: 

  • that when evidence is assessed, age distribution statistics will be given considerable weight. If there is a presumption of discrimination, it is crucial for the employer to be able to provide a detailed explanation of the criteria applied; otherwise, it will be difficult for the employer to discharge the burden of proving that age was not a factor; and
  • that the employees were awarded extraordinarily high awards given existing case law on discrimination.

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