Master Thesis
Active Ageing
and Age Discrimination Legislation
Lessons from the European Union, the International Labour Organisation and
the United States of America
Master of International and European Labour LawJuly 2012
Franziska Pretzsch Supervisors:ANR 461362 Prof. Dr. R. Blanpain
Ms. N. Zekic
Table of Contents
Introduction 7
Chapter 1 The ageing society and older employees 11
A. Definition of older employees 11
B. The need to work longer 13
C. Older employees and the labour market obstacles 15
I. High unemployment rate of older employees 15
II. Stereotypes and prejudices 16
III. Strict labour market policy 17
IV. Remuneration related to seniority 18
V. Mandatory retirement and pre-retirement 19
D. Summary 21
Chapter 2 Active Ageing 23
A. The history 23
B. The notion “Active Ageing” 24
I. Productivity approach 24
II. Life course approach 25
III. The European and the U.S. Active Ageing policies 25
C. Components of Active Ageing policies and relation to ADL 26
D. Summary 27
2
Chapter 3 Age discrimination legislation 29
A. Discrimination and discrimination on the basis of age 30
B. The International Labour Organisation and Age Discrimination 32
Legislation
I. Conventions and Recommendations to support older workers and 32
employment
II. ADL according to the ILO 35
a. Personal scope 35
b. Material scope 37
i. Direct and indirect discrimination 37
ii. Harassment, victimization and instructions to discriminate 38
iii. Employment protection and promotion and working conditions 39
c. Justification for discrimination 40
d. Burden of proof 41
e. Access to jurisdiction, supervision and remedies 43
III. Summary 44
C. The EU and Age Discrimination Legislation 45
I. Introducing ADL in the EU 45
II. Personal scope 46
III. Material scope 46
a. Direct and indirect discrimination 46
b. Harassment, victimization and instructions to discriminate 48
c. Employment protection and promotion and working conditions 49
d. Exemptions regarding national law and national social security schemes 49
IV. Justification for discrimination 50
a. Genuine and determining occupational requirement 50
3
b. Legitimate and proportional aim for a different treatment 51
i. Recruitment age 52
ii. Mandatory retirement ages 52
iii. Promotion of vocational training 52
iv. Remuneration related to seniority 53
v. Terms of notice 53
vi. Tendency of the ECJ and impact on EU member states 54
V. Burden of proof 54
VI. Access to jurisdiction, supervision and remedies 54
VII. Summary and recommendations 55
D. The USA and Age Discrimination Legislation 58
I. Introducing ADL in the USA 58
II. Personal scope 58
III. Material scope 59
a. Disparate treatment and disparate impact (direct and indirect discrimination) 59
b. Employment protection, employment promotion and working conditions 60
IV. Justification for discrimination 61
a. Genuine and determining occupational requirement 61
b. Other reasons for justification – Defence Based on Reasonable Factors 62
Other Than Age
V. Burden of proof 64
VI. Access to jurisdiction, supervision and remedies 67
VII. Summary and recommendations 69
E. Comparison ILO recommendations, Framework Directive and ADEA 71
4
Chapter 4 Age Discrimination Legislation and its impact on the 74
labour market
A. The ADEA and the impact on the labour market of older workers 76
I. Literature review 76
II. Hiring older workers 77
III. Firing older workers 78
IV. Retirement 79
V. Summary 79
B. The EU Framework Directive and the impact on the labour market of 80
older workers
I. Literature review 80
II. General remarks 81
III. Summary 82
C. Conclusion 82
Chapter 5 Conclusion 84
5
Abbreviations
ADL Age Discrimination Legislation
ADEA Age Discrimination in Employment Act 1967
BFOQ Bona Fide Occupational Qualification Defence
EU European Union
EU Directive 2000/78/EC Framework Directive
EEOC Equal Employment Opportunity Commission
EESC European Economic and Social Committee
ETUI European Trade Union Institute
ILO International Labour Organisation
OECD Organisation of Economic Co-operation and
Development
POWADA Protecting Older Workers Against Discrimination Act
RFOA Defence Based on Reasonable Factors Other Than Age
USA United States of America
WHO World Health Organisation
6
Introduction
In recent times, our society has been greying increasingly. Due to a higher life expectancy
and a lower fertility rate, our society is getting older and older. The percentage of people
worldwide older than 69 has increased over the years from 8 per cent in 1950 to 11 % in
2011 and is expected to increase to 22 % by 2050.1 We have to face the fact that our work-
ing population is in flux. The baby boomer generation is about to retire and too few young
people are not able to countervail the work force gap the baby boomers will leave behind.
Our social security systems, especially our retirement schemes, are not laid out to provide
for the high number of prospective pensioners due to the pay-as-you-go based systems in
many western countries. Additionally, companies lose too many well-educated employees
who retire or pre-retire and they cannot compensate the loss with younger people.
The governments of many countries reacted and tried to tackle the impacts of the demo-
graphic change. For instance the European Union (hereafter: EU) introduced, in addition to
other measures - like the promotion of demographic renewal by creating better conditions
for families, the promotion of employment with more jobs and longer working lives of better
quality, incentives to make Europe more productive and dynamic, incentives to receive and
integrate migrants in Europe - measures to secure sustainable public finances in Europe,
thus granting adequate social security and equity for all the generations.2 The European
member states extended the statutory retirement age, abolished or limited pre-retirement
and introduced obligatory private pension fund contributions.3 However, politicians have
realized that all their efforts are useless unless a greater number of older people start or
keep on working.
1 ILO, Brochure – Rights, jobs and social security for older women and men, 2008, 2.2 European Commission: The demographic future of Europe – from challenge to opportunity, (COM 571 final, 2006)
13; European Commission: Dealing with the impact of an ageing population in the EU, (COM 180 final, 2009), 7.3 European Commission: Dealing with the impact of an ageing population in the EU, (COM 180 final, 2009), 4.
7
However, even if the older employees themselves wanted to continue or get back into
work, they are often struggling with high obstacles which keep them from entering the la-
bour market. Older workers are confronted with prejudices concerning their work perform-
ance such as lower productivity, reluctance to do vocational training, inflexibility, less cre-
ativity and so forth.4 Therefore, the unemployment rate amongst older workers in the EU is
considerably higher than amongst younger employees.5 In addition, employers are reluct-
ant to employ or to train their older employees because, from their point of view, the re-
maining work time of older employees does not justify the efforts of the employment or the
training.6 In fact, older employees are frequently treated differently from younger workers
and encounter discrimination based on their age.7 Hence, governments worldwide have
started to combat age discrimination and to introduce the tool of “Age Discrimination Legis-
lation” (hereafter: ADL) to countervail the exclusion of older employees from the labour
market. Additionally, they start to adopt other policy measures – combined under the no-
tion “Active Ageing” - in order to activate older people and to integrate them in labour mar-
kets and the society. Notwithstanding age discrimination remains the biggest problem for
older workers because they cannot enjoy equality of treatment and respect and are
hindered from fully participating in the labour market.8
Little research has been done about existing ADL, its components, principles and good
practice.9 Thus, we may ask what ADL in practice looks like. Furthermore, in the light of
4 OECD, Live Longer, Work Longer, 2006, 63.5 Data according to EUROSTAT 2011, available at
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Employment_statistics#Employment_rates_by_gender.2C_age_and_educational_attainment.
6 B. Jorgensen, P. Taylor, 'Older workers, government and business: Implications for ageing populations of a global-izing economy', in Economic Affairs, Vol. 28, Issue 1, 2008, 19.
7 ILO, Ageing and Labour Markets for Older Workers, ILO employment and training papers No. 33, 1999, 16.8 C. O'Cinneide, Age discrimination and European Law, 2005, 5; ILO, Age discrimination and older workers: Theory
and legislation in comparative context, Conditions of Work and Employment series No. 20, 2008, 45; A. Walker, 'A strategy for Active Ageing', International Social Security Review 2002, Vol. 55, 128; B. Hepple, 'Age discrimination in employment: Implementing the Framework Directive 2000/78/EC', in S. Fredman and S. Spencer (eds), Age as an Equality Issue – legal and policy perspectives, 2003, 75; D. Neumark, and W. Johnson, 'Age Discrimination, job separation and employment status of older workers: Evidence from self-reports', National Bureau of Labor Re-search, working paper No. 5619, 1996, 30.
9 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and
8
Active Ageing policies the question arises whether ADL increases the integration of older
workers in the labour market and enhances the employment rate of older workers.
The master thesis tries to give answers to both questions by comparing the situation in the
United States of America (hereafter: USA) and the EU in critical consideration of the Inter-
national Labour Organisation (hereafter: ILO) recommendations for a good ADL practice.
Apart from the adoption of several conventions and recommendations, the ILO published
some recommendations of a good practice of ADL in 2008 after a comparison of ADL in 40
different countries worldwide.10 Likewise, the USA already enacted their Age Discrimination
in Employment Act (hereafter: ADEA) in 1967. The EU recently introduced its binding Dir-
ective 2007/78/EC (hereafter: Framework Directive) which has now been implemented by
all 27 European member states. The ILO research can give a first indication for compon-
ents and a good practice of ADL. Additionally, after more than 45 years of discrimination le-
gislation in the USA and 12 years in the EU, both countries’ highly developed and
tightened ADL and jurisprudence give the opportunity to examine what ADL in practice can
look like and what kind of problems in practice can occur. Moreover, some U.S. and
European authors researched the question whether ADL has a positive impact on the la-
bour market, especially regarding the employment rate of older workers.11 Due to the con-
siderably experience with ADL and some further research on ADL's impact on the labour
market, the actual European and U.S. ADL are examined.
To frame the current situation for older workers on the labour market, the thesis describes
in the first chapter who is an older worker and what kind of problems he/she has to
Employment series No. 20, 2008, v.10 Ibid.11 See J. Lahey, 'State Age Protection Laws and the Age Discrimination in Employment Act', working paper 12048,
National Bureau of Economic Research, 2006; D. Neumann, 'The Age Discrimination in Employment Act and the challenge of population ageing', working paper 14317, National Bureau of Economic Research, 2008; J. S. Hey-wood and W. S. Siebert, 'Understanding the labour market for older Workers: A survey', IZA discussion paper No. 4033, 2009.
9
struggle with in his/her daily working live.
In the second chapter, the notion “Active Ageing” is introduced and defined. Furthermore,
Active Ageing is linked to ADL and their mutual importance is examined.
The third chapter defines ADL. In the beginning, the term discrimination is described, in
particular the meaning of discrimination based on age. Thereafter the components of ADL
are analysed: First the ILO recommendations of 2008 are evaluated. Subsequently, the
Framework Directive and the ADEA are assessed with regard to the precedent findings.
The research of this thesis will only consider the Framework Directive on European level,
since the consideration of the ADL in all 27 member states exceeds the possibilities of the
thesis.12 The latter is also true for the ADL in the USA and its federal states, which also im-
plemented further ADL prior to the coming into force of the ADEA. Hence, the U.S. federal
states are not within the scope of this thesis.13 Additionally, the thesis gives insight into ac-
tual developments of the ADL in the EU and the USA by explaining the current jurispru-
dence.
The fourth chapter focuses on the question whether ADL has a positive impact on the in -
tegration of older workers into the labour market, in particular whether ADL may increase
the employment rate of older employees.
In the fifth chapter the results are summed up and the question of what role ADL can play
in the policy of Active Ageing and what lessons we can learn from the exist ing ADL in the
EU and the USA will be addressed.
12 An overview can be found in ETUI, Non-discrimination in the European Union, Implementation of Directive 2007/78/EC, Part II Age and disability and Part III Awareness-raising, enforcement and litigation, Brussels 2004.
13 See for a brief introduction S. J. Adams, 'Age discrimination legislation and the employment of older workers', La -bour Economics,Vol. 11, 2004, 240; D. Neumark, The Age Discrimination in Employment Act and the challenge of population ageing, National Bureau of Labor Research, working paper No. 14317, 2008.
10
Chapter 1
The ageing society and older employees
Due to the demographic change and a higher life expectancy, society is ageing and so are
the older employees. As a consequence, our social security systems face serious diffi-
culties to handle the high amount of prospective social benefit recipients and it is neces-
sary that there are a greater number of older workers in employment.
However, an older employee is faced with many problems: even if their life expectancy is
higher and - owing to the modern medicine - their health is better, older employees are still
not able to benefit from those facts. They have to face numerous obstacles in order to get
access to or to remain within the labour market.
In order to understand the urgent problems of a changing society and of ageing employ-
ees, this chapter gives a definition of the notion “older employee”. Thereafter the current
demographic challenges are presented. Furthermore, the research will show actual prob-
lems and disadvantages in the labour market for older employees with a focus on the
obstacles they have to face.
A. Definition of older employees
None of the member states of the Organisation of Economic Co-operation and Develop-
ment (hereafter: OECD), except for the USA, explicitly defines the age when a person is
called an older employee in their legislation. Therefore, the question arises of how a
younger worker can be distinguished from an older worker?
11
Due to the fact that there are no criteria for the definition of age, a definition of an older
worker is quite hard to find.14 Additionally, there is no discrete and insular group of older
workers - everybody ages and will become ‘old’ at some point.15 From the perspective of
acts of discrimination based on age, ADL is not only protecting older people. Everybody
can be discriminated on the basis of age at a certain point in life. Hence, the age and the
notion age are always in flux.
In the USA, persons at the age of 40 or above are protected from age discrimination.16 The
legislation explicitly excludes all persons younger than 40 years from the scope of discrim-
ination legislation.17 The EU does not legally define an older worker. Moreover, the EU
leaves the definition to the discretion of the member states.18 As in the EU, the ILO also
has no legal definition of the notion older worker, but the Older Workers Recommendation
allows the adoption of specific age categories by its member states.19
Nevertheless, for statistical and governmental purposes, an older employee is frequently
defined as a person between 60-65.20 By contrary, the OECD determines an older employ-
ee at an earlier stage, as a person aged 50 years or older.21 The ILO considers an employ-
ee at the age of 55 to be an older worker.22 This is the same as in the EU which usually ac-
knowledges a person as an older employee when the person is aged between 55-64.23
Interestingly, researches have shown that already workers at the age of 45 have got
14 C. O'Cinneide, Age discrimination and European Law, 2005, 5.15 M. Sargaent, Age discrimination in employment, 2006, 4.16 29 U.S. Code 631 (a).17 M. Sargeant, Age discrimination in employment, 2006, 4.18 See Directive 2000/78/EC, Art. 6.19 See ILO Older Workers Recommendation, 1980 (R162).20 'Old age', in Encyclopædia Britannica Online: http://www.britannica.com/EBchecked/topic/426737/old-age.21 OECD, Live Longer, Work Longer, 2006, 16.22 ILO, Ageing of the Labour Force in OECD countries: Economic and Social Consequences, Employment Paper
2002/2, 2002, 10.23 European Commission, Employment in Europe 2009, 38.
12
experiences with discrimination based on age.24 Furthermore, some scientific research has
dealt with the notion that an older employee is a person of 45.25
In compliance with the scientific approach and the U.S. legislation and for the protection of
older employees who experience age discrimination at an early stage in life, the notion
“older employee” shall be defined as a person aged 40 or older for the purpose of this
thesis.
B. The need to work longer
The need for a longer work performance is incontestable. The increase in life expectancy
and the high number of prospective pensioners lead to a potential collapse of our pension
and health schemes.
The life expectancy in the OECD countries increased in the 20 th century dramatically.
When the average life expectancy for women was only 48 years in the former 1950's, it in-
creased to an average of 67 years in 2000 and will go up to an average of 85 years in
2050. The average life expectancy of men increased over the years almost with the same
quick pace (1950 – 45 years, 2000 – 63 years, 2050 – 79 years). 26 According to the ILO, in
Western countries, one out of three persons will be 60 and above in 2050. Especially Ger -
many, Japan and the countries in Southern Europe such as Greece, Italy and Spain will
have the oldest populations worldwide.27 Besides the reform of the current pension and
health schemes, we need to raise the employment rates of older employees.28 Apart from 24 ILO, Report on the ILO Symposium on Business Responses to the Demographic Challenge, 2009, 11.25 A. Ichino, G. Schwerdt, R. Winter-Ebmer, J. Zweimüller, 'Too old to work, too young to retire?', IZA discussion pa-
per series, discussion paper No. 3110, 2007.26 OECD health data 2011, available
http://www.oecd.org/document/30/0,3746,en_2649_33929_12968734_1_1_1_1,00.html.27 ILO, Ageing of the Labour Force in OECD countries: Economic and Social Consequences, Employment Paper
2002/2, 2002, 8.28 European Commission, White paper, An agenda for adequate, safe and sustainable pensions,
13
that financial needs of the public budgets, the older employees can be urged to find
employment or stay employed. The number of older workers in the USA, due to the ageing
of the baby boomer generation, has increased over the years. The U.S. Bureau of Labor
Statistics has reported that more Americans over 55 are now working than at any time over
the past thirty years – many because they need to in order to maintain their standards of
living.29 By way of example, women have often worked less (be the reason to care for
children or relatives) and are therefore not willing to retire at 65 because they have to
expect a low pension payment. Additionally, the woman’s wage is not equal to man's wage
for the same kind of occupation. Woman’s wages vary from 70 to 90 per cent of man's
wages.30 Other reasons for women to work longer are the higher percentage of unpaid,
low-paid, part-time and informal work which can lead to poverty of elderly due to low wage
jobs.31 Furthermore, low wage jobbers are generally more at risk to suffer from poverty
when they become elderly because they can just expect low pensions. The risk of poverty
of elderly people in the EU is one-in-six, and this means that more than 80 million people
are at risk of suffering from poverty when they retire.32 Thus, it can be essential to work as
long as possible to escape the vicious circle of poverty of elderly people.
