In Joined Cases 41, 121 and 796/79
REFERENCES to the Court under Article 177 of the EEC Treaty by the Bayerisches Landessozialgericht [Bavarian Higher Social Court] (Case 41/79), by the Bundessozialgericht [Federal Social Court] (Case 121/79) and by the Hessisches Landessozialgericht [Higher Social Court, Hesse] (Case 796/79) for a preliminary ruling in the actions pending before those courts between
Vittorio Testa, of Salerno, Italy (Case 41/79)
Salvino Maggio, of Karlsruhe (Case 121/79)
Carmine Vitale, of Cava dei Tirreni (Case 796/79)
Bundesanstalt für Arbeit [Federal Employment Office], Nuremberg,
on the interpretation of Article 69 (2) of Regulation No 1408/71 of the Council of
THE COURT,
composed of: H. Kutscher, President, A. O'Keeffe and A. Touffait (Presidents of Chambers), J. Mertens de Wilmars, P. Pescatore, Lord Mackenzie Stuart, G. Bosco, T. Koopmans and O. Due, Judges,
Advocate General: G. Reischl
Registrar: A. Van Houtte
gives the following
At his request the labour office issued the plaintiff on
On
By order dated
In this respect the Bayerisches Landessozialgericht relied in particular on the judgment given by the Court of Justice on
By order dated
In its order the Bundessozialgericht based itself on the following considerations:
Finally, the Bundessozialgericht considers it necessary to point out that if the interpretation of Article 69 (2) given by the Court of Justice infringes the German Constitution, that provision must, if necessary, be referred to the Bundesverfassungsgericht.
The Bundesanstalt für Arbeit on the basis of Article 69 of Regulation No 1408/71 refused to renew his unemployment benefit. The Bundesanstalt für Arbeit considered that, on the basis of the information which it had been able to obtain, Mr Vitale had no prospects of employment at the place to which he had gone and that by extending his stay in Italy unnecessarily he was bound to run the risk of unforeseeable events preventing him from returning in time.
Mr Vitale brought an action against this decision. The Sozialgericht [Social Court] Wiesbaden set aside the decision of the Bundesanstalt für Arbeit and ordered it to pay Mr Vitale unemployment benefit for the period from
The Bundesanstalt für Arbeit appealed against this order to the Hessisches Landessozialgericht on
The national court states in the order making the reference to the Court of Justice that it considers the appeal well founded in so far as the decision of the Bundesanstalt für Arbeit not to extend the time-limit does not seem to it to be a misuse of the discretion which it has in the application of Article 69 (2). However the court making the reference to the Court of Justice requires clarification on the extent of the loss of entitlement to benefits under Article 69 (2) caused by a delayed return of the worker.
Pursuant to Article 20 of the Protocol on the Statute of the Court of Justice of the EEC written observations were lodged by Mr Testa, represented by Helga Niesei, Advocate of the Munich Bar, the Bundesanstalt für Arbeit, represented by Mr Müller, the Government of the Federal Republic of Germany, represented by Martin Seidel, the Government of the Italian Republic, represented by its Agent, Adolfo Maresca, assisted by Franco Favara, Avvocato dello Stato, and the Commission of the European Communities, represented by its Legal Adviser, Norbert Koch.
By order of the Court of
After 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.
Mr Testa observes that German law contains various sanctions where an unemployed person does not comply with his obligation to attend at the appropriate labour exchange or to return from another Member State within a period of three months. One such sanction is that during a certain time the unemployed person shall not draw any benefit (
Three periods may usefully be distinguished where the unemployed person returns after the expiry of the period of three months.
Mr Testa observes that the complete loss of an acquired right under Article 69 (2) is out of all proportion and has no justification in municipal German law. The complete abolition of a benefit is a violation of the guarantee of property contained in the German Basic Law. The position is the same in Community law.
In the view of the defendant in the main action the question raised has already been answered by implication by the judgment of the Court of
The position of the unemployed person is to a certain extent comparable with that of a worker to whom his employer grants paid leave for the purpose of studying abroad for three months. If at the expiry of the leave the worker does not return to his employment the employer may terminate the employment without prior notice. If at the beginning he were to contemplate that the worker might not return, he would make the grant of leave subject to a clause to the effect that the employment would automatically cease if at the expiry of the period agreed the worker did not return to work.
All the Member States have provisions in their insurance against unemployment to the effect that any failure on the part of the unemployed person to make himself available to the competent body adversely affects his entitlement to benefit. Thus under German law (Article 119 (3) of the Arbeitsförderungsgesetz [law on the promotion of employment]) entitlement to benefit is lost on the second occasion that the unemployed person causes a temporary suspension of benefit (Sperrzeit) for four weeks. From this point of view the legal consequence provided in the second part af the first sentence of Article 69 (2) is thus in line with the logic of the system.
