Age Discrimination in Employment

The ECJ cases Mangold and Palacios

Dr. Felipe Temming, LL.M.

University of Cologne Sozrecht@uni-koeln.de www.aus-portal.de

Overview 1. Mangold 22 November 2005

a) b) Presentation of the case Assessment / Analysis Presentation of the case Assessment / Analysis

2.

Palacios 16 October 2007

a) b)

3. 4. 5.

Least common denominator between Mangold and Palacios Outlook Summary

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I. The Mangold case C-144/04 Facts Fixed-term contract between MR Helm (lawyer) and 56 year-old MR Mangold expressly (!) and solely (!) based upon section 14(3) of the Law on parttime working and fixed-term contracts (TzBfG) During (!) the realisation of the contract MR Mangold takes action before the Arbeitsgericht Mnchen His argument: Contractual clause is incompatible with the Fixed-term Directive 1999/70/EC and Framework Directive 2000/78/EC ArbG Mnchen: Reference for a preliminary ruling 29.10.2003 (NZA-RR 2005, 43 ff.)
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I. The Mangold case C-144/04

1. Admissibility of the reference for a preliminary ruling A mere test case? Indices:
a)
b) c)

d) e)

TzBfG does not oblige employer to quote specific objective justification for concluding a fixed-term contract Date of his law-suit Mangolds lawyer (MR Hummel) was resp. is a co-operating partner of MR Helm MR Helm already raised criticism during the law-making process After ECJ held the case national proceedings were not resumed

2.

ECJ:
Order for reference is admissible, because contract has actually been performed and its application raises a question of interpretation of Community law.

3.

Assessment: If Luxembourg wants to hold a case, then he will do so like any other supreme court (see also Foglia cases)

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I. The Mangold case C-144/04

Section 14(3) TzBfG (former version): A

fixed-term employment contract shall not require objective justification if when starting the fixed-term employment relationship the employee has reached the age of 58 Until 31 December 2006 the first sentence shall be read as referring to the age of 52 instead of 58.
has not achieved its goal concerning employment politics.

Thesis: Despite this rigorously liberal approach section 14 (3) TzBfG

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I. The Mangold case C-144/04

1. Majoritarian opinion in Germany: Section 14(3) TzBfG was blatantly incompatible with the Fixed-term Directive 1999/70/EC. None of the three liberal alternatives to prevent abuse of this type of contract were adhered to:
a) b) c) Requirement of objective reasons justifying the renewal of such contracts Fixation of the maximum total duration of such fixed-term employment relationships Limitation of the number of renewals of such contracts or relationships .

2.

3. 4.

ECJ: no infringement of Fixed-term Directive because there were no successive fixed-term employment contracts. But: No doubt as to incompatibility 1999/70/EG, see ECJ 4.7.2006 Konstantinos Adeneler. with Directive C-212/04

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I. The Mangold case C-144/04

1. 2. 3. Framework Directive 2000/78/EC Direct discrimination on the grounds of age (+) Justification according to Art. 6(1) Directive 2000/78/EC?
a) b) Legitimate aim: Promotion of the vocational integration of unemployed older workers. But: Does it meet the test of proportionality?

Broad discretion of Member States in the field of social and employment policy (!! just a mere lips service !!) Problem appropriateness and necessity (para. 65): Derogation from individual rights have to be narrowly construed. It has to be shown that the setting of an age threshold, as such, regardless of any other consideration linked to the structure of the labour market in question or the personal situation of the person concerned, is objectively necessary to the attainment of the objective which is the vocational integration of unemployed older workers . ECJ: danger of long lasting exclusion from the benefit of stable employment. No evidence supplied that age as a sole criterion is appropriate and necessary (!! despite significant correlation !!). Section 14 (3) TzBfG incompatible with Art. 6 Directive 2000/78/EC!

