24.02.2017

News

The Danish Supreme Court goes against the European Court of Justice in Ajos case

In a highly principled judgment, the Supreme Court of Denmark establishes that principles based on EU law cannot necessarily take precedence over a clear national provision. This means that older cases may continue to be comprised of paragraph 2a(3) of the Danish Act on salaried employees.

In a highly principled judgment the Supreme Court of Denmark went against the CJEU ruling in a case concerning severance pay to a dismissed employee with 25 years of seniority.

According to paragraph 2a of the Danish Act on salaried employees, a salaried employee with seniority is entitled to a severance pay. However, according to the former paragraph 2a(3) of Act on salaried employees, the right to severance allowance lapsed if the employee was entitled to employer-paid retirement pension upon retirement.

Recently, the Supreme Court ruled on whether the provision of the former Act on salaried employees was contrary to the EU's discrimination principle, which may affect any cases regarding pre-dating 1 February 2015, when paragraph 2a(3) of Act on salaried employees was repealed.

Case summary: Long-term employee did not receive severance pay

A salaried employee who was employed by the Danish company Ajos A/S was dismissed after 25 years of employment, and with that seniority the employee in general was entitled to a severance pay under paragraph 2a of the Danish Act on salaried employees.

However, the salaried employee was not paid severance pay because he was entitled to employer-paid retirement pension according to the then applicable provision in the Act on salaried employees.

After the dismissal, the salaried employee did not retire, but started a new job. He therefore brought proceedings against his former employer with demands for severance pay, as well as compensation due to discrimination on the grounds of age in violation of the Danish Act on Prohibition against Discrimination on the Labour Market.

CJEU: Disregard paragraph 2a(3) of Act on salaried employees

During the proceedings, the Danish Supreme Court referred a preliminary question to the European Court of Justice to get the court's assessment of whether the Danish rules were in compliance with the general EU principles on non-discrimination.

European Court of Justice replied that the former provision in paragraph 2a(3) of the Act on salaried employees, was incompatible with the general EU principles of non-discrimination, and the Supreme Court should therefore refrain from applying this provision.

The CJEU also pointed out that the interests of corporate legal protection cannot justify setting aside the principle of equal treatment.

Supreme Court Decision: Unwritten principle of EU law does not prevail over national law

However, the Supreme Court did not find that the Act on Denmark's accession to the EU in this case had the required legal basis to let a national law be displaced by an unwritten principle of EU law.

In its decision, the Supreme Court emphasised the existence of clear and unequivocal case law on the former provision of the Act on salaried employees.

Thus, the Supreme Court ruled that the principle of non-discrimination cannot be given precedence over the former paragraph 2a(3) of the Act on salaried employees, and Ajos A/S was entitled to not pay severance pay.

The decision also means that other private companies in Denmark cannot be obliged to post-pay severance pay to employees who did not receive severance pay because they were entitled to a retirement pension.

In our HR eBook (in Danish) you will find examples of written notice, severance agreements, and tools for insertion in your personnel policy. As a subscriber to the eBook, you will also get discounted rates at relevant courses on employment law.

Read more about ours HR eBook and membership here (in Danish)

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