Fri, Aug. 11, 2017

Old Age Clause in CEO Employment Pact

SFe - Washington.   A German private limited company hired a chief executive officer with a fixed-term employment contract that ran through 2018 but terminated him in 2016 at age 60 under a retirement age clause in the same contract.

The CEO sued, claiming a violation of sections 1 and 7(1) of the General Equal Treat­ment Act. The statute is fairly new and lacks precedential construction on the issue. On June 29, 2017, the Court of Appeal, Oberlandesgericht, in the Hamm district de­ci­ded in the matter 8 U 18/17 that the contractual retirement age clause was compatible with the anti-age-discrimination statute. It determined that the parties had reasonably considered the age issue in the context of the plaintiff's eligibility for a company pen­si­on on termination.

In general, top management enjoys less protection than other employees, so company interests may legitimately outweigh the employee's interests. The court did not ad­dress the issue whether the AGG applies to top management or only their subordina­tes because it would not have changed the outcome in this dispute. However, the court granted leave to appeal its decision to the German Supreme Court for Civil Matters in Karlsruhe, where it is docketed as BGH II ZR 244/17.


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