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I. The Mangold case C-144/04

1. Normally, consequences of infringing a directive are:
a) b) Federal Republic of Germany has to reform s. 14 (3) TzBfG No direct applicability of Directive 2000/78/EC
Period for transposition into domestic law of Directive 2000/78/EC as to the criterion age had not yet expired (12/2006) Civil law suit between two private parties (see case Facini Dori, C-91/92)

c)

d)

Only: Obligation on national courts to interpret domestic law in conformity with Community law. here: not possible, furthermore no obligation to interpret national law contra legem (see cases Adeneler, Pupino) Possibly: Compensation from the Federal Republic for damages caused by false transposition of Framework Directive after expiration of the transposition period (see Francovich-case practice of Federal Civil Court, BGH, as to admissibility of these actions is extremely restrictive)

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I. The Mangold case C-144/04

2. 3. Instead: A European Big Bang (para. 74, 75): Section 14 (3) TzBfg is measured against unwritten primary Community law
a) b) ECJ: The principle of non-discrimination on grounds of age must be regarded as a general principle of Community law . Why are Member States bound to that principle?
ERT situation: here (-) Wachauf situation: (+) because of Directive 1999/70/EC ECJ (para. 51): The term implementation, used without any further precision in Clause 8 (3) of the Framework Agreement, does not refer only to the original transposition of Directive 1999/70 and especially of the Annex thereto containing the Framework Agreement, but must also cover all domestic measures intended to ensure that the objective pursued by the directive may be attained, including those which, after transposition in the strict sense, add to or amend domestic rules previously adopted.

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I. The Mangold case C-144/04

3. Consequences, if primary Community law has been infringed: Inapplicability of national law
a) Community law and, more particularly, Article 6(1) of Council Directive 2000/78/EC must be interpreted as precluding a provision [such as section 14(3) TzBfG]. It is the responsibility of the national court to guarantee the full effectiveness of the general principle of non-discrimination in respect of age, setting aside any provision of national law which may conflict with Community law, even where the period prescribed for transposition of that directive has not yet expired. Subsequent development:

b)

c)

Judgment of the Federal Labour Court on 26. April 2006, now pending before Federal Constitutional Court!
Reform of section 14(3) TzBfG (now: age threshold is still 52, but further requirements needed: e.g. 4 months joblessness, maximum total duration of contract 5 years)

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I. The Mangold case C-144/04

1. First problem: 2000/78/EC
a)

Application

of

Directive

ECJ merely states violation of Directive 2000/78/EC (see operative provisions of the judgment) In particular: NO horizontal effect of directive between MR Helm and MR Mangold. Confirmed in Carp (C-80/06): It should be recalled that, according to settled case-law, a directive cannot of itself impose obligations on an individual and cannot therefore be relied upon as such against an individual. It follows that even a clear, precise and unconditional provision of a directive seeking to confer rights or impose obligations on individuals cannot of itself apply in proceedings exclusively between private parties (para. 20).

b)

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I. The Mangold case C-144/04

2. Second Problem: Derivation of the principle of nondiscrimination on grounds of age as a general principle of Community law
Widespread, massive and ongoing criticism! But see the ECJs constituent sources of inspiration to develop general principles of Community Law - Art. 6 (2) EU:

a) b)

c)

Thesis: Derivation not indefensible! No ultra vires act!

Art. 14 ECHR: Nelson v. UK (No. 11077/84), X v. UK (No. 7215/75), Dudgeon v. UK (No. 7525/76), open in B.B. v. UK (No. 53760/00) 12th Prot.: Finland (1.4.2005), Luxembourg (1.7.2006), Netherlands (1.4.2005), Rumania (1.11.2006), Spain (13.2.2008) and Cyprus (1.4.2005) Art. 26 ICCPR: Schmitz de Jong v. Netherlands (No. 855/1999), Love et al. v. Australia (No. 983/2001) 6 (1) Constitution of Finland, Art. 14 Constitution of Spain (personal condition), Art. 59 Constitution of Portugal (Remuneration/Age), Art. 21 (3) Constitution of Greece (protection of the Aged) Art. 21 (1) Charta of Fundamental Rights (not cited in Mangold, but can be of legal relevance, see e.g. cases Hauer, Johnston, BECTU, Pfeiffer)

