Report for the Hearing in Case C-66/92

I — Facts and procedure

A — Legal context of the dispute

Community legislation

1. Article 4 of Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, as amended and updated by Council Regulation (EEC) No 2001/83 of 2 June 1983 (OJ 1983 L 230, p. 6), (‘Regulation No 1408/71’) provides, inter alia, as follows:

‘1. This Regulation shall apply to all legislation concerning the following branches of social security: ... (b) invalidity benefits, including those intended for the maintenance or improvement of earning capacity; ... (g) unemployment benefits; ...

4. This Regulation shall not apply to social and medical assistance, to benefit schemes for victims of war or its consequences, or to special schemes for civil servants and persons treated as such.’

2. Article 5 of the regulation provides that:

‘The Member States shall specify the legislation and schemes referred to in Article 4(1) and (2) ... in declarations to be notified and published in accordance with Article 97.’

3. Article 68(2) of the same regulation lays down that:

‘The competent institution of a Member State whose legislation provides that the amount of benefits varies with the number of members of the family shall take into account also members of the family of the person concerned who are residing in the territory of another Member State, as though they were residing in the territory of the competent State. This provision shall not apply if, in the country of residence of the members of the family, another person is entitled to unemployment benefits for the calculation of which the members of the family are taken into consideration.’

4. Article 7 of Council Regulation (EEC) No 1612/68 of 15 October 1968 on freedom of movement for workers within the Community (OJ, English Special Edition 1968 (II) p. 475) provides, inter alia, as follows:

‘1. A worker who is a national of a Member State may not, in the territory of another Member State, be treated differently from national workers by reason of his nationality in respect of any conditions of employment and work, in particular as regards remuneration, dismissal and, should he become unemployed, reinstatement or re-employment.

2. He shall enjoy the same social and tax advantages as national workers.’

National legislation

5. The national legislation primarily in issue in the present case is the Wet inkomensvoorziening oudere en gedeeltelijk arbeidsongeschikte werkloze werknemers (Law on the Provision of Income for Unemployed Workers who are Elderly or suffering from Partial Incapacity to Work, ‘the IOAW’).

6. Entitlement to benefit under this law is subject to the condition that the monthly income of the person concerned and, where applicable, that of his spouse is less than the basic amount determined in accordance with Article 4(3) of the IOAW. This provides that for an unemployed worker and his spouse half the net basic amount is equal to half the net minimum wage, while for a single unemployed worker with or without children the net basic amount is equal to 90% and 70% respectively of the net minimum wage.

7. Article 4(2) lays down that an unemployed worker and his spouse have equal entitlement to benefit, one-half of which is paid to each of them.

8. Under Article 5 of the IOAW, an unemployed worker residing outside the Netherlands is not entitled to benefit; if the spouse of an unemployed worker residing in the Netherlands lives abroad, the spouse has no entitlement to benefit and the unemployed worker is deemed to be single; likewise if the unemployed worker alone lives outside the Netherlands, the spouse is not entitled to benefit.

9. It is common ground that the IOAW is not specified in the declaration notified by the Netherlands in accordance with Article 5 of Regulation No 1408/71.

Β — Background to the dispute

10. Mr Genaro Acciardi is an Italian national living in the Netherlands, where he was formerly employed. His wife and son live in Italy. Since July 1985 he has been unemployed in the Netherlands. For two years he received benefits under the Wet Werkloosheidsvoorziening (Law on Public Unemployment Benefits, ‘WW’).

11. By decision of 5 February 1988 Mr Acciardi was granted a benefit under the IOAW with effect from 23 July 1987, the date on which the benefits under the WW ceased. On the basis of Articles 4 and 5 of the IOAW, he was classified as a single person without children because his wife and child live outside the Netherlands.

12. Mr Acciardi considered that he should receive benefits at the rate for a married couple. His objection to the abovcmcntioned decision was ruled unfounded by the Mayor and Council of Amsterdam by decision of 16 September 1988. As the action which he brought against this decision was dismissed by a decision of the provincial councillors of 26 June 1989, he appealed to the Raad van State (Council of State).

13. The Raad van State considered that the resolution of the dispute depended on the interpretation of certain provisions of Community law. It therefore decided, by order of 28 February 1992, to stay the proceedings pending a ruling by the Court of Justice on the following questions:

‘(1) Must Article 4(1) of Regulation (EEC) No 1408/71, which provides that that regulation applies to certain branches of social security, be interpreted as meaning that a scheme such as that contained in the IOAW, which has characteristics both of social security and of social assistance, falls within the scope of that regulation?

