In Ingeniorforeningen in Danmark v Region Syddanmark (C-499/08), the European Court of Justice (ECJ) investigated whether a Danish law excluding workers who are entitled to an old age pension from a severance allowance was discriminatory on grounds of age.

Danish law grants a severance allowance to salaried workers who have worked for the same undertaking for at least 12 years. However, that payment was not available to workers who, on termination of the employment relationship, may draw an old age pension under an occupational pension scheme, even if the person concerned intends to continue to work.

Øle Andersen had worked for the Region of Southern Denmark from 1979 to 2006 when he was dismissed at the age of 63. He did not wish to retire at this time, and registered as a job seeker. Mr Andersen also attempted to claim the severance allowance but was unsuccessful as he was entitled to draw on his pension. His trade union took a case on his behalf claiming the legislation was discriminatory and contrary to EU law.

On a preliminary reference, the ECJ held that the legislation operated a difference of treatment which is based directly on grounds of age as it prevented certain workers claiming an entitlement to a severance allowance on the grounds that they are entitled to an old age pension.

The ECJ then considered whether or not that difference in treatment was capable of justification. The Court acknowledged that the severance allowance aims to facilitate the move to new employment for workers who have a long period of service with one employer and who may find it more difficult to get new employment. The ECJ also noted that the restriction is based on the general rule that persons entitled to a pension leave the labour market and that the restriction ensures that such persons do not receive a double payment of the severance allowance and an old age pension.

The ECJ held that the Equal Treatment Framework Directive applied in this situation and that this provision could not be justified as a proportionate means to achieve a legitimate aim. Although the Danish Government had a legitimate aim of preventing older workers from receiving both a severance payment and a pension, the law took no account of those workers who, although they were of pensionable age, did not wish to retire. This made it difficult for such workers to exercise their right to work as they may be forced to accept a lower pension than they would otherwise have got if they had continued working.

This case illustrates that while the Member States enjoy a broad discretion in the choice of measures capable of achieving their objectives in the field of social and employment policy, as outlined in Palacios de la villa (C 411/05), that discretion cannot have the effect of frustrating the implementation of the principle of non-discrimination on grounds of age.