(COM 55 final 2012), 6.29 ILO, Brochure – Rights, jobs and social security for older women and men, 2008, 3.30 ILO, Report of the Director General, International Labour Conference: Equality at work, the continuing challenge
100th Session 2011, 23.31 ILO, Brochure – Rights, jobs and social security for older women and men, 2008, 4.32 A. Zaidi, Poverty of elderly people in EU 25, 2006, 3.
14
C. Older employees and the labour market obstacles
I. High unemployment rate of older employees
The employment rate of older employees is still lower than that of younger employees. In
2010 the employment rate of employees aged between 25 and 54 was 76 % in the EU. By
comparison, the rate of the age group of 55 to 64 years old persons was only 46 %.33 A
more positive picture can be drawn in the USA. The employment rate of the group of
people between 25 and 54 was 75 %, whereas the employment rate of older employees
between 55 and 64 constituted at least 60 %.34 In conclusion, the EU was still not able to
meet its target to increase the employment rate of older employees up to 50 % for a
“Europe 2020”.35
Notwithstanding, recent developments in some countries evoke slight hopes that policy
changes among older employees and their integration in the labour market can lead to
positive effects in the employment rate. For instance, according to a recent report of the
German Federal Ministry of Labour and Social Affairs (Bundesministerium für Arbeit und
Soziales), the percentage of older employees between 55 and 64 increased from 38 % in
2000 to 58 % in 2010. The improvements are achieved by an increase of the statutory re-
tirement age, abolishment of pre-retirement and public programmes to promote older em-
ployees.36 Nevertheless, the employment rate of older employees is still low. Getting into
work and remaining in employment is disproportionately harder for older employees than
33 Data according to EUROSTAT 2011, available at http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Employment_statistics#Employment_rates_by_gender.2C_age_and_educational_attainment.
34 Data according to U.S. Bureau of Labor Statistics, Employment outlook 2010-2020, Labor force projects to 2020: a more slowly growing workforce, 2012, 44.
35 Stockholm European Council, Presidency conclusions, 2001.36 Bundesministerium für Arbeit und Soziales, Fortschrittsreport “Altersgerechte Arbeitswelt”, 2012, 22, 27.
15
for younger. 37 Hence, older workers remain unemployed longer than younger people.38
II. Stereotypes and prejudices
One of the main obstacles for older workers is the employer's believe in stereotypes of
older employees which can be the starting-point for age discrimination in hiring, firing,
training and promotion.39 In the late 1990's older workers have been a nightmare for hu-
man resource managers because they assumed that older workers are less effective, less
flexible, less adaptive and unwilling to study further in order to tackle new work demands
and thus, should retire. Additionally, older workers would cause higher expenses and
therefore mean a barrier to any business organisational change.40 Stereotypes of older em-
ployees have been a long lasting obstacle, although studies have shown that workers over
the age of 55 tend to be some of the most engaged workers.41 Needless to say that sci-
entific researches and empirical studies about the effect of age on productivity are some-
times contradictory, but the majority concludes that there is no gap between the productiv-
ity of older and younger workers.42 Due to the improvements in available research data,
the understanding of productivity of older workers changed during the last decade.
Nowadays it is a proven scientific fact that older workers are not less productive than
younger employees. By contrary, older employees are to a certain degree more productive
than younger employees (especially in comparison to the group younger than 40) and a
higher percentage of older employees can increase the productivity of the company.43 Cer-
37 A. Ichino, G. Schwerdt, R. Winter-Ebmer, J. Zweimüller, 'Too old to work, too young to retire?', IZA Discussion Pa-per Series, discussion paper No. 3110, 2007, 24.
38 D. Neumark, 'The Age Discrimination in Employment Act and the challenge of population ageing', National Bureau of Labor Research, working paper No. 14317, 2008, 8.
39 OECD, Live Longer, Work Longer, 2006, 63.40 B. Jorgensen, P. Taylor, 'Older workers, government and business: implications for ageing populations of a globaliz-
ing economy' in Economic Affairs 2008, Vol. 28, Issue 1, 19.41 ILO, Report on the ILO Symposium on Business Responses to the Demographic Challenge, 2009, 18.42 J. van Oeurs, L. Stoeldraijer, 'Age, wage and productivity in Dutch Manufacturing', De Economist 2011, Vol. 159,
114; Bundesministerium für Arbeit und Soziales, Fortschrittsreport “Altersgerechte Arbeitswelt”, 2012, 14; by con-trast, see OECD, Live Longer, Work Longer, 2006, 63.
43 C. Goebel, T. Zwick, 'Which personnel measures are effective in increasing productivity of older workers', Centre
16
tainly ageing diminishes the cognitive, sensory and motor skills. However, scientific re-
searches have shown that older people are able to compensate those limitations with ex-
perience and therefore the cognitive ability in the current job is not affected.44 Additionally,
human resource managers appreciate the reliability, knowledge by theory and experience,
discipline, loyalty and the ability to work under pressure.45
III. Strict labour market policy
Another reason for a low employment rate of older workers in many countries (for instance
in Belgium, Finland, Japan and Norway) is a strict employment protection policy with high
restrictions for a dismissal of older workers, longer notice periods and higher severance
pay.46 The scientific data about the relation between strict employment policies and the im-
pact on the older employment rate are rare. However, one of the few researches verified
that strict policy provisions tend to have a negative effect on hiring rates.47 At the same
time, high employment protection can help to keep older workers in employment. In Ger-
many, a high degree of co-determination, in particular the existence of numerous worker's
councils, led to a relatively high number of older workers in bigger companies than in small
and mid-sized companies.48 Nevertheless, strict employment protection provisions are nor-
mally one reason for a high unemployment rate of older workers.
for European Economic Research, discussion paper No. 10-069, 2010; L. Maxin, J. Deller, 'Beschäftigung statt Ruhestand: Individuelles Erleben von Silver Work', Comparative Population Studies – Zeitschrift für Bevölkerung-swissenschaft 2010, Vol. 35 (4), 769.
44 L. Maxin, J. Deller, 'Beschäftigung statt Ruhestand: Individuelles Erleben von Silver Work', Comparative Popula-tion Studies – Zeitschrift fuer Bevölkerungswissenschaft 2010, Vol. 35 (4), 769; N. Wild-Wall, P. Gajewski, M. Falkenstein, 'Kognitive Leistungsfähigkeit älterer Arbeitnehmer', Journal for Gerontologie and Geriatrics 2009, Vol. 4, 299; ILO, Report on the ILO Symposium on Business Responses to the Demographic Challenge, 2009, 17.
45 B. Boockmann, T. Zwick, 'Betriebliche Determinanten der Beschäftigung älterer Arbeitnehmer', Zeitschrift für ArbeitsmarktForschung 2004, Vol. 37/1, 58.
46 OECD, Live Longer, Work Longer, 2006, 72.47 K. Daniel, W. Siebert, 'Does the Employment Protection reduce the Demand for Unskilled Labor?', IZA Discussion
Papers, No. 1290, 2004, 3.48 B. Boockmann, T. Zwick, 'Betriebliche Determinanten der Beschäftigung älterer Arbeitnehmer, Zeitschrift für
ArbeitsmarktForschung 2004, Vol. 37/1, 60.
17
IV. Remuneration related to seniority
The higher wages of older workers can cause another obstacle for older workers to gain
employment or stay employed. In Austria, Belgium, France, the Netherlands and Spain,
the high seniority wages are identified as a barrier to the employment of older workers. 49
The productivity of workers increases constantly, due to their gain of job experience, until
the age of 40. Thereafter the productivity level remains stable.50 In correlation to the rise of
productivity, the wages rise and keep rising even after the peak of productivity at the age
of 40, just because of the work tenure and steeply rising wage schemes.51 Even though
their productivity is not higher than the productivity of younger employees, they receive a
higher wage than their younger colleagues which results in an overpayment. That is for in-
stance true for most of the European member states and the USA.52 That leads in the USA
to the practice of termination of the employment at a certain age prior to normal re tirement
ages. In Korea and Japan, the practice turned to fire and re-hire older employees at the
age of 55 to 60 with a substantial drop in earnings of older workers.53
However, in many countries the gap between wages of younger and older employee is, in
fact, not as high as assumed. Dr. Reinhard (at the ILO Symposium on Business Re-
sponses to the Demographic Challenge Geneva 2009) contradicted the frequently main-
stream belief that older workers are much more costly than their younger counterparts. He
argued that normally the costs are only insignificantly higher and the costs of more vaca-
tion time and pensions are often compensated by higher turnover among other groups for
recruiting, hiring and training expenses.54
49 OECD, Live Longer, Work Longer, 2006, 68.50 P. Aubert, B. Crépon , 'Age, wage and productivity: Firm-level evidence', discussion paper INSEE, 2006, 26.51 OECD, Live Longer, Work Longer, 2006, 68.52 Ibid.53 Ibid.54 ILO, Report on the ILO Symposium on Business Responses to the Demographic Challenge, 2009, 18.
18
V. Mandatory retirement and pre-retirement
At a certain point in life, almost every employee has to face retirement. Retirement means
the leaving of a particular workforce by the employee.55 The reasons for retirement are
twofold: either the employee is obliged to leave the workplace or it is his/her free choice.
External factors for a mandatory retirement can be caused by a default retirement age pro-
vision in national laws, in collective agreements, or in individual employment contracts.
Few countries imply a mandatory retirement age to their citizens. Mostly they just intro-
duced a pension system which establishes a statutory retirement age and which offers the
employee the possibility to retire.56 The USA abolished mandatory retirement explicitly in
1986. Employers, however, can still offer incentives for a pre-retirement at a certain age of
the employee and under certain circumstances according to the 1990 Older Workers Be-
nefit Protection Act.57
Additionally, the older employee himself can decide to leave the workforce for numerous
reasons. He/she can be unwilling to continue with the occupation because it is too physic-
ally demanding after decades of work. Moreover, he/she can just feel to be entitled to retire
after decades of contribution to the national pension systems.
In respect of Bismarck's heritage, workers are allowed to retire in Europe at the age of 60
to 65, in the USA the normal retirement age is 65. The average in Europe will increase to
the age of 67 by 2020 after recent amendments of the national pension schemes, in the
55 M. Sargeant, Age Discrimination in Employment, 2006, 105.56 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and
Employment series No. 20, 2008, 9.57 N. Adnett and S. Hardy, 'The peculiar case of age discrimination: Americanisation of the European social model?',
European Journal of Law and Economics 2007, Vol. 23, 36.
19
USA by 2027.58 Most collective agreements and individual contracts contain a provision
which causes a default retirement in the event that the employee turns 65. Moreover,
some occupations are by law restricted to workers by a certain age, e. g. pilots in the USA
have to retire if they turn 65 by the Fair treatment for Experienced Pilots Act.
Nevertheless, the retirement ages are in reality way lower than 65. In 2009, the average
retirement age for men in Europe was 62 years, for women even lower with 61. In the USA
it was 64 years for men and for women 62 in 2011.59
Apart from the above-mentioned stereotypes and seniority wages, another major reason
for the difference in real retirement age and statutory retirement age is the prevalent use of
pre-retirement as a key for reorganisation of companies instead of redundancies in the last
decades. Additionally, a lot of pension schemes had incentives for older employees to re-
tire before the statutory retirement age. For instance, in Belgium it is still possible to retire
when contributory periods are fulfilled without any losses of the pension amount, albeit the
older employees do not meet the statutory retirement age.60 However, the European coun-
tries have already started to amend their retirement schemes and to minimize pre-retire-
ment to a small level. Thereby the average exit age from the labour market was increased
from 59.9 years in 2001 up to 61.4 in 2008.61
58 European Parliament, Pension systems in the EU – contingent liabilities and assets in the public and private sector, 2011, 61; U.S. Social Security Amendments of 1983, H.R. 1900/P.L. 98-21.
59 Data for the EU according to EUROSTAT, available at http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Sustainable_development_-_Demographic_changes#Retirement_age; data for the USA according to Center of Retirement Search at Boston Col-lege, What is the average Retirement Age?, 2011, 5.
60 European Commission, White paper, An agenda for adequate, safe and sustainable pensions, (COM 55 final 2012), 11.
61 European Commission, Green paper, Towards adequate, safe and sustainable European pensions systems, (COM 365 final 2010), 30.
20
D. Summary
The definitions of the notion “older worker” are various. Some legal systems, as the USA,
determine who is an older worker, but mostly the notion remains undefined. For statistical
reasons the older worker is mainly defined as an employee over the age of 55. In respect
of a highest possible level of protection of older workers, the term older worker in this thes-
is is determined as a person at the age of 40 or above.62
The demographic change of the society threatens the functioning of the social security and
health schemes worldwide. Older people live longer and stay longer healthy, but they still
retire early and do not contribute to the social systems anymore. Younger people cannot
compensate the drop in the workforce. Thus, we need older people to stay longer in the la-
bour market. Likewise we have to acknowledge that some older workers want to retire
early for various reasons and that we have to introduce incentives to keep them in the
workforce.
Older workers have to struggle with different kinds of problems in their daily working life.
Most often they have to cope with stereotypes and prejudices which lead to discrimination
and prevents employers hiring older workers or to support them, e. g. by vocational train-
ing. Even though older employees often need to work longer as regards to low prospective
pensions, they still have to face high barriers to enter or to stay in the labour market. The
recent scientific researches have proven that older workers are not less productive than
younger workers because they can benefit from their life long work experience. It cannot
be doubted that older employees are a valuable part of the labour market and the employ-
ers' reluctance to hire and support older employees is not completely rational
62 In accordance with the U.S. ADEA.
21
Notwithstanding the above, the stereotyped thinking, higher seniority wages, high employ-
ment protection legislation and mandatory retirement as well as pre-retirement still results
in a reluctance to employ or support older worker and thus, in a higher unemployment rate
of older workers.
22
Chapter 2
Active Ageing
Active Ageing is the new current policy trend worldwide to tackle the demographic chal-
lenges for the social security and health systems, the labour markets and the aforemen-
tioned labour market obstacles for older employees. For instance the EU dedicated 2012
to Active Ageing and announced the “European Year of Active Ageing”.63
What does “Active Ageing” mean? What are the components of Active Ageing? And what
is the relation to ADL?
A. The history
In the USA Active Ageing could be detected already in the 1960's in gerontology and geri -
atrics. The key to “successful ageing” was seen as maintaining the activity, productivity
and financial success from the middle of the working life until retirement. This approach
was criticised to be too unrealistic because it did not take into account any forms of
inactivity, e.g. disability, illness etc. In the 1980's the policies turned to productive ageing
which referred to a life course employment approach that older people are valuable and
can contribute to the workforce even beyond the normal pension age. The new approach
was caused by older workers who were demanding longer participation in the workforce
and by politicians who were for the first time confronted with ageing population and grow-
ing healthcare costs.64 At the same time, the OECD and the EU also started their efforts to
develop Active Ageing. In the early 1990's the World Health Organisation (hereafter: WHO)
introduced a new approach to Active Ageing which led to the United World Assembly on
63 European Council, European Year of Active Ageing, (COM 462 final 2010).64 A. Walker, 'A strategy for Active Ageing', International Social Security Review 2002, Vol. 55, 123.
23
Ageing in Madrid 2002 and the amendment of a political declaration - the International
Plan of Action on Ageing – as a resource for policy-making on Active Ageing.65
B. The notion “Active Ageing”
The historical development of Active Ageing has shown that there have been many actors
at International level. Consequently, the notion “Active Ageing” has several faces and
forms and there is no prevailing definition.66 However, in general, two different approaches
are established which vary in scale and scope again on national level.
Active Ageing equals a policy:
1) to enhance the productivity capacities of older workers in order to keep them longer in
the workforce
or
2) to activate older people in order to increase their participation in social, economic, cul-
tural, spiritual and political life.
I. Productivity approach
The first approach is followed by the OECD - the “3Ps” policy of population, productivity
and participation. It is focused on the period between employment and retirement and the
related labour and pension policies with special regard to pre-retirement. Thus, the defini-
tion of Active Ageing is restricted and Active Ageing concentrates on a short period in the
life of a working person.67
65 WHO, Active Ageing, A Policy Framework, 2002; UN Political Declaration and Madrid International Plan of Ac-tion on Ageing, Second World Assembly on Ageing, 2002.
66 T. Hutchison, P. Morrison, K. Mikhailovich, 'A review on the literature on Active Ageing', Healthpact Research Centre for Health Promotion and Well-being, 2006, 7 et sqq.
67 OECD, Live Longer, Work Longer, 2006, 25.
24
II. Life course approach
The WHO introduced the long-life activating approach in 1997 – the life course approach.
