ECJ Offers Guidelines to Businesses on Pension Plans

Thursday, February 7, 2013 | Published by

In Odar v Baxter Deutschland GmbH, C-152/11, the Court of Justice of the European Union was presented with a challenge to Council Directive 2000/78/EC regarding equal treatment in employment and occupation.

The plaintiff in this case, Dr. Odar, who was considered severely disabled, was employed by Baxter for over 30 years. Baxter’s social plan provided that pension benefits paid to redundant workers as a result of termination of employment on operational grounds is based on length of service, and that for workers over the age of 54, the calculation method is determined according to the earliest possible beginning of pension eligibility. Dr. Odar challenged Baxter’s social plan claiming that he was unfairly discriminated against, as the pension calculation method resulted in disenfranchising Dr. Odar, because of both his age (since he was over 54 he received an amount lower than he would have had he been younger) and his disability (he received an amount lower than his non-disabled co-workers).

On 6 December 2012, the Court ruled that EU law prohibiting discrimination based on age does not preclude social plans which calculate pension compensation according to age, as long such a difference in treatment may be justified on objective grounds, such as balancing the distribution of financial resources to protect both young and retired workers, especially when such plans are the result of a collective bargaining agreement negotiated between employees’ and employers’ representatives.

However, the Court held that EU law prohibiting discrimination between disabled and non-disabled workers precludes social plans which seek to pay disabled workers a pension rate that is less than those afforded to non-disabled workers. The Court reasoned that severely disabled people face significant challenges obtaining meaningful employment, especially as they approach retirement age, as well as the potential for increased health and lifestyle related costs as a result of their disability, and that such factors must be considered when determining whether a social plan’s objectives are justified.

It remains unclear whether social plans similar to the one described above are becoming a part of the regular pension practice or if this particular plan was simply an isolated incident. However, considering that business and government alike are seeking to increase their flexibility when it comes to employees nearing retirement , in order to safeguard financial resources for younger employees as well as future employees, social plans that propose the most efficient allocation of assets, both economically and for the workforce, must take into account the guidelines set forth by the Court in order to avoid challenges to the pensions systems they incorporate. Continuing a dialogue with employees’ and employers’ representatives as well as works councils will seek to ensure that such agreements are considered fair and may be implemented.

For more information about this case please visit:,T,F&num=C-152/11&td=ALL