August 2007

Kliemt & Vollstadt

www.kliemt.de

Age discrimination law until 17 August 2006

Until and including 17 August 2006, there was no legislation in Germany that expressly prohibited and imposed sanctions on age discrimination.

· Article 3 (3) of the Basic Law (Grundgesetz, GG) contains a special principle of equality and lists a number of prohibitions of discrimination. These apply inter alia to discrimination on the grounds of sex, race and belief. Age, however, is not mentioned.

· The Works Constitution Act (Betriebsverfassungsgesetz, BetrVG) contains provisions intended to protect older employees (Arbeitnehmer). Under section 75 (1) sentence 2 BetrVG (version until 17 August 2006), the employer (Arbeitgeber) and the works council (Betriebsrat) must ensure that employees are not treated unequally because they are outside certain age brackets. Under section 80 (1) no. 6 BetrVG, the works council is to encourage the employment of older persons in the company (Unternehmen). However, these provisions only apply if a works council is in place. In addition, they contain no express prohibition and no sanctions in the case of violation.

· Consequently, until now any statutory protection against age discrimination in German law has been indirect, above all under the following statutes:

o The Protection against Dismissals Act (Kündigungsschutzgesetz, KSchG) provides that dismissals must be reviewed with regard to their social justification.

o The Act on Part-Time Work and Fixed-Term Employment Contracts (Teilzeit- und Befristungsgesetz, TzBfG) provides that there must be an objective reason for time limits to be imposed on employment contracts.

o The Improvement of Occupational Pension Schemes Act (Gesetz zur Verbesserung der betrieblichen Altersversorgung, BetrAVG) states the principle of equal treatment, section 1 b (1) sentence 4 BetrAVG.

· In addition to this, there is a certain protection against age discrimination in all areas as a result of the principle of equal treatment in employment law. This principle was developed by the labour courts from Article 3 (1) of the Basic Law. The principle of equal treatment in employment law is violated if a group of employees is treated differently in comparison with another group despite the fact that there are no differences between the two groups of such a nature and such weight as to justify the unequal treatment (see decision of the Federal Labour Court (Bundesarbeitsgericht) of 19 March 2002 – 3 AZR 229/01, unpublished).

Since 18 August 2006: Express prohibition of age discrimination

There is now express legislation in Germany that prohibits age discrimination and also subjects it to sanctions.

On 18 August 2006, the General Equal Treatment Act (Allgemeine Gleichbehandlungsgesetz, AGG) entered into force. This Act transposes into national law four European directives, including Council Directive 2000/78/EC establishing a general framework for equal treatment in employment and occupation of 27 November 2000.

The General Equal Treatment Act now – in addition to a large number of other prohibitions of discrimination, such as, for example, sex, race, religion, disability – contains an explicit prohibition of age discrimination.

The following is a brief overview of the provisions on age discrimination in the General Equal Treatment Act:

Prohibition of discrimination (Benachteiligung)/harassment (Belästigung) on grounds of age

Section 7 (1) in conjunction with section 1 AGG expressly provides that employed persons (Beschäftigte) may not be treated unfavourably on grounds of age.

· Age means any age, that is, the provision also applies to young people.

· The Act protects employees (Arbeitnehmer), trainees (Auszubildende) and persons of similar status to employees (arbeitnehmerähnliche Personen), and also applicants for vacancies (Bewerber) and former employees. In addition, restricted protection also extends to directors (Geschäftsführer) and board members (Vorstandsmitglieder).

· The prohibition applies in the first instance to the employer, but it also applies to other employees and third parties. The employer must also take suitable measures to prevent unfavourable treatment by other employees and third parties, for example customers.

· The prohibition applies to all employers, regardless of the size of the company.

· The concept of discrimination comprises direct discrimination (direct violation), indirect discrimination (concealed violation), and harassment (continuing violation), section 3 (1) to (3) AGG.

Grounds of justification

Under the General Equal Treatment Act, unfavourable treatment is admissible only if it is objectively justified. This only applies to direct and indirect unfavourable treatment. If the unfavourable treatment reaches the level of harassment, no justification is possible.

Grounds of justification are set out in sections 8 and 10 AGG. Section 8 contains a general ground of justification for all prohibitions of discrimination. Section 10 AGG is narrower in application and contains grounds of justification specifically related to different treatment on account of age. This section provides that unequal treatment on grounds of age is admissible if it is

a) objective and

b) reasonable and

c) justified by a legitimate goal, and

d) the means to achieve this goal are reasonable and necessary.

This applies both to individual employment provisions (e.g. employment contracts (Arbeitsverträge)) and to collective employment provisions (e.g. works agreements (Betriebsvereinbarungen), collective bargaining agreements (Tarifverträge)). Section 10 AGG also lists, by way of example, the cases in which there is a legitimate goal for unequal treatment.

Legal consequences

The General Equal Treatment Act provides more than one legal consequence for a violation of the prohibition of age discrimination.

a) Ineffectiveness

· Provisions in agreements that violate the prohibition of discrimination are ineffective, section 7 (2) AGG.

· Other legal transactions are also void, section 7 (1) AGG in conjunction with section 134 Civil Code (Bürgerliches Gesetzbuch, BGB).

b) Right to refuse performance

If the discrimination reaches the level of harassment, the person affected is entitled to cease his or her work without loss of pay if the employer takes no measures or takes measures that are plainly unsuitable to end the harassment, section 14 AGG.

c) Right of appeal in the case of discrimination

Employees who feel that they are unfavourably treated have a right of appeal. The employer must therefore introduce a complaints unit, section 13 AGG.

d) Damages (Schadensersatz)

A violation of the prohibition of discrimination may give the employee claims for damages:

· The employer must compensate the employee for the damage arising from the violation if the employer is responsible for the breach of duty, section 15 (1) AGG.