2) If so, must Article 68(2) of Regulation (EEC) No 1408/71 be interpreted as preventing a Member State from maintaining a legislative provision under which the benefit of a Community national residing in the Netherlands who is to be regarded as being an unemployed worker for the purposes of the IOAW and whose spouse lives in another Member State or resides there other than on a temporary basis, is determined without taking the spouse into account?

3) If the reply to the first question is in the negative, docs the prohibition of discrimination on grounds of nationality laid down in Community law preclude the application of a legislative provision under which the benefit of a Community national residing in the Netherlands who is to be regarded as being an unemployed worker for the purposes of the IOAW and whose spouse lives in another Member State or resides there other than on a temporary basis, is determined without taking the spouse into account?’

C — Procedure before the Court

14. The order for reference was received at the Court Registry on 4 March 1992.

15. Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted on 5 June 1992 by Mr Acciardi, represented by C. A. J. de Roy van Zuydewijn, Advocaat, on the same date by the Netherlands Government, represented by T. P. Hofstee, Assistant Secretary General of the Ministry of Foreign Affairs, acting as Agent, and on 9 June 1992 by the Commission of the European Communities, represented by D. Gouloussis, Legal Adviser, and B. Smulders, of its Legal Service, acting as Agents.

16. Upon 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.

II — Written observations submitted to the Court

A — First question (the material scope of Regulation No 1408/71)

17. Mr Acciardi, the plaintiff in the main proceedings, considers that a scheme such as the IOAW, which the national court found to have characteristics both of social security and of social assistance, falls within the scope of Regulation No 1408/71. In this connection, he observes that in accordance with the case-law of the Court, schemes with such a mixed character fall within the scope ratione materiae of that regulation, provided there is a link with one of the risks listed in Article 4(1) of the regulation.

18. The plaintiff notes that the IOAW was enacted solely in order to protect categories of employed workers occupying a particularly difficult position in the labour market. With one exception, its scope is limited to employed workers with a genuine work record. The cause of the cessation of the work formerly done must be unemployment or incapacity to work.

19. In the light of these considerations, Mr Acciardi considers that the IOAW belongs to one of the branches of social security listed in Article 4(1) of Regulation No 1408/71, so that the reply to the first question should be in the affirmative.

20. The Netherlands Government gives, by way of introduction, a summary of the legislation in force in the Netherlands, other than the IOAW, concerning the minimum means of subsistence. Firstly, the Algemene Bijstandswet (General Law on Assistance, ‘the ABW’) guarantees to every person lawfully residing in the Netherlands who has insufficient resources on which to live an income equivalent to the social minimum. This law entails one criterion based on wealth and another based on income. Secondly, the Wet inkomensvoorziening oudere en gedeeltelijk arbeidsongeschikte gewezen zelfstandigen (Law on the Provision of Income for Former Self-employed Persons who are Elderly or suffering from Partial Incapacity to Work, ‘the IOAZ’) guarantees former self-employed persons living in the Netherlands who are elderly or suffering from partial incapacity to work an income equivalent to the social minimum.

21. The Netherlands Government considers that the IOAW may be regarded as a social assistance scheme within the meaning of Article 4(4) of Regulation No 1408/71 and that it therefore does not come within the scope ratione materiae of the regulation. It maintains that the IOAW was introduced to guarantee a minimum level of subsistence to elderly unemployed persons and to unemployed persons suffering from partial incapacity to work or premature disability. It provides for the payment of supplementary income to unemployed workers belonging to a specific category and, where applicable, to their spouse.

22. The IOAW forms an integral part of the legislation on the minimum means of subsistence. As funding is provided by the Government, it is not a contributory scheme. The IOAW is implemented by local authorities and an appeal may be made against a decision of a local authority, which may ultimately be referred to the Raad van Slate.

23. The Netherlands Government contends that the scheme laid down by the IOAW was introduced in order to exempt elderly unemployed persons and those suffering from partial incapacity to work from the wealth criterion and the more restrictive income criterion under the ABW scheme. In the Government's opinion, the absence of these criteria does not however mean that this scheme cannot be classified as a social assistance scheme. It is to be regarded as a scheme whereby the public authorities ensure that the minimum needs of unemployed workers and their spouses are met, the right to benefit being dependent on the couple's aggregate income. The scheme in question has clear parallels with that laid down by the ABW, which is indisputably outside the ambit of Regulation No 1408/71. For that reason neither the IOAW nor the ABW are specified in the declaration made by the Netherlands in accordance with Article 5 of the regulation.

