The European Court of Justice found that a Greek labour reserve system did discriminate against older workers, but this was justified as it met employment policy objectives in the context of the acute economic crisis facing Greece at the time.
Facts
A Greek court asked the European Court of Justice (ECJ) to give a preliminary ruling on the provisions of a labour reserve system for public sector employees.
Mr AB was automatically placed under the national labour reserve system prior to his retirement. The relevant legislation provided that employees who satisfied the conditions to receive a full pension could be placed on “reserve” for up to 24 months, from 1 January 2012 until the termination of their employment relationship. This involved a reduction in pay to 60% of basic salary and a loss of promotion opportunities. Mr AB was then dismissed without severance pay some 16 months later, because the law allowed severance pay to be offset against the remuneration paid to an employee during their assignment to the labour reserve.
The referring court asked the ECJ whether the system was age discrimination and, if so, whether it could nevertheless be justified.
Decision
The ECJ held that the labour reserve system involved a difference in treatment which was directly based on the criterion of age. The system only applied to employees who were entitled to a full pension. The criteria for a full pension were having completed 35 years of service and having reached the minimum age of 58 years. This meant that the system was inextricably linked to the employee’s age.
The ECJ went on to hold that this difference in treatment was justified.
The Greek government had argued that the system was introduced in the context of an acute economic crisis and was intended to help prevent the Hellenic Republic from becoming insolvent. It would achieve an immediate reduction in wage costs in the public sector in order to achieve savings of €300 million in respect of 2012. It also furthered employment-policy objectives, by ensuring that a high level of employment would be maintained, and making it possible to establish a balanced age structure between young civil servants and older civil servants in the broader public sector.
The ECJ found that the objective of reducing public expenditure in the context of an economic crisis could not constitute a legitimate aim. Budgetary considerations alone could not be a legitimate aim that justified age discrimination. However, the labour reserve system also appeared to meet legitimate employment-policy objectives. The choice to place the workers concerned under such a scheme rather than to dismiss them was intended to promote a high level of employment, and the scheme had been able to avoid the potential dismissal of younger workers in that sector. These policies could be a legitimate aim. The ECJ also found that, in a context where there was an acute economic crisis, the scheme did not go beyond what was necessary to achieve these employment-policy objectives.
The judgment is available here
AB v Olympiako Athlitiko Kentro Athinon - Spyros Louis, Case C‑511/19 (15 April 2021)