'Legal' age discrimination?
"Any discrimination, direct or indirect, in employment, particularly in respect of sex, age, disability... shall be prohibited."
Art. 11, Polish Labor Code
Elizabeth and I have recently signed a contract to purchase a new condominium in Warsaw, and like most purchasers, have applied for credit from a local bank to finance our purchase. The bank we selected advertised extremely attractive terms, including a low interest rate, 30-year payment term and no up-front fees for up to 80 percent of the purchase price.
During our meeting with the loan officer, we answered her questions regarding our income, assets, marital status, number of dependents, etc. We were told that we should easily qualify for the loan, even though I do not have permanent residency in Poland. The loan would be denominated in U.S. dollars at an initial interest rate of 3.8 percent, adjustable every six months, based upon the London Inter-Bank Offered Rate. Great! Or so I thought until the loan officer later asked my age. At first I did not understand the reason for the question, thinking that it must be a routine question to help the bank collect statistical data on its clientele. I grew suspicious when the loan officer did not ask my wife about her age.
Within a few minutes the reason for the question was made perfectly clear when the loan officer presented the schedule of payments to us. We had intended to take out a 30-year mortgage in order to minimize our monthly payments as much as possible. We were offered, however, a mortgage for 23 years, meaning that our monthly payments would be higher than we had expected. Why? Because I am 42. As the loan officer explained, in 23 years I will be 65, retired and unable to repay the mortgage. I tried to explain that, truth be told, I plan to retire a lot earlier than 65. This is a joke, right? No.
Of course I protested that this is age discrimination and against the law, but to no avail. But my wife is much younger, why not use her age? The loan officer explained that the bank's policy is to use the husband's age in calculating the term of the mortgage as opposed to the wife's, even if the wife is employed. Let's add sex discrimination as well.
Disappointed, we left the bank, vowing never to return. Surely, other banks would be more enlightened, right? Wrong.
Much to my surprise, we ran up against the same age issue at two other banks. And to make matters worse, the interest rates were going up. Swallowing hard my pride, we returned to the first bank and applied for a 23-year mortgage.
Despite my protestations to the contrary, the Polish Civil Code does not prohibit banks, or for that matter any business, from using age to weigh commercial risks. Age and sex discrimination is prohibited in employment, but not necessarily in other sectors. In the case of our mortgage, the bank may use age in calculating a borrower's ability to repay the loan, at least for the time being.
In contrast to the Civil Code, the Polish Constitution appears to prohibit such practices, stating that "no person may be discriminated against in political, social or economic life" and further that "men and women have equal rights in familial, political, social and economic life." Arguably, the bank violated my wife's constitutional rights to be treated equally with respect to economic life by refusing to issue her a 30-year mortgage. As to whether the bank violated my constitutional rights, the answer is open to interpretation.
Help, however, is on the way. The current draft of the EU Constitution, if ratified by all member states, contains language that will arguably make such business practices illegal. Specifically, Title III Article II-21 of the EU Constitution states: "Any discrimination based on sex, race, colour, ethnic or social origin... or age shall be prohibited." The EU Constitution, unlike the Polish Civil Code, does not limit such prohibition to employment matters.
Paul Fogo is a senior attorney with Miller Canfield W. Babicki & Partners.
Art. 11, Polish Labor Code
Elizabeth and I have recently signed a contract to purchase a new condominium in Warsaw, and like most purchasers, have applied for credit from a local bank to finance our purchase. The bank we selected advertised extremely attractive terms, including a low interest rate, 30-year payment term and no up-front fees for up to 80 percent of the purchase price.
During our meeting with the loan officer, we answered her questions regarding our income, assets, marital status, number of dependents, etc. We were told that we should easily qualify for the loan, even though I do not have permanent residency in Poland. The loan would be denominated in U.S. dollars at an initial interest rate of 3.8 percent, adjustable every six months, based upon the London Inter-Bank Offered Rate. Great! Or so I thought until the loan officer later asked my age. At first I did not understand the reason for the question, thinking that it must be a routine question to help the bank collect statistical data on its clientele. I grew suspicious when the loan officer did not ask my wife about her age.
Within a few minutes the reason for the question was made perfectly clear when the loan officer presented the schedule of payments to us. We had intended to take out a 30-year mortgage in order to minimize our monthly payments as much as possible. We were offered, however, a mortgage for 23 years, meaning that our monthly payments would be higher than we had expected. Why? Because I am 42. As the loan officer explained, in 23 years I will be 65, retired and unable to repay the mortgage. I tried to explain that, truth be told, I plan to retire a lot earlier than 65. This is a joke, right? No.
Of course I protested that this is age discrimination and against the law, but to no avail. But my wife is much younger, why not use her age? The loan officer explained that the bank's policy is to use the husband's age in calculating the term of the mortgage as opposed to the wife's, even if the wife is employed. Let's add sex discrimination as well.
Disappointed, we left the bank, vowing never to return. Surely, other banks would be more enlightened, right? Wrong.
Much to my surprise, we ran up against the same age issue at two other banks. And to make matters worse, the interest rates were going up. Swallowing hard my pride, we returned to the first bank and applied for a 23-year mortgage.
Despite my protestations to the contrary, the Polish Civil Code does not prohibit banks, or for that matter any business, from using age to weigh commercial risks. Age and sex discrimination is prohibited in employment, but not necessarily in other sectors. In the case of our mortgage, the bank may use age in calculating a borrower's ability to repay the loan, at least for the time being.
In contrast to the Civil Code, the Polish Constitution appears to prohibit such practices, stating that "no person may be discriminated against in political, social or economic life" and further that "men and women have equal rights in familial, political, social and economic life." Arguably, the bank violated my wife's constitutional rights to be treated equally with respect to economic life by refusing to issue her a 30-year mortgage. As to whether the bank violated my constitutional rights, the answer is open to interpretation.
Help, however, is on the way. The current draft of the EU Constitution, if ratified by all member states, contains language that will arguably make such business practices illegal. Specifically, Title III Article II-21 of the EU Constitution states: "Any discrimination based on sex, race, colour, ethnic or social origin... or age shall be prohibited." The EU Constitution, unlike the Polish Civil Code, does not limit such prohibition to employment matters.
Paul Fogo is a senior attorney with Miller Canfield W. Babicki & Partners.
