Mr Landin was born on 24 November 1944 and was recruited on 11 January 1999 as an engineer under the provisions of the Law on salaried employees in Denmark.With effect from his 65th birthday, on 24 November 2009, Mr Landin applied to have payment of his State retirement pension postponed to a later time so as to increase his pension entitlement. On 30 November 2011, the defendant in the main proceedings notified Mr Landin, then aged 67, of its decision to dismiss him after the expiry of six months, with effect from the end of May 2012. The period in question was calculated having regard to his seniority, according to the Law on salaried employees.

As Mr Landin was over the age of 65 and entitled to a State retirement pension, the defendant in the main proceedings did not pay him severance allowance under the Law on salaried employees. It took the view that a salaried employee who is entitled to a State retirement pension loses his claim to severance allowance even if he continues to be in active employment and even though he has asked for payment of his State retirement pension to be postponed.

Mr Landin worked the entire notice period and, upon its expiry, commenced in another post as a sprinkler engineer with a new employer on general market terms and under the provisions of the Law on salaried employees. He then brought an action, claiming severance allowance under Paragraph 2a(1) of the Law on salaried employees on the basis that the refusal of its payment is contrary to EU law.

The Østre Landsret decided to stay the proceedings and to refer a question to the Court of Justice EU (CJEU) for a preliminary ruling.

Consideration by CJEU

In order to provide an answer to the question referred, it should, first of all, be ascertained whether the Danish Law on salaried employees amounts to a difference of treatment for the purposes of Article 2(1) of Directive 2000/78.

In the present case, the Law on salaried employees deprives certain workers of their right to severance allowance on the sole ground that they are entitled to draw on a State retirement pension scheme at the termination of their employment relationship. The documents before the court state that the entitlement to such a pension is subject to a minimum age requirement of 65 for workers born before 1954. The provision is thus based upon a criterion which is inextricably linked to the age of the employee.

It follows that the national legislation at issue in the main proceedings provides for a difference of treatment based directly on grounds of age for the purposes of Articles 1 and Article 2(2)(a) of Directive 2000/78. It is then necessary to examine whether that difference of treatment may be justified.

The first subparagraph of Article 6(1) of Directive 2000/78 states in effect that Member States may provide that a difference of treatment on grounds of age does not constitute discrimination if, within the context of national law, it is objectively and reasonably justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary. It is settled caselaw of the CJEU that the Member States enjoy a broad discretion in their choice, not only to pursue a particular aim in the field of social and employment policy, but also in the definition of measures capable of achieving it.

In order to assess whether the aim pursued by the disposition at issue in the main proceedings is legitimate, it should be noted, first, that the severance allowance aims to facilitate the move to new employment for older workers who have many years of service with the same employer. Secondly, although the legislature intended to restrict the benefit of that allowance to those workers who, on termination of the employment relationship, are not eligible for a State retirement pension, the preparatory documents relating to that law show that the restriction is based on the premise that those who are eligible for a State retirement pension will generally decide to leave the labour market.

The restriction in the Law on salaried employees is intended to guarantee, in a simple and rational manner, that employers do not pay compensation twice to long-serving employees who have been dismissed, as this would not serve any employment policy objective.

The aim pursued by severance allowance of protecting workers with many years of service in an undertaking and helping them to find new employment falls within the category of legitimate employment policy and labour market objectives provided for in Article 6(1) of Directive 2000/78. According to that provision, those objectives may justify, by way of derogation from the prohibition of discrimination on grounds of age, differences of treatment related, inter alia, to ‘the setting of special conditions on … employment and occupation, including dismissal and remuneration conditions, for … older workers … in order to promote their vocational integration or ensure their protection’. Consequently, objectives of the kind pursued by the provision of national law at issue in the main proceedings must, in principle, be considered, ‘objectively and reasonably’ as well as ‘within the context of national law,’ to justify a difference of treatment on grounds of age as provided for in the first subparagraph of Article 6(1) of Directive 2000/78. .

The CJEU held that:

Article 2(1) and (2)(a) and Article 6(1) of Council Directive 2000/78/EC must be interpreted as meaning that they do not preclude national legislation from providing that an employer must, upon termination of the employment relationship of a salaried employee who has been continuously employed in the same undertaking for 12, 15 or 18 years, pay an amount equivalent to one, two or three months’ salary respectively, unless the salaried employee is entitled to receive a State retirement pension upon termination of employment to the extent that that legislation is both objectively and reasonably justified by a legitimate aim relating to employment and labour market policy as well as constituting an appropriate and necessary means of achieving that aim. It is for the national court to satisfy itself that this is the case.

Why is this decision important?

An ageing population together with a reduction in pension benefits is resulting in an increasing number of workers who wish to remain in employment after attaining the state retirement age. This decision means that such workers will need to weigh up carefully the positive and negative aspects of continuing in employment.