OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 16 September 2010 1( )

Case C‑356/09

Dr Christine Kleist

(Reference for a preliminary ruling from the Oberster Gerichtshof (Austria))

(Social policy – Equal treatment of men and women – Different statutory normal pensionable age for men and women – Discontinuation of the special protection against dismissal under a collective agreement upon reaching the statutory normal pensionable age – Dismissal of an employee after reaching the applicable statutory normal pensionable age for women – Discrimination on the grounds of sex in relation to dismissals – Directive 76/207/EEC – Directive 2002/73/EC)

I – Introduction

1. The Court has dealt time and again with the compulsory retirement of employees who reach the applicable retirement age. From the point of view of European Union law, this problem has predominantly been dealt with in recent years in relation to age discrimination. ( ) In the present case, however, the question of discrimination between male and female employees forms the focal point, as was the case almost 25 years ago in Marshall ( ) and Beets-Proper. ( )

2. Dr Kleist, who was employed as chief physician at the Austrian Pensionsversicherungsanstalt, was compulsorily retired at the age of 60 by her employer. The basis for this was a provision of a collective agreement under which doctors can be retired upon reaching the statutory normal pensionable age. Under Austrian law the normal pensionable age is currently 65 for men and 60 for women.

3. The Court is now asked to decide whether there is discrimination on the grounds of sex if compulsory retirement for women is set at a different age from that for men. In Marshall, a case with very similar facts, the Court accepted that there was discrimination on the grounds of sex. ( ) The present case will in particular deal with whether that judgment should also be followed when compulsory retirement is used to pursue employment policy objectives.

4. Issues relating to the horizontal direct effect of directives or general principles of law, as were recently the subject of great debate in the context of Mangold ( ) and Kücükdeveci, ( ) do not arise in the present case. Rather, this case concerns a classic vertical legal relationship, in which a social security institution governed by public law appears as the employer.

II – Legal background

A – European Union law

5. The European Union legal framework for this case is determined by Directive 76/207/EEC ( ) – now no longer in force – as amended by Directive 2002/73/EC. ( ) ( )

6. Article 2 of Directive 76/207 provided inter alia as follows:

‘1. For the purposes of the following provisions, the principle of equal treatment shall mean that there shall be no discrimination whatsoever on grounds of sex either directly or indirectly by reference in particular to marital or family status.

2.For the purposes of this Directive, the following definitions shall apply:

– direct discrimination: where one person is treated less favourably on grounds of sex than another is, has been or would be treated in a comparable situation;

– indirect discrimination: where an apparently neutral provision, criterion or practice would put persons of one sex at a particular disadvantage compared with persons of the other sex, unless that provision, criterion or practice is objectively justified by a legitimate aim, and the means of achieving that aim are appropriate and necessary;

…

8. Member States may maintain or adopt measures within the meaning of Article 141(4) [EC] with a view to ensuring full equality in practice between men and women.’

7. Article 3(1) of Directive 76/207 provided as follows:

‘Application of the principle of equal treatment means that there shall be no direct or indirect discrimination on the grounds of sex in the public or private sectors, including public bodies, in relation to:

…

(c) employment and working conditions, including dismissals, as well as pay as provided for in Directive 75/117/EEC;

…’

8. In addition, reference should be made to Directive 79/7/EEC, ( ) Articles 1, 3 and 4 of which provide that the principle of equal treatment for men and women should also be progressively implemented with regard to the Member States’ statutory pension schemes. However, Article 7(1) of Directive 79/7 provides inter alia the following exception thereto:

‘This Directive shall be without prejudice to the right of Member States to exclude from its scope:

(a) the determination of pensionable age for the purposes of granting old-age and retirement pensions and the possible consequences thereof for other benefits;

…’

B – National law

1. Statutory provisions

9. Firstly under Austrian law, it is to be noted that Paragraph 253(1) of the General Law on Social Security (Allgemeines Sozialversicherungsgesetz; ‘the ASVG’) sets out different normal pensionable ages for men and women: ( )

‘A male insured person shall be entitled to a retirement pension on attaining the age of 65 years (the normal pensionable age), and a female insured person on attaining the age of 60 years (the normal pensionable age), where the qualifying period (Paragraph 236) has been complied with.’

