C-152/73

JUDGMENT OF 12. 2. 1974 — CASE 152/73

without its being necessary to define grant of a separation allowance, of whether the payment is made by the fact that a worker has his virtue of an option or of an obligation, residence in another Member State either statutory or contractual. may, according to the circumstances, constitute a forbidden discrimination. 3. The rules regarding equality of This is not the case if the scheme treatment forbid not only overt discrimination by reason of relating to such an allowance takes nationality but also all covert forms account of objective differences in of discrimination which, by the the situations of workers according application of other criteria of to whether their residence at the time differentiation, lead in fact to the when they take up their employment same result. The taking into is within the territory of the State consideration, as a criterion for the concerned or abroad.

In Case 152/73

Reference to the Court under Article 177 of the EEC Treaty by the Bundes­ arbeitsgericht (Federal Labour Court) for a preliminary ruling in the action pending before that court between

GIOVANNI MARIA SOTGIU, skilled postal worker, residing in Stuttgart,

and

SOTGIU v DEUTSCHE BUNDESPOST

JUDGMENT

Issues of fact and of law

I — Facts and procedure The Arbeitsgericht dismissed the action by a judgment of 21 August 1970. Mr The facts and procedure may be Sotgiu's appeal, brought before the summarized as follows: Landesarbeitsgericht (the 'Land' Labour Giovanni Maria Sotgiu, of Italian Court) for Baden-Württemberg, was nationality, was engaged as a skilled rejected by a judgment of 21 April 1972. worker by the Deutsche Bundespost, On 18 May 1972 Mr Sotgiu lodged a Stuttgart, under a written contract of further appeal before the Bundesar­ employment made on 23 March 1965. beitsgericht (Federal Labour Court), Mr Sotgiu, whose contract of Stuttgart. employment was extended for an The Fourth Chamber of this court, by indefinite period on 27 August 1965, is Order of 28 March 1973, decided in paid in accordance with the collective pursuance of Article 177 of the EEC wages agreement for Federal Post Office Treaty to stay the proceedings pending a workers (Tarifvertrag fur die Arbeiter preliminary ruling by the Court of der Deutschen Bundespost) of 6 January Justice on the following questions: 1955.

JUDGMENT OF 12. 2. 1974 — CASE 152/73

The free movement of workers The written and oral observations constitutes one of the fundamental submitted to the Court may be summarized as follows: principles of the Community. In excluding the sector of the public service According to the Government of the Article 48 (4) of the Treaty has taken Federal Republic of Germany the account of the fact that the Community regulations governing the separation is not a unitary state organization but is

SOTGIU v DEUTSCHE BUNDESPOST

public service. Accordingly, the field of on the basis of a contract of employment application of Article 48 (4) ratione under' private law does not preclude his personae must take account of the integration' into the public service, to different structures of the public services which he belongs on the same lines as an of Member States. These are the limits official. The fact is of particular of the objectives pursued by Article 48 relevance to the Federal Republic of (4); in particular, it is not the task of the Germany, where activities involving the latter to harmonize national administrat exercise of public authority may be ive structures, nor consequently to carried out not only by officials enjoying standardize the exception which it lays a status under public law, but also by down with regard to the principle of free employees of the state or by workers. movement of workers.

to the first question, the second and considered by a Member State as coming third questions lose their purpose. within its public service, regardless of the nature of the activities carried on The Government of the Italian Republic within the framework of such emphasizes the scope of the questions of employment', whilst stating the express principle raised by the Bundesar wish that Member States would as far as beitsgericht. possible limit the application of Article (a) It maintains, as far as the first 48 (4) to occupations which involve the question is concerned, that Article 48

