JUDGMENT OF 24. 6. 1976 — CASE 97/75 CRIJNS v COMMISSION

In Case 97/75

THE COURT (First Chamber) composed of A. O'Keeffe, President of Chamber, J. Mertens de Wilmars and F. Capotorti, Judges, Advocate-General: J.P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts

The facts and arguments put forward by the parties during the written procedure may be summarized as follows:

I — Facts and procedure

By a Decision of 4 April 1973, the Commission of the European Communities, the defendant, accepted the request for termination of service as from 1 July 1973 made by the applicant. That request was made under Regulation (Euratom, ECSC, EEC) No 2530/72 of the Council of 4 December 1972 introducing special and temporary measures applicable to the recruitment of officials of the European Communities in consequence of the accession of the new Member States, and for the termination of service of officials of those Communities (OJ, English Special Edition 1972 (1-8 December), p. 11). Article 2 (1) of this regulation authorizes the institutions of the Communities ‘Until the 30 June 1973, …, in the interests of the service and in order to meet requirements resulting from the accession to the European Communities of new Member States, to adopt for their officials in grades A 1 to A 5 inclusive measures terminating the service of officials as provided for in Article 47 of the Staff Regulations …’

Article 3 of the regulation contains, in its numerous paragraphs, the rules governing the calculation of the allowances granted to officials who have terminated their service.

According to paragraph 1, for a period of a year they shall be entided to a monthly allowance equal to their last remuneration, and, for a period which may vary according to the circumstances, to a monthly allowance equal to 80 % of their basic salary and lastly for a third period ceasing at the age of 65 years, to an allowance equal to 70 % of that salary.

Paragraph 4 of the same article however enables a limit to be placed on the aggregation of the allowance thus calculated with income accruing to the persons concerned from any new employment. To the extent to which the allowance and this income, aggregated together, exceed the total remuneration, as it would be had he continued in the service, the Community allowance is reduced so that the total is brought down to the level of that total remuneration.

Lastly, according to Article 3 (5) all family allowances provided for by the Staff Regulations of officials shall remain payable but Article 67 (2) of the Staff Regulations governing family allowances shall apply according to the circumstances.

After receiving an allowance equal to his last remuneration during the first year, the applicant was informed by letter from the Commission of 22 October 1974 of the calculation which would be used for the allowance which was due to him for the following period, that is to say, as from 1 July 1974.

Considering that this calculation disregarded the abovementioned provisions, the applicant on 20 December 1974 made a complaint to the Commission under Article 90 of the Staff Regulations.

The Commission, after allowing the period of four months laid down in the fifth subparagraph of Article 90 (2) to lapse, so that it was deemed to have rejected the complaint by implication, adopted an express decision to the same effect, by a letter of 13 June 1975.

On 30 August 1975 the applicant made an application to the Court of Justice, which was registered on 5 September 1975.

The Court (First Chamber), after hearing the report of the Judge-Rapporteur and the views of the Advocate-General, decided to open the oral procedure without any preparatory inquiry.

II — Conclusions of the parties

The applicant claims that the Court should:

‘1. Hold that the allowance in question in Article 3 (4) of Regulation No 2530/72 of the Council, of 4 December 1972, is the allowance mentioned in the first indent of Article 3 (1) (b) of this regulation and that this allowance represents a part of the basic salary, to the exclusion of family allowances. 2. Hold also that family allowances from other sources which are mentioned in Article 3 (5) of Regulation No 2530/72 and in Article 67 (2) of the Staff Regulations of Officials of the European Communities, are governed by the non-aggregation rule laid down in the said Article 67 (2) and that these family allowances do not constitute new income within the meaning of Article 3 (4) of Regulation No 2530/72. 3. Annul the decision or the defendant of 22 October 1974, No 011932, setting out the reductions to be made under Article 3 (4) of Regulation No 2530/72 of the Council of 4 December 1972. 4. Annul, in addition, the decisions of rejection of the complaint which the applicant made against the decision mentioned under head 3. 5. Order the defendant to bear the costs.’

The defendant contends that the Court should:

‘— dismiss the application; — order the applicant to pay the costs taking account of Article 70 of the Rules of Procedure.’