Older workers are not seen as a homogeneous group, but as individuals which are diverse
in their needs, abilities and perspectives. The policy is oriented on a life-long support of in-
dividuals – mainly pre-emptive health measures – to keep individuals as long as possible
active in all areas of life which also includes the working life.68
III. The European and the U.S. Active Ageing policies
The EU has been supporting a life course approach as the WHO, but from a more practic-
al perspective which is also linked to productivity. The EU Commission stated in 1999 that
“Active Ageing is about adjusting our life practices to the fact that we live longer and are
more resourceful and in better health than ever before, and about seizing the opportunit ies
offered by these improvements. In practice it means adopting healthy life styles, working
longer, retiring later and being active after retirement.”69 Active Ageing is one of the main
features of Europe's 2020 strategy for a smart, sustainable and inclusive growing. 70 In the
year of Active Ageing in the EU, the European Economic and Social Committee (hereafter:
EESC) affirmed the middle-path approach and said that ”Ageing should not only be active,
but also healthy, dignified and enjoyable. Hence, ‘Active’ Ageing should not be seen just as
the possibility of prolonging working life or social involvement.”71
The USA formerly followed the productivity approach, but is lately facing health problems
68 WHO, Active Ageing, A Policy Framework, 2002.69 European Commission, Towards a Europe for all ages – Promoting prosperity and integrational solidarity, (COM
221 final 1999).70 European Commission, Europe 2020 – A strategy for smart, sustainable and inclusive growth, (COM 2020 final
2010).71 EESC, European Year for Active Ageing and Solidarity between the Generations 2012, Opinion CESE 1377/2010 –
SOC/389.
25
of its population. Hence, in 2000 the U.S. government launched the Healthy People 2010
programme in order to promote disease prevention and health promotion and additionally
to achieve a healthy and Active Ageing. The programme is supplemented by the National
Agenda for the Environment and Aging to prepare the society for ageing and to enhance
the healthy environment for the ageing U.S. population.72 Currently, the U.S. Active Ageing
policy is characterised by a life course approach which is focused on healthy ageing.73
C. Components of Active Ageing policies and relation to ADL
Due to the diverse approaches of Active Ageing, the components of Active Ageing are vari-
ous. Moreover, national particularities regarding labour market, social security system, cul-
ture and demography of the society prevent a one size fits all solution.
The life course approach of the WHO is based on participation, health and security. Due to
the long-life approach, the suggested measures are not adjusted explicitly to the employ-
ment of older workers, but the WHO acknowledges that labour market programmes and
policies have to enable older workers to participate in the labour market. That also means
that any kind of age discrimination shall be eliminated.74
The productivity approach of the OECD is based on a flexible labour market with new work
models as part-time work; the reform of pension system, especially re-accessing retire-
ment ages and pre-retirement, the change of employers attitudes and practices, the im-
proving employability by life-long learning and training and the reduction of barriers to em-
ployment for older people; one of the main features also embodies age discrimination.75
72 See for further informations http://www.epa.gov/aging/agenda/index.htm#2.73 T. Hutchison, P. Morrison, K. Mikhailovich, 'A review on the literature on Active Ageing', Healthpact Research
Centre for Health Promotion and Well-being, 2006, 28.74 WHO, Active Ageing, A Policy Framework, 2002, 46.75 OECD, Live Longer, Work Longer, 2006, 12.
26
It is uncertain which policy will become more successful because Active Ageing is a new
approach and scientific research is scarce. In 2006 ActivAge compared the different
European member states' policies designed to cope with the demographic change. From
their perspective, the productive ageing policy is too short-sighted because it is contradict-
ory to promote the reduction of social security and health benefits and the extension of the
work performance of employees. Older workers need support from social security and
health schemes in order to remain productive. Thus, the need is clearly for an Active Age-
ing policy which promotes older workers as active citizens in the labour market, in the
health care and the community activities.76 Nevertheless, both approaches are still under
discussion.
Both policies have a common feature in that they promote ADL. Furthermore, ADL seems
to be one main feature of Active Ageing. Walker already stated that age discrimination is
the “antithesis” to Active Ageing.77 Any policy of integrating older workers into society and
labour market can only be successful if they actually have access to society and employ-
ment, but age discrimination is still one of their biggest obstacles to entering the labour
market and participating fully in society.78
D. Summary
Active Ageing is a new policy tool which tries to tackle all the problems of older workers.
76 ActivAge, Overcoming the barriers and seizing the opportunities for Active Ageing Policies in Europe, Final Report 2005, 3.
77 A. Walker, 'Towards Active Ageing in the European Union', Prepared for the Millennium Project Workshop - To-wards Active Ageing in the 21st Century, The Japan Institute of Labour, Tokyo 29-30th November 2001, 14.
78 C. O'Cinneide, Age discrimination and European Law, 2005, 5; ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and Employment series No. 20, 2008, 45; A. Walker, 'A strategy for Active Ageing', International Social Security Review 2002, Vol. 55, 128; B. Hepple, 'Age discrimination in employment: Implementing the Framework Directive 2000/78/EC', in S. Fredman and S. Spencer (eds), Age as an Equality Issue – legal and policy perspectives, 2003, 75; D. Neumark, and W. Johnson, 'Age Discrimination, job separation and employment status of older workers: Evidence from self-reports', National Bureau of Labor Re-search, working paper No. 5619, 1996, 30.
27
Additionally, Active Ageing policies aim to solve the demographic impact on social security
and health schemes. There is no clear notion of Active Ageing at international level, but
two main streams are established. The productivity approach, introduced by the OECD,
and the life long course approach of the WHO. The USA and the EU both implemented
and amended the approaches, but are certainly more in compliance with the WHO ap-
proach. Both policies have in common that fact that they explicitly promote the fight
against any form of age discrimination. Age discrimination is seen to build the biggest
obstacle to the labour market for older employees. Furthermore, Active Ageing cannot be
successfully implemented and promoted if older workers are constantly discriminated
against on account of their age. Hence, ADL is one major feature of Active Ageing.
28
Chapter 3
Age discrimination legislation
According to the ILO, the ADL is an appropriate tool to ensure that older employees can
keep their existing working conditions and their current employment status. Moreover, it
can enhance their access to employment because employers are forced to take the actual
skills and abilities of the employees into account and not the age of the applicant. Further-
more, ADL balances the employee's needs with the employer's concerns because the em-
ployer keeps the discretion to decide whether an older employee shall be hired or trained
as long as his decision is based on a legitimate business reason. “Thus, if ADL is properly
developed and implemented, it can provide equitable solutions for all concerned.”79
What are the components of ADL and what are the actual problems in the implementation
of ADL? In order to understand ADL, we have to examine first the subject of the legislation:
discrimination based on age. Thereafter the most common components of ADL worldwide
pursuant to the ILO research are evaluated. The components are examined with a focus
on a classic legal approach. This embraces questions such as: what is the historical back-
ground of ADL? Who is subject to ADL? What objectives are covered with special regard
to employment protection and employment promotion? Are there any justifications? What
is the legal procedure with regard to access to jurisdiction and burden of proof? Additiona-
lly, the follow-up procedures (mainly the supervision of the implementation of ADL), are
analysed.
Subsequently, the actual ADL of the Framework Directive and the ADEA are examined to
ascertain whether or not they are in accordance with the aforementioned components.
79 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and Employment series No. 20, 2008, v.
29
Thereby the research will also concentrate on practical issues of the implemented ADL
with regard to the current jurisprudence in the EU and the USA.
Finally the ADL components and the two current ADL of the EU and the USA are com-
pared to answer the question how ADL works in practice and what the actual problems of
its implementation are. Eventually some recommendations are given on how the current
ADL may be improved to enhance the protection of older workers against all forms of dis-
crimination.
A. Discrimination and discrimination on the basis of age
Whenever we want to define discrimination, we should start by defining its contrary: equal-
ity. Aristotle's classical definition reads: "equality implies that like cases should be treated
alike and unlike cases unlike, in proportion to their unlikeness."80 The contrary to equality
means that a person is treated less favourably than another person in the same situation.
However, in order to become discrimination, an additional component is needed. Only if
the unequal treatment happens without any justification, it is called discrimination, other-
wise it is only differentiation.81 An additional intent to discriminate is not always necessary.
It depends on the legal system and on whether an objective or subjective approach is
taken. The USA, for example, takes a subjective approach and therefore the intent to dis-
criminate is taken into account. The contrary is true for the EU.82
Discrimination is known in several forms. In the EU, the concepts of direct and indirect dis-
crimination prevail in contrast to the U.S. legislation, which contains the disparate treat-
80 P. Foubert, 'Equality and Prohibition of Discrimination in Employment', in R. Blanpain (ed.), Comparative Labour Law and Industrial Relations in Industrialized Market Economies, 2010, 394.
81 Ibid, 403.82 Ibid.
30
ment or disparate impact equalling direct and indirect discrimination.83 Mostly, discrim-
ination provisions include provisions against harassment, instructions to discriminate and
victimization, and offer the possibility to claim damages.84
The aforementioned is also applicable if it comes to discrimination on the basis of age.
Thereby a certain person is treated less favourably than another person in the same situ-
ation on the ground of his/her age without justification. Discrimination on the basis of age
does not only concern older workers, but all persons of any age group as long as age is
the basis for a different treatment.85 This thesis, however, only focuses on older workers.
From a socio-economic perspective discrimination based on age is based on ageism.
Ageism can be defined as a certain opinion about an individual worker by the means of
stereotypes and myths about older people, added by assuming aged-based characteristics
about an individual without regarding the individual's characteristics. Hence, age becomes
in practice a proxy for the capability of an individual rather than taking into account the real
capacity of a person regardless to its age.86 Regarding older workers, employers consider
older workers mostly to be less productive, less effective, less flexible, less adaptive and
unwilling to study further in order to tackle new work demands, expensive and a barrier to
any business organisation change.87 Those stereotypes are still prevailing in employers'
opinions about older workers even if studies have shown that workers over the age of 55
tend to be some of the most engaged workers88 and that there is no gap between the pro-
ductivity of older and younger workers89.
83 29 U.S.C. § 623 (a). 84 C. O'Cinneide, Report on measures to combat discrimination: Directives 2000/43/EC and 2000/78/EC, country re-
port: United Kingdom, 2007.85 B. Hepple, 'Age discrimination in employment: Implementing the Framework Directive 2000/78/EC', in S. Fred-
man and S. Spencer (eds), Age as an Equality Issue – legal and policy perspectives, 2003, 75.86 J. MacNicol, Ageing and Age Discrimination, 2010.87 B. Jorgensen, P. Taylor, 'Older workers, government and business: implications for ageing populations of a globaliz-
ing economy' in Economic Affairs, Vol. 28, Issue 1, 2008, 19.88 ILO, Report on the ILO Symposium on Business Responses to the Demographic Challenge, 2009, 18.89 J. van Oeurs, L. Stoeldraijer, 'Age, wage and productivity in Dutch Manufacturing', De Economist 2011, Vol. 159,
31
Ageism as a pre-step to discrimination can have profound impacts on the labour market.
As already mentioned, employers are more reluctant to promote their older employees
with promotional training or to employ an older worker.90 The result is a systematic unequal
treatment of older workers because of their age and without any consideration of their ac -
tual abilities and capacities. This systemic form of ageism in employment and the labour
market results in age discrimination in employment.91
B. The International Labour Organisation and ADL
I. Conventions and Recommendations to support older workers and employ-
ment
The international community recognized the special needs and difficulties of older workers
quite early. The ILO already enacted a convention on discrimination in 1958, though
without a separate category of discrimination based on age. It was not until 1988, that the
ILO introduced the Older Worker Recommendation which gives recommendations on how
to improve the situation of older workers. Later the ILO started its Decent Work Pro-
gramme to strengthen anti-age-discrimination policy and to enhance the integration of
older workers in the labour market. 92
Social security and anti-discrimination issues have always been of the utmost importance
to the ILO. Even in the Preamble to its Constitution of 1919, the ILO's goal is stipulated as
being to improve working conditions by “the prevention of unemployment, the protection of
114; Bundesministerium für Arbeit und Soziales, Fortschrittsreport “Altersgerechte Arbeitswelt”, 2012, 14; by con-trast, see OECD, Live Longer, Work Longer, 2006, 63.
90 See footnote 4 and 6.91 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and
Employment series No. 20, 2008, 9.92 ILO, Programme implementation 2010-2011, 313th Session, 2012, 5.
32
the worker against sickness, diseases and injury arising out of his employment, … provi-
sion for old age and injury,...”. Thus, the ILO decided in its 100 th Session, which took place
in 2011, to address the strategic objective of enhancing the coverage and effectiveness of
social protection and social security.93 In order to prepare the session, the ILO conducted a
general survey on the implementation of their Conventions and Recommendations regard-
ing social security in the ILO member states. One aspect of this survey covered the ques-
tion of elimination of discrimination in respect of employment, occupation and social secur-
ity. The ILO noted with satisfaction that most countries reported that the principle of equal-
ity of treatment and non-discrimination is one of the general principles underpinning the
social security system guaranteed by national legislation.94
There are two International standards on ADL which address the issue of employment.
The ILO Convention on Discrimination (Employment and Occupation) No. 111 from 1958 is
the basic convention which requires member states to eliminate any employment-related
discrimination in their legislation on the grounds of sex, race, colour, religion, political opin-
ion, national extraction, and social origin. Age is not included in that category, but article 1
(1)(b) already provides for extending the grounds of discrimination to age, nationality and
disability for domestic purposes and further on Art. 5 permits the ILO member states to
take special measures of protection for reasons such as age which are not judged discrim-
inatory.95 Moreover, the ILO encouraged its members to extend discrimination protection to
all who need it.96 At present, the convention is ratified by 169 member states. Unfortu-
nately, one of the pioneers of ADL, the USA, has not yet ratified the convention. Further-
more, there is little political will to ratify the fundamental convention. The USA considers
93 ILO, Social Security and the rule of law, 100th Session, General Survey concerning social security instruments in light of the 2008 Declaration on Social Justice for a Fair Globalisation, 2011, 1.
94 Ibid, 89.95 Ibid, 90.96 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and
Employment series No. 20, 2008, 14.
33
itself as the founding father of ADL, due to fact that the ADEA was already enacted in
1967, and moreover cannot detect any need to introduce further ADL according to
international agreements as the ILO Conventions or Recommendations.97
The second important international instrument is the Older Workers Recommendation 162,
1980. Unlike ILO conventions, the ILO recommendation does not need to be ratified by its
member states, as it has no legally binding effect on its members. As the term recom-
mendation already suggests, it only provides detailed policy propositions that can be used
in the development of national policies and legislations.98 The recommendation does not
define “older workers”, but leaves it to the discretion of the member states to do so. How-
ever, it encourages the member states to tackle employment problems of older workers
without shifting the problem to another group in the society, e. g. younger employees.99
Furthermore, it calls on the member states to promote equality by positive action and to
support Active Ageing.100
In 1988, the ILO enacted another convention which was supposed to be the link between
the Discrimination Convention No. 111 and social security. Convention No. 168 on Employ-
ment Promotion and Protection against Unemployment was drafted to provide that each
member shall ensure equality of treatment of all persons protected on the same grounds
as those enumerated in Article 1 of Convention No. 111. Additionally, Convention No. 168
added three prohibited grounds for discrimination: age, disability and nationality. Unfortu-
nately, the Convention can be called “the forgotten convention” because, currently, the
Convention has only been ratified by 8 countries.101 Due to its limited ratification and 97 W. R. Corbett, 'The United States', in R. Blanpain et al., The Global Workplace, international and comparative em-
ployment law – cases and materials, 2007,127.98 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and
Employment series No. 20, 2008, 14.99 ILO Recommendation 168 (1980), paragraph 2.100 Ibid, paragraph 3, 5, 11, 13(c), 14(b), 21(a)(b).101 Data according to NORMLEX database, see http://www.ilo.org/dyn/normlex/en/f?
p=NORMLEXPUB:11300:696756039378847::NO:11300:P11300_INSTRUMENT_ID:312313:NO.
34
impact, the convention is not included in further research of this thesis.
II. ADL according to the ILO
According to ILO convention No. 111 and the examination of existing ADL of more than 40
countries, the ILO recommends ADL to consist of the following main components:102
a. Personal scope
Regarding age discrimination, the ILO examined that the personal scope is, in most coun-
tries, quite broad. Clear definitions of who is an “older worker” and what is “age” are rarely
used in ADL.103
According to the ILO, clear and comprehensive definitions of who is subject to the legal act
are essential to assure that ADL is actually used in practice.104 That seems logical because
if anybody is aware that he/she is protected by a legal act, the provided protection will not
be claimed. Furthermore, especially the undetermined notion age often urges the use of a
comparison between age groups. The difficulties may emerge from the determination of
the age groups and where to set the cut-off points between the groups. Moreover, the lack
of determination in the legislation leads to uncertainty which will probably end as an issue
of litigation at court. Thus, the determination of age is only forwarded to the discretion of
judicial bodies. However, judicial procedures are time consuming. Hence, the rulings can
be slowed down which affect older workers. The use of clear notions seems to be advant-
ageous.