This is not the case with view which is generally accepted in the an employee engaged by a public Federal Republic it exercises attributes of organization on the basis of a contract

under private law; such an employee provides, in Article 3 thereof, that: remains a stranger to the organization, 'Provisions laid down by law, regulation to which he is not integrated by any or administrative action or administrat organic bond. The reasons on which ive practices of a Member State shall Article 48 (4) is based are not applicable not apply: to him. — where, though applicable irrespective This provision is intended to , allow of nationality, their exclusive or Member States the opportunity of principal aim or effect is to keep maintaining special rules for their public nationals of other Member States service; such a need obviously does not away from the employment offered.' exist when the public organization is The answer to the third question should

with the concept of 'conditions of work' question of interpreting the concept of and indeed with that of remuneration, 'employment in the public service'. since it is not dependent upon some temporary or occasional disadvantage (a) This concept amounts to a concept but is linked to a situation which is of Community law. To a considerable extent, no doubt, it cannot be defined likely to remain the same throughout the period of employment. except by reference to the national legal situation, but this is a matter of an (c) With reference to the third question independent definition, created by the it should be realized that the spirit and Treaty, the content of which must be aim of Article 7 of Regulation No determined in the first place according to 1612/68 involve a prohibition on the requirements of Community law and treating workers differently according to only in the second instance be based the place of recruitment if the latter is upon national criteria. If it were left to

Such and understood only in a uniform a criterion is contrary to the principle of manner and within the context of freedom of movement. In this respect it Community law. is necessary to recall that in a different In its resolution of 17 February 1972 the sphere the same Regulation No 1612/68 European Parliament considered that

involving the exercise of such authority. — In view of the expansion of the Such a limitation would be in public service in Member States, the accordance with the principles and fundamental principle of free objectives of the Treaty. movement of workers would be in Since the actual wording of Article 48 danger of being deprived of all (4), the preparatory work for the EEC meaning if Member States were free Treaty and a comparison with the first to prevent its application to all paragraph of Article 55 and with Article appointments which they themselves 66 provide no conclusive criteria for could classify by virtue of provisions interpretation, it is as well to bear in of their national law as being within mind in view of its nature and objective the sphere of the public service in the that Article 48 (4) constitutes an widest sense. exception to the fundamental principle of the free movement of workers and of The provisions derogating from Article the general abolition of discrimination 48 (4) must thus be interpreted based on nationality. It cannot therefore restrictively and the concept of be interpreted in a broad sense. 'employment in the public service' must be understood more narrowly than in In answer to the arguments advanced classical international conventions con­ under both domestic and international cerning free movement of workers and law to justify the fact that appointments the right of establishment. within the service, no matter what type of activities they entail, are reserved The exclusion clause of Article 48 (4) exclusively for nationals of the Member must in the first place be limited to the State concerned, it is appropriate, within functions of the public service which are the framework of the EEC Treaty and, concerned with the genuine interests of in particular, after more than twenty the State; this would no doubt include years of European integration, to put such functions as authorize the exercise forward the following considerations: of sovereign activity with regard to individuals and thus make possible, in — In the EEC Treaty, in contrast to certain circumstances, the infringement traditional bilateral or multilateral of rights; this is a matter of public treaties, freedom of movement functions in the classical sense of the constitutes a fundamental guarantee term. of a right which, for the integration of economic and social orders, is of a In view of the tact that Article 48 (4) is genuinely formative nature; wider than the first paragraph of Article 55, it is even possible to admit that — Article 48 (4) constitutes an Member States are entitled to legislate exception to the principle of independently not only with regard to integration, which, in accordance the actual exercise of the powers of the with general principles, must be public authority, but also with regard to restrictively interpreted; all the functions of the public service — the EEC Treaty is based upon the which are indirectly affected in any way principle of equivalence and equality whatever by the decision-making process of treatment of the nationals of the of the State; however, the exception various Member States; the contained in Article 48 (4) must be

