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Age 60 as a legitimate reason to terminate a service relationship with a managing director

The attainment of age 60 can be agreed as an age limit in a service agreement allowing for the termination of the contract. This was decided by the Hamm Higher Regional Court in a judgment dated 19 June 2017, docket number 8 U 18/17. Such an age limit does not violate the General Equal Treatment Act, at least as long as the managing director is entitled to a pension payment thereafter.

The plaintiff, born in 1955, had been the managing director of the company since 2005. The service contract was last renewed up to 31 August 2018. However, the contract also included a provision allowing both parties to terminate the contract with a notice period of six months “upon entering the 61st year of life”. In June 2016, the company terminated the contract effective as of 31 December 2016. The plaintiff challenged the termination and, inter alia, argued that the termination was discriminatory.

The Higher Regional Court ruled in favour of the company and confirmed the validity of the termination based on the contractual provision. While it left open the question whether managing directors are protected by the General Equal Treatment Act, it held that even if it did apply the termination was valid. The court stated that a termination based on age could be justified as the job requirements for a managing director were high and that a company could have a legitimate interest to install a successor. If the managing director was sure to receive pension benefits following his termination, termination due to age – even below the statutory retirement age – could be in compliance with anti-discrimination laws.