The Employment Equality Framework Directive [1] implements standards of equal treatment and non-discrimination in EU employment law. Article 2 prohibits direct or indirect discrimination in the course of employment by reference to any of the characteristics set out in Article 1 (religion, disability, age and sexual orientation).

However, Article 6 sets out two defences which can be used to justify discrimination on grounds of age:

  • Article 6(1) – In the context of national law, differences in treatment on grounds of age will not constitution discrimination if the differences are objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.
  • Article 6(2) – Age-related criteria can also be used for the purposes of admission or entitlement to retirement or invalidity benefits.

In the case at hand, the complainant, Mrs Kristenden, had joined the Danish company Experian in November 2007 at the age of 29. All employees were enrolled into the firm’s DC scheme after nine months of service. Contribution rates under the pension scheme varied according to the employee’s age:

  • Under 35 years of age: employee contribution 3%, employer contribution 6%
  • Aged between 35 and 44: employee contribution 4%, employer contribution 8%
  • Over 45 years of age: employee contribution 5%, employer contribution 10%

Following her resignation from the company in October 2008, HK Danmark represented Mrs Kristenden in a claim against Experian on the basis that the scheme rules were unlawful due to age discrimination.

The European Court acknowledged that employees were being treated differently under the pension scheme on the basis of their age and that, prima facie, this amounted to age discrimination. It also stated that, although fixed ages for the acquisition of certain benefits, such as admission to a pension scheme, was permissible in accordance with the Article 6(2) justification, different levels of DC payment contributions did not fall within the scope of this exception as the provision was to be interpreted narrowly.

Although the Article 6(2) justification failed, Experian were successful in employing the Article 6(1) justification. They argued that higher contributions for older members were intended to allow workers entering into employment later in life to build up a reasonable amount of savings before retirement whilst allowing the company to cover the increased risk of death, incapacity and serious illness as these employees grew older. By the same token, they argued that lower pension contributions for younger employees were intended to impose less of a financial burden on these members by allowing them a greater proportion of their income at their immediate disposal.

The Court held that the age-related increase in contributions was a proportionate means of allowing these legitimate aims to be achieved. They also made it clear that Member States would enjoy a broad margin of discretion when it came to defining the measures capable of achieving a particular aim in terms of social, employment and labour market policy.

In accordance with the principle established through Fuchs and Köhler v Land Hessen [2], “a measure is appropriate for ensuring attainment of the aims pursued only if it genuinely reflects a concern to attain them in a consistent and systematic manner.” By the same token, the measure must not go beyond that which is necessary to achieve the aim. These requirements will fall to the national courts to determine. When making their determination, the national courts should consider whether the detriment resulting from the difference in treatment is outweighed by the benefits of the pension scheme.

The outcome of this case will be reassuring to UK pension scheme providers as the Equality Act (Age Exceptions for Pension Schemes) Order 2010 legitimises different rates of pension scheme contributions for members of different ages, provided that the aim of the different treatment is to equalise the ultimate pension benefit of the members [3].

However, this judgment could elicit concern in respect of the CJEU’s strict interpretation of Article 6(2) as UK law gives rise to a number of age discrimination exceptions which derive from a generous interpretation of this provision. It remains to be seen if these exceptions fall within Article 6(2) were they tested before the European Court.