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‘Redundancy payments based on age could be unlawful’ rules ECJ

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Following a landmark European Court of Justice (ECJ) German redundancy case, UK employers could leave themselves open to discrimination charges if they base their redundancy payouts on age.

In Kucukdeveci v Swedek GmbH & Co, the German government offered a substantially reduced redundancy payout to an employee as they were less than 25 years of age when they began employment.

While the court appreciated that measures were taken to preserve employer flexibility and increase protection for those with lengthy years of service, the court ruled that the worker suffered unlawful age discrimination due to the reduced payout.

The difference in payments was not based upon length of service at the date of dismissal but on the employee’s age at the time of recruitment, the court ruled.

Although strictly concerning German employment law, the ECJ’s decision could have implications for UK employment law through the Framework Directive, under which national courts must discuss any conflicting national laws.

In the UK, both the statutory redundancy pay calculation and the basic award for unfair dismissal are calculated by reference to age as well as length of service.

The basic calculation of one week’s pay for each year of service is increased to 1.5 weeks’ pay for service from age 41 upwards and is reduced to 0.5 week’s pay for service under the age of 22.

The reasons put forward by the UK Government for retaining these age bands when it introduced the UK age discrimination legislation in 2006 were similar to those relied on by the German Government.

If maintained, employers could face challenges to these provisions in an employment tribunal if the ECJ case is referenced.

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Written by Andrew Hodges

March 2, 2010 at 11:39 am

Posted in Comment, LinkedIn

Tagged with , , ,

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