This concerns an interesting and very divisive issue in the area of labour law. As will soon become clear, this case is a natural follow-up to the ground-breaking judgement in C-414/16 Egenberger. But let us start from the beginning. The starting point is a little known and very specific principle of law that applies in some European jurisdictions, like Germany, and that has been accepted by European law (see Art. 17 TFEU). It says that the fundamental right to equal treatment can be limited by the right of religious institutions to have their ethos respected. For example, if positions for Catholic priests were actually advertised on the job market, female applicants could not invoke anti-discrimination laws against the restriction to male applicants because the doctrines of the Catholic church forbid female priests.
However, the ethos of the religious organization does not automatically prevail, and must be balanced against the rights of the employees. This is codified in more detail by Art. 4 of the Directive 2000/78 under which differences in treatment
“shall not constitute discrimination where, by reason of the nature of the particular occupational activities concerned or of the context in which they are carried out, such a characteristic constitutes a genuine and determining occupational requirement, provided that the objective is legitimate and the requirement is proportionate.“
Traditionally, it had been assumed that this balancing exercise is a domain of the MS courts. In Egenberger, the European Court took jurisdiction over the boundaries of permissible discrimination for religious reasons, instead of solely relying on the MS courts (as was arguably indicated by Art. 17 TFEU). For Germany, this meant that full judicial review replaced the restricted “plausibility check” that had been applied under German law. Against that background, it is no surprise that the next case was soon to come to Luxembourg, as has now happened with the request for the preliminary ruling by the Bundesarbeitsgericht.
The judgement C-68/17 IR/JQ sent a clear and sound message to Germany. The starting point remains unchanged. Churches as well as the companies and businesses run by them may still require adherence to their ethos from executive employees (for example the Catholic church may promote adherence to lifelong marriage, and prohibit homosexual marriage etc.) without violating the fundamental right of equality. But this is an exception that needs to be justified under Art. 4 of the Directive 2000/78.
This is exactly the point where the law has changed profoundly after Egenberger. Previously, German judges used to turn a blind eye under the mere plausibility check. By contrast, after Egenberger the European Court takes a close look on the validity of the justification for “ethos-induced” discrimination. And indeed, in the particular case it found that the conditions to allow this kind of discrimination under Art. 4 of the Directive 2000/78 were not met. The company running the hospital (IR) had chosen to employ head doctors irrespective of their beliefs. Moreover, it did not demand Catholic conduct from the non-Catholic employees either. Adherence to the Catholic ethos was clearly not a genuine occupational requirement!
However, one should be careful not to confuse the court’s legal and factual reasoning. The court did not say that it was generally wrong to insist that chief doctors in Catholic hospitals lead a life in accordance with the Catholic ethos. It only said that it was wrong if the institution required this only from Catholic chief doctors. We cannot gauge what would have been the outcome if the hospital had only employed Catholics or had insisted on a Catholic lifestyle in general or at least adherence to the fundamental principles (e.g. no homosexual marriage?) by all employees, regardless of their confession. This may well have been justified under Art. 4 of the Directive 2000/78.
So far so good. However, the Court also restated two important issues already decided in Egenberger. First, it confirmed that national rules that cannot be interpreted in line with European law must be disapplied (in this case concerning § 9 I AGG (Allgemeines Gleichbehandlungsgesetz). This is convincing as it cannot be right for any national court to dismiss a claim on the basis of a provision that violates European law, and to offer the claimant to sue the MS for damages instead, as was held by European lawyers in the Nineties.
Second, it confirmed that the European Charter of Fundamental Rights conferred rights to individuals that could be invoked in disputes between them. Arguably this goes too far because it does not seem to be restricted to labour law, and may alter the foundation of private law in general. The basic rule in private law is party autonomy: I myself decide when and with whom to enter into contracts. This now seems under threat. Will I still be free to rent my central Berlin flat to the young pretty girl instead of the grumpy old geezer (because I prefer young girls for whatever reason, or because I generally do not like old people); or can he sue me in Luxembourg? Will I have to disclose my reasons for the choice? I do not think that the Court wanted to go that far, but how can we know for sure?