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Impact of Directive 2000/78/EC on the consequences of a discriminatory disciplinary decision that became final before the directive entered into force

Susanne Auer-Mayer. Associate Professor of Labour Law and Social Law at the University of Salzburg                     

European Union law affects national labour law in many ways. In the past, the Austrian courts have frequently referred to the European Court of Justice for a preliminary ruling on the scope of the prohibitions of discrimination. Also in its decision of 15 January 2019, C-258/17, E.B., the European Court of Justice answered such a reference for a preliminary ruling. The case concerned a national legal dispute lasting about ten years on the question of the effects of Directive 2000/78/EC on a disciplinary decision pronounced as early as 1975 by which a police officer was put into retirement with a reduced pension on account of homosexual contacts with minors. The article deals in more detail with the decision of the European Court of Justice and its effects.

PAROLE CHIAVE: direttiva 2000/78 / CE - sanzioni disciplinari - discriminazione - paritÓ di trattamento - effetto retroattivo - omosessualitÓ

L'impatto della direttiva 2000/78/CE sulle conseguenze di una decisione disciplinare discriminatoria che Ŕ diventata definitiva prima dell'entrata in vigore della direttiva stessa

Il diritto dell’Unione europea influisce sul diritto del lavoro nazionale in molti modi. In passato, le corti austriache si sono spesso rivolte alla Corte di giustizia europea per una pronuncia pregiudiziale sulla portata dei divieti di discriminazione. Anche nella sua decisione del 15 gennaio 2019, C-258/17, E.B., la Corte di giustizia ha risposto a una domanda dello stesso tipo. La causa riguardava una controversia giuridica nazionale durata circa dieci anni circa la questione degli effetti della direttiva 2000/78/CE su una decisione disciplinare pronunciata già nel 1975 con la quale un agente di polizia è stato messo in pensione con una pensione ridotta a causa di contatti omosessuali con minori. L’articolo si occupa in modo più dettagliato della decisione della Corte di giustizia europea e dei suoi effetti.

Keywords: Directive 2000/78/EC – disciplinary sanctions – discrimination – equal treatment – retroactive effect – homosexuality – sexual orientation – temporal applicability of new rules

Sommario:

1. Introduction - 2. Initial situation under Austrian law - 3. Repeal of the penal provision on which the disciplinary decision was based by the Austrian Constitutional Court - 4. Entry into force of Directive 2000/78/EC - 5. Request for a preliminary ruling from the Austrian Supreme Administrative Court (Verwaltungsgerichtshof) - 6. Material scope of Directive 2000/78/EC - 7. Temporal scope of Directive 2000/78/EC - 8. Existence of discrimination - 9. Extent of back payment - 10. Statute of limitations - NOTE


1. Introduction

In recent years, not least as a result of the case law of the European Court of Justice, European Union law has increasingly influenced national labour law. Since Austria’s accession to the European Union in 1995, the Union’s anti-discrimination provisions in particular have made it necessary to repeatedly amend national legal provisions. In its decision of 15 January 2019, C-258/17, E.B., the European Court of Justice had to deal with legal provisions and an administrative decision on retirement based on them, which had not been in force in Austria for several years. This does not mean, however, that the Court’s statements are irrelevant. On the contrary, they are of great importance beyond the concrete facts of the case and Austrian labour law. In particular, the European Court of Justice makes important clarifications on the issue of the “retroactive effect” of anti-discrimination provisions.

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2. Initial situation under Austrian law

The Austrian Penal Code (Strafgesetz, StG) originally made “indecency” with persons of the same sex a general punishable offence [1]. The Criminal Law Amendment Act of 1971 [2] abolished the threat of punishment for “simple” homosexual acts committed without special qualifying circumstances. The penal provision was retained to a certain extent with the aim of protecting juvenile men, though: The Penal Code (StG), as amended by the Federal Law Gazette (Bundesgesetzblatt) No. 273/1971, made the sexual abuse of minors a punishable offence. However, it differentiated between male homosexuals on the one hand and heterosexuals or female homosexuals on the other with regard to criminal liability. According to Paragraph 128 of the Penal Code (StG), sexual acts with minors committed by persons of full age (i.e. those who have reached the age of 19 at that time and 18 today) were in principle only punishable if the minor had not yet reached the age of fourteen (“defilement”). In contrast, sexual contacts of an adult male person with another male person were separately punishable under Paragraph 129 of the Penal Code (StG) if the latter person had reached the age of fourteen but not yet eighteen (“indecency”). The same applied according to Paragraphs 207 and 209 of the Criminal Code (Strafgesetzbuch, StGB), which entered into force on 1 January 1975. The raising of the age of consent for male homosexuals was based on the opinion that young men be influenced in their sexual orientation by homosexual acts of adults. The legislator at the time assumed that the performance and mental development of people who were involved in homosexual acts at a young age could be considerably strained. It was also considered that it could not be ruled out that the persons affected would find it more difficult to adapt to the given social structures [3]. Mr E.B. was a civil servant in the Austrian police force. Pursuant to Paragraph 13 of the Law on the civil service of 1979 (Beamten-Dienstrechtsgesetz, BDG) in the version relevant to the Appellant, he would have retired on 1 January 2008 (at the age of 65). In 1974, however, he was convicted of an attempted offence of male same-sex indecency on minors aged 14 and 15 under Paragraph 129 of the Penal Code (StG). As a result, the competent Disciplinary Commission imposed on him the disciplinary penalty of compulsory permanent retirement on a reduced pension, the deduction [continua ..]

