Pursuant to Dutch law (Section 7:669 paragraph 4 of the Dutch Civil Code) employers are able to give notice of termination upon or after an employee has reached the age which has been agreed by the employer and the employee or in the event no other age is agreed upon by the employer and the employee, the state old-age pension age. In such event, Dutch law stipulates (Section 7:673 paragraph 7 under b of the Dutch Civil Code) that no (statutory) transition payment is due to those (old-age) employees. It was however doubtful whether the latest provision constituted a prohibited discrimination on ground of age. Further thereto, the Sub district Court has asked preliminary questions in this regard to the Supreme Court.
The Supreme Court has concluded that the exclusion of old-age pensioners to the statutory transition payment in relation to the termination of the employment agreement upon or after reaching the state old-age pension age does not constitute age discrimination within the meaning of the European Directive 2000/78/EC. According to the Supreme Court, the transition payment is solely reserved for employees who pertain to the labour market and who depend on performing work for their livelihood. The transition payment as such can de facto be considered as a compensation for the loss of income in relation to the termination of the employment agreement and as a substantiation of the employer’s duty of care vis-à-vis the employee who has been dismissed. Such duty of care, stated by the Supreme Court, does not exist towards employees who have reached the state old-age pension age/retirement age and thus in principle do not depend on performing work for their livelihood. In view thereof, the aim of excluding old-age pensioners from the right to a transition payment is to avoid the situation that persons who do not depend on performing work in order to provide for their livelihood are in fact entitled to a monetary compensation.
In conclusion: The statutory basis that currently provides for the exclusion of old-pensioners from the transition payment is legitimate and does not constitute age discrimination. Hence, employers are able to terminate an employment agreement with pensionable employees in a natural way, without any substantive tests and costs.