Heuking Kühn Lüer Wojtek advises SPX FLOW in dispute because of age limits clause in employment contract

A ruling obtained by Heuking Kühn Lüer Wojtek on behalf of U.S. industrial group SPX FLOW before the German Federal Labor Court on December 9, 2015 (BAG, 9. December 2015, Az.: 7 AZR 68/14) has now created legal certainty on age limits clauses in employment contracts.

The Federal Labor Court rejected an SPX employee’s appeal who maintained under an action against fixed-term employment contracts that the age limits clause amounted to ageism in his employment contract. Additionally, he held that it was contrary to the am-biguity provisions of Section 305c German Civil Code, because it was based on achiev-ing the 65th year of age and not on the standard retirement age applicable now.

The Federal Labor Court indicated at the hearing that in its view the review intensity did not depend on whether the age limit had been agreed in collective agreements or indi-vidual contracts. Age limits clauses had been deemed reasonable in the past because they were legitimized by sufficiently sensible labor market and social policy considera-tions (such as combating youth unemployment). This would apply to age limits irrespec-tively of whether they were based on an individual contract, a collective agreement, or on statutory provisions. The specific grounds for the court’s decision remain to be seen.

The legality of age limits for terminating employees has been discussed extensively in recent years. Recently, there have been some uncertainties in legal counseling about the effectiveness of age limits under individual contracts providing for automatic termination of employment upon reaching the statutory retirement age. In the past, the Court of Justice of the European Union and the Federal Labor Court had conclusively dealt only with age limits under collective agreements or relevant statutory provisions pertaining to public officials, only expressly confirming their admissibility. In several decisions, the courts had particularly highlighted the discretionary power of the legislature or of the col-lective bargaining parties. It was therefore not entirely beyond doubt whether the case-law principles were transferable to appropriate age limits clauses in employment con-tracts, where stricter legal tests applied.

Counsel to SPX FLOW
Heuking Kühn Lüer Wojtek:
Christoph Hexel,
Dr. Alexander Bork (both Employment), both Düsseldorf