102 See footnote 8.103 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and
Employment series No. 20, 2008, 21.104 Ibid, 22.
35
From a review of the existing legislation, “the (ILO) Committee observes that the categor-
ies of workers and types of occupations or branches of activities most frequently excluded
from the protection from discrimination on the grounds set out in Convention No. 111 are
public servants, domestic workers, certain agricultural workers, casual workers, self-em-
ployed workers, informal economy workers and non-citizens.”105 ”Other categories of work-
ers often excluded from the scope of general labour legislation include members of the ju -
diciary, the armed forces, the police force, and sometimes more generally any worker gov-
erned by specific laws or regulations”106. “Labour laws are also generally limited to wage-
earning employment, which accounts, in many countries, only for a limited proportion of
the active population.”107 Due to the changing employment relationships in a more global-
ised world, the ILO argues that employer’s liability for anti-discrimination behaviour should
not be restricted to old-fashioned employer-employee relationships. Moreover, the anti-dis-
crimination legislation should also protect self-employed, contractors, customers and cli-
ents.108
In times of changing employment relationships and a trend towards self-employment in-
stead of employment, a broad personal scope of ADL is advantageous. Some employment
cannot always be classified as self-employment, albeit it is called self-employment, be-
cause an economic dependency still exists. That makes the person more alike to an em-
ployee than a self-employed. Furthermore, there is no objective reason why an employee
in the public service shall be not within the personal scope of ADL because he/she is also
in a subordination relation with the employer (the public authority) which may discriminate
against him/her on the basis of his/her age. There might be reasons resulting from the
105 ILO, General survey on the fundamental Conventions concerning rights at work in the light of the ILO Declaration of Social Justice for a Fair Globalisation 2008, 101st Session, 309.
106 Ibid.107 Ibid.108 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and
Employment series No. 20, 2008, 29.
36
existential task of the state to assure public health and security which indicate a different
treatment of its employees in concerns of age, but that is a mere question of exemptions
or justifications under special circumstances and not a general excuse to restrict the ap-
plication of ADL of employees of the public service. Finally it is conceivable that public au-
thorities, for instance, introduce measures to promote the employability of their citizens by
means of special vocational training or life long learning programmes. These measures
are also helpful to develop the occupational skills and abilities of self-employed persons.
Consequently, the personal scope shall be broad and shall include all modern forms of
employment.
b. Material scope
i. Direct and indirect discrimination
The majority of countries worldwide distinguish between direct and indirect discrimination
or similar notions.109
The ILO promotes ADL which distinguishes between direct and indirect discrimination to
cover all forms of discrimination.110 Pursuant to that aim, Article 1(1)(a) of the ILO Conven-
tion No. 111 defines discrimination as “any distinction, exclusion or preference made on
the basis of [certain grounds], which has the effect of nullifying or impairing equality of op-
portunity or treatment in employment or occupation”.
A distinction between direct and indirect discrimination is not per se necessary in order to
determine whether an action is discriminatory. However, indirect discrimination is often not 109 Ibid, 23.110 Ibid.
37
easy to detect because the discrimination is covered by a neutral provision. Therefore, the
distinction can be useful to emphasize this second alternative of discrimination in the pub-
lic perception.
ii. Harassment, victimization and instructions to discriminate
According to the ILO, protection against harassment, victimization and instructions to dis-
criminate are less obvious than direct and indirect discrimination, but they are none the
less crucial. Thus, any discrimination – in law or in practice, direct or indirect – falls within
the scope of the ILO conventions111 and can also be found in most ADLs worldwide.112
In the context of ADL, harassment can be defined as exposing a person to an unwanted
behaviour which leads to an aggressive and uncomfortable work environment. Whenever
harassment is committed by another person than the person who initiated the harassment,
we talk about indirect harassment or instructions to discriminate. Victimization means that
a person who complains or is a witness to a complaint, becomes victim of harassment with
the aim of having the complaint withdrawn 113
ADL can only be effective in practice if a person is protected against harassment, instruc-
tion to discriminate and victimization. Otherwise a person may be not treated unlike to an-
other person in the same situation, but may suffer from a negative treatment due to his/her
age. For the implementation of ADL it is also essential to assure that a person who com-
plains or is a witness to a complaint is protected from any harassment which seeks to with-
draw the complaint.
111 ILO, General survey on the fundamental Conventions concerning rights at work in the light of the ILO Declaration of Social Justice for a Fair Globalisation 2008, 101st Session, 312.
112 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and Employment series No. 20, 2008, 26 et sqq.
113 Ibid.
38
iii. Employment protection and promotion and working conditions
Pursuant to the ILO, employment and dismissal protections are the key issues of anti-dis-
crimination legislation in most countries in the world.114
From my perspective, employment protection has to be at the core of ADL. Due to ageism,
stereotypes, high dismissal protection of elderly, mandatory retirement and so forth, an un-
employed older employee has a lower chance to get re-employed than a younger employ-
ee.115 Thus, the main task of ADL has to be to protect the existing employment relation-
ships.
In most of the countries with ADL, the access to training and equal working conditions for
every worker are ensured.116 Under Article 1(3) of the Convention No. 102 “employment”
and “occupation” include access to vocational training, access to employment and to par-
ticular occupations and terms and conditions of employment. As the ILO stated itself
“Providing vocational guidance and taking active measures to promote access to educa-
tion and training, free from considerations based on stereotypes or prejudices, is essential
in broadening the range of occupations from which men and women are able to choose.”117
In order to overcome the stereotypical thinking, especially the assumed lower productivity
of older workers, it is important to warrant access to life long learning, i. e. access to voca-
tional training. The constant training of employees is crucial for the proper functioning and
the effectiveness of the company. Additionally, it assures career possibilities for older work-
ers because they keep up with the qualifications of younger workers. Equal working
114 Ibid.115 See chapter 1.116 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and
Employment series No. 20, 2008, 35.117 ILO, General survey on the fundamental Conventions concerning rights at work in the light of the ILO Declaration
of Social Justice for a Fair Globalisation 2008, 101st Session 2012, 314.
39
conditions for all employees underlines the importance of working conditions as an issue
of labour law. Furthermore, the application of the same working conditions strengthens the
position of older workers because they do not have to fear to be indirectly crowded out by
younger workers who enjoy better working conditions.
c. Justification for discrimination
According to the ILO, all countries with ADL recognise the possibility of justification in the
form of “genuine or bona fide occupational qualification”118.
Whenever an employer has to decide whether an older worker shall be chosen to be hired,
promoted or retrained, there may arise situations that make it necessary to choose a per -
son other than an older worker. For example, this may be due to the responsibility and the
type of the job which, for instance, may be linked to a specific physical fitness. However, it
may also be true with regard to business reasons - for instance the higher value of training
measures for younger employees due to their longer work life.
If ADL wants to be lawful, it has to allow employers to include the aforementioned aspects
in their considerations. Thereby the per se discrimination can be justified if it is serving a
legitimate objective and is not going further than necessary to obtain the objective. In the
case of ADL, the employer has to show that the decision relies on factors which are neces-
sary to the normal daily business or the job in question - the genuine or bona fide occupa-
tional qualification.
118 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and Employment series No. 20, 2008, 36.
40
d. Burden of proof
When it comes to a trial, the party which alleges an infringement of rights or which wants
to enforce its claims in front of the court, has to proof the existence of an infringement or of
its claim. In a discrimination case, this burden of proof for the potential victim of discrimina-
tion can be countervailing to the effectiveness of protection against discrimination and the
search for remedies for caused damages because the victim is most likely to be in a weak-
er position than the perpetrator.119 An employee has normally no access to the employer's
data and therefore is often hindered to prove that he/she is actually treated unequally in
comparison to another employee under the same circumstances. In addition, an employee
who was unlawfully dismissed is under a certain financial pressure and thus, in terested in
a quick trial.
Because of the difficulties of proving discrimination in courts, some countries have decided
to shift the burden of proof to the employer once a prima facie case has been established
by the employee.120 That means that the employee just has to prove that a case of discrim-
ination on grounds of age is possible in the given case and not entirely impossible. There-
after the burden of proof shifts to the employer and he/she is in charge to give evidence
that there is no case of discrimination or that the discrimination is justified due to business
reasons or reasons related to the type of occupation or job responsibility. Likewise, the ILO
recommends establishing an ADL following this procedure.121
However, the prima facie evidence can cause huge difficulties for the employer in practice
if he/she wants to submit that the treatment was not driven by discriminatory concerns. For
119 ILO, Report of the Director General, International Labour Conference: Equality at work, the continuing challenge 100th Session 2011, 16.
120 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and Employment series No. 20, 2008, 39.
121 Ibid.
41
instance, if an employer wants to recruit a new employee, he/she is at risk of being sued
for alleged age discrimination in the recruitment process. Hence, he/she can be obliged to
record why every applicant does not fulfil the job requirements or the reasons behind the
employer's decision to hire or refuse the applicant in order to provide evidence in a pos-
sible age discrimination trial. Such preservation of evidence is time consuming and costly.
However, it could be argued that the weaker position of the employee justifies higher ef-
forts for the employer with regard to the burden of proof and further consequences for the
employer's business. Otherwise the ADL is at risk of becoming a toothless paper tiger. The
employee is theoretically entitled to sue for age discrimination, but the claim is not feasible
due to the aforementioned difficulties for older workers to establish a case.
The employee's situation in ADL cases is similar to dismissal cases, in particular with re-
gards to redundancy due to business operations. The legislation of countries with dis-
missal protection legislation tries to overcome the far-reaching effects of a prima facie
evidence requirement for employers and countervail the asymmetry of information
between employers and employees. Hence, they introduced a right to information for the
employee, but the duty to prove the existence of a wrongful dismissal remains with the em-
ployee.122 Nevertheless, even in the event of a right to information, the employer remains
obliged to provide information about the selection of the dismissed employees. In the end,
the employer has also to file the motives for his/her decision with regard to every employ-
ee in the selection process. This applies to recruitment mutatis mutandis. Thus, the intro-
duction of a right to information does not change the employer's duty to preserve evidence
and is not more advantageous for the employer.
Consequently, I can agree with the ILO that the burden of proof can be based on a prima
122 See for instance the German Protection Against Dismissal Act (KSchG), § 1 (3)(1) KSchG.
42
facie evidence.
e. Access to jurisdiction, supervision and remedies
The recognition of age discrimination and the implementation of ADL are useless unless
an older worker can claim his/her right for equal treatment and get protection from the leg-
al bodies of the national systems. Hence, ADL should be completed by the possibility to
get legal justice in age discrimination cases and to file a case to the national labour courts.
Furthermore, it is essential to promote transparency and constant supervision of the imple-
mentation process in order to ensure the effectiveness of the ADL. Thus, the ILO also sug-
gests that the monitoring of age discrimination cases and the collection of data on actual
age discrimination cases should be fostered123 and that a national independent agency
should be established to enhance transparency and boost ADL.124
Finally, after the employee has filed the discrimination case and the case is decided, a
remedy has to be chosen to establish equality out of the former inequality. Depending on
the initial reason for the trial, the remedies vary in countries with ADL from compensation
to reinstatement to the same or a similar work place, a combination of both or fines and
criminal prosecution. Due to the fact that there are no totally equal cases, the introduced
remedies shall not be onerous, but the ILO suggest that at least some guidelines shall be
given when to use reinstatement, for instance in the case of unfair dismissal, or just com-
pensation in the case of a discriminatory job interview.125 In my opinion, the adoption of a
remedy system under ADL is vital because otherwise the infringement of ADL provisions
remains without legal consequences. Therefore, the question is not if a remedy system
shall be introduced, but rather how detailed the provisions shall be to determine the
123 Ibid, 33.124 Ibid, 42.125 Ibid, 40.
43
possible remedies. In order to find a suitable solution for the individual case, I recommend
a general provision which imposes remedies in the case of infringement, but leaves it to
the latitude of the national court to decide which remedy is appropriate.
III. Summary
The research of the ILO presented some major components of ADL in a worldwide com-
parison of the implementation of ADL. The research has shown that the findings and fur-
ther recommendations of the ILO are reasonable and may assure, from a legal perspect -
ive, the protection of older workers against age discrimination. Thus, the ILO
recommendations can be promoted in order to assure a successful ADL.
In a nutshell, the suggested components of ADL in compliance with the ILO findings and
recommendations for ADL126 are:
− a broad personal scope which includes clear and comprehensive definitions like
who is an older worker and what does the notion age mean,
− the guarantee of the core elements of employment protection as protection against
unfair dismissal and unemployment as well as active employment promotion as vo-
cational training and equal working conditions,
− the possibility to justify discrimination due to occupational reasons or reasons in the
nature of the employee,
− a facilitated burden of proof for employees on the basis of a prima facie evidence,
− general access to jurisdiction which includes a remedy system and supervision as a
follow-up mechanism to assure the implementation of successful ADL
126 Ibid, 12-13.
44
C. The EU and Age Discrimination Legislation
I. Introducing ADL in the EU
The European ADL is relatively young in comparison to the U.S. ADL tradition, which star-
ted as early as 1967. It was not before the adoption of the Treaty of Amsterdam in 1997
that the EU was entitled to “take appropriate action to combat discrimination based on sex,
racial or ethnic origin, religion or belief, disability, age or sexual orientation”, Art. 13 TEC
(now article 19 TFEU). The subsequent Framework Directive provides a “general frame-
work for combating discrimination on the grounds of religion or belief, disability, age or
sexual orientation as regards employments and occupation with a view to putting into ef-
fect in the member states the principle of equal treatment.” According to the European
Court of Justice (hereafter: ECJ), the Framework Directive does not contain a prohibition
on discrimination itself, but rather assumes the existence of a General Principle of a pro-
hibition of age discrimination in Community Law.127 The Framework Directive, however,
has full horizontal direct effect in the meaning that a national court is obliged to apply the
general principle of prohibition of age discrimination as a standard for legal review.128
The Framework directive only imposes minimum requirements to the member states rep-
resenting the non-negotiable minimum level of protection to be implemented across
Europe. However, the Framework Directive leaves it up to the member states' discretion
whether or not they want to introduce stricter provisions in order to protect the principle of
equal treatment.129 As mentioned above, the research of this thesis will only consider the 127 ECJ, case 144/04 Mangold, [2005] ECR 9981, 71; see for a contradictory opinion K. Riesenhuber 'The EC Anti-
Discrimination Framework Directive 2000/78', in N. ten Bokum et al. Age Discrimination Law in Europe, 2009, x et sqq.
128 According to the ECJ after the Kücükdeveci judgement, see M. de Mol, 'Kücükdeveci: Mangold Revisited – Hori-zontal Direct Effect of a General Principle of EU Law Court of Justice of the European Union (Grand Chamber) Judgement of 19 January 2010, Case C-555/07', European Law Journal 2010, Vol. 6; B. Cash, ‘The ECJ has de-veloped a new doctrine’, B. Cash's European Journal 05.02.2010.
129 Art. 8, EU Directive 2000/78/EC.
45
implementation of ADL in the Framework Directive and European jurisprudence.
II. Personal scope
The notion of age is not defined in the Framework Directive and its scope is not limited to
groups above a certain age. Thus, the Framework Directive is applicable to all age groups,
including younger and older employees.130 Hence, problems do not occur when it comes to
defining whether somebody is within the scope of the Framework Directive, but rather
whether or not an act of discrimination has actually occurred.
According to Art. 3, the Framework Directive applies to all persons in the private or public
sector in the field of employment, which includes employees and self-employed individu-
als. Member states may provide that this Directive does not apply to the armed forces.131
The personal scope is limited and does not grant access to employment for every
employee.
III. Material scope
a. Direct and indirect discrimination
As mentioned above, discrimination occurs in different forms and on different matters. The
Framework Directive distinguishes between direct132 and indirect133 discrimination, but also
grants protection against harassment134 and instruction to discriminate against persons135.
130 C. O'Cinneide, Age discrimination and European Law, 2005, 11.131 Art. 3 (4), EU Directive 2000/78/EC.132 Ibid, Art. 2 (2) a.133 Ibid, Art. 2 (2) b.134 Ibid, Art. 2 (3).135 Ibid, Art. 2 (4).
46
Direct discrimination means that one person is treated less favourably than another is, has
been or would be treated in a comparable situation (on the grounds of age).136 The less fa-
vourable treatment imposes a detriment upon the claimant. The Framework Directive uses
a comparative approach, which forces the claimant to show that he or she was treated less
favourably in comparison to another real or hypothetical individual.137 Unfortunately, there
is no guidance for the finding of a suitable comparator or a definition of age groups in the
Framework Directive. That leads to the transfer of the determination of the comparator
from the legislation to the jurisprudence which can lead to time losses until a suitable com-
parator is finally defined by the jurisprudence. Furthermore, the interests and experiences
of the different age groups vary tremendously. A 20-year-old employee may require more
development, training and protection in comparison to a 40-year-old experienced worker.