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3. Repeal of the penal provision on which the disciplinary decision was based by the Austrian Constitutional Court

In its ruling of 21 June 2002 [6], the Austrian Constitutional Court (Verfassungsgerichtshof, VfGH) declared Paragraph 209 of the Criminal Code (StGB) [7], which was corresponding to the former Paragraph 129 of the Penal Code (StG), to be unconstitutional. It assessed the disputed regulation as inherently unobjective and therefore as a violation of the constitutional principle of equality [8]. It exclusively covered homosexual activities between persons of the male sex in which one partner had already reached the age of nineteen and the other had reached the age of fourteen but not eighteen. This had the consequence, in particular, that initially non-punishable contacts between partners of different ages, none of whom was younger than fourteen or older than nineteen years, suddenly became punishable at the time when the older partner exceeded the age of nineteen. The offence, on the other hand, ceased as soon as the younger partner exceeded the age of eighteen. The penal provision mentioned above thus led to a changing sequence of impunity, punishability and renewed impunity under certain circumstances, whereby the duration of the first two periods depended on the extent of the age difference [9]. Austrian legislature subsequently repealed Paragraph 209 of the Criminal Code (StGB) with effect from 13 August 2002. The Constitutional Court (VfGH) did not treat the question of the unconstitutionality of the different treatment of male-homosexual and female-homosexual or heterosexual relationships in detail in the aforementioned decision. However, it affirmed that it was within the scope of the legislator’s legal policy to take special precautions in the area of sexual relations between young people up to a certain “age of consent” in the interest of undisturbed personality development [10]. In this regard, the Constitutional Court (VfGH) had stated in an earlier decision from 1989 that criminal legislature could not be challenged under the aspect of the principle of equal treatment or Article 8 of the European Convention on Human Rights, if it took the view, on the basis of authoritative expert opinions in connection with facts of experience, that homosexual influence endangered male adolescents to a significantly higher degree than females of the same age and therefore considered a stricter criminal liability to be necessary to protect the undisturbed development of personality only with regard to male homosexual [continua ..]

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4. Entry into force of Directive 2000/78/EC

It is recalled that Directive 2000/78/EC establishing a general framework to combat discrimination based on religion or belief, disability, age or sexual orientation in employment and occupation entered into force on 2 December 2000. Article 2 of Directive 2000/78/EC prohibits, inter alia, both direct and indirect discrimination based on sexual orientation. According to Article 2 (2) (a) of the Directive, direct discrimination shall be taken to occur where one person is treated less favourably than another is, has been or would be treated in a comparable situation, on any of the grounds referred to in Article 1 – in the specific context: sexual orientation. Article 2 (2) (b), on the other hand, provides that (only) indirect discrimination shall be taken to occur where an apparently neutral provision, criterion or practice would put persons having a particular sexual orientation at a particular disadvantage compared with other persons unless that provision, criterion or practice is objectively justified by a legitimate aim, and the means of achieving that aim are appropriate and necessary. The provisions of Directive 2000/78/EC had to be implemented into national law by the Member States by 2 December 2003 at the latest [13]. As a result, the Austrian Federal Equal Treatment Act (Bundes-Gleichbehandlungsgesetz, B-GlBG) [14] applicable to the Federal Service (in the broader sense) was comprehensively revised [15] and a new Equal Treatment Act (Gleichbehandlungsgesetz, GlBG) for the private sector was enacted [16] in order to comply with the anti-discrimination provisions of EU law. The relevant amendments entered into force on 1 July 2004. However, the abolition of all potentially discriminatory provisions in other legal regulations was not linked to these amendments. According to the settled case-law of the European Court of Justice, individuals may rely on the provisions of a directive before the national courts against the State where the latter has failed to implement the directive correctly whenever these provisions appear to be unconditional and sufficiently precise. Therefore, it does not matter whether the State is acting in its capacity as an employer or as a public authority [17]. In contrast, even a clear, precise and unconditional provision of a directive seeking to confer rights on or impose obligations on individuals cannot of itself apply in a dispute exclusively between private persons. In any case, however, [continua ..]

