JUDGMENT OF 23. 9. 1982 — CASE 274/81 BESEM v NIEUWE ALGEMENE BEDRIJFSVERENIGING
In Case 274/81 REFERENCE to the Court under Article 177 of the EEC Treaty by the Raad van Beroep [Social Security Court], Amsterdam, for a preliminary ruling in the action pending before that court between
THE COURT (Second Chamber) composed of: O. Due, President of Chamber, A. Chloros and F. Grévisse, Judges, Advocate General: P. VerLoren van Themaat Registrar: L. Grønning-Nielsen, Legal Secretary
gives the following
JUDGMENT
Facts and Issues
The facts of the case, the course of the procedure and the observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:
I — Facts and procedure before the national court
1. Mr Besem, an EEC citizen, commenced his employment and his periods of insurance in the Netherlands in 1934. Apart from the five years from 1948 to 1953 during which he was unemployed, Mr Besem was employed and insured for 26 years in the Netherlands and for nearly 13 years in the Federal Republic of Germany where, in 1978, he was declared unfit for work. The number of periods of insurance completed by him thus totalled 39 years out of a possible maximum of 44.
2. Since Mr Besem was subject first to Netherlands legislation on incapacity for work, under which the amount of the benefit is independent of the length of the completed periods of insurance (the distributive svstem). and then to the scheme in force in the Federal Republic of Germany, where the amount of benefit depends on the length of such periods (the accumulative system), the provisions of Chapter 3 on old-age pensions apply by analogy pursuant to Article 40 of Regulation No 1408/71. Article 43 (3) in that chapter provides that where under a distributive system such as that in the Netherlands the granting of benefits is conditional upon a worker's being subject to it at the time when the risk materializes, any worker who is no longer subject to that system shall be deemed to be still so subject if he is subject to the legislation of another Member State at the time when the risk materializes. On the facts described above, therefore, Mr Besem is entitled to receive benefits on the basis of the Wet op de Arbeidsongeschiktheidsverzekering [Law on insurance against incapacity for work, hereinafter referred to as “the 1966 Law”]. Article 46 of the regulation concerns the award of benefits and provides, in particular, that the competent institution in each Member State shall proceed first to calculate the theoretical amount of benefit, taking into account all the periods of insurance completed in the Member States as if they had been completed in that Member State. If the amount of benefit does not depend on the length of the periods of insurance completed then thai amount is to be taken, pursuant to the second sentence of Article 46 (2) ia), as the theoretical amount. Next, the actual amount of the benefit is established on the basis of the theoretical amount in the ratio which the lenpth of the periods of insurance completed in the Member State in question bears to the total length of the periods of insurance completed.
3. That calculation apan, the competent institution in the Netherlands, the Nieuwe Algemene Bedrijfsvereniging, applied a reduction to the daily wages which formed the basis for calculating Mr Besem's benefits in the Netherlands based on the gaps in his completed periods of insurance to which reference was made above. The reduction was effected in application of the Bijzonder Dagloonbesluit (Order laying down special rules for determining the daily wage), which was adopted on the basis of the 1966 Law and applies solely to determination of the wages of workers who are entitled to benefits under that law exclusively as a result of Article 45 (3) of Regulation No 1408/71. In accordance with Article 8 of the Dagloonbesluit, the reduction was calculated as a proportion of the daily wages under the general rules obtaining under Netherlands legislation by multiplying those wages by a fraction, of which the numerator represents the total periods of insurance completed in the Netherlands or in other Member States and the denominator represents the period comprised between the date from which the beneficiary is considered to have been insured under Regulation No 1408/71 and that on which the risk materialized.