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I. The Mangold case C-144/04

1. Tactical approach of ECJ in Mangold: Construction of primary law in the light of secondary law, here Directive 2000/78/EC (arguable from a dogmatic point of view) Alternative: Citing the Charta of Fundamental Rights, for the first time in ECJ 27.6.2006, case C-540/03, Directive 2003/86/EC Advantage of 1 and 2: No need to touch the sensitive issue of a minimum or maximum standard as to level of protection of European (European Acquis of fundamental rights)

2.

3.

4.

Possible (positive) side effect in Mangold: definite overcoming of self-imposed limits as to the direct application of Directives in horizontal constellations between private parties

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I. The Mangold case C-144/04

1. Third problem: agency-situation (Wachauf)
a) b) What does implementation of Community Law mean? Mangold (para. 51): The term implementation does not refer only to the original transposition of Directive 1999/70 and especially of the Annex thereto containing the Framework Agreement, but must also cover all domestic measures intended to ensure that the objective pursued by the directive may be attained, including those which, after transposition in the strict sense, add to or amend domestic rules previously adopted. ECJ in Josefa Navarro (C-246/06): implementation (+) as to national law that had been passed long before Directive 2002/74/EC came into force (para. 32); same approach in Cordero Alonso (C-81/05, paras. 31 f., 34, 37)
Thesis: Similar development as seen with regard to obligation on Member States to interpret domestic law in conformity with Community law (von Colson, Marleasing-doctrine)

c)

d)

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II. The Palacios case C-411/05

Facts

Problem: Legality of standard mandatory retirement clauses in collective agreements (65 years), which are coupled with the entitlement to a retirement pension. Flix Palacios: 65 years, monthly retirement pension of about 2.000 (100% of the contribution base) Legal framework: Spanish Law 14/2005 allows as from 3 July 2005 mandatory retirement clauses as an instrument for compulsory retirement of workers, as long as they are coupled with the entitlement to a retirement pension (if necessary obligation to cite aims of employment policy). Juzgado de lo Social No. 33 de Madrid: reference for a preliminary ruling (14 November 2005)

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II. The Palacios case C-411/05

1. Big surprise: ECJ upholds mandatory retirement clause 65 years in collective agreements Legal yardstick: Directive 2000/78/EC Mandatory retirement clause establishes within the meaning of Art. 3 (1) (c) Directive 2000/78/EC (see also Marshall case with regard to Directive 76/207/EEC, para. 33 f.) Mandatory retirement clause establishes different treatment directly based on age Legitimate aim: broad discretion of Member States here: employment and labour policy, promotion of full employment, recruitment of new workers and mechanism to absorb unemployment (intergenerational allocation of jobs) Important: Art. 6 (1) Directive 2000/78/EC does not demand a clear reference to legitimate aims!

2. 3.

4. 5.

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II. The Palacios case C-411/05

6. Test of proportionality a) Level of scrutiny: broad margin of appreciation for Member States (para. 69): in particular as regards the choice which the national authorities concerned may be led to make on the basis of political, economic, social, demographic and/or budgetary considerations (!!) and having regard to the actual situation in the labour market in a particular Member State, to prolong peoples working life or, conversely, to provide for early retirement (see also putty-soft recital 25 of Directive 2000/78/EC)
b) c) d) Necessity: not unreasonable to take the view mandatory retirement clause may promote full employment Appropriateness: not unduly prejudicing because of financial compensation by way of a retirement pension, collective agreements allow flexible solutions with regard to compulsory retirement In the light of those factors, it cannot reasonably be maintained that [a mandatory retirement clause] is incompatible with the requirements of Directive 2000/78.

