OD FLASH | A contractual dismissal indemnity that is progressively reduced from the age of 61 does not constitute age discrimination

French Supreme Court, Social Division, January 8, 2025 – no. 23-15.410
In this case, an employee, dismissed for unfitness and impossibility of redeployment at the age of 63, received a severance pay set by the collective agreement for metallurgy engineers and managers of April 27, 1973. Under article 29 of this agreement, the contractual redundancy payment is progressively reduced – without this reducing the payment to less than the legal dismissal allowance – in such a way that it is reduced :

– by 5% for employees aged 61

– by 10% for employees aged 62 or over

– 20% for employees aged 63

– 40% for employees aged 64.

These principles have been reproduced in the National Metallurgy Collective Bargaining Agreement of February 7, 2022 (article 75.3.3).

The employee’s request for payment of the balance of his dismissal indemnity was rejected on the grounds that this reduction mechanism was discriminatory, and he filed an appeal before the French Supreme Court. The employee complained that, in order to exclude the discriminatory nature of this mechanism, the Court of Appeal held that it was legitimate, i.e. objectively and reasonably justified by a legitimate purpose, namely that it was “ intended to encourage the departure of employees who have reached retirement age, in order to promote the sharing of work between generations and the professional integration of young workers ”. The Court added that these provisions were all the more appropriate in that the employees concerned benefited from sufficient economic coverage with regard to the purpose in question, and that the reduction was not inappropriate to achieve the objective pursued.

After recalling article L. 1133-2 of the French Labor Code, according to which differences in treatment between employees based on age are authorized provided they are objectively and reasonably justified by a legitimate objective, the Cour de cassation, adopting a solution identified by the Court of Justice of the European Union (CJEU), considers that this method of calculation does not constitute a difference in treatment based on age in a discriminatory manner.

Indeed, in a Baxter ruling of December 6, 2012, the CJEU held that the amount of severance pay provided for in a redundancy plan could differ according to the age of employees, in a way that was unfavorable to older employees, due to the lesser prejudice suffered by employees made redundant at an age very close to retirement.

Moreover, the High Court noted that the disputed reduction was the result of an agreement negotiated between the social partners and employer representatives, which enabled them to strike a balance between their respective interests, while leaving each party the option of denouncing the agreement.

Taking up the arguments of the Court of Appeal, with regard to the full retirement age at the time of the events, and taking into account the freedom of the social partners in negotiating this agreement, the French Supreme Court held that this mechanism pursued a legitimate purpose.

This decision is in line with the French Supreme Court’s established rulings on differences in treatment based on age. For several years now, the Court has been ensuring that such differences are objectively and reasonably justified by a legitimate objective, such as :

– employment, labor market and vocational training policy (Cass. Soc. February 16, 2011 n°09-72.061; Cass soc November 26, 2013 n°12-24.690).

– or the protection of employee health (Cass. soc., 14 sept. 2017, n° 15-17.714 ; Cass. soc., 6 mars 2024, n° 22-18.100).