Germany: Federal Labour Court Justification of age discrimination – age limits in collective agreements

The Federal Labour Court recently ruled that an employer bound by a collective agreement age limit provision based on the standard retirement age under the statutory pension insurance scheme may reject an initial applicant who exceeds this age limit in favour of a younger applicant. Although this constitutes discrimination against older employees, it is justified if the employer invokes the provisions of the collective agreement (Federal Labour Court, ruling of 8 May 2025 – 8 AZR 299/24).

The Federal Labour Court thus strengthens the principle of intergenerational justice. It remains to be seen whether this also allows employers not bound by collective agreements to reject employees who exceed age limits based on provisions effectively agreed in individual contracts without exposing themselves to compensation claims. In detail:

Facts

The plaintiff sued for compensation under Section 15(2) of the AGG. The plaintiff had exceeded the standard retirement age and was recognised as severely disabled with a degree of 60. He applied for a position with the defendant, a municipal corporation under public law, referring to his severe disability. The defendant hired a younger applicant who had not yet reached the standard retirement age. The defendant did not invite the plaintiff to an interview. Upon request by the plaintiff, the defendant did not provide any information about the reasons for rejecting his application. The plaintiff then claimed discrimination on the grounds of age and/or severe disability.

Justification standard for age discrimination

The Federal Labour Court ruled that the discrimination against the plaintiff was justified by legitimate objectives in the field of labour and social policy in the public interest. The objective of the collective agreement provision was to improve the distribution of employment between the generations by promoting access to employment for younger people. The retirement of older people should enable younger people to gain professional experience with a view to career advancement.

The prerequisite for justification is that a younger qualified applicant is available and that the employer consistently pursues the objective of intergenerational justice. It is generally sufficient for the employer to invoke its commitment to the age limit provision in the collective agreement. On the other hand, it would be inconsistent for an employer to reserve the right to hire an older applicant who appears particularly suitable to them, even though a suitable younger applicant is available, because the older applicant has exceeded the age limit.

Although the collective agreement provisions in the case decided were explicitly tailored to the case of re-employment, the Federal Labour Court convincingly extends this standard to the rejection of new hires from outside the company who have exceeded the standard retirement age. Furthermore, no distinction is made between permanent and fixed-term employment contracts, as both types of employment offer younger people the opportunity to gain professional experience. 

In addition: Exception to the obligation to invite severely disabled persons

Although the plaintiff – who was not obviously unsuitable for the job – was not invited to an interview in the specific case, contrary to the obligation under Section 165 sentence 3 of SGB IX, the Federal Labour Court also ruled, in view of the justification presented, that the employer had not violated the prohibition of discrimination under Section 7(1) in conjunction with Section 7(1) in conjunction with Section 164(2) sentence 2 SGB IX. The Federal Labour Court convincingly applied a teleological reduction of the provision on inviting severely disabled persons. In this case, the invitation would have been a "mere formality".

Conclusion

The grounds for the ruling specify the criteria according to which age discrimination is justified. Employers bound by collective agreements may, with reference to the age limit provisions applicable to them, give preference to younger applicants who have not yet reached the age limit over applicants who have exceeded it.

Employers who are not bound by collective agreements are well advised not to discriminate on the basis of age. The Federal Labour Court did not rule on whether such discrimination can be justified by age limits in individual contracts. At the very least, the following points should be taken into account:

• The age limits in individual contracts should be clearly formulated and, for objective justification, should also be based on the standard retirement age.
• The goal of generational justice must be consistently pursued. Arbitrary exceptions must therefore not be made.
• This should apply even more in the case of justification based on individual contracts. In the specific case, the Federal Labour Court expressly ruled that the actual age structure in the company was not relevant to the legitimacy of the objective. However, the reason for this was precisely that the employer had adopted the collective agreement provisions as its own.

Employers should document the objective pursued (internally) to be prepared for any subsequent disputes.