· If the employer merely carries out a works agreement or a collective bargaining agreement which violates the prohibition, the employer is liable to pay damages only if the employer violates the prohibition of discrimination intentionally (vorsätzlich) or with gross negligence (grob fahrlässig), section 15 (3) AGG.

· If an applicant is not given employment, the damages are limited to three months’ pay if the applicant would not have been employed even if the selection had been made without unequal treatment, section 15 (2) sentence 2 AGG.

· There is no claim to a contract of employment or to promotion, section 15 (6) AGG.

e) Prohibition of victimisation (Maßregelungsverbot)

Finally, the employer may not discriminate employees who assert their rights under the General Equal Treatment Act, section 16 (1) AGG.

Time limits

The employee must assert damages claims in writing within a period of two months, section 15 (4) AGG. Different periods may be agreed in collective bargaining agreements. Following this, the employee must institute proceedings within three months after asserting the claim in writing, section 61b (1) Labour Court Act (Arbeitsgerichtsgesetz, ArbGG).

Duties of the Employer

The employer has a duty to take the necessary measures to ensure protection against discrimination, section 12 AGG. These include but are not limited to announcing the General Equal Treatment Act in the enterprise, training the employees and imposing sanctions on employees who violate the prohibition of discrimination.

Areas of age discrimination relevant in practice

1. Age discrimination on the creation of an employment relationship

a) Job advertisements

The General Equal Treatment Act introduces appreciable changes to the previous legal situation in Germany with regard to advertising job vacancies. Section 11 AGG expressly provides that a vacancy may not be advertised in violation of section 7 (1) AGG. This means that job advertisements must be expressed as neutrally as possible and care must now also be taken with regard to age data.

Examples of violations:

“Company A is looking for a secretary aged 30 or lower.”

“Company B seeks to recruit a dynamic young man”.

“Paralegal (female) aged 40 or over needed”.

But even after the entry into force of the General Equal Treatment Act, reasonable statements of minimum requirements with regard to age and experience are likely to be admissible, provided this is necessary for the job, section 10 (1) no. 2 AGG.

Example: “at least five years’ job experience for personnel managers”

b) Selection procedure

The prohibition of discrimination must also now be taken into account in the selection procedure for job recruitment. It is advisable to review existing personnel questionnaires to eliminate questions displaying age discrimination.

Until now, there have been no problems associated with asking an applicant’s age. Following the entry into force of the General Equal Treatment Act, the situation has changed. Direct questions as to age should now be avoided as far as possible, in order to avoid damages claims. The same applies to the express request for application documents containing a photograph and stating the applicant’s age. The age can in any case normally be determined from certificates or from the curriculum vitae.

In the selection procedure too, all indications suggesting age discrimination should be avoided. An example of an indication would be sorting out all the applications that do not state the applicant’s age. The same applies if applicants above a particular age are rejected. As a basic principle, personnel decisions should avoid everything that suggests discrimination. In addition, personnel decisions must be carefully documented.

c) Age limits in employment contracts

In Germany, there is no legislation providing that an employment contract ends when the employee reaches a particular age. Even when the employee reaches retirement age, notice of termination of employment must be given or the employment contract must be terminated by mutual agreement. It is therefore customary for employment contracts to be limited in advance to a particular age – usually the standard retirement age under the statutory pension scheme (gesetzliche Rentenversicherung), which at present is still the age of sixty-five. However, the Act on Part-Time Work and Fixed-Term Employment Contracts requires an objective reason for limiting the employment contract to a particular age (section 14 (1) TzBfG).

To date, the Federal Labour Court has recognised collectively agreed age limits for particular occupation groups, for example pilots, insofar as they serve to protect the life and health of third parties. For example, the Federal Labour Court has held that a collectively agreed age limit of 60 is admissible for pilots (see Federal Labour Court decision of 21 July 2004 – 7 AZR 589/03, BAG Report 2005, 204).

The Federal Labour Court has also recognised agreements in individual contracts by which the employment relationship ends when the employee reaches the statutory retirement age. At all events, this applies if the employee, under the terms of the contract and with regard to the duration of the contract, is able to qualify for a (standard) statutory old-age pension or has already qualified for one (see Federal Labour Court decision of 27 July 2005 – 7 AZR 443/04, Neue Zeitschrift für Arbeitsrecht 2006, 37).

Section 10 (5) AGG now expressly provides that an agreement that the employment relationship is to end without notice on a date on which the employee is entitled to apply for an old-age pension is not inadmissible unfavourable treatment under the General Equal Treatment Act. However, it remains open whether this is to apply only to the full pension claim or also to the reduced pension claim when the pension is drawn at an earlier date, section 36 of the Social Security Code VI (Sozialgesetzbuch VI, SGB VI).

In the case of persons covered by the statutory pension scheme, there are also special rules governing agreements entered into with reference to an age below sixty-five. Such agreements are valid only if they are entered into within the last three years before the intended termination or if they have been confirmed by the employee. Failing this, they are deemed to have been entered into with reference to the age of sixty-five (section 41 sentence 2 SGB VI).

d) Fixed-term employment contracts with older employees

Under section 14 (3) sentence 1 and 4 TzBfG, no objective reason is necessary to impose a time limit on the employment relationship if the employee has reached the age of fifty-two at the commencement of the fixed-term employment contract. This provision continues in effect until 31 December 2006, section 14 (3) sentence 4 TzBfG. From 1 January 2007, the age limit will be raised to fifty-eight, section 14 (3) sentence 1 TzBfG.

But agreements on time limits must on no account be based on this provision. Existing agreements must also be reviewed: in the year 2005, the European Court of Justice held that section 14 (3) sentence 4 TzBfG violates Directive 2000/87/EC and also violates the prohibition of age discrimination arising from fundamental principles of Community law, and that it may therefore not be applied by national courts (see ECJ decision of 22 November 2005 – C-144/04, Mangold, Der Betriebs-Berater 2005, 2748).

