Available for pay
Labour & European Law Review Weekly Issue 346 20 November 2013
The European equal treatment directive outlaws direct and indirect discrimination, except in certain circumstances, such as setting different ages for entitlement to benefits. In Dansk Jurist- og Økonomforbund v Indenrigs- og Sundhedsministeriet, the Court of Justice of the European Union (CJEU) held that a policy of not allowing pension-age Danish civil servants to receive “availability” pay constituted discrimination on the ground of age.
Mr Toftgaard, a civil servant, was dismissed with effect from 31 December 2006 on the ground of redundancy. He became entitled on the same date to a pension because he had reached the age of 65 (although he was still below the compulsory retirement age of 70).
He claimed he was entitled to “availability” pay which was offered to civil servants who were made redundant as long as they remained available for work while they received it. His employer said he was not eligible because he was over 65 and entitled to draw a pension. Mr Toftgaard brought a claim of age discrimination.
Questions for the CJEU
The Danish Supreme Court asked the CJEU to decide whether it was contrary to Article 6(2) of the directive to set age limits under occupational social security schemes if the schemes only related to retirement or invalidity benefits. It also asked whether Article 6(1) of the directive outlawed a national provision under which civil servants who had reached retirement age were not entitled to availability pay.
Article 6(1) states that it is not discriminatory on grounds of age for member states to treat people differently if it can be “objectively and reasonably justified by a legitimate aim” .... and “the means of achieving that aim are appropriate and necessary”.
Article 6(2) states that it is not discriminatory for member states to set fixed ages (which can differ) in terms of admitting members to occupational social security schemes and establishing their entitlement to retirement or invalidity benefits.
Decision of CJEU
Even supposing that availability pay formed part of an occupational social security scheme, the Court ruled that it was neither a retirement nor an invalidity benefit and therefore did not fall within Article 6(2).
It also held that the aims behind the policy - to ensure the availability of experienced civil servants in the event of redundancies while limiting entitlement to those who were available for work - fell within the category of legitimate employment policy and labour market objectives provided for in Article 6(1).
Equally, it was not unreasonable to limit entitlement to availability pay to civil servants who could not claim a retirement pension, given that the aim of the law was to provide increased protection for civil servants who did not have a long term replacement income. It was also appropriate to achieve the objective of ensuring the availability of civil servants in the event of redundancies.
However, the downside of the policy was that people of pension age who wanted to remain available for re-employment in the civil service were being deprived of availability pay, just because they could draw a pension. They were in effect forced to take their pension, even if they preferred to stay in the labour market, regardless of whether they would be entitled to a full pension or not. This was particularly disadvantageous to anyone who wasn’t entitled to draw a full pension.
The Court concluded that the provision was not necessary because the same aim could be achieved by less restrictive, but equally appropriate, measures. In this case, allowing civil servants to temporarily waive their right to their pension during the time that they were in receipt of availability pay.
This case is an important victory for the workers involved. It is however unlikely to have much impact in the UK where there isn’t a right to ‘availability pay’ on redundancy. Instead, there is usually an entitlement to a redundancy payment and/or to access to pension benefits.
The principle in Dansk Jurist is consistent with the case of Ingeniorforeningen i Danmark v Region Syddanmark, in which the CJEU held that the exclusion of workers from a severance payment was unlawful where the exclusion applied irrespective of whether the employee took their pension, or continued looking for work. The workers in the i Danmark case could not take their pension and look for work. Had the policy in the i Danmark case been restricted to those who chose to take their pensions early and remove themselves from the job market, the policy would not have been unlawful.