The Supreme Court recently ruled(1) that a retirement policy which makes redundant all employees who are entitled to early retirement is discriminatory and, as a direct form of age discrimination, cannot be justified by claiming that such a policy amounts to a socially compatible form of redundancy.


The plaintiff, a technician who had been employed with the Austrian public broadcaster since 1994, was terminated effective as of August 31 2012. The plaintiff had successfully challenged an earlier termination, and challenged this second termination on the basis that it was socially unfair and discriminatory. He claimed that the defendant had no valid business or performance-related reasons to terminate him, but rather that the defendant had merely invoked its retirement policy, which permitted the termination of employees who had acquired a statutory entitlement to an early retirement pension. Under this retirement policy, the termination of employment relationships was inextricably tied to age and therefore amounted to direct age discrimination. Direct age discrimination cannot be justified by cost-cutting measures.

The defendant essentially argued that it had accumulated losses in previous years and was only recently able to make a profit because it was afforded a federal grant. This federal subsidy was subject to the statutory condition that the defendant reduce its headcount and personnel costs. Based on those conditions, the defendant adopted a general policy that allowed it to terminate employees who were entitled to an early retirement pension. These redundancies paid due regard to the social circumstances of affected employees. According to the defendant, the redundancy measures were also in the public interest, because they ensured that public broadcasting could be maintained.


The labour court upheld the complaint and ruled that the plaintiff's termination was invalid because it amounted to direct age discrimination.

The appeal court lifted that decision and remitted the case back to the labour court for a new decision following supplementary proceedings. According to the appeal court, mere financial deliberations cannot justify age discrimination, but broader economic objectives may. According to the appeal court, the retirement policy in the case at hand was rooted in the statutory framework specifically enacted for the defendant in order to reduce its personnel costs. Under the circumstances it therefore appeared legitimate to make redundant those employees who already had an entitlement to a statutory early retirement pension. For those employees, termination was less of a social hardship than for younger employees who relied on their working income as a means of subsistence. However, this rationale holds true only if the economic situation of the defendant specifically required that the plaintiff be made redundant, because only then can it be assessed whether the defendant's selection was based on valid social criteria. Since the labour court gathered no evidence nor presented any findings on this issue, the appeal court ruled that the case had to be remitted to the lower court.

The plaintiff appealed the appeal court decision and requested that the Supreme Court decide on the merits, reinstating the first-instance decision.

The Supreme Court re-established the labour court's decision. According to the Supreme Court, although the defendant's retirement policy paid due regard to social safeguards, those safeguards specifically referred to certain forms of statutory retirement provisions, requiring employees to be at least 62 years old. Consequently, the defendant's retirement policy was conditional on an employee's age and therefore amounted to direct age discrimination.

In line with Article 6 of the EU Employment Equality Framework Directive (2000/78/EC), the Equal Treatment Act provides that direct discrimination can also be justified if certain criteria are met. Following the directive's language, the act provides that differences in treatment on grounds of age do not constitute discrimination if they are objectively and reasonably justified by a legitimate aim and if the means of achieving that aim are appropriate and necessary. According to the Supreme Court, this rule also applies with respect to general measures adopted by an employer (as was the case with the defendant's retirement policy).

However, according to the Supreme Court, whether following the social policy objectives of the act or the directive, employees with early pension entitlements cannot be terminated without considering the specific circumstances. Although it can be said that reaching full retirement age and receiving a corresponding pension entitlement is part of a social policy that seeks to facilitate access to employment for younger employees, the same cannot be said with respect to the system of early retirement. This has to do with recent legislative actions, which have sought to abolish any form of early retirement in Austria, resulting in the gradual phasing out of early retirement schemes and deductions in pension payments for retirees under such schemes. The aim of this legislation is to increase the de facto age of retirement and gradually align the different retirement systems.

Citing case law from the European Court of Justice, the Supreme Court also invoked the Charter of Fundamental Rights of the European Union, according to which everyone has the right to engage in work and pursue a freely chosen or accepted occupation. This right would be curtailed if a retirement policy like the one employed by the defendant was allowed to stand.

The Supreme Court therefore concluded that retirement policies tied to early pension entitlements and cost-cutting – but not offering a broader social policy rationale – run counter to existing policy deliberations in Austria that are aimed at increasing the factual retirement age. Consequently, such a retirement policy cannot constitute a sufficient justification for age discrimination. Cost-related redundancy measures alone cannot justify age discrimination.

However, the Supreme Court hinted that another social policy objective might have given rise to a valid defence. It is an accepted principle under Austrian employment law that in case of redundancies, an employer should consider the social hardship associated with redundancy measures and terminate only those employees who are least affected by such measures. The defendant failed this test because it asserted that its policy was aimed solely at making the most expensive employees redundant, without considering the social setting of the case – in particular, without considering younger employees for redundancies who might be in a better position to find other gainful employment. The Supreme Court therefore concluded that the defendant's redundancy policy, although generally a viable means of achieving the social selection required in connection with redundancy measures, was neither appropriate nor necessary in the given circumstances and thus could not justify the age discrimination faced by the plaintiff.


The Supreme Court sought to clarify conflicting issues based on the dual system of age discrimination and social selection in relation to redundancy measures. The decision indicates that the requirement to consider social selection and weigh social hardship – which was developed for cases of socially unjustified dismissals – can also qualify as a justification for age discrimination. However, this requires that employers specifically be able to show how such a social selection plays out and why specific terminations foster broader social goals of access to employment. A general retirement policy not supported by accepted social policy goals and solely resulting in cost effectiveness cannot pass this test.

For further information on this topic please contact Jakob Widner at Graf & Pitkowitz Rechtsanwälte GmbH by telephone (+431 401 17 0) or email ([email protected]). The Graf & Pitkowitz website can be accessed at www.gpp.at.


(1) OGH August 18 2016, 9 ObA 106/15a.