The Federal Labour Court therefore no longer applies section 14 (3) sentence 4 TzBfG. As a result of this, the agreement on a time limit is ineffective unless at the same time there is an objective reason under section 14 (1) TzBfG (see Federal Labour Court decision of 26 April 2006 – 7 AZR 500/04, Der Betriebs-Berater 2006, 1858).

Agreements on time limits that were made before the ECJ Mangold decision are also ineffective. There is no need to protect public confidence (see Federal Labour Court decision of 26 April 2006 – 7 AZR 500/04, Der Betriebs-Berater 2006, 1858).

The consequences of the decision in Mangold are not to be underestimated: if the agreement on a time limit for the employment contract is ineffective, there is an employment contract for an indefinite period of time under section 16 TzBfG. The only requirement is that the employee takes legal action within three weeks after the agreed date of termination, section 17 TzBfG.

2. Age discrimination during the contract of employment

a) Payment by age

Section 2 (1) no. 2 in conjunction with section 1 AGG now expressly provides that age discrimination is inadmissible. This applies in relation to the conditions of employment and work, including pay.

In the light of the unequivocal wording, it must be doubted whether pay scales dependent solely on age, such as are found above all in collective pay agreements, are still admissible. Existing provisions should therefore also be reviewed in this connection for potential age discrimination.

b) Reduction in working hours and extension of vacation

Such provisions serve as a general rule to maintain the operative capacity of older employees and take account of their increased need for recreation. Unequal treatment here therefore serves a legitimate purpose, that is, the protection of these employees. There is more than one reason to believe that such provisions are still admissible, for section 10 no. 1 AGG expressly authorises the protection of older employees.

c) Promotion (Beförderung)

In connection with promotion, the remarks made above on the selection procedure when filling job vacancies apply. The criteria for promotion should be free of the elements of discrimination of the General Equal Treatment Act such as age and they should be drawn up on the basis of sound reasoning. In addition, the decision should be adequately documented, in order to avoid later damages claims.

3. Age discrimination on the termination of an employment relationship

a) General

Within the scope of the Protection against Dismissals Act, age in itself does not in principle constitute a reason that might socially justify termination of employment, section 1 (2) KSchG.

Section 41 sentence 1 SGB VI also makes it clear that the claim of an employee to a pension is not a ground for dismissal. However, section 41 sentence 1 SGB VI only applies to employees who are covered by the statutory pension scheme and to whom the Protection against Dismissals Act applies.

Outside the scope of the Protection against Dismissals Act, a dismissal is ineffective only if it is contrary to public policy (sittenwidrig) (section 138 BGB) or contrary to good faith (treuwidrig) (Section 242 BGB).

b) Effectiveness of the provisions of the General Equal Treatment Act

The General Equal Treatment Act creates confusion rather than simplifying matters in the question of age discrimination in connection with dismissals.

Under section 2 (4) AGG, dismissals are to be governed solely by the provisions on general and special protection against dismissal. However, the Act contains some provisions that contradict section 2 (4) AGG, for under section 6 (1) no. 2 AGG, the termination of the employment relationship is also within the scope of the General Equal Treatment Act. Section 10 nos. 6 and 7 AGG contains express provisions for dismissals.

It remains to be seen whether section 2 (4) AGG will continue in force. This is questionable above all because the provision may be in contravention of European law. At all events, the employees not within the scope of the Protection Against Dismissals Act are probably insufficiently protected against discrimination in connection with dismissal by this provision.

c) Selection for redundancy on social criteria (Sozialauswahl)

In the case of redundancy (betriebsbedingte Kündigung), there must be selection on social criteria if there is more than one comparable employee and not all of them are to be dismissed, section 1 (3) sentence 1 KSchG. When the selection for redundancy on social criteria is made, under section 1 (3) sentence 1 KSchG length of employment, age, obligations to maintain and any severe disability must be taken into account. Taking age into account is discrimination against younger employees.

Under section 10 no. 6 AGG, taking age into account in connection with selection on social criteria on the occasion of a redundancy in the meaning of section 1 KSchG is still admissible. This applies at all events insofar as age is not given general precedence over other selection criteria. Instead, the special features of the individual case and the individual differences between the comparable employees, in particular their prospects in the labour market, must be the decisive factors.

d) Prohibitions of dismissal

Prohibitions of dismissal for older employees with a certain length of employment are frequently encountered in works agreements and above all in collective agreements. These prohibitions of dismissal also constitute discrimination of younger employees. They are to remain admissible under the General Equal Treatment Act. Section 10 no. 7 AGG provides that such provisions are a legitimate goal. At all events, this applies insofar as the protection against dismissal of other employees in connection with social selection under section 1 (3) is not reduced by a serious error.

e) Severance payments (Abfindungen) under a redundancy scheme (Sozialplan)

In the case of redundancy schemes, depending on their wording, age has an effect either to the advantage or to the disadvantage of older employees. Several payments are often increased according to increasing age and/or length of employment. In addition, there are provisions which disadvantage older employees in the amount of severance payments (Abfindungszahlungen).

Section 10 no. 8 AGG defines the conditions under which payments in redundancy schemes may still be admissible. It provides that both scales by age or length of employment and the exclusion of employees who are financially provided for, for example because they are entitled to receive a pension after drawing unemployment benefit, are a legitimate goal for unfavourable treatment.

IV. Conclusion

· Since the entry into force of the General Equal Treatment Act on 18 August 2006, there have been express legislation prohibiting and imposing sanctions on age discrimination.