III — Submissions and arguments of the parties

A —. According to the applicant the calculation set out in the Commission's letter of 22 October 1974 as regards the aggregation of the allowance provided for in Article 3 (1) (b) of Regulation No 2530/72 with the income received from the new employment, infringes the first indent of Article 3 (1) (b) and Article 3 (4) and (5) as well as Article 62 — especially the third paragraph, and Article 67 — especially the second paragraph, of the Staff Regulations of Officials. According to Article 3 (4) of Regulation No 2530/72, ‘the income accruing to the official concerned from any new employment during this period shall be deducted from the allowance provided for in paragraph 1, in so far as that income plus that allowance exceeds the total remuneration last received by the official in the performance of his duties. That remunerations shall be weighted as provided in paragraph 3.’

1. The applicant claims in the first place that the Commission infringed this provision by including — in order to apply the rule reducing aggregations — in the allowance granted by the Community, the family allowances granted by the latter and in the calculation of income accruing from new employment, the family allowances received by virtue of that employment, when the inclusion of these family allowances is excluded by Article 3 (4) which refers only to the allowance mentioned in paragraph (1) (b) (80 % of the basic salary) and the actual ‘income’ received from the new employment. It appears from a comparison between subparagraphs (a) and (b) of Article 3 (1) that the concepts of ‘remuneration’ and ‘basic salary’ are not equivalent, which is corroborated by the third paragraph of Article 62 of the Staff Regulations of Officials, according to which ‘Remuneration shall comprise basic salary, family allowances and other allowances’. On the other hand paragraph (5) of the same Article 3, referring to Article 67 (2) of the Staff Regulations, lays down a special system of non-aggregation regarding family allowances received through the Community with those received from elsewhere. The Commission was therefore not entitled, in order to calculate the allowance for the purposes of applying Article 3 (4), to take account only of the basic salary, as adjusted by the weighting and it is necessary to delete from the calculation made by the Commission under the heading ‘Allowance at 80 % (gross)’ the headings ‘head of household allowance’, ‘dependent child allowance’, ‘family allowances received from elsewhere’, and ‘education allowance (flat-rate part)’. The result would have been an allowance of BF 73125 instead of BF 78970. Added to the new income that allowance would exceed the last total remuneration only by BF 100 and not by BF 12103, as appears from the calculation made by the Commission.

2. According to the applicant his point of view is confirmed, furthermore, by the fact that in interpreting Article 3 (4) and (5) as it does, the Commission takes account of Community family allowances (dependent child allowance) which are not in fact paid, precisely as a result of the application of the combined provisions of Article 3 (5) of Regulation No 2530/72 and Article 67 (2) of the Staff Regulations, because of the fact that the applicant receives an allowance of the same character in the Netherlands. Further, it applies to the same class of family allowances two quite independent non-aggregation rules. The head of household allowance and the education allowance are, wrongly, subjected to the rule laid down in Article 3 (4) whilst the dependent child allowance is subjected, properly, to Article 3 (5) of Regulation No 2530/72 in conjunction with Article 67 (2) and, wrongly, to the non-aggregation rule in Article 3 (4). Lastly, to regard ‘family allowances from other sources’ as ‘income accruing to the official concerned from any new employment’ within the meaning of Article 3 (4) is illegal because of the fact that the legal provisions in force in the Netherlands take account not of the actual number of children, but of a tax figure.

B —. In its defence, the Commission replies that in order to interpret Article 3 (4) of Regulation No 2530/72 correctly, this provision must be seen in the context of the whole of this regulation. The said paragraph (4) takes its inspiration from Article 5 (4) of Regulation No 259/68 of the Council of 29 February 1968 (OJ, English Special Edition 1968 (I), p. 30) which at the time of a previous operation reducing the number of staff also laid down a ceiling for the allowance to be paid to an official who had opted for ‘voluntary termination of service’ and who received income from his new employment and indicates the intention of the legislature clearly. The system consists in allowing the person concerned to draw new income, on condition that its amount, aggregated with that of the allowance does not exceed the level of the last total remuneration. According to the Commission it appears from the administrative complaint of 20 December 1974 that the applicant wishes the Commission to pay him the allowance (80 % of his basic salary), the head of family allowance and the education allowance, that is a total of BF 79268, to which is added the new income (salary + dependent child allowance) amounting to BF 52351 which is a total income of BF 131619 which exceeds by BF 12401 the last total remuneration which was BF 119218. The Commission disputes the argument of the applicant that the allowance mentioned in Article 3 (4) is the percentage of the basic salary referred to in paragraph 1 (b) and therefore does not include family allowances. The Commission points out that the family allowances in the system of the Staff Regulations, for example in Article 81, often represents a percentage of the basic salary. It is of the opinion that since the allowance referred to in Article 3 (1) (a) actually and undeniably includes family allowances, it could hardly be otherwise as regards the allowance mentioned in paragraph (1) (b). The general structure of this article, furthermore, shows clearly that it was intended to grant an allowance corresponding, during the first year, to the whole basic salary increased by all the allowances and during the following period, to a decreasing percentage of the basic salary increased by family allowances. The final calculation of the amounts due to the applicant is based on a comparison which would be impossible if the three factors in that comparison did not include the same essential components, including the family allowances. The fact that the allowance referred to in Article 3 (4) of Regulation No 2530/72 includes the family allowances appears clearly from a comparison between that article and Article 5 (4) of Regulation No 259/68. As regards the argument based on Article 67 (2) of the Staff Regulations, the Commission points out that the dependent child allowances which the applicant receives in his new employment are actually received by him and therefore form a part of his new income. The argument of the applicant concerning the inclusion of family allowances in the “new income”, the inclusion of which would be illegal under the Netherlands legislation, must be rejected because Article 3 (4) of Regulation No 2530/72 and Article 67 (2) of the Staff Regulations require the Commission to take account of family allowances received from elsewhere. These provisions take precedence in any case over national provisions.