24. According to the Netherlands Government, it is irrelevant that the scheme in question is targeted at a limited group, namely unemployed workers who are elderly or suffering from partial incapacity to work. In Case 249/83 Hoeckx [1985] ECR 973 the Court held that in order to fall within the field of social security a legislative provision had to cover one of the risks specified in Article 4(1) of the regulation. On this point the Netherlands Government observes that it is not so much the fact of being unemployed that gives entitlement to the benefit provided by the IOAW as the fact that the persons concerned have insufficient income on which to live once they have received benefits for the maximum period laid down by the WW, which insures against the risk of unemployment. In other words, the condition to which the entitlement in question is subject is not the occurrence of unemployment, but its continuation and the resultant inadequacy of resources.

25. On those grounds, the Netherlands Government considers that the first question should be answered in the negative.

26. The Commission notes firstly that the fact that the declaration made by the Netherlands under Article 5 of Regulation No 1408/71 does not specify the IOAW under the heading ‘unemployment benefits’ does not in itself mean that the regulation is not applicable to that law. According to Case 35/77 Beerens [1977] ECR 2249, the fact that a scheme has not been specified in these declarations is not of itself proof that it does not fall within the field of application of the regulation. Consequently, the question whether a scheme can be regarded as a social security scheme within the meaning of Article 4(1) of the regulation must be answered in the light of the provisions laid down by Community law itself.

27. The Commission observes that the regulation does not define ‘social security’ or ‘social assistance’. It is nevertheless possible, according to the Commission, to deduce relevant criteria for classifying a piece of national legislation from the case-law of the Court. Firstly, it is necessary to examine whether the scheme in question confers upon recipients a legally defined status independent of an individual, discretionary assessment of the situation or of personal needs. Secondly, it must be ascertained whether the benefit relates to one of the branches of social security listed in Article 4(1) of Regulation No 1408/71. If it does, the legislation falls within the scope ratione materiae of the regulation even if it also has features of a social assistance benefit, in other words, if it is a benefit of a mixed nature. The regulation is not applicable only where the benefit is a social benefit providing minimum means of subsistence generally, without being related to a particular risk, such as old-age or invalidity.

28. In the opinion of the Commission, the IOAW has characteristics which, according to the case-law of the Court, result in Regulation No 1408/71 being applicable. The unemployed person concerned has a statutory right to benefit provided he meets certain conditions. There is no individual, discretionary assessment within the meaning mentioned above. Moreover, the benefit does not provide minimum means of subsistence generally but is related directly to the risk of unemployment, in particular since the beneficiary must seek paid work and accept a suitable job.

29. Moreover, the payment of benefit under the IOAW follows immediately the payment of benefit under the WW and is granted only to unemployed persons who have not yet reached the statutory retirement age.

30. In the light of these considerations, the Commission considers that the benefit in question is an unemployment benefit within the meaning of Article 4(1 )(g) of the regulation.

Β — Second question (interpretation of Article 68(2) of Regulation No 1408/71)

31. According to the plaintiff in the main proceedings, it follows from the actual wording of Article 68(2) of Regulation No 1408/71 that the question should be answered in the affirmative because the only exception permitted, that in the second sentence of that provision, is not applicable in the present case.

32. With regard to the imposition of obligations on the spouse, such as the requirement to register with the employment office, the phrase ‘as though they were residing in the territory of the competent State’ means that such an obligation is considered to have been met by registration with a corresponding agency in the country of residence. This view is supported by the case-law of the Court, particularly Case 228/88 Bronzino [1990] ECR531 and Case 12/89 Gatto [1990] ECR 557.

33. In view of the reply it proposes to the first question, the Netherlands Government has not submitted observations on the second.

34. The Commission refers first of all to the objective of Article 68(2) of Regulation No 1408/71. As the legislation of several Member States takes account of the family situation of the unemployed person when calculating unemployment benefit, Article 68(2) provides that in such a case the members of the family residing in the territory of a Member State other than the competent State cannot be treated differently from the members of the family living in the territory of the latter. This provision is based on the principle that there is no difference from the point of view of family expenditure between an unemployed person whose family lives with him and one whose family lives in another State. It also aims to prevent discriminatory treatment of migrant workers, as in most cases an unemployed person whose family lives in another Member State is such a worker.