· Employers must be prepared for an increasing inclination of employees to defend themselves against age discrimination. Here, inadmissible age discrimination may have legal consequences including, without limitation, the following:

o the ineffectiveness of agreements and other legal transactions

o the right of employees to refuse performance

o employee claims to damages

· When an employment relationship is created, account should be taken of age discrimination above all in the following areas:

o job advertisements

o selection procedure for job recruitment

o age limits in employment contracts

o time limits in employment contracts with older employees

· In the course of the employment relationship, the question as to the existence of age discrimination is relevant above all in connection with

o payment arrangements

o reduction in working hours and extension of vacation for older employees and

o promotion.

· When dismissals are effected, account should be taken of age discrimination above all in connection with the following topics:

o reason for termination

o selection for redundancy on social criteria

o prohibitions of dismissal for older employees

o severance payments under a redundancy scheme

The Anti-Discrimination Tribunal of Queensland upheld complaints by eight woman over the age of 35 that they had suffered age discrimination when they applied for, but were refused, employment by Virgin Blue Airlines.

Click here for a fuller report on this case.

Spanish retirement challenge

The UK is not the only European country to spark controversy over compulsory retirement ages. Spain is facing a challenge in the European Court of Justice (ECJ) over retirement laws.

The law in question allows collective agreements to include clauses for compulsory retirement. These clauses are lawful where the only conditions for compulsory retirement are that the employee has reached normal retirement age and fulfils social security requirements for entitlement to draw a pension.

The Spanish Court has referred the issue to the ECJ asking the following questions:

• Does the principle of equal treatment relating to age, set out in the EC Treaty and the Framework Directive, prohibit such a law?
• If the law is prohibited, does this require the Spanish Court to disapply the provision of the law which makes the compulsory retirement clauses lawful?

The case was lodged with the ECJ in November 2005, but no decision has yet been published. If the ECJ rules that the Spanish law contravenes the Directive, this could have significant consequences for the UK’s default retirement age.

Félix Palacios de la Villa v Cortefiel Servicios SA, José María Sanz Coral and Martin Tebar Less (ECJ C-411/05)

Unsuccessful challenge to Canadian mandatory retirement laws

Two university employees were made to retire at age 65 under a mandatory retirement policy. They claimed that the policy was discriminatory on the grounds of age and therefore unlawful under section 15 of the Canadian Charter of Rights.

Their claim was rejected on the basis that the Charter, which is part of the Canadian constitution, only applies to government laws and actions, not to agreements between private individuals. It was found not to apply to the employer’s mandatory retirement policy, since that was a private matter.

As the Charter is part of the constitution, all other Canadian laws must be consistent with it. The employees in this case also argued that the Human Rights Act, which limits employment related age discrimination claims to those aged between 45 and 65, was contrary to the Charter. This claim was also unsuccessful (after appeal), on the basis that although the provision in the Human Rights Act does discriminate on the grounds of age that discrimination is justified under section 1 of the Charter.

Connell & Harrison v The University of British Columbia [1990]. Click here for a link to the judgment.

European Union member states have until December 2006 to introduce age discrimination laws. Other countries have had age discrimination legislation from many years.

Click the links on the left to read an outline from the leading employment law firms from the ius laboris alliance (www.iuslaboris.com) of age discrimination laws in their jurisdictions.

Hungary has implemented the following directives with the Act CXXV of 2003 on equal treatment and the promotion of equal opportunities:

• Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions
• Council Directive 79/7/EEC of 19 December 1978 on the progressive implementation of the principle of equal treatment for men and women in matters of social security
• Council Directive 86/378/EEC of 24 July 1986 on the implementation of the principle of equal treatment for men and women in occupational social security schemes
• Council Directive 86/613/EEC of 11 December 1986 on the application of the principle of equal treatment between men and women engaged in an activity, including agriculture, in a self-employed capacity, and on the protection of self-employed women during pregnancy and motherhood
• Council Directive 97/80/EC of 15 December 1997 on the burden of proof in cases of discrimination based on sex
• Council Directive 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin
• Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation

There are no other regulations in Hungary in force.

The Equal Treatment Authority (hereinafter: the Authority) was established by Act CXXV of 2003 on equal treatment and the promotion of equal opportunities as set in the Government Decree No 362/2004 (XII.26.). The Authority started its work on the 1st February 2005. It is an independent organisation, which was set up by the Hungarian Government to receive and deal with individual and public complaints about unequal treatment and to implement the principles of equality and non discrimination.

Who’s covered?

The principle of equal treatment must be observed by:

a) the Hungarian State,

b) local and minority governments and all bodies thereof,

c) organisations exercising powers as authorities,

d) armed forces and policing bodies,

e) public foundations, public bodies,

f) organisations performing public services,

g) institutions of elementary and higher education (hereinafter collectively: educational institutions),

h) persons and institutions providing social care and child protection services, and child welfare service,

i) museums, libraries, elementary educational institutions,

j) voluntary mutual insurance funds, private pension funds,

k) entities providing health care,

l) parties, and

m) budgetary organs that do not belong to points a)-l)

in the course of establishing their relationships, in their relationships, in the course of their procedures and measures.

What enforcements/remedies do exist?

Each person has right to lodge a complaint to the Authority about the violation of equal rights.

What decisions are made by the Authority?

If the Authority has established that the principles of equal treatment have been violated, they may

• order that the situation constituting the violation of law should be stopped,
• prohibit the continuation of the violation of law
• publish its decision establishing the violation of law
• impose a fine from fifty thousand to six million HUF

Damage can only be awarded by the court. To get compensation the victim has to sue the violator in the court.

How common are claims?

During the one year of its operation the Authority received about 500 complaints, the majority of them were ethnic discrimination. The equal rights of people were mostly abused in employment. The Authority has established the violation of equal treatment in 9 cases, the parties made an agreement with the help of the Authority in 6 cases, in 3 cases a fine was imposed against the disriminator, in 125 cases no discrimination was established and in 24 cases the Authority dissolved the proceedings, partly because the client withdrew the complaints, partly because paralell with the Authority’s procedure the case was at court on the same ground.

