No obligation to retire early

Employee cannot be required to take early retirement

An employer needing to carry out a reorganisation that will involve job losses cannot simply expect employees to exercise their right to retire early. In this situation, an employer runs the risk of being guilty of prohibited age discrimination. This was the conclusion reached by the Sub-District Court of Zutphen (12 October 2006, LJN AZ0661).

An employee had worked for her employer since 1990. Her current position was Head of Personnel, Organisation and Training. Within her division, another Head of Department with a shorter length of service occupied a different position. Her employer was suffering significant losses and needed to cut costs. As the employee was eligible for early retirement, the employer suggested she take up this option. The employee refused to do so. A dispute arose over the issue. The employer would not drop the matter, suspended the employee and submitted an application to the Sub-District Court to rescind the employment contract.

Position had not ceased to exist

However, the Sub-District Court refused to rescind the employment contract. The Sub-District Court did hold that the employer had provided sufficient evidence that a reorganisation or cost-cutting exercise was necessary from a business perspective. Despite this, the court determined that the employee’s position had not ceased to exist.

The employer argued “that one would expect of a senior member of staff such as the employee that she of all people would realise the seriousness of the company’s financial situation and would show solidarity”. The Sub-District Court was not persuaded by this argument, commenting “whatever about that, this cannot mean that the employee should renounce the rights that are due to her or make way for a colleague, who not only has a different position but has also been in employment for a shorter period, which the employer does not dispute”. The Sub-District Court further held that the employer’s actions were contrary to the Equal Treatment Act as regards age, as the employer distinguished between employees who were eligible for early retirement and those who were not.

Commentary

Why shouldn’t an employer forced to make cutbacks be entitled to expect employees to take early retirement? The answer can be found in this judgment. The Sub-District Court held that an employee cannot simply be expected to renounce his rights in this way. It would also conflict with the rules on dismissal, which provide as a basic principle that where employees are made redundant for business economic reasons an employee’s length of service should be taken into consideration. Last, but certainly not least, a significant argument against such action is that the employer would be guilty of prohibited age discrimination as a result.

This judgment is a product of our time. Early retirement was originally intended as a measure to counteract youth unemployment by enabling older employees to make way for younger ones. The opposite problem now threatens, as we come to expect that the efforts of older employees will be much needed to keep our economy going. The employer in this case will need to look for a solution more suitable to the times in which we live. Perhaps by applying the rules on length of service after all.

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