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5. Request for a preliminary ruling from the Austrian Supreme Administrative Court (Verwaltungsgerichtshof)

In the light of the mentioned legal background, Mr E.B. unsuccessfully requested, in June 2008, the annulment of the disciplinary decision and the closure of the disciplinary proceedings against him. In addition, in February 2009, he applied for the reassessment and back payment of his salary and higher pension benefits to which he was entitled without the disciplinary penalty. He justified this by stating that there had been discrimination on the basis of sexual orientation, the avoidance of which required him to be treated, from the point of view of pay and pension entitlement, as if he had been in active employment until reaching his statutory retirement age. In the alternative, he demanded, at least, payment of his pension without the 25% reduction. During the – very long – proceedings, Mr E.B. in particular also raised the question, whether the effects of the disciplinary decision, which in 1976 undisputedly (not yet) infringed European Union law requirements, had not become obsolete as a result of the prohibition of discrimination under Article 2 of Directive 2000/78/EC. Initially Mr E.B. was unsuccessful with his applications. After several legal proceedings, however, the Austrian Supreme Administrative Court (Verwaltungsgerichtshof, VwGH), which had jurisdiction as the last domestic instance, decided by order of 27 April 2017 [22] to refer the following questions to the European Court of Justice for a preliminary ruling pursuant to Article 267 of the Treaty on the Functioning of the European Union: ‘(1) Does Article 2 of Directive 2000/78 preclude the continued the legal effects of an administrative decision that has become final, taken in the field of civil service disciplinary law (disciplinary decision), compulsorily retiring and reducing the pension benefits of a civil servant, where that administrative decision was not yet subject to provisions of EU law, in particular the Directive, at the time when it was adopted, but a (national) decision to the same effect would infringe the Directive if it were adopted after its entry into force? (2) If the first question is answered in the affirmative, is it, for the purposes of creating a non-discriminatory situation, (a) necessary under EU law, for the purposes of determining the civil servant’s pension, to treat him as if, in the period between the entry into force of the administrative decision and his reaching statutory pensionable age, he had not been retired but [continua ..]

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6. Material scope of Directive 2000/78/EC

In its decision of 15 January 2019, C-258/17, E.B., the European Court of Justice rightly, as a preliminary question, points out the need to examine whether a situation such as that created by the disciplinary decision against Mr E.B. comes within the material scope of Directive 2000/78/EC. This question arises in particular because Article 3 (3) of the directive expressly states that the directive does not apply to payments of any kind made by state schemes or similar, including state social security or social protection schemes. According to the settled case-law of the European Court of Justice, the material scope of the directive does not extend to social security and social protection schemes whose benefits are not equivalent to “pay” within the meaning given to that term for the application of Article 157 (2) of the Treaty on the Functioning of the European Union [23]. Indeed, the concept of ‘pay’ is interpreted broadly by the European Court of Justice. It has stated on several occasions, in particular, that “pay” is to be assumed in any event if a pension benefit is paid only to a particular group of employees, if it is directly dependent on the period of service rendered and if its amount is determined on the basis of the (last) remuneration of the employees. Whether the respective system exists alongside or instead of a statutory social security system is irrelevant [24]. The European Court of Justice left the examination of the existence of “pay” in that sense to the Austrian national court. Since the European Court of Justice has already repeatedly qualified civil service pension schemes such as the Austrian one as “pay” [25], it must be assumed that Mr E.B.’s pension is to be qualified as “pay” too and that Directive 2000/78/EC therefore is applicable in principle. The Austrian Supreme Administrative Court (VwGH) also based its reference for a preliminary ruling to the European Court of Justice on this assumption. In particular, it convincingly pointed out that, even in the view of the Austrian courts, civil service retirement benefits and social security matters are fundamentally different areas of law. In addition, the Law on the civil service of 1979 (BDG) is based on the complementary concepts of “civil servant in civil service” and “civil servant in retirement”. It thus describes a different status within an upright [continua ..]

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7. Temporal scope of Directive 2000/78/EC