The claims are not common in Hungary, employees are not aware of their rights.

What claims are most common and what are trickiest issues for employers?

The most common cases of discrimination are cases of national or ethnic belonging, there are a few cases of age discrimination. Most of the claims are brought by old age people who were not hired or dismissed because of their age. Frequently also in job advertisements the employers request employees under a certain age.

Are there any specific exceptions in your laws?

T he provisions of the Act on Equal treatment do not apply to family and private life and relationships directly connected with the activities of the religious life of the Churches, relationships of parties except for the political or other opinion, relationships between the members of legal entities and organisations without a legal entity, relationship related to membership, except for the establishment of membership.

Retirement ages

Although the employer can never force an employee to retire the Hungarian Labour Code considers the employee who has reached the age necessary for the retirement (generally 62 years old) and has the necessary service period (generally 20 years) a retired person, even if the employee is not officially a retired person. Different rules are applicable for retired employees, as they can be dismissed without any justification and there are not entitled to severance payment.

Interesting cases

1. On 15th December 2003 a civil servant of over 50 was made redundant because the Government made a decision about cuts in civil service. The Authority has to dismiss the case, because the Act of the principle of equal treatment was not in force yet.
2. The mayor office of a village dismissed a civil servant with a working capacity reduced by 67 percent but before that time they employed an other civil servant with working capacity by 50 percent. The claimant turned both to the Authority and the Labour Court at the same time asking them to statue that he was a victim of violation of equal treatment, because the employer’s reason for his dismissal was that he was given pension. The Authority had to dismiss the case because the discrimination was being investigated by the Labour Court.
3. The Authority established the violation of the principle of equal treatment and imposed a fine of Huf 450.000 on a travel agency employed 4 new people who were about 30. The reason for the violation of equal treatment was the age of the dismissed people.
4. A regional branch of a state financial institution’s civil servants turned to the Authority with their complaint because only middle aged graduated civil servants were the victims of the lay-offs in 2004. The clients also objected to the way the chief administrator of the supervisory authority wanted to cut the number of the staff: in a circular sent to the local authorities 90 % of HUF 164.000 was set as the minimal saving per capita stemming from the reduction. Defining this sum the graduate civil servants of the staff became the discriminated group. The Authority examined the principle of lay-offs and saw that the average sum was set in the circular with which all categories of civil servants could be affected. This is why the complaint was dismissed. It was also investigated if certain age groups were discriminated in the lay-offs. We examined the ages of the people made redundant. The data did not show any sign of discrimination. Although all the dismissed civil servants were over 31 the proportion of people between 31 and 60 was 82,9 % in the staff. The case was dismissed as baseless.

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Overview

In the U.S., federal law prohibits age discrimination in the workplace. Under the Age Discrimination in Employment Act (ADEA), it is unlawful to discriminate against an employee or job applicant on the basis of age with respect to any term, condition, or privilege of employment (e.g., hiring, firing, promotion, layoff, compensation or benefits, job assignments, training). Some courts have extended the ADEA’s protections to retired employees (challenging discrimination with respect to retiree benefits). Employers are also prohibited from including age preferences, limitations or specifications in job notices or advertisements. An employer may not retaliate against an individual for opposing employment practices that are discriminatory or for filing an age discrimination charge. The ADEA also has been construed to prohibit harassment based on one’s age.

To establish a violation under the ADEA, the employer/job applicant must be able to prove that his or her age was a determining factor in the employer’s actions. Evidence of age discrimination can take one of two forms: 1) direct evidence of intent to discriminate (e.g, specific comments), or 2) indirect (circumstantial) evidence, such as statistical data.

In addition to federal law, most states have adopted laws protecting against age discrimination. Some state law provisions are more expansive in their coverage than the ADEA.

Who’s covered?

The ADEA protects employees and job applicants who are 40 years of age or older from being discriminated against on the basis of their age, provided that the employer employs at least 20 or more workers. In some instances, the laws adopted by the States provide more protection than the ADEA, either by covering employers with fewer than 20 employees or by protecting individuals who are less than 40 years of age.

What enforcement/remedies exist?

The Equal Employment Opportunity Commission (EEOC) is the federal agency that enforces the ADEA. Before an individual can file a civil action in court, s/he must file a charge (complaint) with the EEOC. The EEOC is responsible for investigating the complaint. At the conclusion of its investigation, the EEOC issues either a notice of determination or a “right-to-sue” letter. After receiving the notice/letter, the individual has 90 days to file an action in court.

The ADEA provides the following remedies to a successful complainant: back pay (including the value of lost benefits), reinstatement or front pay, liquidated (double the back pay award) damages (if employer’s actions are found to be willful), attorneys’ fees and costs. Back pay is limited to wages for the two years preceding the date of the individual filed the EEOC charge. If the employer’s actions are willful, back pay is awarded for a period of three years. Punitive and compensatory damages are not recoverable under the ADEA.

How common are claims?

According to the EEOC, age discrimination claims represent just over one-fifth (22%) of the charges filed with the agency. In 2005, age discrimination claims ranked fourth in the total number of claims filed with the EEOC, following race (35.5%), sex (30.6%), and retaliation (29.5%). Since 2002, the actual number of age discrimination claims filed has declined. During the same time period, the number of race, sex, and retaliation claims also have declined.

What claims are most common and what are trickiest issues for employers?