Thus, the needs and the expectations of the age groups differ and there may be an issue
of equal treatment of basically unequal employees.138
Fredman suggests substantiating an equality approach which abstains from any comparis-
on based on less favourable treatment and rather approves direct discrimination whenever
a detriment for the claimant is ascertained as a result of actual or perceived age.139 Never-
theless, over forty years, the ECJ has constantly followed a formal equality approach and
defined discrimination as the “application of different rules to comparable situations or the
application of the same rule to different situations”140. Thereby the Court was able to out-
weigh the formal equality shortcomings and add individual justice.141
Contrary to direct discrimination, indirect discrimination occurs where a per se neutral 136 Ibid, Art. 2 (2) a.137 C. O'Cinneide, Age discrimination and European Law, 2005, 20.138 M. Sargeant, Age discrimination in Employment, 2006, 59 sqq.139 S. Fredman, 'The Age of Equality', in S. Fredman and S. Spencer (eds) Age as an Equality Issue – legal and policy
perspectives, 2003, 56.140 See for instance Government of the Italian Republic v. Commission of the European Economic Community, C
13/63, [1963], ECR 165.141 M. de Vos, Beyond Formal Equality, Positive Actions under Directives 2000/43/EC and 2000/78/EC, 2007, 11.
47
provision, criterion or practice would put persons having a particular age at a particular
disadvantage compared to other persons142, “... unless that unlike treatment is objectively
justified by a legitimate aim and the means of achieving this aim are appropriate and
necessary.”143 Here the decisive factor for the different treatment is not the age itself, but a
provision, criterion or practice which places persons of a certain age at a less favourable
position than a comparable group of persons. Hence, the claimant has to show a disparate
impact between age groups and the aforementioned general difficulties in defining age
groups may emerge. However, based on recital 15 of the Framework Directive, the
claimant can refer to statistical evidence to prove an unlike treatment, which can ease the
burden of proof for the claimant, in the case of a possible indirect discrimination on the
grounds of age.144 Nevertheless, before the claimant can rely on statistical evidence
he/she has to determine which age groups shall be compared in the statistical evidence
and the comparator problem remains. However, as mentioned above, the comparator is-
sue could, so far, be solved by the ECJ for every individual case.
b. Harassment, victimization and instructions to discriminate
The prohibition of discrimination in Article 2(3)(4) covers also harassment and instructions
to discrimination. Art. 2(3) Framework Directive, provides that “a form of discrimination
within the meaning of para. 1 [shall be deemed], when unwanted conduct related to [age]
takes place with the purpose or effect of violating the dignity of a person and of creating an
intimidating, hostile, degrading, humiliating or offensive environment.” The concept of har-
assment may be defined according to national laws and practices of the member states.
142 Art. 2 (2) b, EU Directive 2000/78/EC.143 Ibid, Art. 2 (2) b (i).144 M. Sargeant, Age discrimination in Employment, 2006, 60.
48
c. Employment protection and promotion and working conditions
The material scope covers the areas of employment and occupational protection. In
particular, the Framework Directive applies to conditions for access to employment, self-
employment or occupation, including selection criteria and recruitment conditions, and pro-
moting access to vocational guidance, vocational training, advanced vocational training
and retraining, including practical work experience; employment and working conditions,
including dismissals and pay; membership of and involvement in an employers’ or workers’
organisation, or any organisation whose members carry on a particular profession.145
d. Exemptions regarding national law and national social security schemes
The directive is without prejudice to any measure of member states deemed necessary for
maintaining public security and public order, the prevention of criminal offences, protection
of health, rights and freedoms.146 Moreover, the directive does not apply to payments to
state schemes, in particular social security or social protection schemes.147
Contrary to the wording of recital 14 of the Framework Directive, national retirement age
provisions of the member states are not excluded from the material scope of the Frame-
work Directive. The ECJ stressed in the Palacios de la Villa judgement that “the directive
does not affect the competence of the member states to determine retirement age and
does not in any way preclude the application of that directive to national measures govern-
ing the condition for termination of employment contracts where the retirement age, thus
established, has been reached.”148 Hence, a national provision of retirement age may con-
145 Art. 3 (1) EU Directive 2000/78/EC.146 Art. 2 (5), EU Directive 2000/78/EC.147 Ibid, Art. 3 (3).148 ECJ, case C-411/05 Palacios de la Villa,[2007], ECR I – 8531.
49
stitute a case of discrimination and cannot be excepted from the scope of the Framework
Directive. The member states can only derive from recital 14 the competence to justify the
discrimination according to the general justification rules of the Framework Directive.149
Consequently, the national provisions on retirement ages are, in general, verifiable by the
ECJ.
IV. Justification for discrimination
a. Genuine and determining occupational requirement
The Framework Directive enables the member states to declare a difference in treatment
inconsistent with the notion of discrimination by the reasons of the nature of the particular
occupational activity and thereby justify the prohibited discrimination150. The particular oc-
cupational activity or the context in which the activity is carried out has to constitute “a
genuine and determining occupational requirement, provided that the objective is legitim-
ate and the requirement is proportionate.”151 It can hardly be imagined how a specific age
shall become a genuine and determining occupational requirement. Roughly, every job
can be performed before or after a certain age and therefore the condition to be of a cer-
tain age cannot constitute an indispensable requirement for an occupation. Solely a char-
acteristic related to age can be used as a proxy for age and can be a genuine and determ-
ining occupational requirement, for instance physical fitness, as argued by the ECJ in the
Wolf case – the case will be further explained below152.
149 K. Riesenhuber 'The EC Anti-Discrimination Framework Directive 2000/78', in N. ten Bokum et al. Age Discrimination Law in Europe, 2009, xliii.
150 Art. 4 (1) EU Directive, 2000/78/EC.151 Ibid, Art. 4 (1).152 ECJ, case C-229/08 Colin Wolf v. Stadt Frankfurt am Main, [2010], OJ C 63.
50
b. Legitimate and proportional aim for a different treatment
Furthermore, the Framework Directive provides a special justification ground for age dis-
crimination. The member states have the opportunity to justify differences of treatment on
grounds of age according to Art. 6 (1).153 Thus, differential treatment does not constitute
discrimination if it is objectively and reasonably justified by a legitimate aim, including
legitimate employment policy, labour market and vocational training objectives and if the
means of achieving that aim are appropriate and necessary. The provision indicates a list
of differential treatments and legitimate aims which is not exhaustive, for instance the set-
ting of special conditions on access of employment and vocational training or the fixing of
a maximum age for recruitment.154 Unfortunately, the EU did not provide any guidance to
its legislation and left it to the discretion of the member states and the ECJ to fill this
gap.155 The difference of the national legislations and their level of protection of older work-
ers against discrimination may differ, due to the different national interests. An evaluation
of the implementation by the member states and its impact would go beyond the scope of
this thesis. However, in general, there is the danger that member states do not consider
which age-based distinctions they want to preserve and which are unnecessary. Moreover,
there are very few national analyses about possible legitimate aims for discrimination and
about the question under which circumstances the achieving of legitimate aims are appro-
priate and necessary. The member states appear to be uncertain about how to deal with
age discrimination and are willing to leave these issues to national and European jurispru-
dence.156 Hence, the current ECJ jurisprudence will be analysed briefly.
153 Besides the general justification provision in Art. 6 (1), the member states may combine the entitlement to retire -ment or invalidity benefits in their national schemes to different ages for employees, “provided this does not result in discrimination on the grounds of sex”. See Art. 6 (2).
154 M. Sargeant, Age discrimination in Employment, 2006, 70.155 C. O'Cinneide, Age discrimination and European Law, 2005, 33.156 Ibid.
51
i. Recruitment age
For instance, the fixing of a maximum age for recruitment which is based on the training
requirement of the post in question or the need for a reasonable period of employment be-
fore retirement is justified under Art. 6 (1)(a). Thus, the ECJ ruled in the Wolf case that a
maximum age for recruitment at thirty years for the public fire service may be in compli-
ance with the objective of ensuring sufficient operational capacity and proper functioning of
the public fire service. Regarding the decrease of work performance and cognitive abilities
of firemen over 50 years old, the national provision is not going beyond what is necessary
to achieve the objective.157
ii. Mandatory retirement ages
Additionally, the ECJ stressed in Palacios de la Villa and Age Concern England that the
member states enjoy broad discretion in their choice of default retirement ages. A national
employment policy which promotes full employment by facilitating access to the labour
market for employees, especially for younger employees, is a legitimate aim and may be
appropriate and necessary.158 The Court upheld this judgement regarding state and nation-
al collectively agreed retirement ages.159
iii. Promotion of vocational training
In contradiction to the aforementioned, the ECJ also strengthened the position of older
workers. In the prominent Mangold case, the ECJ deemed the aim to promote vocational
157 ECJ, case C-229/08, Colin Wolf v. Stadt Frankfurt am Main, [2010], OJ C 63.158 ECJ, case C-411/05, Felix Palacios de la Villa, [2007], ECR 8531; ECJ, case C-388/07 Age Concern England [2009] ECR I-
1569.159 ECJ, C-45/09.Rosenbladt v. Oellerking GmbH, [2011], OJ C 346.
52
integration of unemployed older workers as a legitimate aim. The Court ruled that the pro-
vision was neither appropriate nor necessary because it allowed the conclusion of fixed-
term contracts without fulfilling objective reasons for a temporary employment or restric-
tions regarding the maximum duration and number or renewals of such a fixed-term con-
tract. Thus, the provision did not take into consideration the current labour market structure
and the personal situation of the worker.160
iv. Remuneration related to seniority
In addition, the ECJ stated that the seniority of an employee is an appropriate and neces-
sary measure to determine the amount of remuneration he or she gets. The longer an em-
ployee performs his/her service, the more experienced he/she becomes and the more
his/her work performance improves. Thus, the length of service is a legitimate objective to
the national pay policy.161
v. Terms of notice
Contrary to this, the Court ruled that a provision contravenes the principle of non-
discrimination, if, in case of a dismissal, the period of notice correlates with the length of
service, but periods before the completion of a certain age are not taken into account for
the calculation. The possible flexibility of younger employees and potential higher recruit-
ment rates due to shorter periods of notice, are too weak as arguments to justify such a
massive infringement of the prohibition of discrimination and are therefore inappropriate to
justify the discrimination.162
160 ECJ, case C-144/04 Mangold [2005] ECR I-9981, 60.161 ECJ, case C-17/05, B. F. Cadman v. Health & Safety Executive, [2006], ECR 9583.162 ECJ, case C-555/07, Kücükdeveci, [2010], OJ C 36, 43.
53
vi. Tendency of the ECJ and impact on EU member states
The ECJ already rendered many judgements which gave the member states a lot of latit -
ude in most of the cases by protecting their national interests and social security schemes
to the detriment of claims against discrimination. Regarding the promotion of older employ-
ees, remuneration and dismissal, the ECJ has apparently supported the protection of
workers against discrimination. Although the implementation in national legislation and jur-
isprudence of the member states goes beyond the scope of this thesis, it can be derived
from the ECJ’s jurisprudence that the member states often try to treat different groups of
citizens unequally for various reasons in their legislation and are not sufficiently hindered
from doing so by the ECJ.
V. Burden of proof
The burden of proof of a discriminatory provision, criterion or practice is basically placed
on the claimant. He/she has only to establish a prima facie evidence for discrimination.
Thereafter the burden of proof shifts to the defendant who has to vitiate an infringement of
the principle of the equal treatment.163
VI. Access to jurisdiction, supervision and remedies
The victims of discrimination have full access to the jurisprudence of the member states.
Additionally, the national courts may ask the ECJ for a preliminary judgement concerning
age discrimination according to Art. 156 TFEU.
163 Art. 10 (1), EU Directive 2000/78/EC.
54
The Framework Directive stipulates that the member states have to report to the Commis-
sion every five years all the information necessary for the Commission to draw up a report
to the European Parliament and the Council.164 Beyond that, the EU does not have an ad-
missible institution which supervises the implementation of and compliance with the
Framework Directive in the member states.
In addition, the Framework Directive leaves the issue of remedies or sanctions to the dis-
cretion of the member states.165 Sanctions are necessary to ensure that the national rules
about prohibition of discrimination on age are applied in the member states. Hence, sanc-
tions can be an important tool to improve compliance with equal treatment provisions. So
far, only an incomplete overview of how the member states made use of sanctions is avail-
able – it varies from penal and civil actions to just financial compensation or no
implementation at all.166 As a consequence, the remedies in the EU and its impact on the
implementation of ADL cannot be evaluated.
VII. Summary and recommendations
The Framework Directive is only partly in compliance with the aforementioned standards,
but not always to the detriment of a good practice of ADL.
The definitions in the personal and material scope used in the Framework Directive do not
contain a determination of “age” or “older worker” and are based on a comparator ap-
proach which may cause problems to find suitable age groups for the comparison and
164 Art. 19 (1), EU Directive 2000/78/EC.165 Art. 17, EU Directive 2000/78/EC.166 See for brief introduction W. Düvel, Schömann, I., Clauwaert, S., Non-discrimination in the European Union, Im -
plementation of Directive 2007/78/EC, Part III Awareness-raising, enforcement and litigation, Brussels 2004, 45 sqq.; See also D. O'Dempsey, A. Beale, Age and Employment, European Network of Legal Experts in the non-dis-crimination field, 2011: The report is not even mentioning the possibility of sanctions.
55
shifts the problem towards the jurisprudence, but the research has shown that the ECJ is
experienced in defining comparators. Thus, the problem occurs to be more of an academic
nature and there is actually no evidence that suggests a change in practice. The Frame-
work directive distinguishes between direct and indirect discrimination. The personal scope
is wide enough to include all modern forms of employment. The exception for the armed
forces may be a limitation, but is rarely used by the member states.167 Thus, the personal
scope needs no amendment.
Additionally, the protection of employment is in compliance with the suggested ADL com-
ponents, contains all areas of employment and occupation, especially unemployment and
dismissal protection, and also the promotion of vocational training and working conditions.
The Framework Directive offers the member states not only the possibility to justify a dif -
ferent treatment on the basis of age on the ground of an occupational requirement, but
also extend the justifications to various reasons of public interest. To the numerous differ-
ent national justifications exists the diverse jurisprudence of the ECJ which is to the detri-
ment of older workers as well as to their advantage. Even the EU Commission itself stated
that the practice of the member states raises questions about the best way on how to de -
termine the exceptions to equal treatment.168 Due to these findings, I suggest that the EU
monitors the implementation of the Framework Directive in the member states and focuses
on whether the aims of the Framework Directive are achieved and whether the open ap-
proach needs some supportive guidelines or even an amendment in the Framework Dir-
ective itself.169
167 The member states rather restrict the equal treatment regarding health and fitness issues of their armed forces and use Art. 4 (1) as a justification to do so. See W. Düvel, Schömann, I., Clauwaert, S., Non-discrimination in the European Union, Implementation of Directive 2007/78/EC, Part II Age and disability, Brussels 2004, 28.
168 D. O'Dempsey, A. Beale, Age and Employment, European Network of Legal Experts in the non-discrimination field, 2011, 5.
169 Even the EU is aware of the fact that further surveys are needed to examine the national implementation of the jus-tification procedures in the different member states. See D. O'Dempsey, A. Beale, Age and Employment, European Network of Legal Experts in the non-discrimination field, 2011, 5.
56
The access to jurisprudence is granted and the burden of proof only requires a prima facie
evidence and thereafter shifts to the employer. The EU does not have a special supervi-
sion body which is in charge of monitoring the implementation of the Framework Directive
and giving guidance to the member states on the question of how the EU wants the mem-
ber states to implement the Directive. Additionally, as mentioned above, further examina-
tion of the implementation and compliance of the member states is fragmentary, and, with
regards to justification and the use of sanctions, available only in a limited scale. That
leads to the question whether a specialised European institution may be an appropriate
tool to ensure the supervision of the Framework Directive. The answer cannot be given
here and needs further research, especially regarding costs, effectiveness and possible
implementation. However, in general, such an institution could contribute to the further im-
plementation of the Framework Directive and national ADL of the European member
states.
57
D. The USA and Age Discrimination Legislation
I. Introducing ADL in the USA
The USA have adopted legislation against discrimination based on age as early as 1967
with the ADEA. The ADEA's intent is to “promote employment of older persons based on
their ability rather than age, to prohibit arbitrary age discrimination in employment, [and] to
help employers and workers find ways of meeting problems arising from the impact of age
on employment.”170 In the tradition of a common law system, most of the applicable law re-
garding age discrimination is derived from precedents, although the ADEA is a statutory
framework for the numerous jurisprudence of the U.S. Supreme Court. A complex system
of providing evidence for discrimination has been developed, shifting the burden of proof
from employee to employer and vice-versa. Apart from the ADEA, some decisive cases
under Title VII of the Civil Rights Act, which prohibits discrimination on the grounds of race,
colour, religion, sex or national origin, are also applicable to ADEA cases.171
II. Personal scope
The ADEA is one of the few legal acts in the world which defines age and older workers. 172
The ADEA defines an older worker by setting the age limit for application to 40 years of
age. Hence, the ADEA does not have to face difficulties that may result from other meas-
ures to define the personal scope, like the comparison of age groups in the EU. Initially,
the ADEA was only applicable to employees between 40 and 65, later it was raised to 70
170 29 U.S.C. § 621 (b).171 Title VII was amended in 1991 to eliminate the employer’s ability to escape liability in title VII for mixed-motive
cases by providing that he/she would have made the same decision in the absence of the discriminatory motivation. By contrary, the ADEA was not amended similarly and stays silent regarding mixed-motive cases. See also Desert Palace Inc. vs. Costa 123 S.Ct. 2148 (2003) and below under burden of proof.
