Severance allowance

Case no. 186/2012 and case no. 96/2013 etc.
Judgments delivered on 17 January 2014

The Region of Southern Denmark
vs.
The National Federation of Social Educators acting for A
and
The National Federation of Social Educators acting for B

and

The Municipality of Slagelse
vs.
FOA acting for C

The fact that an employee is entitled to old-age pension does not in itself justify lapse of severance allowance under s. 2a of the Danish Salaried Employees Act. The lack of or late payment did not constitute an infringement so serious in nature that the employees were entitled to compensation under the Danish Discrimination Act

The cases concerned dismissal of 16 people who were over the age of 60 at the time of dismissal. They had been continuously employed in the same enterprise for at least 12 years, and the employers had in most of the cases refused to pay severance allowance, citing s. 2a(3) of the Danish Salaried Employees Act, according to which no severance allowance will be payable, if the employee will – on termination of the employment relationship – receive an old-age pension from the employer and if the employee has joined the pension scheme in question before attaining the age of 50 years.

In 14 cases (the cases comprised by the Eastern High Court's judgment), the main issue was whether the employees were entitled to severance allowance. The employers were all public employers, as the private employers had granted the claim for severance allowance during the pre-trial proceedings at the High Court. In the cases where severance allowance had to be or had been paid, there was a further issue of whether the employers had committed an infringement so serious in nature that compensation was payable under s. 7 of the Danish Discrimination Act.

Previously, established case law dictated that if an employee was entitled to old-age pension, his or her right to severance allowance would lapse. However, in its judgment of 12 October 2010 (the Ole Andersen judgment), the Court of Justice held that the Employment Directive precludes national legislation pursuant to which workers cannot claim a severance allowance, although they intend to waive their right to old-age pension temporarily in order to continue with their career. According to this judgment, s. 2a(3) of the Salaried Employees Act cannot be applied by a public employer if an employee establishes such intention.

The majority of the Supreme Court found that it was not possible based on the Ole Andersen judgment, among others, to infer any general established guidelines for when employees must be regarded as having temporarily waived their right to old-age pension in order to continue their career, and that such decision should reasonably be made by the legislature. Consequently, the ruling in the cases at hand had to be based on a concrete assessment of the evidence, and the majority of the Supreme Court found no basis for setting aside the High Court's opinion.

The infringement was not so serious in nature as to order any of the employers to pay compensation pursuant to the Discrimination Act.

In one of the cases (the case comprised by the Western High Court's judgment), the issue only concerned whether the employer was liable to pay compensation pursuant to s. 7 of the Discrimination Act, because the employer had agreed to pay severance allowance too late.

As, pursuant to the Ole Andersen judgment, the employer had reason to consider the significance of this judgment for payment of severance allowance in these cases, and as the employer, shortly after having received documentation showing that the employees were available for the labour market, granted the claims, the infringement was not so serious in nature as to order the employer to pay compensation pursuant to the Discrimination Act.

The Supreme Court thus affirmed the Eastern High Court's judgment, but amended the Western High Court's judgment.