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Germany: Companies May Exclude Spouses Who Are More than 15 Years Younger than the Deceased from Survivors’ Benefits

(Apr. 25, 2018) In a decision published on April 11, 2018, the German Federal Labor Court (Bundesarbeitsgericht, BAG) ruled that a clause in an occupational pension agreement that excludes from survivors’ benefits spouses who are more than 15 years younger than the deceased former employee does not constitute discrimination on the grounds of age. (BAG, Feb. 20, 2018, Docket No. 3 AZR 43/17, BAG website (in German).)

Background

The plaintiff, who was born in 1968, is the widow of a retired employee 18 years her senior who died in 2011 and had been granted a spouse’s pension promise by his former employer. The defendant in this case is an insolvency insurance company, since insolvency proceedings were instituted against the former employer’s assets in 2010. (BAG at 2 et seq.)

The occupational pension agreement in question stated that, upon the death of a beneficiary, the surviving spouse is eligible for a spouse’s pension only if the surviving spouse is not more than 15 years younger than the deceased employee. (Id.) The plaintiff claimed that this age difference clause (Altersabstandsklausel) is inadmissible discrimination on the grounds of age and therefore void. (Id. at 4.)

In principle, according to German law, any discrimination on the grounds of age in relation to employment and working conditions is not allowed. (Allgemeines Gleichbehandlungsgesetz [AGG] [German General Act on Equal Treatment] Aug. 14, 2006, BUNDESGESETZBLATT [BGBl.] [FEDERAL LAW GAZETTE] I at 1897; as amended, § 1, § 2, para. 2, no. 2, § 7, para. 1 (unofficial English translation), German Laws Online website.)  A provision in an agreement which violates the prohibition of discrimination is void. (Id. § 7, para. 2.) However, a difference of treatment on grounds of age does not constitute discrimination if it is objectively and reasonably justified by a legitimate aim. (Id. § 10, para. 1, sentence 1.) Moreover, the means of achieving that aim must be appropriate and necessary. (Id. § 10, para. 1, sentence 2.)

The plaintiff brought an action before the Labor Court of Cologne seeking payment of survivors’ benefits under her husband’s occupational pension plan. While the court of first instance dismissed the claim, the Higher Labor Court of Cologne (Landesarbeitsgericht Köln) essentially ruled in favor of the plaintiff. The defendant appealed the ruling of the second instance to the BAG. (BAG at 5–7.)

Decision

The BAG upheld the ruling by the court of first instance. The Court held that the defendant is not obligated to pay the plaintiff a survivor’s pension. (Id. at 8–10.)

The BAG stated that the exclusion of spouses who are more than 15 years younger than the deceased employee constitutes direct discrimination against the employee on the grounds of age. The BAG explained that the clause referring to the age difference between the beneficiary and his or her spouse can affect only employees who are at least 33 years old. This is because in Germany a person cannot enter into a marriage before he or she reaches the age of 18. (Id. at 19.)

However, the BAG held that the discrimination was justified since the former employer pursued a legitimate aim by using the age difference clause. The BAG stated that the relevant German provisions implement EU Council Directive 2000/78/EC, according to which objectives related to employment policy, the labor market, and vocational training can serve as legitimate aims. The Court found that using age difference clauses to strike a balance between the different interests involved in order to the make occupational pensions available to a broader public is a legitimate aim in this context, as is limiting the financial risks of granting spouses’ pensions. An employer has a legitimate interest in maintaining a manageable and calculable liability for occupational pension benefits. (Id. at 16, 23–28; Council Directive 2000/78/EC of 27 November 2000 Establishing a General Framework for Equal Treatment in Employment and Occupation art. 6, para. 1, 2000 O.J. (L 303), 16, EUR-Lex website.)

The Court further stated that the exclusion at issue is also appropriate and necessary. The measure allows the employer to limit the financial risks, and the legitimate interests of the affected employees are not unduly impaired. Where the difference in age between the spouses is more than 15 years, the marriage is a priori designed in a way that the surviving spouse will live a part of his or her life without the beneficiary. As more than 80% of all married couples in Germany have an age difference of less than seven years, it is justified to exclude spouses from survivors’ benefits where the difference in age deviates significantly from the average age gap, according to the BAG. The BAG concluded that no other solution was possible as clauses providing a reduction of the spouse’s pension for exceeding the 15-year age difference on the basis of actuarial methods or the postponement of the commencement date for payments is not as effective as the complete exclusion of the spouses concerned. (BAG at 29–34.)

Prepared by Catharina Schmidt, Law Library intern, under the supervision of Jenny Gesley, Foreign Law Specialist.