C —. 1. In its reply the applicant maintains that to the extent to which the wording of Article 3 (4) is clear there is no need to interpret it. It is undeniable that the allowance provided for by Article 3 (1) (b) which is mentioned in Article 3 (4) and which constitutes only a percentage of the basic salary, necessarily excludes family allowances. 2. The concept of “total income” used by the Commission for the purposes of the comparison which it made, is not to be found in Regulation No 2530/72. Article 3 of Regulation No 2530/72 uses only the following concepts: (a) the total remuneration last received, which is both the sum paid monthly during the first year after resignation and the ceiling of the aggregation of the new income and allowances paid after that first year. Only that total remuneration “includes”, in accordance with Article 62 of the Staff Regulations, the basic salary, family allowances and allowances (Article 3 (1) (a) and (4). (b) The monthly allowance paid after the first year and which corresponds to a percentage of the weighted basic salary (Article 3 (1) (b) and (3)). (c) Other allowances: family allowances (Article 3 (5), allowances under the social security scheme (Article 3 (6)), the retirement pension, in certain circumstances (fifth subparagraph of Article 3 (7) and family allowances, if the former official is entitled to a pension before the age of 60 (Article 3 (8)). (d) Income received by the person concerned from any new employment, aggregated with the allowance referred to under (b). 3. Although it is correct, as the Commission states, that the monthly allowance provided for in Article 3 (1) (a) includes family allowances, it is not possible to deduce from this that the same is true in respect of the allowance referred to in paragraph 1 (b). The use of the expressions “last remuneration” in paragraph 1 (a) and “basic salary” in paragraph 1 (b) already emphasizes the difference, the basic salary being only a constituent element in the remuneration, beside and therefore to the exclusion of family allowances. 4. The general structure of Article 3 to which the Commission refers in the second place does not correspond to the interpretation which the Commission gives to it and is contradicted by the wording. Community legislation clearly intended to grant, for the first year, an allowance equal to the last remuneration (basic salary + family allowances + allowances) and for the following periods, a percentage of the basic salary. It follows from the argument of the defendant that not only would the interim allowance (equals the allowance laid down by paragraph (1) (b)) vary according to whether family allowances are in question, but also that this allowance would be higher in the case of an official having no family burdens. The Community legislature wished precisely to avoid that illogical consequence by including in the calculation of the aggregation laid down by Article 3 (4) only the actual interim allowance and by providing a special system of non-aggregation for family allowances. 5. The applicant further disputes the usefulness of the comparison suggested by the Commission between Article 3 (4) of Regulation No 2530/72 and Article 5 (4) of Regulation No 259/68, which is not in question in the present case. 6. The applicant lastly draws attention to the fact that the Commission contradicts its own argument when it applies it. In fact in the contested decision family allowances are included at the level of 100 % whereas, if they were included in the allowance, as the Commission claims, they could have been included in the calculation only up to an amount of 80 %. In the same way the expatriation allowance, which is not included in the aggregation calculation, should have been if the allowance provided for in paragraph (1) (b) is the same as that provided for in the same paragraph under (a). Lastly, the weighting which was applied only at 80 % of the basic salary should, according to Article 3 (3), also have affected the dependent child allowance and the education allowance. 7. The applicant also disputes the Commission's argument that the family allowances which the applicant receives from his new employment are actually received by him and therefore form part of his new income. Family allowances are not remuneration for an occupational activity, but constitute an allowance granted to cover extraordinary expenses. That is apparent from the Commission's note IX/1186/74, in which it accepts that family allowances come within the non-aggregation rules, in accordance with Article 67 (2) of the Staff Regulations, from the Commission's note 1687/IX/73, from Regulation No 260/68 of the Council of 29 February 1968 (OJ, English Special Edition 1968 (I), p. 37) from which it appears that family allowances do not constitute taxable income and, lastly, from the position of the applicant with regard to Netherlands law. 8. The Commission's argument that family allowances in the system of the Staff Regulations, for example in Article 81, often represent a percentage of the basic salary, is irrelevant and, in fact, confirms that the basic salary does not include family allowances without which these would be calculated on their own basis. 9. The applicant concludes that in any case even if there were to be a doubt as to the meaning of Article 3 (4) — quod non — a provision which includes a certain legal protection cannot be interpreted widely to the detriment of the person concerned.