Age discrimination claims frequently arise in the context of a lay off or reduction-in-force. Even though employees in the protected class are typically required to waive their rights under the ADEA in exchange for receiving a severance package, they still file suit and challenge the legality of the employer’s lay off selection process. For a variety of reasons, plaintiffs have a difficult time prevailing in such cases. Recently, plaintiffs avoided dismissal of their claims by arguing that their waiver of rights is not legally enforceable. Although the U.S. Supreme Court recently held that disparate impact claims are cognizable under the ADEA, employers need only establish that it had a reasonable basis for the selection process it used (e.g., employees on the higher end of the salary spectrum can be targeted for lay off to reduce company costs, even if that means that older employees, due to their long service with the company, are more likely to be on higher end of the pay scale).

Are there any specific exceptions in your laws?

There are certain narrow exceptions to the ADEA. The ADEA permits employers to impose mandatory age cutoffs in jobs where the individual’s age is “reasonably necessary to the normal operation of the particular business” –– commonly referred to as a bona fide occupational qualification (BFOQ). A BFOQ is usually associated with jobs involving public safety (e.g., police, fire) or aviation. The ADEA permits mandatory retirement at age 65 of a person who, in the two years prior to the action, was a bona fide executive or high policy-making employee, if such person is entitled to an “immediate non-forfeitable annual retirement benefit” equaling at least $44,000. This exception has been read narrowly.

Retirement ages

The ADEA permits mandatory retirement at age 65 of a person who, in the two years prior to the action, was a bona fide executive or high policy-making employee, if such person is entitled to an “immediate non-forfeitable annual retirement benefit” equaling at least $44,000. As noted above, this exception has been read narrowly by the courts.

Interesting cases

CH1 11096396.1

Smith v. City of Jackson, 544 U. S. 228 (2005). The U.S. Supreme Court held that employees may maintain an age discrimination claim using a “disparate impact” theory. Under a disparate impact theory, a person may sue an employer even if there is no evidence that the employer intentionally discriminated against him or her on the basis of age. All that an individual must show is that the employer had a policy that disproportionately adversely impacted those over the age of 40. An employer may defend its policy by showing that it had a reasonable basis for adopting such a policy.

General Dynamics Land Systems, Inc. v. Cline, 540 U.S. 581 (2004). The U.S. Supreme Court held that it is lawful to favor older workers over younger workers, even if the younger workers are within the protected age group (40 years and older). Thus, age-based distinctions in employee benefits and other facets of employment are lawful under the ADEA, so long as they benefit relatively older employees within the protected age group.

Hazen Paper v. Biggins, 507 U.S. 604 (1993). The U.S. Supreme Court held that the employer did not violate the ADEA when it discharged a 62-year-old employee a few weeks before his pension benefits would have vested. The Court emphasized that the employer showed its motivation was based on factors other than age. The Court did warn that “[p]ension status may be a proxy for age . . . in the sense that the employer may suppose a correlation between the two factors and act accordingly.” However, the Court also noted that an employee’s age is analytically distinct from years of service, and thus a decision based on years of service is not necessarily age-based.

Whittington v. The Nordam Group Inc., 429 F.3d 986 (10th Cir. 2005). A federal appeals court declined to adopt a “bright-line” rule on how much of a difference in age is required between an older worker and his or her replacement to establish a case for age discrimination. In rejecting the plaintiff’s argument that a five-year age difference should be evidence of age discrimination, the court observed that all five-year age differences were not the same and that some were more suspicious than others. To date, no federal appeals court has adopted a bright-line rule regarding how many years difference is needed to support a claim of age discrimination.

Jankovitz v. Des Moines Indep. Comty. Sch. Dist., 421 F.3d 649 (8th Cir. 2005). A federal appeals court held that a school district’s early retirement incentive plan violated the ADEA because it arbitrarily cut off eligibility to participate in the plan at age 65. The court held that the plan was discriminatory on its face and rejected the school district’s argument that the plan was legal under the ADEA’s safe harbor provision. The safe harbor provision permits an employer to adopt a voluntary early retirement incentive plan that would be prohibited under the law provided that the plan is consistent with the purposes of the ADEA. The appeals court held that the plan was inconsistent with the law’s purpose of prohibiting arbitrary age discrimination because eligibility rested solely on the employee’s age. Other courts have upheld early retirement plans where eligibility is based on an age + years of service formula.

Hjort

www.hjort.no

Overview

Under Norwegian legislation there are two Acts that solely regulate discrimination: The Gender Act and the Discrimination Act. In addition to this legislation, there are discrimination regulations in the Employment Act, chapter 13, and also in the Criminal Code.

According to the Employment Act, section 13-1 (1), direct and indirect discrimination on the basis of political views, membership of a trade union, sexual orientation, disability or age is prohibited. Harassment and instruction to discriminate persons for reasons are also regarded as discrimination.

The provisions of the Employment Act, chapter 13 apply to all aspects of employment, from advertising to termination of the employment.

There are only national laws.

Many of the discrimination provisions implement EU- directive.

Exceptions from the prohibition against discrimination

According to the Employment Act, section 13-3, age discrimination may be justified in the following cases:

1) When discrimination has a just cause, that does not involve disproportionate intervention in relation to the person or persons so treated and that is necessary for the performance of work or profession.

2) When discrimination is necessary to the achievement of a just cause and does not involve disproportionate intervention in relation to the person or persons so treated is not in contravention of the prohibition against indirect discrimination, discrimination on the basis of age or discrimination against an employee who works part-time or on a temporary basis.

Preferential treatment

According to the Employment Act, section 13-6, Preferential treatment that helps to promote equality of treatment is not in contravention of the provisions of chapter 13. Such special treatment shall cease when its purpose has been achieved.

Who’s covered?

The provisions of the Employment Act, chapter 13 apply to all employees, to the employer’s selection and treatment of self-employed persons and contract workers. Further there is of no consequence whether the employee works part-time or on a temporary basis.

There are no specific limitations. Only commissioned officers and other militarily crew are excluded.

What enforcement/remedies exist?

