Background

Under European and UK law, it is generally unlawful to discriminate between employees on the grounds of age. However, this is not the case if the discrimination can be objectively and reasonably justified by a legitimate aim and the means of achieving the aim are appropriate and necessary (or, under UK law, proportionate) – so-called objective justification. The aim must reflect public policy objectives and not just reasons particular to an employer. An example is staff retention and workforce planning between different generations of employees.

The Court of Justice of the European Union (CJEU) was asked to rule on whether a pay practice for Danish civil servants could be objectively justified. It provided that civil servants dismissed because their post had ended should receive up to three years' pay so they remained free for work if other posts became available. However, the practice did not extend to civil servants who had reached pension age (65).

The judgment

The Danish Government claimed the legitimate aim of its pay practice was to ensure the availability of civil servants for new posts rather than having them return to the labour market and lose their expertise. It also ensured their independence by protecting them from personal and political pressures. Those eligible for a pension were not eligible for availability pay as they would be unlikely to return to work and had the protection of income from their pension.

The CJEU accepted that the aims of the policy were legitimate but decided that the way the policy operated went further than was necessary to achieve the Government's aims. This was because it deprived civil servants had reached age 65 but who wished to remain in the labour market of availability pay, forcing them to draw their pension. It could also force civil servants to accept a pension that was lower than the pension they would have if they were to re-enter employment and build up extra pension. Less restrictive and equally suitable measures could achieve the aims. These might include providing availability pay where a person had temporarily waived his/her right to draw pension in order to continue in work and sanctions where the person refused to take up a suitable alternative post

Comment

The ruling shows the difficulty of justifying age discriminatory pay practices by treating employees who are eligible to draw a pension differently from those who are not. Even where there are good policy grounds for treating employees differently (something in itself hard to prove), for a discriminatory approach to be lawful, employers will need to operate their policy in a way that discriminates as little as possible between employees of different ages. In practice, age discriminatory policies are unpopular with employees and employers will need to consider carefully whether they are prepared to spend time and money fighting an employee challenge.

Case: Dansk Jurist- og Økonomforbund (C-546/11)