In the view of the Government of the Italian Republic a Community regulation which aims as a whole
The Court has already had occasion to find in the judgments in
Article 69 (2) of Regulation No 1408/71 must therefore be interpreted as meaning that the period of three months provided in Article 69 (1) (c) is the maximum period (subject to any extension) during which the unemployed person may continue to be entitled to unemployment benefits without being
The Government of the Italian Republic accordingly concludes:
If Article 69 (2) of Regulation (EEC) No 1408/71 is interpreted as meaning that all entitlement to benefits is irrevocably lost simply as a result of the expiry of the period provided in Article 69 (1) (c), it is invalid
The Government of the Federal Republic of Germany is of the opinion that the questions put call for an answer in the affirmative. The aforementioned Article 69 (2) of Regulation No 1408/71 must be interpreted as meaning that after the expiry of the period of three months provided for therein all entitlement to unemployment benefits from the competent Member State is lost and this is so independently of the question how such a case should be judged with regard to the national provisions of the State concerned.
Article 69 is a special provision of Community law going beyond the simple co-ordination of national legislation. The exception to the obligation to be available to the employment services of the competent State provided for in Article 69 must be regarded as a radical innovation in the social law of all Member States. Since it is an independent rule of Community law, Article 69 must be binding in its entirety in the same way for the Member States. This means in particular that the rules providing for penalties, which are an integral part of the measure, must be uniformly interpreted in the Community, that is to say their legal effect must be the same for all Member States. This is why it is impossible to adopt the opinion put forward in the order making the reference to the effect that the second part of the first sentence of Article 69 (2) refers to the terms of municipal law.
The interpretation favoured by the Federal Government is likewise the only one which accords with the purpose of Article 69 (2). Only a sufficiently serious penalty such as the loss of
The aim of the obligation to return is to allow the re-integration of the unemployed person by measures promoting employment (offers of work, retraining and so forth). Such measures can be taken only in respect of workers resident in the country. An unlimited extension of the opportunity provided for in Article 69 would considerably increase the costs of unemployment insurance without the Member State in question being able to terminate its burden by taking policy measures in relation to the labour market.
Such interpretation is also the only one consistent with the origin of Article 69. That provision, which was not contained in Regulation No 3, was proposed by the Council Secretariat on
The country in which the person was last employed should pay unemployment benefit for three months; once that period has expired the worker will no longer have any entitlement in the country where he was last employed (cf. Council Document No 916/69 (Soc. 83) of
In its present form Article 69 (2) is the implementation of that decision by the legislative draftsman. In order to make clear that entitlement to the benefits in question takes effect as against the country of employment there were added in the final version the words
On the question of the compatibility of Article 69 (2) with Article 51 of the Treaty the Federal Government adopts the arguments put forward by the Commission. It adds that, contrary to the position in the case of
The interpretation favoured by the Federal Government is also compatible with higher-ranking rules of Community law.
In the opinion of the Federal Government it is unnecessary to answer the question whether and how far entitlement to social security benefits, and in particular the contingent entitlement, which is at issue here, relating to unemployment benefits, are covered by the protection of property guaranteed by Community law. In any event, it is not possible to regard the restriction which the Community legislature adopted in the second part of the first sentence of Article 69 (2) as adversely affecting pre-existing property rights. Rights arising from insurance against unemployment are possible only within the limits provided by the social security legislation. In place of the requirement of availability to the employment services of the competent State, which is the condition for the retention of the entitlement to benefit normally laid down in municipal law, the Community legislature has substituted another requirement, namely return to the competent State within the period provided for. That provision does not lead to the abolition of any property right.
The loss of rights as a result of Article 69 (2) does not violate the principle of proportionality. The period prescribed by the legislature is not unreasonable, for it may be thought that it would generally have been possible to find the unemployed person other employment within that period if he had been available to the competent employment services. Further, in special circumstances the period of three months may be extended at the request of the unemployed person by the appropriate authorities.
In consequence the Government of the Federal Republic of Germany proposes that the question put by the Bundessozialgericht should be answered as follows:
The observations submitted by the Commission may be divided into four parts:
The Commission observes in this respect that Article 69 (2) of Regulation No 1408/71 guarantees to the unemployed person who returns to the competent State at the end of a stay in another Member State for the purpose of looking for work the right to continue to receive benefits under the national legislation of the competent State. The obligation to continue to provide benefits exists nevertheless only in respect of the unemployed person who returns before the expiry of the period during which he is entitled to benefits under Article 69 (1) (c). Consequently, the unemployed person must return to the competent State before the expiry of the period of three months laid down by that provision.
If the unemployed person returns late, the competent State is no longer bound to continue to pay him benefits. This clearly appears from the wording of the
The fist part of the sentence may nevertheless leave doubts on the question whether the loss of entitlement relates solely to the period of absence exceeding the prescribed period or to the whole of the time during which the legislation of the competent State recognizes that he is entitled to benefits. In so far as there may be any doubt it is removed by the second part of the first sentence of Article 69 (2), to the effect that the unemployed person who does not return before the expiry of the period stipulated in the first part of the said sentence loses all entitlement to benefits.