10. This variation in normal pensionable age for men and women is also laid down in constitutional law in Austria. ( ) For that purpose, Paragraphs 1 to 3 of the Federal Constitutional Law on Different Pensionable Ages for Male and Female Insured Persons (Bundesverfassungsgesetz über unterschiedliche Altersgrenzen von männlichen und weiblichen Sozialversicherten) provide: ( )

‘Paragraph 1. Statutory provisions which lay down different pensionable ages for males and females covered by statutory social insurance are permissible.

…

Paragraph 3. As from 1 January 2024, the pensionable age for retirement pensions shall be raised for female insured persons by six months on 1 January each year until 2033.’

2. Terms of a collective agreement

11. The collective agreement relevant in the present case is Staff Regulations B for Doctors and Dentists employed by Austria’s Social Security Providers (Dienstordnung B für Ärzte und Dentisten bei den Sozialversicherungsträgern Österreichs; ‘the DO.B’), in the version of 1 October 2005.

12. Under the terms of this collective agreement, after a certain length of service doctors employed by Austria’s social security providers receive special protection against dismissal, the distinguishing feature of which is that it largely excludes an employer’s ordinary right of termination. The term ‘protected from dismissal’ is also used in relation to this. However, this special protection from dismissal only applies until the normal pensionable age has been reached. The employer retains the right to retire an employee as soon as the employee reaches the normal pensionable age.

13. Such retirement is governed by Paragraph 134(2) and (4) of the DO.B as follows: ( )

‘(2) Doctors with protection from dismissal have the right to retire if:

...

2. there is an entitlement to draw a retirement pension under Paragraph 253 of the ASVG …

…

(4) The board can retire a doctor with protection from dismissal if the doctor:

1. fulfils the conditions pursuant to subparagraph 2, point 1, 2 or 4 …’

14. In addition, it is relevant to the present case that the DO.B establishes a pension insurance scheme thereunder. Its benefits are designed as additional benefits, as provided for in Paragraph 89(1) of the DO.B:

‘Benefits from the statutory pension insurance scheme shall be credited to the relevant benefits payable under the present pension provisions.’

However, the additional benefits under the DO.B sometimes significantly exceed the social security law (statutory) pension under the ASVG.

III – The facts and the main proceedings

15. Dr Christine Kleist was born on 11 February 1948 and was employed from 7 January 1985 by the Pensionsversicherungsanstalt, an Austrian social security provider, where she was last engaged as chief physician.

16. In 2005 the Pensionsversicherungsanstalt took the decision to terminate the employment of all employees, both male and female, who satisfy the conditions for retiring them under the relevant collective agreement.

17. Dr Kleist did not wish to retire at the age of 60. She informed the Pensionsversicherungsanstalt of this in a letter dated 9 January 2007 and requested to remain employed until the age of 65. Nevertheless, the Pensionsversicherungsanstalt gave notice of termination of the employment of Dr Kleist in a letter dated 6 December 2007 and retired her on 1 July 2008.

18. Prior to her retirement, Dr Kleist’s net monthly salary was EUR 4 032.39. At the time of her retirement, her monthly pension pursuant to the DO.B was EUR 3 890.62. Were she not to have retired until 1 March 2013, that is to say, after attaining the normal pensionable age for men of 65, then, according to information provided by the referring court, she would have received a net monthly pension of EUR 4 829.85.

19. Dr Kleist’s retirement by the Pensionsversicherungsanstalt does not prevent her from continuing to practise professionally and from being employed or self-employed. According to information provided by the referring court, she could continue to draw her statutory pension pursuant to the ASVG even if she were to work. ( )

20. According to the referring court, in the district in which Dr Kleist was employed as chief physician for the Pensionsversicherungsanstalt, 23 doctors are registered as seeking employment, although there may in fact be about three times as many.