172 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and Employment series No. 20, 2008, 21.
58
and finally the age cap and the mandatory retirement age were removed in 1986.173
However U.S. companies are allowed to offer incentives for pre-retirement at a certain age
of the employee and under certain circumstances according to the 1990 Older Workers
Benefit Protection Act. Thus, a “voluntary” mandatory retirement in the term of a waive-
able older workers' right is established.174
The notion of “employee” means any individual employed by an employer, except for per-
sons elected to public offices and their appointed staff as well as civil servants.175 The ad-
dresses of the ADEA are employers, employment agencies and labour organisations.176
The term “employers” refers to every organisation engaged in the public or private industry
with more than 20 employees, but also agents of employers, single states of the USA and
their subdivisions and offices.177
III. Material scope
a. Disparate treatment and disparate impact (direct and indirect discrimination)
Under U.S. discrimination law, two theories of discrimination are known: disparate treat-
ment and disparate impact. According to the U.S. Supreme Court, the difference between
the two is that in the case of disparate treatment “the employer just treats people less fa-
vourably than others because of their race, colour, religion, sex or national origin (or age)”,
whereas on the contrary, disparate impact “involves employment practices that are neutral
in their treatment of different groups, but fall in fact more harshly and one group and can-
173 L. M. Friedman, 'Age discrimination law: some remarks on the American experience', in S. Fredman and S. Spen-cer, Age as an Equality Issue – legal and policy perspectives, 2003, 175, 190.
174 N. Adnett and S. Hardy, 'The peculiar case of age discrimination: Americanisation of the European social model?', European Journal of Law and Economics 2007, Vol. 23, 36.175 29 U.S.C. § 630 (f).176 29 U.S.C. § 623.177 29 U:S.C. § 630 (b).
59
not be justified by business necessity.”178 The major difference between the two theories is
that subjective intent to discriminate is an element of a disparate treatment claim, though
not of a disparate impact claim.179 With the Smith v. City of Jackson judgement, the long
lasting uncertainty whether or not the disparate impact theory is applicable under the
ADEA has been answered in the affirmative way.180 The two theories can be compared to
the European notions of direct and indirect discrimination, apart from the requirement of an
employer's intent.
b. Employment protection and promotion and working conditions
The material scope of the ADEA is limited to employment. According to § 623 ADEA, the
employer shall not dismiss or refuse to hire an employee on grounds of his age. Addition -
ally, the employee may not be discriminated with regards to compensation, as well as con-
ditions or privileges of employment.181 The ADEA has mainly been established to warrant a
fair access to employment and to avoid wrongful dismissal or unemployment rather than to
promote vocational guidance and training. Therefore, the ADEA is limited to a negative
provision which makes it unlawful to limit, classify, or segregate employees in a way that
would tend to deprive an individual of employment opportunities.182 Regarding the intention
of the legislator to promote access to employment and to avoid wrongful dismissal, the
coverage of vocational training at the material scope of the ADEA does not seem to be a
default rule, but due to the negative formulation of the provision at least possible. Working
conditions are included into the material scope, especially wages related to seniority and
178 International Board of Teamsters v. United States, 41 U.S. 324, 335 n. 15 (1977).179 Wards Cove Packing Co. v. Atonion, 490 U.S. 642, 109 S.Ct. 2115, 104 L.Ed. 2d 733 (1989), R. Belton, D. Avery,
Employment Discrimination Law, Cases and Materials on Equality in the Workplace, 1999, 63.180 Smith v. City of Jackson, 544 U.S. 228 (2005); the Supreme Court failed prior to the City of Jackson judgement to
declare the disparate impact theory definitely applicable under the ADEA. Moreover, the court explicitly left the question unanswered, see Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993). See also D. Neumark, 'The Age Dis-crimination in Employment Act and the challenge of the ageing population', working paper 14317, 2008, 5 et sqq.
181 29 U.S.C. § 623 (a)(1).182 29. U.S.C. § 623 (1)(2).
60
have often been the subject of judicial decisions.183
IV. Justification for discrimination
a. Genuine and determining occupational requirement
The ADEA offers numerous justifications for discriminatory treatment. According to § 623
(f)(1), an action otherwise prohibited under the ADEA is not unlawful where “age is a bona
fide occupational qualification reasonably necessary to the normal operation of the particu-
lar business”. The Bona Fide Occupational Qualification Defence (hereafter: BFOQ) allows
the defendant to apply a different treatment because of age if he can fulfil the requirements
of a two prong test set forth in Western Air Lines, Inc. v. Criswell184: First, the employer has
to prove that the age-related job qualification is “reasonably necessary to the essence of
the business” and secondly, that the qualification is “compelled to rely on age as a proxy
for the safety-related qualifications”.185 Therefore, the employer has to prove that all per-
sons of the affected age group are not qualified for the job and that an individual assess-
ment would be highly impractical.186 The BFOQ defence has been approved in most cases
where physical fitness is a decisive element, e.g. for policemen and firemen.187
183 See below, burden of proof.184 Western Air Lines Inc. v. Chriswell, 472 U.S. 400, 105 S. Ct. 2743, 86 L.Ed. 2D 321 (1985). Mr. Chriswell and Mr.
Starway, both pilots for Western Air Lines, tried to avoid the mandatory retirement for pilots aged 60 under the Fed -eral Aviation Administration and applied for reassignment as flight engineers. Both requests have been denied due to a company's retirement plan which required all crew members to retire with 60. The plaintiffs argued that the under-age-60 requirement violates the ADEA. During the trial, the jury was instructed that the BFOQ is only applicable if the requirement is reasonably necessary to the essence of the defendant's business. Further the jury was in formed that the normal business is the safe transport of passengers. The defendant claimed that the instructions have been insufficient regarding the legitimate objective of safety of passengers. The Supreme Court affirmed the correctness of the jury instruction and formulated the requirements for the BFOQ.
185 Western Air Lines, Inc. v. Criswell, 472 U.S. 400, 105 S. Ct. 2743, 86 L.Ed. 2D 321 (1985).186 R. Belton, D. Avery, Employment Discrimination Law, 1999, 627.187 Ibid.
61
b. Other reasons for justification – Defence Based on Reasonable Factors Other
Than Age
Apart from that, the U.S. jurisdiction knows additional jurisprudence for age discrimination.
The employer can defend a discriminatory practice by the bona fide seniority system, the
bona fide employee benefit plan, § 623 (f)(2)(a, b) and the Defence Based on Reasonable
Factors Other Than Age (hereafter: RFOA). The thesis will focus on the RFOA because it
is the most controversial justification and is currently in the process of being amended.
According to § 623 (f)(1), the RFOA provides that an action otherwise prohibited under the
ADEA is not an unlawful employment practice “where the differentiation is based on reas-
onable factors other than age”. The RFOA has, at present, produced a lot of controversy in
ADEA cases due to its lack of clarity about the burden of proof and its substantive content.
Moreover, it is sometimes regarded as overlapping with the business necessity defence in
disparate impact cases.188 Furthermore, the RFOA produces inconsistent results, e. g. in
cases related to seniority and its relation to age discrimination under the ADEA. In Metz v.
Transit Mix Inc.189, the Supreme Court ruled that the excessive salary of an older worker is
directly linked to his seniority and further to his age. Thus, the replacement of the employ-
ee on grounds of his high salary would violate the ADEA.
In contradiction to this case, the Supreme Court stated in Hazen Paper Co. v Biggins190
188 Ibid, 615.189 Metz v. Transit Mix Inc., 828 F.2d 1202 (1987). Mr. Metz was a 54 years old manager at Transit Mix Inc. which
was already for 3 years under enormous financial trouble when they fired Mr. Metz after 27 years of employment. He was replaced by a 43 old man whose salary was only the half of Mr. Metz's one. At Transit Mix Inc., the increase of wages was directly connected to the time of employment. The Supreme Court affirmed that the plaintiff could es-tablish a prima facie evidence of discrimination on the basis of age pursuant to the McDonnell Douglas require-ments. The Court of lower instance stipulated that the desire to safe employment costs is, in Mr. Metz case, re lated to age. However it was not an ADEA case because the assessment was only related to the individual, Mr. Metz, and not to the group of older employees of Transit Mix Inc.
190 Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993). Mr. Biggins was 62 years old and almost fulfilled the years of service for his pension to vest when he was dismissed by Hazen Paper Co. The defendant stressed that he was firing Mr. Biggins because he was to close to the vesting of his pension-plan. The Supreme Court decided that in this case
62
that decisions based on seniority strongly correlate with age, but that further evidence is
needed that the age was the actual motivating factor for the decision.191 Hence, the Su-
preme Court increased the burden of proof for the plaintiffs. Moreover, the jurisprudence
led to a reluctance of courts to accept age discrimination disparate impact claims based on
the employer's motivation to reduce the employment costs caused by older employees.192
Therefore, on 30 March 2012, the Equal Employment Opportunity Commission193 (here-
after: EEOC) released its final rules on the “Differentiations Based on Reasonable Factors
Other than Age” regulation, 29 C.F.R. § 1625.7, by identifying new considerations for es-
tablishing the “reasonable factor other than age” defence in age discrimination cases.
Among other things, the final rules declare that the degree of subjectivity in decision-mak-
ing should be considered in evaluating the employer’s liability where it is alleged that an
employment practice has a disparate impact against older workers. The considerations
also include the extent to which the factor having a disparate impact “is related to the em-
ployer’s stated business purpose,” and the extent to which the employer defined the factor
accurately and applied it fairly and properly (and provided supervisors guidance) to avoid
disparate impact. The final rule is effective on April 30, 2012.194 Due to the fact that the
guidelines have just been released recently, we have to wait until jurisprudence and litiga-
tion has emerged regarding the new RFOA. Some U.S. attorneys assume that the new
guidelines are clearly easing the burden of proof for the employee to the detriment of the
employer, who has now to prove that he used concrete performance criteria and did not
use excess subjectivity.195 In any case, the new guidelines can lead to certainty about the
age was not the motivating factor because it was related to the years of service. According to the Court, age and the years of service are distinct. Furthermore, decisions based on years of service are not necessarily based on age.
191 Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), confirmed in Kentucky Retirement Systems v. EEOC, 128 S.Ct. 2361 (2008) and extended to annuitant status in McKnight v. Gates, 2008 WL 2491626 (2008).
192 D. Neumark, 'Age Discrimination Legislation in the United States', working paper 8152, 2001, 11.193 For further informations about the EEOC see below access to jurisdiction, supervision and remedies.194 Questions and Answers on EEOC Final Rule on Disparate Impact and “Reasonable Factors Other Than Age” under
the Age Discrimination in Employment Act of 1967, see http://www.eeoc.gov/laws/regulations/adea_rfoa_qa_final_rule.cfm.
195 D. S. Weiser, S. Estreicher, Z. D. Fasman, P. Grossman, Stay current – a client alert from Paul Hastings, April 2012.
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application and the scope of the RFOA.
V. Burden of proof
The U.S. jurisprudence developed different examination schemes for disparate treatment
cases in order to present the discriminative intent of the employer and to determine the or-
der of the giving of evidence of the parties, i.e. the burden of proof. In general, age dis-
crimination and the employer's illegal intent can be proven by two different evidential
standards.196
In order to prove the discriminatory intent of the employer, the employee needs to estab-
lish direct evidence, such as discriminatory statements. The showing of direct evidence re-
quires that the plaintiff present evidence that proves the ultimate fact of discriminatory an-
imus without the necessity of an inference or a presumption of the Court.197
At first sight, these requirements complicate the burden of proof to the detriment of the
claimant, but the U.S. jurisprudence also recognises the establishment of a prima facie
evidence.
In the absence of direct evidence, the prima facie precedents established in McDonnell
Douglas v. Green (1973)198 and Texas Department of Community Affairs v. Burdine
196 R. Belton, D. Avery, Employment Discrimination Law, 1999, 74.197 See, Heim v. Utah, 8 F.3d, 1541, 1546 (1993).198 In McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), the aerospace and aircraft manufacturer McDonnell
Douglas Corp. laid off the afro-american employee Green when it came to a general shortage of work force. Mr. Green alleged the lay-off was based on racial motives and initiated a three weeks lasting lock-in. Thereafter McDon-nell Douglas offered vacancies, but refused to rehire Mr. Green due to his participation in the lock-in. Pursuant to the U.S. Supreme Court, Mr. Green could establish a prima facie evidence of discrimination on the basis of race and his involvement in civil rights activities. The plaintiff could successfully show that McDonnell Douglas was search-ing for employees with the qualifications of Mr. Green. Moreover, he was rejected, albeit he was qualified for the job and McDonnell Douglas continued searching for the applicants after the rejection.
64
(1981)199 are used which lightens the burden of proof for the claimant. First, the claimant
tries to give a prima facie case for discriminatory intent, which means he/she has to show
that he/she is a member of the protected group (under the ADEA), that he/she was quali-
fied for the position in question, that he/she was rejected, and that the employer continues
to search for younger applicants. Thereafter, the burden of proof shifts to the employer
who has to offer a legitimate non-discriminatory explanation. Finally, the plaintiff has the ul-
timate possibility to show that the defendant's presented explanation was just a pretext
and that, in fact, age was the true intent.200 The jurisprudence developed an exemplary list
of employer conducts that plaintiffs can use to establish pretext discrimination easing the
argumentation, see for instance Maughan v. Alaska Airlines, Inc.201
In the case that direct evidence has been presented, but the employer alleges that the
same adverse employment decision would have been made regardless of the discrimina-
tion (based on the age of the employee), the McDonnell Douglas test is inapplicable. This
is because the McDonnell Douglas test requires that direct evidence is lacking and further
circumstances have to be taken in consideration in order to proof the existence of a dis-
criminatory intent for the employer's decision. On the other hand, in the mixed-motives
cases, direct evidence for age discrimination is established, but the discriminatory intent is
199 The Supreme Court reaffirmed the findings of McDonnell Douglas v. Green in Texas Department of Community Affairs v. Burdine, 450 U.S. 248 (1981). Ms. Burdine filed a suit against her former employer after she has been dis-missed as an accounting clerk in the public service career division because she assumed that the termination of her contract was a discrimination based on her sex. The defendant alleged that the plaintiff was replaced as one of three individuals by a male who was better qualified for the job. Additionally, the three individuals had to be replaced be-cause they did not work well together . According to that, the plaintiff's decision was only caused by these non-dis-criminatory considerations. The court of lower instance reversed the burden of proof to the detriment of the defend-ant and obliged the defendant to proof that the actually hired employees are better qualified than the rejected claimant. The Supreme Court clearly rejected this approach and stressed that the claimant has to demonstrate that an unequal treatment is given in an equal situation as already stated in McDonnell Douglas. Apart from that, he ap -proved the findings from McDonnell Douglas.
200 McDonnell Douglas Corp. vs. Green, 411 U.S. 792 (1973); Furnco Construction Corp. vs. Waters, 438 U.S. 567 (1978); Texas Department of Community Affairs vs. Burdine, 450 U.S. 248 (1981); Henn vs. National Geographic Society, 819 F.2d 824, 828 (1987), cert. denied, 484 U.S. 964 (1987).
201 Maughan v. Alaska Airlines, Inc., 2008 WL 2372486 (2008), recognized evidence for pretext discrimination in-cludes: evidence which shows that the defendant's presented reason for prejudicial employment action was false; evidence which proofs that the defendant was acting against the company's written policy for similar cases; evidence that the presented reasons are retroactively invented and thus, could not motivate the employer's action; written in-structions from supervisors which requested the plaintiffs behaviour, albeit the employer's detrimental action is actu-ally based on even that behaviour; documentation of work performance not until the termination of the employment.
65
not free of doubt because the decision is influenced by illegitimate discriminatory motives
and by legitimate reasons. Due to that fact, the defendant in Price Waterhouse v. Hop-
kins202 presumed that the plaintiff has the burden to present substantial evidence that the
legitimate reasons did not lead to the employer's action. However, the U.S. Supreme Court
contradicted and stated that there is “no sense to ask whether the legitimate reason was
the true reason.”203 According to the Court, in the mixed-motives case, the plaintiff only has
to prove that age was a substantial factor that motivated the defendant's decision and the
burden of proof shifts to the defendant. Thereafter, the defendant has to proof that his final
decision would have been taken regardless to the discriminatory motives.204 Thus, the bur-
den of proof was lightened for the employee and similar to the prima facie evidence in Mc-
Donnell Douglas just needed the possibility of an employer's intent based on discriminat-
ory motives.