contract of employment under private (b) With regard to the second question, law. The exception made by Article 48 it is necessary to refer to the prohibition (4) is no doubt as a general rule of all discrimination which is mentioned applicable to 'officials' [fonctionnaires or in Article 48 (2) of the EEC Treaty and Beamte] whose special status is justified in Article 7 (1) and (4) of Regulation No by the very fact that they are usually 1612/68, and which is applicable to all entrusted with powers involving the conditions of work and employment. In exercise of public authority; however, this respect it is of little consequence contractual employees [agents contrac­ whether the separation allowance paid tuels or Angestellte], that is employees by the Deutsche Bundespost constitutes without special status under public law, part of the remuneration. In so far as it may also be entrusted with such is paid on a permanent basis to workers functions. It is particularly difficult to whose home is abroad, regardless of the define the field of application of Article possibility of a later removal, it is 48 (4) with regard to services which, equivalent to supplementary, remuner­ whilst forming part of the public service, ation. do not touch upon national interests; In any case the separation allowance this might be the case with appointments in public institutions of an industrial or falls within 'other conditions of work', a commercial nature or in nationalized concept which must be interpreted in a enterprises. wide sense by virtue of the wording and the objective of the provision in question In the last analysis it is thus essential to as well as of the case law of the Court. It have recourse also to factual criteria in is of little consequence whether the order to interpret the concept of separation allowance is the subject of a 'employment in the public service' from contractual agreement or is paid the point of view of Community law. voluntarily or determined by a provision In conclusion it is necessary, according of public law. to the Commission to realize that the The answer to the second question concept of 'employment in the public should therefore be in the affirmative. service' as it appears in Article 48 (4) of the EEC Treaty is a concept of (c) The third question poses the Community law which has no reference problem of hidden or indirect to the law of Member States. It is to be discrimination.

based on other criteria such as residence The criterion of residence abroad might abroad, language, place of birth, descent not appear to be discriminatory in a case or performance of military service in the in which, unlike workers recruited country may in fact conceal within the country, workers recruited discrimination on the basis of abroad receive a separation allowance nationality. Such would be the case in without having to find a home in the particular if the application of certain country of employment or to remove, criteria of differentiation were to result, and in which they receive the allowance in all cases or in the vast majority of at the lower rate for a practically cases, in foreigners alone being affected unlimited period throughout the whole without any objective justification. of their period of employment. The In this case only the Bundesar­ question whether this scheme gives rise beitsgericht is in a position to decide to discrimination either in intention or in whether the rules at issue in the main effect, or whether it is only intended to action and the different treatment which control one particular situation in an they prescribe almost exclusively for objective way, should be settled in terms foreigners can be objectively justified. of national law.

Grounds of judgment

1 By Order of 28 March 1973, received at the Court Registry on 20 July 1973, the Bundesarbeitsgericht, in pursuance of Article 177 of the EEC Treaty, asked three questions relating to the interpretation of Article 48 (4) of the Treaty establishing the European Economic Community and Article 7 (1) and (4) of Regulation No 1612/68 of 15 October 1968 on freedom of movement for workers within the Community (OJ 1968, L 257, p. 2).

Paragraph (4) of the same Article reads: 'Any clause of a collective or individual agreement or of any other collective regulation concerning eligibility for employment, remuneration and other conditions of work or dismissal shall be null and void in so far as it lays down or authorizes discriminatory conditions in respect of workers who are nationals of the other Member States.'

By virtue of Article 48 (4) of the Treaty, however, these provisions are not applicable to 'employment in the public service'.

The extent of this exception must therefore be defined.

4 Taking account of the fundamental nature, in the scheme of the Treaty, of the principles of freedom of movement and equality of treatment of workers within the Community, the exceptions made by Article 48 (4) cannot have a scope going beyond the aim in view of which this derogation was included.

The interests which this derogation allows Member States to protect are satisfied by the opportunity of restricting admission of foreign nationals to certain activities in the public service.

On the other hand this provision cannot justify discriminatory measures with regard to remuneration or other conditions of employment against workers once they have been admitted to the public service.

On the second question

7 The second question asks whether Article 7 (1) and (4) of Regulation No 1612/68 is to be interpreted as meaning that the separation allowance paid in addition to wages falls within the concept of 'conditions of employment and work'.