21. Dr Kleist challenged the termination of her employment before the Landesgericht Innsbruck (Regional Court, Innsbruck) and lost there at first instance. ( ) Following an appeal lodged by Dr Kleist, legal proceedings continued before the Oberlandesgericht Innsbruck (Higher Regional Court, Innsbruck), which set aside the judgment at first instance and upheld Dr Kleist’s action. ( ) The proceedings are now pending before the Oberster Gerichtshof (Supreme Court), the referring court, before which the Pensionsversicherungsanstalt brought an appeal on a point of law.

IV – Reference for a preliminary ruling and proceedings before the Court of Justice

22. By an order of 4 August 2009, lodged at the Court Registry on 4 September 2009, the referring court submitted the following questions to the Court of Justice for a preliminary ruling:

‘(1) Is Article 3(1)(c) of Directive 76/207/EEC, as amended by Directive 2002/73/EC, to be interpreted – in the context of a system of employment law in which the general protection of employees against dismissal is determined by their social (financial) dependence on the job – as precluding a provision of a collective agreement offering special protection against dismissal, over and above the statutory general protection against dismissal, only until that point in time at which, in a typical case, there is social (financial) cover in the form of a retirement pension if men and women become entitled to draw that retirement pension at different times?

(2) In the context of such a system of employment law, does Article 3(1)(c) of Directive 76/207, as amended by Directive 2002/73, preclude a decision by a public employer terminating the employment of a female employee just a few months after she acquires the financial cover of a retirement pension, in order to employ new workers who are already pressing to join the job market?’

23. In the proceedings before the Court of Justice, the Pensionsversicherungsanstalt, Dr Kleist and the European Commission made written and oral submissions.

V – Assessment

24. The reference for a preliminary ruling from the Oberster Gerichtshof comprises two questions, the first of which relates to the reduction of the protection from dismissal under the collective agreement upon reaching the normal pensionable age, while the second concerns termination of a female employee’s employment contract directly in connection with her reaching the normal pensionable age.

25. From the point of view of European Union law, both questions referred raise fundamentally the same legal problem: it should be discussed whether an employer may terminate the employment of a female employee and retire her for employment policy reasons as soon as she reaches the statutory normal pensionable age, which is different for men and women. Therefore I propose to deal with both questions together, as, incidentally, was also done in the order for reference and in the majority of the observations of parties to the proceedings.

26. In this connection, it is not the statutory and constitutional law rules on the normal pensionable age in Austria as such that are in question, but solely thereference to the normal pensionable age in the retirement policy of the defendant employer.

27. In assessing the present case it is sufficient to have regard to Directive 76/207, as amended by Directive 2002/73. Although the present case could, as Dr Kleist suggests, be examined additionally in the light of the prohibition on age discrimination under Directive 2000/78/EC, ( ) this would, however, not be overly helpful. First, the Court has already held that compulsory retirement upon reaching the statutory normal pensionable age may be justified on employment policy grounds, meaning that there is no age discrimination. ( ) Secondly, on the basis of the information before the Court, Dr Kleist does not contest her compulsory retirement as such, but rather the fact that this occurred at an earlier time for her than would have been the case for her male colleagues. ( ) The legal issue in this case is therefore unequal treatment on the grounds of sex.

A – Applicability of Directive 76/207

28. Under Article 3(1)(c) of Directive 76/207, the principle of equal treatment of men and women applies to the public and private sectors, including public bodies, in relation inter alia to employment and working conditions, including dismissals.

29. As an employed chief physician at an Austrian social security provider, Dr Kleist was an employee ‘in the public sector’ or in a ‘public body’ and therefore, according to the introductory phrase of Article 3(1) of Directive 76/207, fell within the personal scope of the principle of equal treatment.

30. The concept of dismissal within the meaning of Directive 76/207 is to be interpreted widely. ( ) The question whether a female employee such as Dr Kleist may be compulsorily retired on reaching the normal pensionable age for women, pursuant to her employer’s general policy concerning retirement, is a question relating to dismissal. ( ) Consequently the case also falls within the material scope of the principle of equal treatment under Article 3(1)(c) of Directive 76/207.