However, the U.S. Supreme Court changed the established case law in the Gross v . FBL
Finance Services, Inc. decision.205 The Court stated that the plaintiff has to prove by a pre-
ponderance of evidence that age was the “but for” cause of the alleged adverse employ-
202 490 U.S. 228 (1989). Ms. Hopkins was a senior manager at Price Waterhouse and wanted to become a partner. In order to become a partner, the application had to be supported by incumbent partners. Ms. Hopkins had not enough support to be -come a partner immediately, but was held for reconsideration the following year. The negative comments of the partners were referring to her interpersonal skills, e.g. her excessive aggressiveness, but also to her personality as a woman. Some partners directly advised her to become more feminine in order to improve her chances for a partnership. Ms. Hopkins filled a case because of discrimination on the basis of sex according to Title VII. The court stated that Ms. Hopkins has shown that an impermissible motive was a motivation for an adverse employment decision and thus, the burden of proof shifted to Price Waterhouse. Ms. Hopkins was not obliged to show that the illegitimate factor was the only true reason for the decision, but a substantial factor in the adverse employment. Hence, Price Waterhouse had to demonstrate by a prepon-derance of evidence that it would have reached the same decision in the absence of any gender considerations.
203 Ibid.204 W. R. Corbett, 'The United States', in R. Blanpain et al., The Global Workplace, international and comparative em-
ployment law – cases and materials, 2007,136.205 Gross v. FBL Financial Services, Inc. (2009) 08-441. Mr. Gross was a claims administration director for FBL when
his contract was reassigned and he became a claim project coordinator at the age of 54. Many of his job responsibil -ities have been transferred to a newly created position, named claim administration manager. A forty years old wo -man who was formerly supervised by Mr. Gross became the new claim administration manager. Even though the re-muneration for the new position of Mr. Gross and the new established position of claim administration manager have been equal, Mr. Gross felt the reassignment to be a demotion because of the reallocation of his job responsibil -ities. Thus, he filed a case according to § 623 (a) ADEA and showed evidence that the reassignment was based at least partly on his individual age. FBL alleged that the decision was part of a restructuring of the company and that the new position is better suited to the the abilities of the plaintiff. According to the findings of the Court Mr. Gross had to proof that his age was the overriding motive for the reassignment and it was not sufficient to just produce some evidence that age was a motivating factor.
66
ment action and that the Title VII case law of the Price Waterhouse v. Hopkins judgement
cannot be extended to the ADEA cases: “Unlike Title VII, the ADEA’s text does not provide
that a plaintiff may establish discrimination by showing that age was simply a motivating
factor. The ordinary meaning of the ADEA’s requirement that an employer took adverse ac-
tion ‘because of’ age is that age was the ‘reason’ that the employer decided to act.” 206
Thereby the U.S. Supreme Court made it harder for a claimant to bring a claim by increas-
ing the burden of proof on the plaintiff required to bring a claim under the ADEA. On March
13, 2012 lawmakers introduced the Protecting Older Workers Against Discrimination Act
(hereafter: POWADA) in the U.S. Senate that would explicitly reject the U.S. Supreme
Court's ruling in Gross v. FBL Financial Services and ease the burden of proof in favour of
the plaintiff.207
The disparate impact of an action of the employer is the second alternative for the employ-
ee to show a discriminatory act. The plaintiff does not have to show a discriminatory intent
- he just has to show that the employer's policy that appears neutral, in fact, impacts older
employees more adversely. Prima facie evident is sufficient. Thereafter, the burden of
proof shifts to the employer who has to show that his policy is based on a legitimate busi-
ness necessity. Finally, the plaintiff has the opportunity to show that alternatives exist,
which would have had the same effectiveness with less adverse impact, and that the de-
fendant refused to apply those alternatives.208
VI. Access to jurisdiction, supervision and remedies
In contrary to the EU, the U.S. system has a supervision body and appeals to this body for
206 Gross v. FBL Financial Services, Inc. (2009) 08-441.207 See press release of Iowa's senator Tom Harkin at http://harkin.senate.gov/press/release.cfm?i=336287; see also
testimony of C.L. Owens , Executive Director National Employment Law Project before the U.S. Senate Special committee on Aging 05/15/2012 at http://aging.senate.gov/events/hr245co.pdf.
208 Griggs v. Duke Power Co., 401 U.S. 424 (1971); Ward’s Cove Packing Co. v. Antonio 490 U.S. 642 (1989).
67
guidance and preliminary procedures in an age discrimination trial .The federal law is ad-
ministered by the EEOC since 1978. The EEOC is in charge of handling complaints about
age discrimination and gives binding interpretations for the ADEA as well as for Title VII
cases, called procedural regulations.209 Before an individual claimant can bring a civil ac-
tion in an age discrimination claim to court, he has to file a charge to the EEOC within 180
days after the discriminatory act occurred. The EEOC will try to solve the dispute by con-
ciliation, conference and persuasion. In any case, the claimant can file a lawsuit after 60
days. Additionally, the EEOC itself can file a lawsuit at court.210 Hence, the access to juris-
prudence is warranted. In comparison to the EU, the EEOC ensures at least some basic
supervision and guidance and provides annual statistics about the implementation and jur-
isprudence of the ADEA.211
The ADEA also stipulates the enforcement of the provisions of the ADEA by the national
courts. Therefore, a variety of remedies are established, e. g. back pay and reinstatement
and front pay and instatement, which gives the courts a broad discretion. Thus, the ADEA
does not only recognise reinstatement of the employee in the case of dismissal, but also
instatement of a rejected applicant. Additionally, whenever a provision of the ADEA is viol-
ated, the concerned employee is entitled to compensation in the amount of the unpaid
minimum wages or unpaid overtime compensation.212 In addition, in a case of “wilful” viola-
tion of the ADEA the employer is also liable for an equal amount of the aforementioned
compensation as liquidated damages.213
209 29 C.F.R. § 1626, for instance guidance on understanding waivers of discrimination claims in employee severance agreements, see http://www.eeoc.gov/laws/types/age_guidance.cfm.
210 29 U.S.C. § 626 (d).211 See, http://www.eeoc.gov/eeoc/statistics/enforcement/adea.cfm.212 29 U.S.C. § 626 (b).213 29 U.S.C. § 626 (b) in connection with § 216 (b).
68
VII. Summary and recommendations
Likewise to the Framework Directive, the ADEA is only partly in accordance with the sug-
gested components of ADL which diminishes the employee’s prospects of success of prov-
ing a violation of the ADEA.
The notions of “age” and “older worker” are clearly defined in the ADEA and give certainty
to who can actually get access to ADL under U.S. law. However, the access is restricted to
employees only. Compared to their own proposals and the EU Framework Directive, the
personal scope of the ADEA is too limited and could, at least, be extended to self-em-
ployed persons and removal of the restriction regarding the size of the company. ADL does
not only protect persons from any discriminatory act of an employer, but also from any dis -
crimination by public authorities. As mentioned above, public authorities can introduce
measures to promote the employability of their citizens which are also helpful to develop
the occupational skills and abilities of self-employed persons. Thus, self-employed persons
cannot be excluded from the personal scope of ADL. Furthermore, there are no good argu-
ments why ADL is not applicable to companies with less than 20 employees.214
The different kinds of discrimination are unambiguously determined by disparate treatment
and disparate impact which equal the direct and indirect discrimination of the European
Framework Directive, but which require the additional element of discriminatory intent of
the employer.
In contrary to the Framework Directive, the employment protection is formulated in a neg-
ative way and established rather to give protection against unfair dismissal and access to
214 The author could not find any arguments which are against an extension of the scope as regards to self-employed and the size of the company. Unfortunately, current literature is not focused on these issues and could not provide any further findings.
69
employment than access to vocational training for older workers. The suggested ADL com-
ponents and the EU Framework Directive require with good reasons the latter as well. Re-
garding the integration of older employees and the improvement of their chances on the la-
bour market, an equal treatment regarding vocational training is essential. Older workers
are at risk to be less trained than younger employees without an assurance of equal treat-
ment, since employers could tend to favour the training of younger workers expecting a
longer return on their investment in terms of performance due to the longer work life
ahead. The scope of § 623 ADEA allows for an interpretation including vocational training.
In order to enhance this important feature for older workers, I suggest that § 623 may be
interpreted to include also vocational training.
The possibilities to justify discrimination based on age are not only restricted to the area of
occupational qualification, but do also include further justifications for unlike treatment. In
particular, the RFOA has always been a controversial justification because it is so far am-
biguous when a dismissal is based on a reasonable factor other than age. This uncertainty
leads to a detriment to the employee. Recently, the EEOC released a clarification about
the RFOA that will clarify how the RFOA has to be applied. Thereby the burden of proof for
the employee will be eased and hence, the application of the RFOA.
The U.S. jurisprudence stipulates a multi-prong burden of proof system which is not al-
ways to the benefit of the employee. First the employee has the burden of proof which
makes it more difficult for the employee to prove unequal treatment. Even though the Mc-
Donnell Douglas prong-test allows the employee to bring forth prima facie evidence, it may
be difficult to present evidence in a discrimination case or maybe the employer's decision
was based on mixed motives. Regarding the latter, the jurisprudence raised the burden of
proof to a very high level to the detriment of the employee, and it is, so far, unclear
70
whether the U.S. Senate will follow the recommended facilitation by the POWADA. Hence,
a discriminated employee may fail in invoking the ADEA or he/she may even be
discouraged to file a case under the ADEA, due to the high burden of proof. Thus, the
POWADA needs to be enacted to ensure an efficient and effective ADL.
The access to jurisprudence is warranted. Moreover, the U.S. ADL established a supervis-
ory body – the EEOC - which monitors the ADL, gives guidance and furthermore, is in
charge to reconcile between the parties in a discrimination case before the case can be
filed to courts. The establishment of the EEOC has to be regarded as an important feature
in order to warrant an effective and sustainable ADL policy. Moreover, much scientific U.S.
research proved that the establishment of the EEOC strengthened the power of the ADEA
because it enhanced the resources for the practical work with, and research on, age dis-
crimination cases and helped to boost “pattern and practice” legal actions.215 In contrary to
the Framework Directive, the ADEA knows a complex system of remedies and clearly em-
phasizes the necessity to enforce the provisions of ADL in practice. With regard to the
sometimes non-existent remedy system in the national legal systems of the EU member
states, the decision of the U.S. legislator to make sanctions a compelling component of the
jurisprudence of the national courts highlights the utmost importance of ADL in the USA
and increases the relevance in the U.S. legislation.
E. Comparison between ILO recommendations, Framework Directive and ADEA
ADL should promote a concept of equality and enhanced individual choices, to protect dig-
nity and facilitate social inclusion.216 The ILO examined the current ADL worldwide and
215 J. Lahey, 'State age protection laws and the ADEA', National Bureau of Economic Research, working paper No. 12048, 2006, 5; D. Neumark, 'Age Discrimination Legislation in the United States', National Bureau of Economic Research, working paper No. 8152, 2001, 4.
216 S. Fredman, 'The Age of Equality', in S. Fredman and S. Spencer (eds), Age as an Equality Issue – legal and policy perspectives, 2003, 54.
71
suggested a good practice of ADL which can be the starting-point for further examinations
of current ADL.
Both the EU and the USA, only partly adhered to the examined components for ADL in
their national ADL and jurisprudence. The missing components in the ADL and jurispru-
dence have negative impact on the protection and promotion of older workers and can
hinder them from getting access to employment. Thus, the research has shown that it is
necessary to comply with the suggested ADL components in order to achieve good prac-
tice in ADL. Furthermore, the identified deficiencies of the U.S. and European ADL may be
a help for countries which want to introduce ADL in their legislation, in order to avoid the
same loopholes and defects. Finally the thesis gives an overview about the current
European and U.S. ADL with the following major findings:
At first sight, the European Framework Directive fulfils most of the recommendations for
ADL. The definitions, the personal and material scopes and the burden of proof are in
compliance with the recommendations, albeit the definitions and personal scope differ
from the recommendations - but for good reasons. On the contrary, the justification and the
supervision of the Framework Directive give rise to concerns about the appropriateness of
the Framework Directive and its implementation by the member states and the ECJ. In any
case, the EU should focus on the monitoring of the implementation in the member states
and whether the aims of the Framework Directive, i. e. equal treatment, are achieved or
not. Thereby, the EU should consider whether or not the establishment of a special institu-
tion for discrimination may be an adequate instrument to foster the implementation of
equal treatment principles within the member states. The Framework Directive, at present,
is a start in the right direction, but still far away from meeting all the recommendations and
facilitating good practice in ADL.
72
The ADEA also does not provide all the proposals for ADL. The personal scope is restrict-
ive and outdated and should be amended. The material scope does not explicitly include
equality in vocational training. Thus, at least an appropriate interpretation of the ADEA
should be established to provide also vocational training. The justification and the burden
of proof gives rise to concerns about the appropriate implementation and exercise of ADL
and its motives. The EEOC, the U.S. government and the jurisprudence should take care
of the implementation of the guidelines to the RFOA and the enactment of the POWADA.
Otherwise the U.S. ADL is at risk to offer loopholes for circumvention of equal treatment of
older workers. Considering the lack of a supervisory body and a uniform sanction system
in the EU, the establishment of sanctions and of the EEOC and the efforts to promote ADL
have to be explicitly emphasized.
73
Chapter 4
Age Discrimination Legislation and its impact on the labour market
After we examined how ADL is implemented in practice and what problems may occur, the
question arises what impact ADL has on older workers in the labour market. The Active
Ageing policy tries to increase the participation of older worker in society and aims at help -
ing older workers to remain a vital part of society and the workforce.217 The ILO states that
ADL can protect older workers' in their employment and moreover can enhance the em-
ployment rate of older workers.218 Does ADL indeed succeed in this endeavour?
A pertinent question in this respect is what influences ADL has on employers? In the end,
the employer decides who he/she wants to hire or fire. Are they affected by ADL in their
decision-making, for instance which employee they hire or fire? Moreover, does ADL have
a positive impact on employment rates of older workers and the length of employment?
Does it have any impact on the retirement or pre-retirement conduct of older workers?
What is already known about the effects of ADL?
This chapter tries to elaborate the impacts of ADL by reviewing existing literature. As
already seen above, the ADL in the USA is one of the oldest ADL worldwide. Since 1967
the ADEA was amended several times. It became applicable for employees aged 40-65,
than 40-70 and, finally, with the abolition of the mandatory retirement age the ADEA covers
all employees aged 40 and above. Due to its long history and several amendments, the
ADEA and its impacts on the labour market have been subject to numerous scientific stud-
ies. The results of the studies are presented by means of ADL and its effect on the hiring
217 See chapter 1.218 ILO, Age discrimination and older workers: Theory and legislation in comparative context, Conditions of Work and
Employment series No. 20, 2008, v.
74
and firing older workers as well as retirement.
Conversely, the European ADL is relatively young and scant European and national stud-
ies of the EU member states are available. Most European and national studies concen-
trate on the question of whether reported age discrimination cases diminished after the in-
troduction of the Framework Directive219 rather than on the economic impacts on the la-
bour market. Additionally, studies mainly concentrate on the impact of employment protec-
tion legislation in general and not specifically on ADL.220 Hence, only some general re-
marks can be given.
Although the EU is competent for retirement as an issue of social security, decisions on
European level require unanimity of the European member states.221 With regard to an ab-
olishment of mandatory retirement within the Framework Directive, the member states are
enabled to set age limits in national occupational security schemes and ages for the enti -
tlement of a retirement pension in their national schemes.222 Thus, there is no abolishment
of mandatory retirement as in the ADEA. Nevertheless, a European national study ex-
amined changes in a European national retirement systems and their impact on employ-
ment of older workers. Due to the fact that the abolishment of the mandatory retirement is
also a component of the ADEA and most U.S. studies are also related to retirement, the
aforementioned study is also presented to give an insight into the interplay between retire-
ment and employment in Europe.
219 See for instance Eurofund's European Working Conditions Survey 2005 which indicates that after the implementa -tion of national ADL, the age discrimination incidents declined in some European member states, but increased at the same time in others.
220 See for instance K. Daniel and W. Siebert, 'Does employment protection reduced the demand for unskilled workers?', Institute for the Study of Labor, working paper No. 1290, 2004. The study indicates that strict employ-ment protection legislation has, in general, the effect to raise the recruitment requirements and to complicate the en-tering for low skilled workers.
221 Art. 153 (1)(c), (2)(b) EU Directive 2000/78/EC.222 Ibid, Art. 6 (2).
75
A. The ADEA and the impact on the labour market of older workers
I. Literature review
In 1999, Neumark and Stock did research on the relationship between the ADEA and the
use of long-term incentive contracts which included a “voluntary” mandatory retirement
age as a feature of labour contracts.223 In their opinion, the adoption of the ADEA led to a
remarkable boost of employment of older workers, but was not related to the abolishment
of the mandatory retirement by the ADEA.224 In 2006, Lahey ascertained that the ADEA
has unintended negative consequences regarding hiring, firing and retirement. However,
she only could detect impact on workers aged 50 and above, but not for younger
workers.225
Adams also analysed, in 2004, the effects of the adoption of the ADEA on the employment
of older workers, especially on the employment rate of older workers in correlation with hir-
ing and retirement. He concludes that the ADEA had some positive impacts on employ-
ment of older workers, but that definite results on hiring and retirement of older workers
are, in general, hard to find.226
Neumark examined again the ADEA and its impacts on the employment of older workers in
2008. This time he focused on the demographic change and whether the ADEA may over-
come the problems arising from age discrimination in the case of hiring and firing. He just
223 The so called Lazear model (1979) which is based on the assumption that a mandatory retirement is part of a life-time contract between worker and employer and embodies a long-term incentive of the worker regarding the de-crease in his productivity at a certain point in his working life, see S. Stern and P. Todd, 'A test of Lazear's mandat-ory retirement model', in S. W. Polachek, Worker well-Being, Research in Labor Economics 2000, Vol. 19, 253.