Criminal sanctions:

According to the Employment Act, section 19-1, employer who wilfully or negligently breaches the provisions in the Employment Act or orders contained in or issued pursuant to this Act shall be liable to a fine, imprisonment for up to three months or both. In the event of particularly aggravating circumstances the penalty may be up to two years’ imprisonment.

Civil remedies:

Claims regarding discrimination can be settled by the ordinary courts.

Compensation:

According to the Employment Act, section 13-9, anyone who has been discriminated may demand compensation without regard to the fault of the employer. The compensation shall be fixed at the amount the court deems reasonable in view of the circumstances of the parties and other facts of the case. The level of such compensation is in general relative low in Norway, in comparison with for example the UK.

Compensation for financial loss as a result of discrimination in contravention of the Employment Act, chapter 13 may be claimed pursuant to the normal rules of compensation.

Burden of proof:

According to the Employment Act, section 13-8, the employer must substantiate that discrimination has not occurred if the employee submits information that gives reason to believe that discrimination has taken place.

Other enforcing body:

In Norway there is a discrimination mandate, which operate ex officio or on request. The mandate gives statements regarding discrimination. If the statement does not lead to improvement, the case can be taken to the discrimination committee. The committee has the authority to instruct the employer in order to stop the discrimination. The committee can also give the employer compulsory fine until the discrimination stops. The decisions of the committee can be taken to court.

How common are claims?

Claims regarding discrimination due to age are not very common in Norway, especially in comparison to other form of discrimination law.

What claims are most common and what are trickiest issues for employers?

In Norway, we expect the most common claims to be in recruitment. Employees who have reached a certain age are often neglected in recruitment. Further more it has been known that there is quite a few claims regarding the advertisement.

There are a very few examples of claims due to retirement age. This is because the provisions state that dismissal before an employee reaches 70 years of age due solely to the fact that the employee has reached retirement age is not objectively justified.

Further more, we expect it to be more common that the employer and the employee enter into an agreement in cases the employer wants to dismiss a employee because of his age.

Are there any specific exceptions in your laws?

There are no such exceptions in Norwegian laws, except that commissioned offiserer and other militarily crew are excluded, as mentioned above.

Retirement ages

The general retirement age in Norway is 67, however the employees have the right to remain in position until the age of 70. According to the Employment act, section 15-7 (4), Dismissal before an employee reaches 70 years of age due solely to the fact that the employee has reached retirement age pursuant to the National Insurance Act shall not be deemed to be objectively justified. After the employee reaches 66 years of age, but not later than six months before he reaches retirement age, the employer may inquire in writing whether the employee wishes to retire from his post upon reaching retirement age. A reply to this inquiry must be returned in writing not less than three months before the employee reaches retirement age. Provided that this is expressly stated in the inquiry, protection against dismissal under the preceding paragraph lapses if no reply is received within the time limit stated.

Interesting cases

The provisions regarding age discrimination under Norwegian legislation is of relatively new date. Today there is no legal decision of any interest.

Discrimination of employees is prohibited under Article 10 of the Estonian Employment Contract Act (Eesti Vabariigi töölepingu seadus, hereinafter ECA). Article 10 (3) of ECA stipulates that discrimination shall be taken to occur where a person applying for employment or an employee is discriminated against on grounds of sex, racial origin, age, ethnic origin, level of language proficiency, disability, sexual orientation, duty to serve in defence forces, marital or family status, family-related duties, social status, representation of the interests of employees or membership in workers’ associations, political opinions or membership in a political party or religious or other beliefs. Pursuant to Article 10 (1) of ECA, employers shall not, upon employment and entry into employment contracts, discriminate against persons applying for employment on any of the grounds listed in Article 10 (3) of ECA. Pursuant to Article 10 (2) of ECA, employers shall not discriminate against employees on any of the grounds specified in Article 10 (3) of ECA upon remuneration, promotion in employment or office, giving instructions, termination of employment contracts, access to retraining or in-service training or otherwise in employment relations.

Article 10² of ECA prohibits both direct and indirect discrimination against employees or persons applying for employment.

Direct discrimination shall be deemed to occur where a person applying for employment or an employee is treated less favourably than another person applying for employment or another employee is, has been or would be treated in a comparable situation, on any of the grounds specified in Article 10 (3) of ECA (including age) (Article 10² (2) of ECA).

Indirect discrimination shall be deemed to occur where an apparently neutral provision, criterion or practice would put employees or persons applying for employment at a particular disadvantage compared with other employees or persons applying for employment on any of the grounds specified in Article 10 (3) (including age), unless that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary (Article 10² (3) of ECA).

In addition to the above, Article 10² of ECA prohibits harassment of employees. For the purposes of ECA, harassment shall be deemed to be a form of direct discrimination on any of the grounds specified in Article 10 (3) of ECA (including age). Harassment shall be taken to occur where unwanted conduct or act, either verbal, non-verbal or physical, takes place against a person in a relationship of subordination or dependency with the purpose or effect of violating the dignity of the person and of creating a disturbing, intimidating, hostile, degrading, humiliating or offensive environment, and the person rejects such conduct or tolerates it for a reason that it affects his or her access to office or employment or in order to maintain the employment relationship, have access to training, receive remuneration or have access to other advantages or benefits.

Although a general discrimination prohibition was also in place in Estonia before Estonia joined EU, the respective regulation was developed further in order to meet the requirements of the EU anti-discrimination directive upon Estonia’s accession to EU.

Who’s covered?

The anti-discrimination regulation provided by the ECA applies to employees working on the basis of an employment contract, i.e. an agreement under which the employee undertakes to do work for the employer in subordination to the management and supervision of the employer, and the employer undertakes to remunerate the employee for such work and to provide the working conditions stipulated in the agreement between the parties, a collective agreement, law or administrative legislation (Article 1 of ECA). People working or providing services on the basis of other types of agreements are not covered by the anti-discrimination legislation.