B – Unequal treatment on the grounds of sex

31. Article 3(1)(c), in conjunction with Article 2(1), of Directive 76/207 provides that there is to be no direct or indirect discrimination on the grounds of sex in relation to dismissals.

32. Direct discrimination occurs when one person is treated less favourably on the grounds of sex than another is, has been or would be treated in a comparable situation (first indent of Article 2(2) of Directive 76/207); the underlying unequal treatment is therefore directly linked to sex. On the other hand, there is only indirect discrimination where an apparently neutral provision, criterion or practice would put persons of one sex at a particular disadvantage compared with persons of the other sex (second indent of Article 2(2) of Directive 76/207).

33. The delimitation between direct and indirect discrimination is legally significant above all because the possibilities of justification differ according to whether the underlying unequal treatment is directly or indirectly linked to sex: The second indent of Article 2(2) of Directive 76/207 sets out in a very general manner the possibilities of justifying indirect unequal treatment on the grounds of sex (‘objectively justified by a legitimate aim’), whereas direct unequal treatment on the grounds of sex can be justified only by special requirements specific to one sex – for example as regards pregnancy and maternity (Article 2(7) of Directive 76/207) – or by the objective of assisting the underrepresented sex (Article 2(8) of Directive 76/207 in conjunction with Article 141(4) EC, now Article 157(4) TFEU).

34. At first sight it appears as if the contested provision in the present case is formulated in a manner that is gender neutral: Paragraph 134(4)(1) of the DO.B enables a social security provider to retire employees who are protected from dismissal when they reach the statutory normal pensionable age. On closer scrutiny, however, it is apparent that the criterion of the normal pensionable age is inseparably linked to sex, as in Paragraph 253(1) of the ASVG the Austrian legislature lays down different retirement ages for men and women. The combined effect of Paragraph 134(4)(1) of the DO.B and Paragraph 253(1) of the ASVG is a system whereby women may be retired from the age of 60 and men from 65. Consequently, the result is that the disputed retirement rules are directly linked to sex, and have the effect that women can lose their jobs five years earlier than men. ( )

35. Of course, direct unequal treatment on the grounds of sex is to be found only if women and men are in an identical or at least a comparable situation. ( ) If, on the other hand, women of 60 years of age were, objectively, in a different situation from their male colleagues of the same age, a difference in treatment between both groups of persons would be lawful and even required.

36. The elements which characterise situations and their comparability must in particular be determined and assessed in the light of the subject-matter and purpose of the rules which make the distinction in question. The principles and objectives of the field to which the rules relate must also be taken into account. ( )

37. As is apparent from the documents in the case, compulsory retirement pursuant to Paragraph 134(4) of the DO.B serves in particular to make jobs available for younger people who are already ‘pressing’ to join the job market. Therefore compulsory retirement pursues an employment policy objective.

38. The referring court and the Pensionsversicherungsanstalt emphasise that, having regard to this employment policy objective, the situation of female employees like Dr Kleist who have reached the age of 60 is not comparable to that of male colleagues who are the same age as, unlike male employees, the female employees have already reached the statutory normal pensionable age and they therefore benefit from social security cover resulting from their right to a pension in the event of losing their job.

39. At first glance, it could be tempting to follow this line of argument and to conclude that, merely because a right to a pension exists, there is a decisive material difference which excludes any comparability between male and female employees.

40. It is even possible to find case-law in which the Court appears to take such a position. Thus, in Burton, ( )Birds Eye Walls ( ) and Hlozek ( ) the Court held it lawful to link certain social benefits granted by employers to a pensionable age that differs for men and women.

41. However, it appears to me that these judgments dealt with isolated cases and cannot in any event be applied more generally. Thus, the bridging payments in Burton and Birds Eye Walls served to cover employees’ loss of income where they took early retirement for operational or health reasons. ( ) In Hlozek the bridging allowance was specifically aimed at financially cushioning a special risk of long-term unemployment, a risk which was statistically proven to arise for men and women at different ages and was particularly high as the statutory retirement age drew closer. ( ) In the present case however, so far as is apparent from the documents in the case, there are no indications of there being such a specific risk.

