Exclusion of persons entitled to an AOW pension from transition payment does not constitute age discrimination
13 May 2018
The Supreme Court has determined that the provision that persons entitled to an AOW (General Old Age Pensions Act) pension are not entitled to a transition payment if the termination or non-continuation of the employment agreement takes place in connection with the employee's reaching the AOW pension age or after the employee has already reached the AOW pension age, is not in violation of Directive 2000/78/EC. According to the Supreme Court this provision therefore does not constitute age discrimination.
Pursuant to Article 673 paragraph 7 under b of Book 7 of the Dutch Civil Code, employees who have reached the AOW pension age are not entitled to a transition payment in case their employment agreement is terminated. A discussion about the question of how this exclusion relates to the equal treatment legislation arose in the specialised literature. The Utrecht subdistrict court submitted questions about this to the Supreme Court for a preliminary ruling (ECLI:NL:RBMNE:2017:3249). On 9 February 2018 (ECLI:NL:PHR:2018:158) the advocate general found that there is no discrimination since the legislator pursues a legitimate purpose, namely preventing persons who are no longer required to perform work in order to support themselves, as they qualify for AOW benefits, from benefiting from a transition payment.
The Supreme Court answered these questions for a preliminary ruling today and concluded that the exclusion of persons entitled to an AOW pension from the transition payment does not constitute age discrimination (ECLI:NL:HR:2018:651). The Supreme Court considered as follows:
"The transition payment is intended for employees who are required to perform work in order to support themselves. A first indication of this is that the transition payment is intended to enable the employee, using the financial means involved, to make a transition to a new job easier. The intention referred to there to compensate the employee for the dismissal by means of the transition payment must also be considered in connection with the circumstance that he is still required to perform work in order to support himself; the transition payment therefore compensates (to some extent) the loss of the income from work that is required for his maintenance. The fact that the obligation to pay a transition payment is considered an implementation of the duty of care of the employer vis-à-vis an employee who is dismissed or whose temporary contract is not renewed is in keeping with this. According to the government this duty of care does not include cases in which the employee is no longer required to perform work in order to acquire an income because the employee has reached the retirement age.
In addition to this, the legislator has opted for an abstract and standardised scheme, with the conditions for the entitlement to a transition payment and the rules for calculating the amount thereof being described in a precise manner in the law. This scheme does not take into account circumstances other than those specified in Articles 673-673d of Book 7 of the Dutch Civil Code.
In view of the above the purpose of the exclusion from a transition payment for employees who have reached the AOW age is to prevent persons who are, in general, no longer required to perform work in order to support themselves, from being entitled to a transition payment. In other words: the rule prevents a category of persons for whom the payment is not intended from being entitled to the transition payment."