Case 3 - Retirement

Case 3 - retirement

Legal framework:

1. National law

In Austria civil servants have to retire at the age of 65.

Until October 2000 each civil servant was entitled to choose the date of his retirement between his 60th and 65th birthday (retirement by declaration). The “Pensionsreformgesetz 2000”, issued in August 2000 that turned into force in October 2000, changed this by increasing the minimum age for retirement by declaration. For civil servants born in 1941 it was changed to 60,5, for those born in 1942 it was changed to 61,5.

Moreover, for civil servants who retire after the 31st of December 2002, new regulations for figuring out the amount of the pension turned into force. These new regulations were less favourable for the civil servant. The consequence was that civil servants born in 1941 had to stay longer, but still had the possibility to retire by declaration in 2002 and to profit from the more favourable conditions of “old law”. This was not true for a part of civil servants born in 1942.

Art. 96 para 4 of the Pensionsgesetz rules that the more favourable old law for figuring out the pensions stays applicable even for retirements after the 31st of December 2002, if

- the civil servant was already 55 on 1st of December 1997 and

- the civil servant is not older than 61,5 when he retires.

Please note that in the understanding of Austrian law, the relationship between the state and its civil servants is not dissolved when they retire, but continues with modified mutual rights and duties (f.e. the civil servant stays disciplinary liable for his behaviour). Therefore, pensions for civil servants are not seen as a part of a state system of social security but more like the continuous payment of a (reduced) salary.

The Administrative Court has only the power to control the legality of an administrative decision. Therefore, it is relevant whether this decision is in compliance with the legal situation that existed when the administrative decision was taken.

2. Community Law

The Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation, based on Art. 13 (now Art. 19) of Treaty, contains following provisions:

“CHAPTER I

GENERAL PROVISIONS

Article 1

Purpose

The purpose of this Directive is to lay down a general framework for combating discrimination on the grounds of religion or belief, disability, age or sexual orientation as regards employment and occupation, with a view to putting into effect in the Member States the principle of equal treatment.

Article 2

Concept of discrimination

1. For the purposes of this Directive, the "principle of equal treatment" shall mean that there shall be no direct or indirect discrimination whatsoever on any of the grounds referred to in Article 1.

2. For the purposes of paragraph 1:

(a) direct discrimination shall be taken to occur where one person is treated less favourably than another is, has been or would be treated in a comparable situation, on any of the grounds referred to in Article 1;

(b) indirect discrimination shall be taken to occur where an apparently neutral provision, criterion or practice would put persons having a particular religion or belief, a particular disability, a particular age, or a particular sexual orientation at a particular disadvantage compared with other persons unless:

(i) that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary, or

…

Article 3

Scope

1. Within the limits of the areas of competence conferred on the Community, this Directive shall apply to all persons, as regards both the public and private sectors, including public bodies, in relation to:

…

3. This Directive does not apply to payments of any kind made by state schemes or similar, including state social security or social protection schemes.

4. Member States may provide that this Directive, in so far as it relates to discrimination on the grounds of disability and age, shall not apply to the armed forces.

…

Article 6

Justification of differences of treatment on grounds of age

1. Notwithstanding Article 2(2), Member States may provide that differences of treatment on grounds of age shall not constitute discrimination, if, within the context of national law, they are 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.

Such differences of treatment may include, among others:

(a) the setting of special conditions on access to employment and vocational training, employment and occupation, including dismissal and remuneration conditions, for young people, older workers and persons with caring responsibilities in order to promote their vocational integration or ensure their protection;

…

(c) the fixing of a maximum age for recruitment which is based on the training requirements of the post in question or the need for a reasonable period of employment before retirement.

2. Notwithstanding Article 2(2), Member States may provide that the fixing for occupational social security schemes of ages for admission or entitlement to retirement or invalidity benefits, including the fixing under those schemes of different ages for employees or groups or categories of employees, and the use, in the context of such schemes, of age criteria in actuarial calculations, does not constitute discrimination on the grounds of age, provided this does not result in discrimination on the grounds of sex.