42. Quite apart from the specific features of each case, I consider that it would also be an error for reasons of principle to permit employers to differentiate between male and female employees according to the statutory normal pensionable age that is respectively applicable. Such an approach would lead to the differences between men and women in relation to the statutory normal pensionable age that still exist extending to other areas – here to the area of dismissal. Generalising the differences within the framework of statutory social security systems would, however, be contrary to the Court’s settled case-law, according to which the exception that still exists to the principle of equal treatment in relation to the pensionable age under statutory pension schemes (Article 7(1)(a) of Directive 79/7) is to be interpreted strictly. ( )

43. In a system which provides for a different pensionable age for women and men, ( ) the mere existence of a right to a pension at 60 years of age cannot be a material reason for differentiating between female and male employees. Rather, the existence or absence of a right to a pension from the age of 60 to 64 is inseparably linked to the sex of the respective employee: just by virtue of the fact that they are women, once female employees in Austria reach the age of 60, they have, under the applicable national law, attained the normal pensionable age and have the right to a pension. The right to a pension is thus not an objective criterion independent of sex by which the category of female employees can be differentiated from their male colleagues.

44. Overall therefore, if, due to employment policy reasons, female employees may be compulsorily retired 5 years earlier than their male colleagues, there is direct unequal treatment on the grounds of sex.

C – No justification for the unequal treatment

45. It remains to be examined whether such direct unequal treatment on the grounds of sex can be justified.

1. Employment policy

46. As mentioned above, compulsory retirement pursuant to Paragraph 134(4) of the DO.B serves principally to make jobs available for younger people who are already ‘pressing’ to join the job market and it therefore pursues an employment policy objective.

47. It is possible that such employment policy considerations could constitute objective justification for indirect unequal treatment on the grounds of sex and rule out discrimination, as the possibilities for justifying indirect unequal treatment are, pursuant to the second indent of Article 2(2) of Directive 76/207, drafted in particularly broad terms (‘objectively justified by a legitimate aim’).

48. The main proceedings however, as mentioned above, ( ) concern a case of direct unequal treatment on the grounds of sex. In this case, Directive 76/207 does not provide for any justification based on employment policy. This is a fundamental difference between the first and second indents of Article 2(2) of Directive 76/207. ( )

49. In this respect, the legal situation is fundamentally different from that applicable to the prohibition on age discrimination, where, pursuant to Article 6(1) of Directive 2000/78, even direct unequal treatment on the grounds of age may be justified by employment policy objectives. ( ) This difference in relation to Directive 2000/78 is all the more glaring as the European Union legislature, when modernising Directive 76/207, otherwise closely followed the provisions adopted shortly before then on age discrimination, in particular in relation to the definition of direct and indirect discrimination. ( )

50. These differences relating to possibilities of justification, on the one hand between direct and indirect unequal treatment on the grounds of sex, and on the other hand between unequal treatment on the grounds of sex and age, are not a matter of chance. It may admittedly be a legitimate employment policy objective to compulsorily retire older employees who have already reached the relevant normal pensionable age and who are covered, from a social-welfare point of view, by means of an appropriate pension entitlement. ( ) However, the employment policy objective must not be attained to the detriment of employees of a particular sex.

51. This is nevertheless exactly what happens if, on employment policy grounds, female employees are required to leave their jobs five years earlier than their male colleagues. In this case, women, solely because a lower statutory normal pensionable age applies to them, are relied upon far more than men to attain the employment policy objectives. They are adversely affected to a greater extent than their male colleagues in respect of their right to engage in work and pursue their occupation (Article 15(1) of the Charter of Fundamental Rights of the European Union). ( )

52. It may admittedly be that a female employee can draw a retirement pension for a longer period than a male colleague on the basis of her earlier retirement and possibly also on the basis of her longer life expectancy. The Pensionsversicherungsanstalt referred to this during the oral proceedings before the Court, presenting numerical examples. However, as the Commission rightly responded, merely examining the expected period of receipt of a pension is insufficient. Instead, the effects of the different retirement dates for male and female employees on their respective lifetime income should be taken into consideration: men can earn a salary for five more years than women and will moreover draw a higher monthly pension as a result of their longer period in employment.

