In its most recent decision , the Curia (the Supreme Court of Hungary) examined whether the requirement of equal treatment related to age can be considered in cases where the employer terminates the employment of a retired employee solely because of his age, without giving reason. In this article we examine the answer given by the Curia in connection with this question.
1. Exceptions to the reasoning obligation
As a general rule in Hungarian labour law, the employer is obliged to justify the termination. However, there are exceptions, for example, the probationary period, as we detailed in our previous article[i].
In addition to the probationary period, the retired status also creates an exception to the above obligation, so if the employer terminates the employment of the retired employee, it is not obliged to justify it.
However, even in the event of termination without reason during probationary period, the court may consider the requirement of equal treatment and, in the event of a breach of it, may found the dismissal unlawful (e.g. termination without justification based on the pregnancy of the employee is unlawful).
However, it has not been clear whether the court can consider the requirement of equal treatment relating to age, in case the employer dismisses a retired employee without justification, but clearly because of his age.
2. Facts of the case
In the case in question, the retired employee worked for the employer in the position of bus driver, where the employer wanted to hire younger employees, therefore he dismissed the retired employee without giving reason.
In his action against the employer, the employee explained that the employer had terminated the employment only because of his retired status, and therefore discriminated him based on his age. Based on the above he requested the determination of the unlawfulness of the termination of the employment and the restoration of his employment.
The employer referred to section 66(9) of the LC[ii], based on which the indefinite employment may be terminated without justification, and the judicial practice, which in such cases does not consider the above action of the employer to be contrary to the requirement of equal treatment.
3. The decisions of the first and the second instance court
The court of first instance considered the action of the employee as he complained the discrimination on the grounds of his age and not the non-reasoned termination.
In view of the above, the court found that the employer may not argue that equal treatment could not be considered in the event of termination of the employment of a retired employee without justification. Therefore the court restored the employment of the employee.
The court of second instance, unlike the court of first instance, concluded that the termination of the employment relationship was lawful, and that the employer did not violate the requirement of equal treatment.
The above was established on the basis of the fact that the Labour Code excluded from the prohibition of age discrimination the dismissal of retired employees, so such termination can be legal, regardless of the reason, and may therefore be made even in the interest to fresh the age of the employees.
The above was determined by the case-law of the Court of Justice of the European Union [iii], which ruled that national legislation may differ from EU rules on equal treatment in order to achieve an employment policy or labour market objective.
The court of second instance found that if, despite the statutory authorisation, the observance of the requirement of equal treatment in the context of termination had to be examined, the above provision would be undermined.
4. The decision of the Curia
In its judgment, the Curia upheld the judgment of the court of second instance and declared the termination lawful.
Like the court of second instance, it referred to the judicial practice[iv] according to which, the regulation on the termination of the employment of a retired employee without justification is legal because of the fact that the employee becomes entitled to pension, which can cover his livelihood.
In its judgment, it also mentioned the decision of the Constitutional Court[v], which found that the provision of the LC allowing the employer to terminate the employment of a retired employee entitled to old age pension without giving reason is not unconstitutional.
5. Assessment of the decision
It can be seen that although the law protects the interest of the employee against the employer in many respects in view of the asymmetric nature of the employment, the retired status of the employee in itself justifies the possibility of termination by an employer without having regard to the requirement of equal treatment related to age.
In the light of the above, it is irrelevant in this context why the employer wishes to terminate the employment, so the reason can be that it wants to hire younger workers.
The above is possible based on the practice of the Court of Justice of the European Union and the relevant provision of LC, however, it is important to note that besides this aspect, the retired employee shall be treated in the same way as the other employees.
[i] IS A PROBATIONARY PERIOD OF MORE THAN 3 MONTHS VALID IN HUNGARY? - Blog - Smartlegal
[ii] Act I of 2012 on the Labour Code
[iii] Council Directive 2000/78/EC
[iv] EBH 2019.M.14
[v] Decision of the Constitutional Court 11/2001. (IV. 12.)
© International Law Firms 2016-2017 All rights reserved.
3, Montée de Clausen, L - 1343 Luxembourg
Luxembourg Commercial Register Number F-9208.