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II. The Palacios case C-411/05

Assessment
a) Core statement:

No strict scrutiny test with regard to prohibition of age discrimination, but rather a mere test of rationality within the principle of proportionality. Inconsistency with Mangold! Hierarchy of grounds / different level of review? b) Test of proportionality:
sheer infinite discretion of Member States as to legitimate aims and measures which can be taken (inconsistency with case law in the area of fundamental freedoms and other fundamental rights). But: entitlement to a retirement pension is not a legitimate aim itself! Felix Palacios fundamental rights are watered down. no detailed assessment as to whether compulsory retirement really brings about full employment. EJC becomes a follower of lump-of-labour-fallacy.

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II. The Palacios case C-411/05

c) Sharpest contradiction and inconsistent result:
Palacios: Most discriminating clause with regard to different treatment based on age is being upheld. Mangold: The less infringing clause in the area of fixed-term work is declared inapplicable.
Had the test of arbitrariness (Palacios) been applied to the Mangold case, Section 14 (3) TzBfG would be still in force. Fixed-term work for people aged over 52 was equally meant to promote full employment in that problematic group. Plus: significant correlation between higher age and long-term unemployment! Had strict scrutiny been applied in Palacios, standard retirement clauses would have been struck down because flexible retirement age schedules are less abridging.

d)

ECJ does not mention Community law at all!

general

principles

of

Explanation: He did not have to. ECJ did not revoke the existence of a prohibition of age discrimination as a general principle of Community law! Once the Charta of fundamental rights is in force its existence will be inevitable.

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II. The Palacios case C-411/05 ECJ performs Dancing procession of Echternach!
Margin of discretion has become even broader for Member States and Social Partners. ECJ shrinks away from intruding too far into Member States labour and social policy with the help of the prohibition of age discrimination.
ECJ swings toward the conservative line of German Courts (e.g. Federal Labour Court, German Constitutional Court). Legal uncertainty for all courts as to future development: Dangerous back and forth moves fatal for the protection of human rights! Palacios offers no sustainable solution for the pressing needs and problems of an aging European society.

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III. Smallest common denominator

Points of Orientation for the justification of direct or indirect discriminations based on age :
a) Member States and social partners hold more responsibility and very wide discretion in the selection and/or pursuit of a legitimate end in the realm of labour and social policy as well as in the determination of means for the attainment of that end (Palacios). The proportionality test has come closer to a test of arbitrariness, but is has to be determined on a case-by-case basis (Palacios). If the means are not unreasonable, they may be viewed as necessary (Palacios). If the provision or measure is not based on age alone, but rather other circumstances are generally taken into consideration, the prejudicial effects of the means are appropriate (Mangold/Palacios).

b)
c) d)

Thesis: There will still be an impermissible discrimination on the basis of age where no evident, legitimate end is present and age is the only requirement or the means are utterly inapt ("unreasonable").
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IV. Outlook 1. Pending cases as to age discrimination:

a) b) c) Bartsch (C-427/06, opinion delivered on 22 May 2008) Seda Kckdeveci (C-555/07) Age Concern England (C-388/07)

2.

Pertinent cases already held by ECJ:

a) b) c) Maruko (C-267/06) Feryn (C-54/07) Coleman (C-303/06)

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V. Summary
1. Prohibition of age discrimination should be conceived as a chance and not only as a legal burden. Both parties to an employment contract con profit from age-neutrally drafted clauses. Mangold was not only bold but also convincing! The partly unjustified criticism in Germany clearly made an impact on the ECJ when it held Palacios. There is the possibility to delegate responsibility to Member States, Social Partner and employers without having to sacrifice the prohibition of age discrimination straight away. Future will tell which of both judgments will be a mere footnote of the history of the prohibition of age discrimination: Mangold or Palacios.

2. 3. 4.

5.

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Blagodaria Vi za vnimanieto! Thank you for your attention!

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