53. It is clear from the order for reference that, for a female employee such as Dr Kleist, considerable financial losses result from compulsory retirement at the age of 60. Had Dr Kleist’s employment relationship continued until she reached the age of 65, she would have received her salary for another five years. After that, at the age of 65 she would, pursuant to the DO.B, have been able to claim a net monthly pension 24.1% higher than that resulting from her compulsory retirement at the age of 60; ( ) the nominal difference from her current pension would amount to more than EUR 900 net per month.

54. A provision which results in such far-reaching employment ( ) and financial ( ) consequences specifically for persons of one sex does not have due regard to the fundamental importance of the principle of equal treatment of men and women ( ) (see, in addition, the second subparagraph of Article 3(3) TEU, ( ) Article 10 TFEU ( ) and Articles 21(1) and 23(2) of the Charter of Fundamental Rights).

55. In those circumstances a policy of compulsory retirement, such as the one at issue here, by which a woman loses her employment generally five years earlier than a man cannot be justified on employment policy grounds.

2. Other aspects

56. In the following points I deal briefly with a few other arguments, put forward in particular by the Pensionsversicherungsanstalt.

a) Advancement of women

57. The Pensionsversicherungsanstalt suggests that its policy of compulsory retirement upon reaching the normal pensionable age serves in particular to promote women entering the workforce. The Pensionsversicherungsanstalt is apparently referring to the special ground of justification in Article 2(8) of Directive 76/207 in conjunction with Article 141(4) EC (now Article 157(4) TFEU), which applies even to direct unequal treatment on the grounds of sex.

58. However, the requirements of Article 2(8) of Directive 76/207 are not met. To require a woman to vacate her job for other women cannot be regarded as an appropriate measure to promote the vocational activity of the underrepresented sex. This applies all the more where, in a case such as the present one, an employee in a senior post loses her job in favour of a new entrant into the profession, who necessarily cannot be employed at the same level in the internal hierarchy. Nor can it be automatically guaranteed that a woman will actually be selected from the pool of available new entrants to the profession and that the vacated post will actually be filled by a woman.

b) Preventing a statutory pension and income from work from being received concurrently

59. In addition, the Pensionsversicherungsanstalt submits that it is necessary to retire 60 year old women to ensure that they do not draw a statutory pension pursuant to the ASVG in addition to their income from work. Apparently, employees have the right to such a pension as soon as they reach the statutory normal pensionable age, irrespective of whether they actually retire or continue to work.

60. This argument must however also be rejected. Following established case-law, unequal treatment on the grounds of sex cannot be justified by referring to budgetary considerations. ( )

61. Therefore, it should be noted merely for the sake of completeness that the feared concurrent receipt of a pension and income from active work cannot be effectively prevented at all by compulsorily retiring a woman. As is apparent from the documents before the Court, a female employee whose employment contract has been terminated is able, even after reaching the statutory normal pensionable age, to enter into a new employment relationship or to become self-employed and, in addition, to draw her statutory retirement pension.

62. Apart from that, suspending payment of the statutory retirement pension whilst an insured person – irrespective of his or her sex – continues to work would be a less restrictive and, at the same time, more effective means of avoiding the concurrent receipt of the statutory retirement pension and income from work. Alternatively, such income of an insured person who is still working could be deducted from the statutory pension.

63. A retirement policy whereby employees of one sex lose their jobs five years earlier than those of the other sex is therefore neither an appropriate nor a necessary means to deal with the problem of the concurrent payment of a statutory retirement pension and income from work. Ultimately this problem must be solved within the framework of the statutory pension system.

VI – Conclusion

64. In the light of the foregoing considerations, I propose that the Court should answer the questions referred to it by the Oberster Gerichtshof as follows:

Article 3(1)(c) of Directive 76/207/EEC, as amended by Directive 2002/73/EC, prohibits female employees from being compulsorily retired for reasons of employment policy upon reaching the statutory normal pensionable age applicable to them if this normal pensionable age is five years lower than that applicable to male employees.