35. In the Commission's opinion, Article 68(2) applies to the benefit in question in the present case. However, as Article 68(2) relates to the calculation of the benefit to which the unemployed person himself is entitled, whereas the spouse of the person concerned has a personal entitlement to benefit under the IOAW, it is uncertain whether the said Community provision is applicable here. In the Commission's opinion, although the IOAW apparently gives the spouse of the unemployed person a ‘personal entitlement’, there is nevertheless a close link between the entitlement of the unemployed person himself and that of his spouse. The spouse becomes entitled only if the unemployed person is himself granted benefit under the IOAW. It is therefore more accurate to speak of a ‘derived entitlement’ than a ‘personal entitlement’. The Commission considers that the purely formal application of Article 68(2) would have unacceptable consequences for a migrant worker whose spouse resides outside the Netherlands while being supported by him, because the spouse herself does not have a job. It is precisely these consequences that Article 68(2) aims to prevent.

36. As regards the fact that, pursuant to Article 26(2) of the IO AW, the spouse of an unemployed person must, like him, be registered with the employment office and must, for example, be available for training, the Commission refers to the Bronzino and Gatto judgments, with regard to Article 73 of Regulation No 1408/71. In those judgments the Court ruled that the latter provision was to be interpreted as meaning that where the legislation of a Member State which provides certain family benefits requires, as a condition for the grant of those benefits, a member of the worker's family to be registered as unemployed with the employment office for the territory in which that legislation applies, that condition must be considered to be fulfilled where the family member is registered as unemployed with the employment office of the Member State in which he resides. In the Commission's opinion, the reasons which led the Court to this conclusion are also valid, mutatis mutandis, in relation to Article 68(2) of Regulation No 1408/71.

C — Third question (applicability of the principle of non-discrimination)

37. According to the plaintiff in the main proceedings, the system chosen by the national legislature, namely that a recipient is deemed a single person when his spouse lives in a State other than the Netherlands, has the consequence that migrant workers are deemed to be single persons more often than Netherlands workers and therefore receive lower benefits more often. The system therefore produces a covert form of discrimination.

38. In his view, this opinion is supported by the Court's case-law, particularly Case 41/84 Pinna [1986] ECR 1, in which the Court held that the residence criterion set out in Article 73(2) of Regulation No 1408/71 was not of such a nature as to secure the equal treatment laid down by Article 48 of the EEC Treaty. According to MrAcciardi, it follows from this case-law that a provision such as that at issue in the present case constitutes a form of covert discrimination on grounds of nationality, which is prohibited because it has no objective justification.

39. The Netherlands Government notes that Article 5(2) of the IO AW, under which an unemployed person whose spouse is living outside the Netherlands is deemed to be single, applies whether or not the persons concerned are Netherlands nationals. It therefore contends that there is no direct discrimination based on nationality. Nor docs it appear to the Netherlands Government that married migrant workers from other Member States of the European Community are caught more frequently by Article 5(2) of the IOAW than married workers of Netherlands nationality.

40. If some difference in treatment were nevertheless found, the Netherlands Government considers that the application of the contested provision of the IOAW would be objectively justified. Indeed, the purpose of the national scheme in question is to ensure that unemployed workers who are elderly or suffering from partial incapacity to work and the members of their families have a minimum means of subsistence. The residence qualification is an essential characteristic of schemes which, like the one in question, are social assistance schemes. The Netherlands Government's obligation to provide the minimum means of subsistence is limited to persons lawfully residing in the Netherlands. Moreover, the amount of the statutory benefit aimed at providing a minimum means of subsistence is fixed in relation to the circumstances prevailing in the Member State concerned. It is therefore perfectly justifiable for a scheme, such as the IOAW scheme, which aims to provide a minimum means of subsistence to make the place of residence a criterion for the grant of benefit because such a criterion takes account of the social circumstances of the unemployed worker and in no way presupposes discrimination based on nationality.

41. While adhering to its view that the IOAW scheme is a social assistance scheme and is therefore outside the ambit of Regulation No 1408/71, the Netherlands Government concedes that it is a social advantage within the meaning of Article 7(2) of Regulation No 1612/68. However, the right to equal treatment with regard to social advantages applies only if the migrant worker resides in the Member State concerned. If the members of his family do not live with him, the Netherlands Government considers that it is not necessary to take account of them, exactly as in the case of national workers with families living in another Member State. In order to rectify this situation, the members of the worker's family may exercise the right to install themselves with him pursuant to Article 10 of the same regulation.

42. In the light of these considerations, the Netherlands Government considers that the third question should be answered in the negative.

43. In view of the reply it proposed to the first question, the Commission has not submitted observations on the third.

D. Λ. O. Edward

Judge-Rapporteur

1 Language of the case: Dutch.