Age-discriminating dismissal in small companies

BAG, judgment dated 15.7.2015 – 6 AZR 457/14

Even in small companies with less than 10 employees, dismissal  can be ineffective as a result of age discrimination in accordance with Section 7 AGG (General Equality of Treatment Act) if, on the basis of evidence presented, direct disadvantaging for age reasons as per Section 22 AGG can be suspected, and the employer does not succeed in refuting this suspicion.

Suspicion ruling under Section 22 AGG also applies in small companies to the detriment of the employer

The decision by the BAG (Federal Labor Court) was based on the following facts: the plaintiff, born on January 20, 1950, had been employed by the defendant as doctor’s assistant in a joint practice since December 16, 1991. At the time of the serving of notice of dismissal in 2013, the practice had a further four, younger employees in addition to the plaintiff. The plaintiff was most recently deployed predominantly in the laboratory. By letter dated May 24, 2013, the defendant terminated her employment relationship to December 31, 2013. In the letter of termination, the defendant justified the dismissal by stating that this was due to changes in the laboratory area that made it necessary to restructure the practice. In addition, the plaintiff was “now entitled to a pension”. The other four employees were not dismissed. Through her legal action, the plaintiff contested the effectiveness of the dismissal and demanded compensation based on age discrimination. Even the letter of termination gave rise to the suspicion of disadvantaging based on her age. The defendant argued that the intention was merely to formulate the letter of termination in a friendly and binding manner. Notice of termination had been served due to an expected falling away of 70 to 80 percent of the chargeable laboratory services. A comparison between the plaintiff and the other doctor’s assistants was not possible as she is less qualified. This was the only reason for her dismissal. The previous instances had dismissed the action. The appeal to the Federal Labor Court on a point of law was successful and resulted in the matter being referred back to the State Labor Court (LAG) Saxony.

Deviating opinion of the LAG Saxony

The State Labor Court Saxony had also argued that age-related discrimination certainly did not apply, as the different treatment was admissible under Section 10 AGG in the case of the plaintiff given her age. By taking account of the plaintiff’s age, the defendant had pursued a legitimate aim, as it had wished to protect younger employees, not entitled to a pension, against dismissal. Consequently, the consideration of the “pension entitlement” or of the age was appropriate and necessary, both from an abstract perspective as well as, in the specific case, within the meaning of Section 10 Sentence 1 and 2 AGG.

BAG: suspicion ruling under Section 22 AGG applies to the detriment of the employer

The 6th Senate of the Federal Labor Court argued against this by stating that the dismissal was in violation of Section 7 AGG and thus ineffective. Based on the suspicion ruling of Section 22 AGG, the plaintiff had stated that the dismissal was due to the entitlement to a pension. In turn, the defendant should therefore have been able to demonstrate that the age discrimination, to be suspected on the basis of reference to the “pension entitlement”, was not given. It had not produced the evidence necessary for this. It was not yet possible to establish whether and to what extent the plaintiff was entitled to the damages asserted. The 6th Senate therefore considered itself compelled to refer the matter back to the State Labor Court for a new hearing and a decision.

Summary

This ultimately surprising decision by the BAG illustrates once more that extreme caution is called for as early as when formulating the notice of termination. Even in a small company, notice of termination can be ineffective as a result of age discrimination. We therefore strongly recommend avoiding polite formulations in the notice of termination which are intended to state a reason for the dismissal. Under Section 22 AGG, such formulations can create a suspicion to the disadvantage of the employer during litigation, which is difficult to refute.