The Supreme Court sets a limit to EU Regulation

The Danish Supreme Court has recently given a judgment of very fundamental importance in the widely publicised Ajos case. The case involved a 60-year old salaried employee who had been dismissed after 25 years of service. Pursuant to the Danish Salaried Employees Act, the employee was in principle entitled to a severance allowance of 3 months' salary due to his long-term employment. The dispute was caused by the fact that the then current Section 2a (3) of the Salaried Employees Act provided that the right to a severance allowance would lapse if the employee was entitled to employer-paid retirement pension upon expiry of the employment. This was the case for the relevant employee, and he did not receive the severance allowance. The Supreme Court's judgment of 6 December 2016.

For the Supreme Court, the question was whether the provision of Section 2a (3) was contrary to the EU law principle of non-discrimination on grounds of age. The European Court of Justice (ECJ) had previously given judgment in a similar case (the Ole Andersen case, C-499/08), but unlike that judgment, the question now was whether the principle of non-discrimination on grounds of age would also apply in connection with private employers - contrary to the express statutory provision of the Danish act.

During the proceedings, the Supreme Court referred two preliminary questions to the ECJ, and the ECJ responded by ruling of 19 April 2016 that (i) Section 2a (3) of the Salaried Employees Act is contrary to the EU law principle of non-discrimination on grounds of age, (ii) it rested with the Supreme Court to interpret the provision in conformity with EU law, and (iii) if it was not possible for the Supreme Court to establish an interpretation of the provision which was in conformity with EU law, it rested with the Supreme Court to refrain from applying the provision.

Read our previous comments about the ECJ's ruling

In connection with the referral of the preliminary questions, the Supreme Court was of the opinion that the Danish statutory rule did not allow for an interpretation of the provision that was in conformity with EU law. Therefore, the Supreme Court's dilemma was whether the Supreme Court should refrain from applying Section 2a (3) of the Salaried Employees Act or whether the Supreme Court should allow for the provision to remain in force in spite of the ECJ's instructions. As such, there was a "contra legem" situation.

The Supreme Court stated that, since the principle of non-discrimination on grounds of age is not part of the set of legislative acts to which Denmark had assigned direct binding effect upon its accession to the EU, the principle cannot take precedence over a validly adopted statutory rule that had been enforced in Denmark for a long time. Against this background, the Supreme Court stated that, if the Supreme Court refrained from applying Section 2a (3) of the Salaried Employees Act, the Supreme Court would act outside the scope of its authority as the judicial power of the community.

Consequently, the Supreme Court found that the provision of Section 2a (3) of the Salaried Employees Act should remain in force and thus ruled in favour of the employer in regard to the claim for payment of severance allowance.

The judgment shows that EU law principles which do not stem from the set of legislative acts to which Denmark had assigned direct binding effect upon its accession to the EU cannot set aside the Danish statutory rules in the relationship between two private parties.

Within the area of employment law, this implies that Danish employees cannot invoke general EU law principles toward their private employers if there is a clear and unambiguous Danish rule that regulates the issue.

Please note that the Supreme Court did not dissociate itself from the actual principle of non-discrimination on grounds of age. The Supreme Court recognised the existence and appropriateness of the principle, but found that the principle should not be assigned such value in terms of source of law that it could set aside Danish law.

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