…

Article 18

Implementation

Member States shall adopt the laws, regulations and administrative provisions necessary to comply with this Directive by 2 December 2003 at the latest or may entrust the social partners, at their joint request, with the implementation of this Directive as regards provisions concerning collective agreements. In such cases, Member States shall ensure that, no later than 2 December 2003, the social partners introduce the necessary measures by agreement, the Member States concerned being required to take any necessary measures to enable them at any time to be in a position to guarantee the results imposed by this Directive. They shall forthwith inform the Commission thereof.”

Art. 13 para 1 TEC rules:

“Article 19

(ex Article 13 TEC)

Without prejudice to the other provisions of the Treaties and within the limits of the powers conferred by them upon the Union, the Council, acting unanimously in accordance with a special legislative procedure and after obtaining the consent of the European Parliament, may take appropriate action to combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation.”

Facts

The applicant, an Austrian civil servant, was born in 1939. He retired by declaration on 1st of January 2003 (this date seemed to have been chosen by the applicant erroneously; he would not have had any problems if he had retired one month earlier), when he was older than 63. On 3rd of July 2003 the Federal Minister of Finances decided on the amount of pension to be granted to the applicant (from 1st of January 2003 until 1st of June 2003). He applied the new (less favorable) rules that have turned into force on 1st of January 2003. He argued that Art. 96 para 4 of the Pensionsgesetz were not applicable because the applicant was older than 61,5 years when he retired.

The applicant appealed against this decision first before the Austrian Constitutional Court, arguing that Art. 96 para 4 of the Pensionsgesetz violates the principle of equal treatment of all citizens laid down in Art. 7 of the Federal Constitution. The Constitutional Court did not see a problem of Constitutional law and therefore refused to deal with the case. The applicant appealed then – which is possible in Austria – to the Austrian Administrative Court.

Later on, the applicant asked the administration to meet a new decision on his pensions from 1st of January 2004 onwards. The Federal Minister of Finances decides on 26th of February 2007. In this decision he also applies the new, less favorable rules of the Pensionsgesetz 2000 to figure out these pensions.

The applicant appealed against this decision to the Austrian Administrative Court.

In both appeals he argued as follows:

Art. 96 para 4, even though it might be in compliance with the Austrian Constitution, brings about discrimination by age. Civil servants who retire at the same time (after the end of 2002) are treated unequally, even though all other relevant parameters for figuring out the pensions are identical. Those who are younger (born in 1941 or 1942) get higher pensions than him (born in 1939).

Art. 96 para 4 of the Pensionsgesetz therefore violates Art. 6 of the above mentioned directive as well as basic principles of Community Law.

The Federal Minister of Finances argued as follows:

"His first decision concerned periods of time where the directive was not immediately applicable because the timeframe for its implementation has not expired.

Moreover, there is no discrimination by age, because the applicant had the possibility to retire by declaration under the more favorable conditions of the old law when he was younger than 61,5 years, and – even later – until the 1st of December 2002.

Finally, art. 96 Para 4 pursues a legitimate aim, namely to avoid a violation of legitimate expectations. Civil servants born in 1942 expected to be entitled to retire at the age of 60 (that means before 2003) by declaration and would therefore benefit from the more favorable conditions of the former law. They were surprised by the new law in August 2000, because they had to stay until the age of 61,5 (and therefore some of them longer than the end of 2002) now. Therefore it was necessary to grant them the benefit to figure out their rents according to the old rules when they retire after 2002."

Questions:

1. From the point of substantive law is there an unequal treatment on the ground of age by the mentioned national provision?

2. Affirmatively, is this direct of indirect unequal treatment?

3. Would such an unequal treatment by national law be unadmissible in any case?

4. Do you think unequal treatment is justified in this case? On which legal basis is this to be assesed?

5. From which point of time EU-law has to be observed by the national judge and what are the impacts of it?

6. Do the general principles of EU-law play a relevant role in this case?

7. What would be the consequences of a violation of the Directive by the respective national law?