In the second step – and this has been the really crucial question – the Court had to examine to what extent a situation such as that of Mr E.B. fell within the scope ratione temporis of Directive 2000/78/EC. In this respect, it is first and foremost undisputed that discriminations identified by the European Court of Justice must also be corrected for the past. Only the European Court of Justice itself can exceptionally limit the temporal effects of its judgments [27]. If it fails to do so, leaving aside any limitation period that may have occurred, the date on which the prohibition of discrimination comes into force is in principle the date from which discrimination has to be corrected. In accordance with Austrian law, European Union law therefore does not provide for any “genuine” retroactive effect. The prohibitions of discrimination also apply only to matters which fall within their temporal scope [28]. The decisive date for the application of the prohibitions of discrimination within the meaning of Directive 2000/78/EC is – irrespective of their application as general principles of European Union law – the date of expiry of the time limit for transposition and thus 3 December 2003 [29]. Legal situations the relevant aspects of which occurred in their entirety before that date must therefore not be subsumed under the prohibition of discrimination. Thus, European Union law does not apply to legal situations that have arisen and become final before the relevant provisions came into force [30]. However, according to the case-law of the European Court of Justice, this lack of “retroactive effect” does not alter the fact that a new rule of law, unless otherwise specified, applies from the entry into force of the act introducing it, and is directly applicable to the future effects of legal situations that have arisen and become final under the old law [31]. Accordingly, in the Joined Cases Bruno and O’Brien [32], for example, with regard to discrimination of part-time workers on acquisition of the necessary contribution periods for a pension, it was stated that even the periods of employment predating the entry into force of Directive 97/81/EC – which had originally been lawfully “excluded” – needed to be taken into account. Similarly, the European Court of Justice ruled in Maruko [33] in relation to a survivor’s pension which was [continua ..]

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8. Existence of discrimination

With the fundamental applicability of the prohibition of discrimination, it is of course not yet finally stated that in the case of Mr E.B. there was also in fact an unlawful discrimination on the basis of sexual orientation. The Austrian Government argued in particular that the rules of service pragmatism applicable to E.B. did not in themselves differentiate according to sexual orientation, which in any case meant that there was no direct discrimination. However, the European Court of Justice with good reasons rejects this argument. As explained above, the disciplinary decision was based on Mr E.B.’s criminal conviction. This, in turn, was based on a criminal law norm differentiating between heterosexual and female-homosexual on the one hand and male-homosexual relationships on the other. In my opinion, their discriminatory nature is obvious from today’s point of view. Austria’s convictions by the European Court of Human Rights also prove this. Consequently a disciplinary decision based on this discriminatory criminal conviction also constitutes direct discrimination within the meaning of Article 2 (2) (a) of Directive 2000/78/EC [42]. The European Court of Justice leaves it up to the national court to examine the extent to which a civil servant who, at that time, infringed his ethical obligations in a way comparable to E.B.’s infringement would have been subject to a disciplinary sanction if the male homosexual nature of that infringement had been disregarded. In the light of the facts mentioned above, it can hardly be doubted, however, that the discriminatory criminal conviction was the main reason for the disciplinary sanction and that without the latter, in any event, no such severe penalty would have been imposed [43]. Thus, as of 3 December 2003, Mr E.B. was subject to unlawful discrimination on the grounds of his sexual orientation.

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9. Extent of back payment

With regard to the determination of the amount of the retirement benefit to which Mr E.B. is entitled in a non-discriminatory manner, the European Court of Justice refers to the necessity of an examination as to whether and, if so, to what extent a certain reduction in the retirement benefit would also have occurred if heterosexual or female-homosexual contacts with minors had been involved. From today’s point of view, it is rather obvious that such a reduction would not have taken place in such a case. Under this assumption, Mr. E.B. has in principle been entitled to a pension benefit completely disregarding the originally pronounced reduction of 25 percent since the entry into force of Directive 2000/78/EC. Especially since this is a matter of establishing a non-discriminatory state of affairs and not of awarding claims for damages, it is, as stated by the European Court of Justice too, also irrelevant whether Mr E.B. worked in the private sector during his early retirement (and thus mostly avoided financial disadvantages) [44]. In addition, it should be noted that the distinction between female and male homosexuals in the present context also justifies the presumption of discrimination on grounds of sex. If one follows this, the inadmissibility goes back considerably further than to December 2003. This is because the prohibition of discrimination on the basis of sex already applied under European Union law at the time of Austria’s accession to the Union in 1995.

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10. Statute of limitations

The European Court of Justice has, of course, completely omitted treating one final question probably due to a lack of a corresponding submission: that of the statute of limitations. The fact that the reduction of Mr E.B.’s pension was unlawful in principle from 3 December 2003 (even from 1996, if discrimination on grounds of sex was assumed) does not necessarily mean, in view of the existence of national provisions on limitation, that the difference due must be paid from this point in time. The European Court of Justice has repeatedly made it clear that the fact alone that an employee assumed that national law was in conformity with European Union law and consequently assumed that certain claims did not exist before a corresponding judgment, does not prevent the plea of limitation [45]. Consequently, the principle of effectiveness under European Union law obviously does not require that limitation periods generally run only from the point in time at which the employee can recognise the claim. Austrian law in principle provides for a limitation period of three years for claims to remuneration [46]. However, the filing of an action or the assertion of a claim in administrative proceedings leads to an interruption of the current limitation period. This period then begins to run anew only after the proceedings have been concluded [47]. In the specific case, Mr. E.B. took action against the reduction of his pension as early as June 2008. From today’s perspective, his claim to subsequent payment of the amount wrongly deducted from his pension thus goes back much further than three years.

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NOTE

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