By judgement dated 5 March 2013 (docket no.: 1 AZR 417/12), the
Federal Labour Court affirmed the permissibility of age limits in
shop agreements, pursuant to which the employment relationship ends
with the expiry of the calendar month in which the employer reaches
the statutory retirement age.
Under examination in the case up for decision was a central shop
agreement which envisaged the end of the employment relationship
upon reaching the age of 65, without this requiring a termination.
The claimant of the underlying dispute, born in 1942, had been
employed at the defendant since 1980. According to the
"notification of hiring" signed by both parties, the
employment relationship had been concluded for an indefinite
period. When his employment relationship with the defendant ended
when he reached the age of 65 in August 2007, the employee in
question took legal action.
Both prior instances dismissed the complaint. The claimant's
appeal on points of law was also unsuccessful before the Federal
Labour Court. The Erfurt judges made it clear that it is
fundamentally possible for a central works council and the employer
to regulate in a voluntary central shop agreement an age limit for
the end of employment relationships, as long as the principles of
reasonableness and fairness within the meaning of Sec. 75 para. 1
German Shop Constitution Act [Betriebsverfassungsgesetz,
BetrVG] have been observed. These are regularly deemed
observed if the age limit is linked to the time at which the
employee could draw the statutory pension from the statutory
pension insurance scheme. Such a regulation does not violate the
prohibition of age discrimination. The agreement of an indefinite
employment relationship is not an individual contractual agreement
which suppresses the age limit regulation of central shop
One may not draw the mandatory conclusion from the judgement that
the age limit regulation of a shop agreement fundamentally
suppresses individual contractual agreements. An indefinite
employment contract must, pursuant to the favourability principle,
regularly have precedence over a later age limit regulation in a
shop agreement, for it is usually more favourable for an employee
if he himself is able to decide on the basis of this employment
contract whether he wishes to retire upon reaching the statutory
retirement age or whether he wishes to continue working. Decisive
in the present case was that, by agreement in the employment
contract, the employment relationship was subjected in its entirety
to the applicable collectively bargained provisions, and that this
had been sufficiently evident to the employee. The central shop
agreement had thereby become the subject matter of the individual
contract, with the result that in this particular case the
favourability principle had not been violated. Consequently, in
order to ensure the validity of age limit provisions in shop
agreements, employers should not only ensure that the age limit
provision is permissible in the actual shop agreement, but also
that the indefinite individual employment contracts contain a
corresponding opening clause for the applicable collectively
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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