224 D. Neumark and W. Stock, 'Age discrimination laws and labor market efficiency', Journal of Political Economy 1999, Vol. 107, 1123.
225 D. Lahey, 'State age protection laws and the Age Discrimination in Employment Act', working paper 12048, Na-tional Bureau of Economic Research, 2006, 24.
226 S. J. Adams, 'Age discrimination legislation and the employment of older workers', Labour Economics,Vol. 11, 2004, 237.
76
concludes that the ADEA boosts the employment of older workers, but not the hiring
rate.227
Recently, Neumark and Song examined the question whether ADL has an effect to in-
crease employment to the age of 65 as a supplement of changes of the full retirement age
in the social security systems and the abolishment of mandatory retirement ages and
found proof for that interplay.228 Von Wachter just concentrated on the abolishment of man-
datory retirement and concluded a direct impact on employment of older workers. 229
II. Hiring older workers
According to Lahey, it is difficult to detect employers' reluctance to hire older workers.
However, they generally tend to hire older workers less frequently because they fear diffi-
culties if they have to dismiss them, in particular because of possible lawsuits under the
ADEA and associated high compensation costs and legal expenses. In the course of her
research, she concludes that the amendments of the ADEA, especially the abolishment of
a mandatory retirement age, led to a drop in the employment rate of workers aged 50 and
above.230
Pursuant to Adams, the effect of the ADEA on the employment of older workers is ambigu-
ous. However, he could clearly find evidence that the stock of new hired older workers did
not change.231
227 D. Neumark, 'The Age Discrimination in Employment Act and the challenge of population ageing', National Bureau of Labor Research, working paper No. 14317, 2008, 22.
228 D. Neumark and J. Song, 'Do stronger age discrimination laws make social security reforms more effective?', Na-tional Bureau of Economic Research, working paper No. 17467, 2011, 31.
229 T. von Wachter, 'The End of Mandatory Retirement in the U.S.: Effects on retirement and implicit contracts', Center for Labor Economics working paper No. 49, University of California Berkeley, 2002, introduction.
230 D. Lahey, 'State age protection laws and the Age Discrimination in Employment Act', working paper 12048, Na-tional Bureau of Economic Research, 2006, 2, 22.
231 S. J. Adams, 'Age discrimination legislation and the employment of older workers', Labour Economics,Vol. 11, 2004, 237.
77
Neumark concluded that the ADEA does not promote hiring and thus, does not have a
positive effect on hiring of older workers. The cause can be found in the possible higher
legal expenses for ADEA cases which employers want to avoid.232
III. Firing older workers
Lahey stated that employers are concerned about legal action stemming from the ADEA
and thus, refrain to lay-off older workers. They try to obtain a consensual termination of the
employment contracts by offering high retirement incentives. At first sight, that may be a
win-win-situation for older workers and the employers. Pursuant to Lahey, the older work-
er, however, is not completely free in his choice for a retirement incentive because he is
frightened that the employer is willing to fire him/her in any case. As a consequence, he
can choose between leaving his workplace with or without compensation.233 Neumark and
Stock could also find some evidence that the introduction of the ADEA may preclude lay-
offs because it changes the relationship between employer and worker to a long-term
commitment. From their perspective, the ADEA does not affect the offering of high retire-
ment incentives as an alternative to a costly termination of the contract (due to compensa-
tion for the employee) under the ADEA and those incentives are mostly long-term agree-
ments.234
These findings are approved by Adams and Neumark who stated that the introduction of
the ADEA led to longer working life of employees and to a direct shift of the employee from
the workplace to pension.235
232 D. Neumark, 'The Age Discrimination in Employment Act and the challenge of population ageing', National Bureau of Labor Research, working paper No. 14317, 2008, 22.
233 D. Lahey, 'State age protection laws and the Age Discrimination in Employment Act', working paper 12048, Na-tional Bureau of Economic Research, 2006, 3.
234 D. Neumark and W. Stock, 'Age discrimination laws and labor market efficiency', Journal of Political Economy, Vol. 107, 1999, 1123.
235 S. J. Adams, 'Age discrimination legislation and the employment of older workers', Labour Economics,Vol. 11, 2004, 240; D. Neumark, The Age Discrimination in Employment Act and the challenge of population ageing, Na-
78
IV. Retirement
Neumark and Stock suggested that the sole abolishment of mandatory retirement ages did
not change retirement age in practice because retirement was caused by other matters, e.
g. pension schemes.236 Later, Neumark and Song concluded that the increase of the full
retirement age of pension schemes in conjunction with the introduction of the ADEA may
increase the employment of older workers and retard the retirement to the age of 65 and
above.237 On the other hand, von Wachter concluded already in 2002 that the mere abol-
ishment of the mandatory retirement age forced already the employment by 10 % to 20 %
for workers aged 55 and older from 1990 to 2010.238 Additionally, the job tenure and the
wages have not been affected by the abolishment.239
V. Summary
The economic studies on the impact of the ADEA on the labour market, especially on the
employment and retirement age of older workers and the hiring and firing conduct of the
employers are ambiguous. Some of the researchers could detect a boost in employment of
older workers and some not. The majority found that there was no increase in the hiring
rate of older workers. It rather seems that ADL hinders employers hiring older workers be-
cause they fear high costs as a consequence of possible age discrimination trials.
Moreover, the employment character changed to a long-term employment with incentives
for the older worker to leave the workplace for a pension. Apart from this incentive
tional Bureau of Labor Research, working paper No. 14317, 2008, 23.236 D. Neumark and W. Stock, 'Age discrimination laws and labor market efficiency', Journal of Political Economy,
Vol. 107, 1999, 1084. 237 D. Neumark and J. Song, 'Do stronger age discrimination laws make social security reforms more effective?', Na-
tional Bureau of Economic Research, 2011, 31.238 T. von Wachter, 'The End of Mandatory Retirement in the U.S.: Effects on retirement and implicit contracts', Center
for Labor Economics working paper No. 49, University of California Berkeley, 2002, introduction; U.S. Bureau of Labor Statistics, Employment outlook 2010-2020, Labor force projects to 2020: a more slowly growing workforce, 2012, 60.
239 T. von Wachter, 'The End of Mandatory Retirement in the U.S.: Effects on retirement and implicit contracts', Center for Labor Economics working paper No. 49, University of California Berkeley, 2002, introduction.
79
employment contract model, the employment contract is more likely to be terminated by
mutual agreement with compensation than by lay-offs. Finally, the introduction of the ADEA
led to a higher employment rate of older workers due to a higher protection of the existing
employment relationships.
Additionally, it is rather unclear whether the abolishment of the mandatory retirement boos-
ted the employment rate of older employers or it was caused simply by prolonging the stat-
utory retirement ages in the national security schemes.
B. The EU Framework Directive and the impact on the labour market of older
workers
I. Literature review
In 2007, Adnett and Hardy examined the introduction of ADL in Europe and whether the
impacts are comparable to the findings in the USA and whether the employment rate of
older employees can be raised.240 In 2009, Heywood and Siebert did a survey on the phe-
nomenon that retirement is quite abrupt in many European countries with a focus on the
impact in the UK. They also examined the effects of ADL on the employment market in
consideration of the UK Employment Equality Regulation which implemented the Frame-
work Directive.241 In 2010, Hairault, Langot and Sopraseuth examined whether the retire-
ment age affects older workers' employment prior to retirement. Based on the French La-
bour market, they could prove that the distance to retirement directly affects the likelihood
of employment of older workers.242
240 N. Adnett and S. Hardy, 'The peculiar case of age discrimination: Americanisation of the European social model?', European Journal of Law and Economics 2007, Vol. 23.
241 S. Heywood and S. Siebert, 'Understanding the labour market for older workers: a survey', Institute for the Study of Labor, discussion paper No. 4033, 2009.
242 J. O. Hairault; T. Sopraseuth; F. Langot, 'Distance to Retirement and Older Workers‘ Employment: The Case for
80
II. General remarks
Adnett and Harry focused on the question why the Framework Directive has been intro-
duced after decades without a common ADL in Europe. In their opinion, it was mainly to
raise the employment rate, but they do not expect real improvements in Europe. The long-
term contract is already characteristic for the European labour market because of the high
employment protection legislation and the social security systems. Thus, fundamental
changes as in the U.S. system are not expected. However, it may also occur that an earlier
retirement is concluded between the parties. Conversely to costly age discrimination trials
in the USA, the reason for early retirement agreements may be caused by compensation
regulations in redundancy protection legislations in the EU.243
From Heywood's and Sieberts' perspective, ADL is generally appropriate to enhance em-
ployment protection, but restricts the employee's chances to get hired. According to them,
older workers are different from younger workers regarding their productivity and hence,
age discrimination is helpful for the business. Consequently, they conclude that the intro-
duction of ADL is of no avail to increase the employment chances of older workers.244
Both studies do not take into consideration the impact of mandatory retirement. Hairault,
Langot and Sopraseuth proved that the average employment of older workers between 55
and 59 increases dramatically when the retirement age is higher than 60 and pre-retire-
ment is not possible. Moreover, in countries with a high eligibility age for the retirement
schemes, the employment rate of older employees is significantly higher than in countries
Delaying the Retirement Age', Journal of the European Economic Association 2010, Vol. 8 (5), 1068.243 N. Adnett and S. Hardy, 'The peculiar case of age discrimination: Americanisation of the European social model?',
European Journal of Law and Economics 2007, Vol. 23, 39 et sqq.244 S. Heywood and S. Siebert, 'Understanding the labour market for older workers: a survey', Institute for the Study of
Labor, discussion paper No. 4033, 2009, 12.
81
with a lower retirement age.245
III. Summary
The impact of ADL in the EU is less examined than in the USA, in particular with regard to
the possible economic impacts and a raise of the employment rate for older workers. Nev-
ertheless, it is likely that the increase of the already existing high employment protection
also leads to a lower hiring rate than in the USA. Additionally, the increase of consensual
termination of the labour contracts and earlier retirement also may increase. The impact of
mandatory retirement is only examined under national studies. However, a change in the
statutory retirement age of the national pension scheme can improve the employment rate
of older workers because the employment of older workers is directly related to the dis-
tance to statutory retirement.
C. Conclusion
The available research on the impacts of ADL is fragmented and only the U.S. research
provides some empirical surveys about the impact of ADL on the employment of older
workers. The impact in the EU is less clear, but provides at least some data about the in -
terplay between retirement and employment of older workers. Further research should be
done in the USA and the EU to examine the effects and impacts of the introduction of the
ADEA and the Framework Directive, the national ADL on the European and the national la-
bour markets and the employment and retirement of older workers.
From the scarce empirical facts, we can derive some major findings which should be con-
245 J. O. Hairault, T. Sopraseuth, F. Langot, 'Distance to Retirement and Older Workers‘ Employment: The Case for Delaying the Retirement Age', Journal of the European Economic Association 2010, Vol. 8 (5), 1068.
82
sidered with caution. The U.S. research implies that older workers can benefit from the
ADEA in respect of the length of their employment contracts and the will ingness of employ-
ers to offer high compensation to older workers to leave the workforce instead of using dis-
missals. The employment of older workers seems to be boosted in the USA, contrary to
the hiring. It is ambiguous whether the abolishment of mandatory retirement ages alone or
in conjunction with changes in pension schemes led to an increase of the employment of
older workers. However, it is true that the employment of older workers between 55 and 66
increased in the USA. The same is also true for Europe after the amendment of retirement
schemes and minimizing pre-retirement to a small level.246
In the light of the demographic change, the need for states to get older workers in employ-
ment and to keep their older employees longer in the workforce, this development is nev-
ertheless not completely satisfying. In the end, the ADL prolongs the working time of older
workers until they are able to retire according to the national security schemes or even by
pre-retirement and the offering of compensation. The hiring rate of older workers, however,
did not increase. That implies that ADL is not an answer to get more older people in em-
ployment, but just to keep them longer in the workforce. Hence, we need other measures
to improve the hiring rate of older workers and to abolish the labour market barriers for
older workers.
246 European Commission, Green paper, Towards adequate, safe and sustainable European pensions systems, COM (365 final 2010), 30.
83
Chapter 5
Conclusion
In the wake of the demographic change of the society the functionality of social security
and health schemes worldwide are at stake. Older people live longer and stay healthy
longer. From an economic perspective, they still drop out of the labour market too early.
Hence, they do not contribute to the social systems. Younger people cannot compensate
for the drop in the workforce. Thus, we need older people to stay longer in the labour mar-
ket. However, we have to accept that older employees want to leave the workforce for their
retirement after decades of work and contributing to the social security schemes. Con-
sequently, we need incentives for older workers to remain active in the labour market.
Even though it cannot be doubted anymore that older employees are a productive and
valuable part of the labour market, older workers have to struggle with different kinds of
problems in their daily working life. Most often they have to cope with stereotypes and pre -
judices, higher seniority wages, high employment protection legislation and mandatory re-
tirement which lead to discrimination based on age and to employers' reluctance to hire
and support older employees.
Active Ageing is a recent policy to tackle those problems of older workers and to solve the
demographic impacts on the social security and health schemes. Active Ageing tries,
amongst others, to tackle age discrimination because age discrimination embodies one of
the biggest obstacles to the labour market for older employees. Consequently, ADL is pro-
moted under Active Ageing policies.
The research has shown that the components for a good practice of ADL - in compliance
84
with the ILO - should contain a broad personal scope which includes clear and compre-
hensive definitions like who is an older worker and what does the notion age mean, the
guarantee of the core elements of employment protection as protection against unfair dis-
missal and unemployment as well as active employment promotion as vocational training
and equal working conditions, the possibility to justify discrimination due to occupational
reasons or reasons in the nature of the employee, a facilitated burden of proof for employ-
ees on the basis of a prima facie evidence and general access to justice which includes a
remedy system and supervision as a follow-up mechanism.
Both the EU and the USA only partly adhere to above mentioned proposals in their nation-
al ADL and jurisprudences. The missing parts in the ADL and jurisprudence have to some
extent negative impacts on the protection and promotion of older workers and can hinder
them from getting access to employment. Thus, the research has clearly shown that it is
basically necessary to comply with the aforementioned proposals in order to achieve a
good practice in ADL and both, the EU and the USA, have to increase their efforts to as-
sure a good practice of ADL.
The question whether ADL increases the employment rate of older workers is not easily
answered. The available research on the impacts of ADL is fragmented and only the U.S.
research provides some empirical surveys about the impact of ADL on the employment of
older workers. The impact in the EU is less clear, but provides at least some data about
the interplay between retirement and employment of older workers. Further research
should be done in the USA and the EU to examine the effects and impacts of the introduc-
tion of the ADEA and the Framework Directive, the national ADL on the European and la-
bour markets of the member states and the employment and retirement of older workers.
The scant empirical research implies that ADL prolongs the working time of older worker
85
until they are able to retire, but the hiring of older workers did not increase. That leads to
the conclusion that ADL is not an answer to get more older people in employment, but just
to keep them longer in the workforce.
There is no doubt that the protection of older workers is of essential importance. If discrim-
ination based on age occurs in the workplace, affected employees are less likely to stay
with the employer than workers who did not sustain discrimination on the basis of age.247
That is even more tragic because older workers remain generally longer unemployed than
younger people.248 Thus, the protection of older workers' workplaces against any form of
age discrimination has to be on top of the agenda of labour market policies.
Nevertheless, the main aim to raise the number of older workers in employment cannot be
achieved by ADL. Even though the examined surveys did not consider ageism and stereo-
typing explicitly, one main factor why employers hesitate to employ older workers is clearly
connected to prejudices about older workers' productivity and adaptivity.249 Moreover, high
employment protection and seniority wages also enhance the burden for older workers to
enter the labour market.250 As a consequence, other supplementary actions are needed to
overcome stereotypes and to enhance the employment of older workers. Eventually, we
need a broader approach to tackle the discrimination of older workers and to enhance the
integration of older workers in the labour market and society. We need “a triangle of activ-
ity: the legislation, promotion and the cultural change”.251
Thus, we need ADL as a part of Active Ageing policies.247 D. Neumark, and W. Johnson, 'Age Discrimination, job separation and employment status of older workers: Evid-
ence from self-reports', National Bureau of Labor Research, working paper No. 5619, 1996, 29.248 D. Neumark, 'The Age Discrimination in Employment Act and the challenge of population ageing', National Bureau
of Labor Research, working paper No. 14317, 2008, 8.249 See already chapter 1.250 Ibid.251 International Federation on Ageing, Conference Copenhagen 2006, Ageism: Towards a global review, paper: 'Age
discrimination in Europe: A late bloomer or wallflower?', 2006, 17.
86
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