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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