The question put to the Court should therefore be answered in the negative.
This interpretation does not conflict with the judgment given by the Court on
Although this question has not been raised by the courts making the references the Commission considers next how far the fact that the effect of the provisions of Regulation No 1408/71 may stand in the way of benefits provided for by municipal law in relation to social security may be regarded as incompatible with Article 51 of the EEC Treaty.
In the view of the Commission the answer to this question must decidedly depend on the answer to the question whether the rules contained in Article 69 (2) on residual rights are to be considered separately or in conjunction with the other provisions of that article. If Article 69 is regarded as a whole it is apparent that the first two paragraphs form a coherent unit. In order to help him to find employment in other Member States Article 69 (1) allows the unemployed person to retain certain benefits payable by the competent State without having to make himself available to the employment services of that State or to submit himself to their control.
To this extent Article 69 of Regulation No 1408/71 is an innovation which goes beyond the co-ordination of national social security systems and was enacted to encourage the free movement of workers. The question of the loss of residual entitlement in the event of returning late cannot be considered outside this context. If the advantages and disadvantages of the rules in question were balanced the conclusion would be reached that the penalty for returning late is sometimes likely to have serious consequences. It is also necessary to be aware of the fact that the possibility created by Article 69 may easily be abused in that the unemployed person may not use the opportunity to look for work. Further, by giving an opportunity to extend the prescribed period the second sentence of Article 69 (2) offers a remedy where the complete loss of entitlement after the expiry of the period would be unreasonable.
In the Commission's view the above considerations reveal no ground likely to make the first sentence of Article 69 (2) of Regulation No 1408/71 incompatible with Articles 48 to 51 of the EEC Treaty.
The question whether the legislative powers of the Community institutions take account of the principle of the sovereignty of the people enacted in Article 20 of the Basic Law involves the question whether Article 1 of the German Law of Judgment of the Bundesfinanzhof of Judgment of the Bundesverfassungsgericht [Federal Constitutional Court] of
In the view of the Commission the legal provisions decided by the institutions of the European Communities on the basis of the legislative powers which have been given to them cannot be examined for their compatibility with the constitutional rules of the Basic Law. Community law is an independent legal order, that is, it is independent of the national legal order and has its own institutions and system of legal remedies. In this respect it should be observed that the loss of entitlement provided for by Article 69 (2) is in any event a necessary restriction in the interests of a wider freedom of movement for workers.
The Commission also observes that it cannot be considered in the present case that there is any incompatibility with Article 14 of the German Basic Law. Articles 119 and 120 of the Arbeitsförderungsgesetz itself provides for the partial or total loss of the residual entitlement to unemployment benefit where the unemployed person does not comply with certain conditions. These include that he should make himself available to the employment services. Such restrictions can obviously not be regarded as an infringement of Article 14 of the Basic Law, for they constitute a limitation inherent in that type of property. This principle must also apply to the similar restriction contained in Article 69 (2).
In conclusion, the Commission is of the opinion that the answer to be given to the question referred for a preliminary ruling could be as follows:
Mr Testa, represented by Helga Niesei, the Government of the Federal Republic of Germany, represented by Martin Seidel, and the Commission of the European Communities, represented by Norbert Koch, presented oral argument at the sitting on
The Government of the Italian Republic, represented by M. Favara, and the Commission of the European Communities, represented by Norbert Koch, presented oral argument at the sitting on
The Advocate General delivered his opinion at the sitting on
The Bundesanstalt für Arbeit refused to continue to pay unemployment benefit to the workers concerned on the basis of Article 69 (2) of the said regulation, which provides that a worker loses all entitlement to benefits under the legislation of the competent State if he does not return there before the said three month period has expired. It likewise refused to apply in their favour the provision of the second sentence of Article 69 (2) of the said regulation which, in exceptional cases, allows the competent services or institutions to extend the period of three months to which the continuance of benefit is subject. The workers concerned then brought actions before the German courts seeking a declaration that they were entitled to continue to receive unemployment benefits.
On those grounds,
THE COURT
in answer to the questions referred to it by orders of 15 February, 19 June and
A worker who returns to the competent State after the three month period referred to in Article 69 (1) (c) of Regulation No 1408/71 has expired may no longer claim entitlement, by virtue of the first sentence of Article 69 (2), to benefits as against the competent State unless the said period is extended pursuant to the second sentence of Article 69 (2).
Kutscher
O'Keeffe
Touffait
Mertens de Wilmars
Pescatore
Mackenzie Stuart
Bosco
Koopmans
Due
Delivered in open court in Luxembourg on
A. Van Houtte
Registrar
H. Kutscher
President