This question is raised both in view of the nature of this payment and having regard to the fact that according to the relevant national provisions it is a matter of an optional payment.

8 The aim of Article 7 of Regulation No 1612/68 is to ensure equality of treatment of workers who are nationals of Member States with regard to all statutory or contractual provisions determining their position and in particular their financial rights.

The separation allowance, in so far as it constitutes compensation for the inconveniences suffered by a worker who is separated from his home, represents supplementary remuneration and is thus one of the 'conditions of employment and work' within the meaning of the Regulation.

JUDGMENT OF 12. 2. 1974 — CASE 152/73

This interpretation, which is necessary to ensure the effective working of one of the fundamental principles of the Community, is explictly recognized by the fifth recital of the preamble to Regulation No 1612/68 which requires that equality of treatment of workers shall be ensured 'in fact and in law'.

It may therefore be that criteria such as place of origin or residence of a worker may, according to circumstances, be tantamount, as regards their practical effect, to discrimination on the grounds of nationality, such as is prohibited by the Treaty and the Regulation.

SOTGIU v DEUTSCHE BUNDESPOST

12 However, this would not be the case with a separation allowance the conditions of allotment and rules for the payment of which took account of objective differences which the situation of workers may involve according to whether their residence, at the time their taking up a given post, is within the territory of the State in question or abroad.

In this respect the fact that, for workers whose home is within the territory of the State concerned, payment of the separation allowance is only temporary and is bound up with an obligation to transfer the residence to the place of employment, whilst the same allowance is paid for an indefinite period and is not bound op with any such obligation in the case of workers whose residence is abroad, whatever their nationality, may be a valid reason for differentiating between the amounts paid.

In any case it is not possible to state that there is discrimination contrary to the Treaty and the Regulation, if it is apparent from a comparison between the two schemes of allowances taken as a whole that those workers who retain their residence abroad are not placed at a disadvantage by comparison with those whose residence is established within the territory of the State concerned.

On those grounds,

Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the Government of the Federal Republic of Germany and the Commission of the European Communities; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 48 and 177; Having regard to Regulation No 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities;

THE COURT

in answer to the questions referred to it by the Bundesarbeitsgericht (Fourth Chamber) by Order of 28 March 1973, hereby rules:

1. Article 48 (4) of the Treaty is to be interpreted as meaning that the exception made by this provision concerns only access to posts forming part of the public service. The nature of the legal relationship between the employee and the employing administration is of no consequence in this respect.

2. Article 7 (1) and (4) of Regulation No 1612/68 is to be interpreted as meaning that a separation allowance, paid in addition to wages, falls within the concept of 'conditions of employment and work', without its being necessary to define whether the payment is made by virtue of an option or of an obligation, either statutory or contractual.

A. Van Houtte R. Lecourt

Registrar President

OPINION OF MR ADVOCATE-GENERAL MAYRAS

DELIVERED ON 5 DECEMBER 1973 1

Mr President, An examination of the preliminary Members of the Court, questions put to you by the Bundesarbeitsgericht (Federal Labour Introduction Court), Kassel, in pursuance of Article 177 of the Treaty, will lead you — for the first time as far as I am aware — to Article 48 of the Treaty establishing the European Economic Community lays define the scone of this exception by down the principle of freedom of giving a ruling on the meaning of the movement for workers within the term 'employment in the public service'. Common Market; as a consequence of The facts which gave rise to the action this principle it goes on to state that all brought before the Bundesarbeitsgericht discrimination based on nationality are simple. between workers of the Member States An Italian national, Mr Sotgiu, has been as regards employment, remuneration employed as a skilled worker by the and other conditions of work and Deutsche Bundespost, Stuttgart, since employment is to be abolished. 1955, although his family is still living in However, an exception is made by Italy. paragraph (4) of this Article, the In accordance with the collective wages provisions of which 'shall not apply to agreement which applies to workers in employment in the public service'. the Federal Post Office, Mr Sotgiu's

1 — Translated from the French.