What enforcement/remedies exist?

Estonian law does not set forth criminal sanctions for age discrimination in employment relations.

An employee or a person applying for employment against whom the employer discriminated on the ground of age has the right to demand from the employer compensation for the damage caused by the discrimination. A person with whom the employer refused to enter into an employment contract on the ground of age shall not have the right to demand entry into an employment contract.

A discrimination dispute may be brought to the Legal Chancellor, who conducts a conciliation procedure, to the Labour Dispute Committee or the court of first instance.

How common are claims?

We are not aware of any court practice on age discrimination in employment relations under Estonian law.

What claims are most common and what are trickiest issues for employers?

Since there is no court practice on age discrimination in employment relations in Estonia, it is difficult to predict which issues may prove to be trickiest for employers.

Are there any specific exceptions in your laws?

Pursuant to Article 10¹ subsection 4 of ECA, taking account of the sex, level of language proficiency, age or disability upon employment of a person, or upon giving instructions or enabling access to retraining or in-service training shall not be deemed to be discrimination under Estonian law, if this is an essential and determinative professional requirement arising from the nature of the professional activity or related conditions. The law does not provide any specific grounds capable of justifying differences in treatment of employees.

Retirement ages

Under Estonian law, mandatory retirement applies only to certain categories of civil servants (e.g. regular members of the defence forces, judges, etc). Other than these exceptional cases, employers cannot force employees to retire nor can they fix a certain retirement age. Employees can be dismissed only on grounds exclusively listed in ECA (e.g. breach of duties, unsuitability of an employee for the work due to professional skills or for reasons of health, etc).

Interesting cases

As explained above, we are not aware of any court practice on age discrimination in employment relations under Estonian law.

Many of the uncertainties surrounding the age laws will only be clarified once tribunals and courts begin to decide cases. We plan to summarise the important age cases as they are decided. We also include important relevant discrimination cases in other areas.

Please contact us with any relevant cases of which you are aware

CADMAN v. THE HEALTH AND SAFETY EXECUTIVE

In a nutshell

The European Court of Justice (”ECJ”) has ruled that an employer generally does not need to specifically justify using length of service to calculate pay. An employer will only have to justify using this system for a particular job if a worker can provide evidence that raises serious doubts that this is an appropriate way of rewarding experience.

For more details of this case, click here.

MANGOLD v. HELM

In a nutshell

A German law providing older fixed term workers with fewer legal protections than their younger counterparts was unlawful age discrimination. Although the German government had a legitimate aim, the way in which it had sought to achieve that aim was not proportionate.

Another important aspect of this decision was the ECJ’s ruling that the German government had acted illegally in implementing an age discriminatory law even though the deadline for implementing the age strand of the 2000 EC Anti-discrimination Framework Directive had not yet expired.

For more details of this case, including a link to the judgment, click here.

CROSS v. BRITISH AIRWAYS

In a nutshell

The financial cost to a private employer of avoiding an indirectly discriminatory provision will not, on its own, be a good enough justification. Cost will only be accepted as justifying discrimination where it is one of a number of other justifying factors.

For more details of this case, including a link to the judgment, click here.

Further information and advice on age discrimination can be obtained from a range of expert organisations at the click of a button.

Lewis Silkin

Law firm Lewis Silkin has an extremely highly regarded Employment and Incentives Department with more than 40 specialist lawyers. A group of those lawyers, all of whom have a special interest in age discrimination, developed considerable expertise in the area ahead of the implementation of the new laws. Leading that team is joint head of department, James Davies, who has had a particular interest in age discrimination for many years and has developed a considerable reputation on the subject.

To find out more about Lewis Silkin’s Employment and Incentives Department, please click here to visit the firm’s website.

ius laboris

ius laboris is a world wide alliance of leading law firms providing specialised services in employment and labour law, pensions and employee benefits. Its member firms have contributed to the International section of this site and can provide expert advice on age discrimination laws in their home jurisdiction.

Sacker and Partners

Sacker and Partners is the leading specialist pensions law firm in the UK with 44 expert lawyers, and a first-class client base of over 1,000 pension schemes, including around 20 FTSE 100 companies. Sacker and Partners won Pensions Law Firm of the Year 2006 and Niche Law Firm of the Year 2005.

Agebusters

Agebusters, a website provided by TAEN – The Age and Employment Network, is designed to be an invaluable first port-of-call for anyone wishing to know about the UK’s Age Discrimination Regulations. Within Age Regulations and Useful Links there are specific sections tailored to the needs of:

• Individuals
• Employers
• Labour market intermediaries (such as recruitment agencies, job brokers, training and adult career advice providers)
• Journalists and broadcasters

Age Concern

Age Concern is the UK’s largest organisation working with and for older people. The Age Concern website contains a section dedicated entirely to the age discrimination Regulations.

Age Positive

The Government is working to change attitudes towards age. The Age Positive website contains guidance to encourage employers to end age discrimination in the workplace and to give people more choice and flexibility.

CIPD

The Chartered Institute of Personnel and Development is the professional body for those involved in the management and development of people.

DTI

Guided by the principles of flexibility and partnership, the DTI employment division aims to improve the quality of working life for individuals, and to create the right conditions for business success. The DTI supports better regulation and is working to promote best practice and effective employment relations.

DWP

The Department for Work and Pensions seeks to:

• promote opportunity and independence for all;
• help individuals achieve their potential through employment; and
• work to end poverty in all its forms.

EFA

The Employers Forum on Age (EFA) is an independent network of leading employers who recognise the value of an age diverse workforce. Founded in 1996 by 18 of the UK’s top employers, the EFA sets the agenda for age and employment issues in the UK. In addition to supporting employers, the EFA influences Government, business and trade unions, and campaigns for real, practical change in issues such as flexible retirement and the age discrimination legislation.