D —. In its rejoinder, the Commission considers what it regards as being the two fundamental arguments of the applicant that is to say: (a) that the monthly allowance included in the calculation under Article 3 (4) of Regulation No. 2530/72 does not include family allowances; (b) that the ‘income accruing to the official concerned from any new employment’ does not include the dependent child allowance (kindertoelage) paid in the Netherlands. The Commission observes that the ‘total remuneration last received’ is not limited only to the basic salary, increased by family allowances. Other allowances (expatriation allowance, entertainment allowance, etc…) form part of the total remuneration and were excluded from the allowance paid after the first year. Furthermore it is true that the allowance varies according to whether family allowances are paid but it would be untrue to say that a former official not having had family responsibilities would receive an allowance higher than a former official with family responsibilities. In fact, in the latter case, the ceiling for the application of the non-aggregation rule is higher since the total remuneration last received includes family allowances. As regards the fact that family allowances received in the Netherlands are not part of the ‘income accruing from any new employment’, the Commission considers that the context of Article 3 (4) of Regulation No. 2530/72 the ‘new income’ refers to income received prior to service with the Communities and, as such, includes family allowances. The argument based by the applicant on the decision of 22 October 1974 and Communications Nos. 1186/74 and 1687/IX/73 are not conclusive. A department of the Commission has not, any more than the Commission itself, jurisdiction to give an authentic interpretation of a Council regulation. The reference in document IX/1186/74 to ‘income paid as remuneration for occupational activity’, refers only to the exclusion of occasional income or income derived from personal assets. It is not possible either to draw conclusions, as regards the inclusion of family allowances in the salary, from the fact that under Regulation No. 2530/72 they are exempted from Community tax. The very character of family allowances is, furthermore, different in the Member States. The Commission also rejects the applicant's statement that in the Netherlands ‘kindertoelage’ does not form part of income. During the oral procedure on 21 May 1976, the parties expounded the arguments they had put forward during the written procedure. The Advocate-General delivered his opinion at the hearing on 16 June 1976.

Law

1. The application is for the annulment of the Commission's decision of 22 October 1974 and, so far as is necessary, of the implied decisions of rejection of the applicant's complaint.

2. The applicant, a former official of the Commission, has benefited since 1 July 1973, the date on which his service was terminated, from the provisions of Regulation (Euratom, ECSC, EEC) No 2530/72 of the Council of 4 December 1972, OJ, English Special Edition 1972 (1-8 December), p. 11) which, by reason of the accession of new Member States, establishes special measures concerning the recruitment of new officials and the termination of service of certain officials of the Communities.

3. Article 3 (1) of this regulation provides that ‘An official affected by the measures provided for in Article 2 (1) shall be entitled: (a) for a period of a year, to a monthly allowance equal to his last remuneration, and (b) for a period fixed in accordance with the table in paragraph 2, to a monthly allowance equal to: 80 % of his basic salary for the 30 following months; 70 % of his basic salary thereafter.’

4. Paragraph (4) of this same article provides however that The income accruing to the official concerned from any new employment during this period shall be deducted from the allowance provided for in paragraph (1) (b) in so far as that income plus that allowance exceeds the total remuneration last received by the official in the performance of his duties, such last remuneration being determined on the basis of the table of salaries in force on the first day of the month for which the allowance is payable

5. The last monthly total remuneration of the applicant was BF 119281.

6. Since 1 September 1973, the applicant has worked as a scientific associate in the Law Faculty of the ‘Katholieke Hogeschool’ at Tilburg, in the Netherlands.

7. By the contested decision of 22 October 1974, the Commission informed him of the calculation which it had made pursuant to Article 3 (4) quoted above, in order to establish the deductions to be made from the allowance payable to him as from the beginning of the second year following the termination of his service.

8. According to this calculation that reduction amounts to BF 12103 per month.

9. The complaint is made that the Commission has, in adding the allowance for termination of services and the income accruing from his new employment, for the purposes of comparing their total with his total remuneration last received, included in that allowance the Community family allowances to which the applicant is entitled under Article 3 (5) and included in that income the family allowances which are granted to him under the legislation of the Netherlands.

10. It is said that the excess results from this method of calculation and so consequently does the reduction mentioned above, whereas by omitting the family allowances the excess would be only FB 100.

11. According to the applicant, the method of calculation adopted by the Commission infringes Article 3 (1) (b), (4) and (5) of the said regulation, as well as Article 62, especially paragraph (3) thereof, and Article 67, especially paragraph (2) thereof, of the Staff Regulations of Officials of the European Communities.

12. According to the Commission, it follows from the fact, which is not disputed, that the monthly allowance granted during the first year since the termination of service includes family allowances, that the same is necessarily true in respect of the allowance granted during the following period.

13. It adds that any other method of calculation would be incompatible with the non-aggregation rule set out in Article 3 (4) the object of which is precisely to prevent the person concerned from receiving from the budget of the Community institutions an income exceeding the amount of his total remuneration last received.

14. It refers, further, to the system adopted at the time of the first scheme of voluntary resignations, in 1968, by Regulation No 259/68, from which Regulation No 2530/72 took its inspiration and which included family allowances in the allowance called allowance for voluntary termination of service.

15. In the same way, as regards the calculation of the amount of income received by the person concerned in his new employment, that term must be interpreted by reference to the income accruing in the preceding employment, that is to say, the remuneration received as an official which without any possible doubt includes family allowances.

16. In a general way, the calculation laid down in Article 3 (4) can logically be made only to the extent to which two expressions to be added together, that is to say, ‘income accruing from any new employment’ and ‘the allowance provided for’ have the same content as the expression with which their addition must be compared, that is to say, ‘the total remuneration last received’, which includes family allowances.

17. Neither the wording nor the background of Article 3 (4) of Regulation No 2530/72 makes it possible for the interpretation thereof given by the Commission to be followed.

18. In fact the different expressions used in Article 3 (1) (a), that is to say, ‘monthly allowance equal to his last remuneration’ and 3 (1) (b), that is to say, ‘monthly allowance equal to 80 % of his basic salary’, expressly and unambiguously indicate that the latter allowance does not include a percentage of the total remuneration but only of the basic salary, which precisely excludes family allowances.

19. That interpretation is confirmed by Article 62 (3) of the Staff Regulations of Officials which specifies the distinction between ‘remuneration’, ‘basic salary’, ‘family allowances’ and ‘allowances’.

20. The argument based by the Commission on Regulation No 259/68 must also be rejected.

21. In fact Article 3 (4) of Regulation No 2530/72 differs from Article 5 (4) of Regulation No 259/68 precisely in that it states that it refers only to the allowance prescribed for the period referred to in paragraph 1 (b) whereas Regulation No 259/68 refers generally to the ‘allowance provided for in paragraph (1)’.

22. Article 3 (5) of Regulation No 2530/72 provides that the whole of the family allowances are due to the official who receives the allowances provided for in paragraph (1).

23. That provision adds, however, that the provisions of Article 67 (2) of the Staff Regulations, that is to say, the special rules regarding the aggregation of Community and national family allowances, apply.

24. It appears from the combination of these provisions that family allowances, both those granted under national legislation and those granted by the Community, are exempt from the calculation provided for in Article 3 (4) and are the subject of special non-aggregation rules which, moreover, are applicable in the present case.

25. The argument of the Commission founded upon the fact that ‘total remuneration last received’ includes family allowances cannot invalidate the conclusion based both on the express wording of paragraph (2) and the system of Article 3 which includes a special non-aggregation rule for family allowances.

26. In fact this apparent lack of logic is corrected by the fact that, by applying Article 67 (2) of the Staff Regulations of Officials, an aggregation of family allowances is excluded in any case.

27. The Submission is well founded.

Costs

28. Under Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs if they have been asked for in the successful party's pleading.

29. The defendant has failed in its defence.

30. It must therefore be ordered to bear the costs.

On those grounds, THE COURT (First Chamber) hereby:

1 Annuls the decision of the Commission of 22 October 1974;

2 Orders the defendant to bear the costs.