4. Mr Besem appealed to the Raad van Beroep, Amsterdam, and the President of that court held on 10 September 1980 that the Boards' decision to apply the reduction should be annulled on the ground that it was incompatible with the method for calculating benefits laid down by Regulation No 1408/71 for the following reasons. The second sentence of Article 46 (2) (a) concerning distributive systems of insurance means that under such systems the length of completed periods of insurance does notjaffect the calculation of the theoretical amount, since otherwise the sentence would be of no effect. In addition Article 46 (2) (b), which prescribes that the actual amount is to be determined on the basis of the theoretical amount, limits definitively the effet which the aggregate length of completed periods of insurance in the various Member States may have on the actual amount. Therefore, the criterion to be applied with regard to each Member State taken individually is the relationship of the period of insurance completed there to the sum of the periods of insurance completed in the aggregate in all the Member Sutes, and not the relationship between each period of insurance taken separately to the potential total length of completed periods of insurance. The President of the Raad van Beroep concludes that the regulation was specifically designed to enable the advantages of a distributive system to be extended, at least in part, by virtue of Article 46 (2), to a worker whose entitlement to benefits derives exclusively from Article 45 (3).
5. The Nieuwe Algemene Bedrijfsvereniging contested the decision of the President of the Raad van Beroep before the said Raad, which stayed the proceedings and referred the following question to the Court for a preliminary ruling:
“Is it compatible with the method of calculating benefits provided for by Article 46 (2) of Regulation No 1408/71 for the amount of the benefit from a Member State, whose competent institution must apply Article 45 (3) of the regulation in order to grant entitlement to the benefit and whose legislation considered to be of the kind mentioned in Article 37 (1) of the regulation, to be determined by the extent to which the period between the date on which the person concerned was first insured in any one Member State and the date on which the incapacity for work occurred is completed by periods of insurance in accordance with the legislation of the Member States or by virtue of the regulation, with the result that the rights only of those workers who have moved to another Member State are restricted?”
II — Procedure before the Court
The order making the reference was lodged at the Court Registry on 19 October 1981.
Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice written observations were submitted by the Government of the Netherlands, represented by F. Italianer, Secretary-General at the Ministry of Foreign Affairs; by CG. Besem, in person; by the Nieuwe Algemene Bedrijfsvereniging, represented by W. M. Leveh-Overmars, Head of the Legal Department for social security matters; and by the Commission, represented by J. Amphoux, Legal Adviser, assisted by A. Haagsma, a member of its Legal Department, both acting as Agents.
On hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any preparatory inquiry. However, the Court put a number of questions to the Commission and the Nieuwe Algemene Bedrijfsvereniging, requesting them to reply at the hearing.
By order of 24 March 1982 the Court decided pursuant to Article 95 (1) of the Rules of Procedure to refer the case to the Second Chamber.
III — Written observations
1. Mr Besem confines his observations to stating his support for the decision of the president of the Raad van Beroep.
2. The Nieuwe Algemene Bedrijfsvereniging submits that a theoretical amount determined in accordance with the second sentence of Article 46 (2) (a) may include a factor which takes account of the periods of insurance. The sentence in question serves to indicate that the provisions relate to distributive systems and the only rule which may be inferred from it is that under a distributive system the theoretical amount must be established according to the rules of that system, that is to say, in the present instance, in accordance with Article 8 of the Dagloonbesluit. In the opinion of the Bedrijfsvereniging the system established by the 1966 Law takes the form of insurance against loss of wages. The amount of benefit must therefore be determined in each particular case on the basis of the amount of wages which have been lost. That is why the law itself contains a number of provisions to adjust the daily wages when in the light of the claimant's working life, in particular the relationship between periods of employment and periods of unemployment or partial employment, the daily wages if fixed in accordance with the general rules would not provide an accurate indication for determining the amount of wages which would in fact be earned were the beneficiary not unfit for work. Article 8 of the Dagloonbesluit forms part of that system of adjustment. The provision is likewise compatible with the provisions in Article 46 (2) (b) of the regulations which concerns the calculation of the actual amount of benefit based on the theoretical amount, the determination of which is governed exhaustively by Article 46 (2) (a).
