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Odar v Baxter Deutschland GmbH (ECJ case)

14 December 2012

Subjects : Redundancy; Ill health and age; International case

The Facts

Dr Odar worked for Baxter Deutschland Gmbh (“Baxter”). Baxter operated a redundancy scheme which implemented German law (the AGG). The formula for calculating redundancy compensation for workers covered by this scheme was based on their age, length of service and gross monthly pay. A special formula was applied to workers over 54 years old. This had the effect of reducing compensation on an increasing basis as workers got closer and closer to state pension age.

Dr Odar was aged over 54 and suffered from severe disabilities. Under the German state pension scheme, Dr Odar was entitled to an ordinary old age pension at 65 (from 1 August 2015) and an additional pension for severely disabled people at 60 (from 1 August 2010).

Dr Odar's employment ended on 31 December 2009 after 30 years service with Baxter. Dr Odar received a gross redundancy payment of €303,253.31 (assuming a state pension date of 1 August 2010). If he was not aged over 54, Dr Odar would have received €616,506.63.

Dr Odar claimed both direct age discrimination and indirect disability discrimination in relation to the calculation of his redundancy payment.

The ECJ decision

The ECJ ruled that this was not unlawful direct age discrimination.

The ECJ ruled that the special formula that was applied to those aged over 54 amounted to a difference in treatment on the grounds of age. However, the ECJ held that this difference in treatment was justified by a legitimate aim and the means of achieving it were appropriate and necessary.

In its decision, the ECJ said that the redundancy scheme had an aim that was capable of justification, namely the protection of younger workers and facilitation of their integration into employment. The ECJ also referred to its decision in Andersen v Region Syddanmark where an employee’s entitlement to replacement income in the form of a pension had been considered to be relevant.

The ECJ held that the special formula did not go beyond what was appropriate and necessary to achieve the aims. The age factor used in the calculation increased progressively from age 18 until it peaked and plateaued at age 57. The age factor only started to decrease at age 59. The ECJ also made reference to the fact that the formula was contained in a collective agreement. It was the product of collective bargaining and a negotiation between the employer and trade union.

In relation to the indirect disability discrimination claim, the ECJ held that this did amount to discrimination and it could not be justified.

The judgment is available here

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Johann Odar v Baxter Deutschland GmbH, Case C-152/11