The European Court of Justice has ruled that the limitation of the extension of an employment relationship beyond the statutory age limit is permissible and does not constitutes an abuse of fixed-term employment contracts.
The case: A teacher in Bremen had reached the statutory retirement age and, according to the applicable collective bargaining agreement, the employment relationship with the city of Bremen would have ended with the achievement of the statutory retirement age. However, the parties agreed to continue the employment relationship until 31 July 2015 and thus deferred the automatic termination of the employment relationship according to section 44 No. 4 of the collective bargaining agreement. The teacher then applied again to defer the termination of the employment relationship further; however, this was declined and the teacher brought an action against the city of Bremen on the grounds that a time limitation on the postponement of the end of the employment relationship was not permissible under European law.
The LAG Bremen stayed the proceedings and referred questions to the ECJ for a preliminary ruling.
To the LAG Bremen it seemed questionable whether the provision of national law – Section 43, Sentence 3 SGB VI (social security statute book VI) – that allows the postponement of the termination of the employment relationship several times when the statutory retirement age is reached, without having to give a new reason for the time limitation, is compatible with European law. The court wanted to know if the national provision is compatible with the prohibition of discrimination on grounds of age and in accordance with the Council Directive 2000/78 establishing a general framework for equal treatment in employment and occupation and the framework agreement regarding fixed-term employment contracts which is annexed to Council Directive 1999/70/EC (to prevent abuse through successive fixed-term employment contracts).
The court decided on 28 February 2018 (docket number C-46/17) that the provision in question was compatible with European law and that it was not discriminatory on grounds of age or an abuse of fixed-term employment contracts.
The court stated that Art. 2 II of the Council Directive 2000/78/EC shall be interpreted as not precluding a national provision which, like the one in issue, makes the postponement of the date of termination of the employment relationship subject to the employer’s temporary consent for employees who have reached the statutory age limit.
Regarding the framework agreement the ECJ was doubtful whether a repeated postponement of the end of the employment relationship may even be considered as successive fixed-term contracts or would rather be seen as contractual postponement of the retirement age.
Even if the LAG Bremen comes to the conclusion that the postponement of the end of the employment relationship is to be considered as successive fixed-term contracts, Section 5 No. 1 of the framework agreement shall be interpreted as not precluding a national provision which, like the one in issue, allows the parties to the employment contract, indefinitely and without further conditions, to postpone the agreed termination of the employment relationship by agreement, possibly on several occasions, once the statutory retirement age has been reached, simply because the worker is entitled to an old-age pension by reaching the statutory retirement age.
An employee that has reached the statutory age limit is usually at the end of his working life and therefore does not have the alternative of an unlimited employment contract and is therefore in a different position to other employees. Furthermore, the extension of the employment relationship at issue ensures that the employee concerned will continue to be employed under the original conditions while retaining his right to an old-age pension.
Regarding employment contracts it therefore seems to make sense to always specify that the employment relationship ends once the statutory age limit is reached. The possibility of postponing the end of the employment relationship by agreement of both parties is still present in this case and can be used multiple times, without limitation.