3. The Government of the Netherlands concedes that according to the second sentence of Article 46 (2) (a) the amount of benefit established under a distributive system constitutes the theoretical amount within the meaning of the regulation, but it maintains that the regulation contains no provisions concerning the method of calculating the amount of the national benefit. It is for national legislation to determine that method where entitlement to benefit under a distributive system exists only as the result of applying Article 45 (3) of the regulation. In this instance the Netherlands legislation has endeavoured to harmonize as much as possible the method of calculation under the 1966 Law, whereby the amount of benefit corresponds to the theoretical amount referred to in the second sentence of Article 46 (2) (a), with the method of calculation prescribed in the first sentence of Article 46 (2) (a) for determining the theoretical amount of benefit under accumulative systems of insurance. The last-mentioned method also disregards uninsured periods. In addition the calculation of daily wages is left, in principle to national legislation to regulate. The Government of the Netherlands concludes that the reply to the question raised by the Raad van Beroep should be in the affirmative, and adds that the rights of migrant workers to which Article 45 (3) applies are not restricted by the rules in question since such workers would have no rights at all under Netherlands law alone.
4. The Commission points out that the Dagloonbesluit applies only to workers who are entitled to benefits solely by virtue of Article 45 (3) of the regulation. For that category of persons Article 8 of the Dagloonbesluit links calculation of benefit to the length of completed periods of insurance, a factor which is not taken into account for any other category covered by the 1966 Law. The theoretical amount must be calculated as if the claimant had always lived and worked in the same Member State. If that Member State is the Netherlands, Article 8 of the Dagloonbesluit does not apply. If it is applied none the less, the amount which is fixed is not the true theoretical amount of the benefit but the theoretical amount which has already been adjusted. Article 8 of the Dagloonbesluit is therefore incompatible with Article 46 (2) of the regulation.
IV — Oral procedure
At the sitting on 29 April 1982, C. G. Besem, appearing in person, the Nieuwe Algemene Bedrijfsvereniging, represented by F. W. M. Keunen and I. C. van Alderwegen, acting as Agents, and the Commission, represented by A. Haagsma, acting as Agent, presented oral argument.
The Advocate General delivered his opinion at the sitting on 17 June 1982.
Decision
1. By order of 14 October 1981, which was received at the Court on 19 October 1981, the Raad van Beroep [Social Security Court], Amsterdam, referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question concerning the interpretation of Article 46 (2) of Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community (Official Journal, English Special Edition 1971 (II), p. 416; codified version: Official Journal 1980 C 138, p. 1).
2. The question arose in the course of the proceedings brought by an EEC citizen against a decision of the Nieuwe Algemene Bedrijfsvereniging [New General Trade Association], the “competent institution” within the meaning of Regulation No 1408/71, to the effect that a five-year period of unemployment between 1948 and 1953 during which the person concerned was not insured against invalidity could not be taken into account in calculating the invalidity benefit granted pursuant to the abovementioned regulation in conjunction with the Wet op de Arbeidsongeschiktheidsverzekering of 1966 [the Netherlands Law on insurance against incapacity for work, hereinafter referred to as “the 1966 Law”].
3. It appears that apart from those five years Mr Besem worked, and was therefore insured, from 1934 onwards partly in the Netherlands and partly in the Federal Republic of Germany, where in 1978 he was declared unfit for work.
4. Under the provisions of the 1966 Law the amount of the benefit is not dependent on the length of the periods of insurance which have been completed but on the degree of incapacity for work and the amount of the daily wage which the person concerned could have obtained had he not been unfit for work. The Bijzonder Dagloonbesluit WAO [Order laying down special rules for determining the daily wage, based on the 1966 Law] provides, however, that where entitlement to benefit arises solely by virtue of the Community regulation, the daily wage is to be reduced proportionately if there are one or more uninsured periods after the date on which the person concerned was insured for the first time in a Member State.
5. It was in application of the Bijzonder Dagloonbesluit that the Bedrijfsvereniging reduced Mr Besem's daily wage, calculated under the general rules for applying the 1966 Law, on the basis of the ratio of the uninsured period to the periods of insurance completed in the two Member States in question. The daily wage thus reduced was adopted by the Bedrijfsvereniging as the basis for calculating the benefit in accordance with the provisions of Article 46 (2) of Regulation No 1408/71.
6. The President of the Raad van Beroep, Amsterdam, allowed Mr Besem's appeal on the ground that such a reduction in the daily wage was contrary to Regulation No 1408/71. The Nieuwe Algemene Bedrijfsvereniging lodged an appeal against that decision with the Raad itself, which referred the following question to the Court for a preliminary ruling:
“Is it compatible with the method of calculating benefits provided for by Article 46 (2) of Regulation No 1408/71 for the amount of the benefit from a Member State, whose competent institution must apply Article 45 (3) of the regulation in order to grant entitlement to the benefit and whose legislation is considered to be of the kind mentioned in Article 37 (1) of the regulation, to be determined by the extent to which the period between the date on which the person concerned was first insured in any one Member State and the date on which the incapacity for work occurred is completed by periods of insurance in accordance with the legislation of the Member States or by vinue of the regulation, with the result that the rights only of those workers who have moved to another Member State are restricted?”
7. In order to replv to the question it is necessary to examine more closely the provisioni in Regulation No 1408/71 which are applicable to the case.
8. Annex III to ihe regulation lists the legislation referred to in Article 37 (1) of the regulation under which the amount of invalidity benefit is independent of the length of the insurance periods. It is apparent from the annex that the Netherlands Law of 1966 on insurance against incapacity for work is of that type, but that the German Law on the same subject is not.
9. Article 40 of the regulation provides that the provisions contained in Chapter 3 (Articles 44 to 51, concerning old-age and death benefits) are to apply by analogy to invalidity benefits paid to a worker who has been successively or alternately subject to legislation in two or more Member States, at least one of which is not of the type referred to in Article 37 (1).
10. Where the legislation of a Member State which, like the Netherlands Law in question, makes the grant of benefits conditional upon a worker's being subject to its legislation at the time when the risk materializes, has no requirements as to the length of insurance periods, Article 45 (3) of the regulation provides that any worker who is no longer subject to that legislation is to be deemed to be still so subject at the time when the risk materializes if, inter alia, he is subject at that time to the legislation of another Member State.
11. Article 46 (2) lays down the method of calculation to be used where conditions for entitlement to benefits are not satisfied unless account is taken of the provisions of Article 45. According to Article 46 (2) (a) the competent institution must, before calculating the amount of the apportioned benefit, calculate the theoretical amount of benefit which the person could claim if all the periods completed under the legislation of the Member States to which he has been subject had been completed in the State in question and under the legislation administered by it on the date on which the benefit is awarded. It is expressly added that “if, under that legislation, the amount of the benefit does not dépend on the length of the periods completed then that amount shall be taken as the theoretical amount referred to in this subparagraph”.
12. It is thus apparent that the situation which is the subject-matter of the main proceedings is governed by a comprehensive set of Community rules which contain all that is necessary to enable the theoretical amount to be determined bv considering those rules in conjunction with the national provisions laying down the amount of benefit which would be received by a worker entitled to such benefit under the national legislation alone.
13. It is not compatible with those rules for a Member State to adopt for the purpose of determining the amount of benefit in such circumstances provisions designed to alter the way in which the theoretical amount is calculated so as to make that amount less than that which would result from the general provisions in force under the national legislation.
14. The reply to the question is therefore that it is not compatible with the method of calculating benefits provided for by Article 46 (2) of Regulation No 1408/71 for the competent institution of a Member State whose legislation is considered to be of the kind referred to in Article 37 (1) of the regulation to determine the theoretical amount of the invalidity benefit on the basis of the extent to which the period between the date on which the person concerned was first insured in any one Member State and the date on which the incapacity for work occurred comprises periods of insurance completed under the legislation of the Member States or by virtue of the abovementioned regulation.
Costs
The costs incurred by the Government of the Kingdom of the Netherlands and by the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings before the national court, the decision as to costs is a matter for that court.
On those grounds, THE COURT (Second Chamber), in answer to the question referred to it by the Raad van Beroep, Amsterdam, by order of 14 October 1981, hereby rules: