C-279/80

JUDGMENT OF 17. 12. 1981 — CASE 279/80

Those essential requirements abolish 4. Article 59 of the Treaty does not all discrimination against the person preclude a Member State which providing the service by reason of his requires agencies for the provision of nationality or the fact that he is manpower to hold a licence from established in a Member State other requiring a provider of services than that in which the service is to be established in another Member State provided. and pursuing such activities on the territory of the first Member State to comply with that condition even if he holds a licence issued by the State in which he is established, provided, 3. The freedom to provide services is however, that in the first place when one of the fundamental principles of considering applications for licences the Treaty and may be restricted only and in granting them the Member by provisions which are justified by State in which the service is provided the general good and which are makes no distinction based on the imposed on all persons or under- nationality of the provider of the takings operating in the Member State services or his place of establishment, in which the service is to be provided and in the second place that it takes in so far as that interest is not safe- into account the evidence and guarded by the provisions to which guarantees already produced by the the provider of the service is subject provider of the services for the pursuit in the Member State of his of his activities in the Member State establishment. in which he is established.

composed of: J. Mertens de Wilmars, President, G. Bosco, A. Touffait and O. Due (Presidents of Chambers), P. Pescatore, Lord Mackenzie Stuart, A. O'Keeffe, T. Koopmans, U. Everling, A. Chloros and F. Grévisse, Judges,

Advocate General: Sir Gordon Slynn Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of the employment concluded with that other procedure and the observations person, for the performance of work submitted under Article 20 of the usually carried on in his undertaking." Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows: The opening words of Article 2 (1) of that Law including subparagraph (a) thereof permit the introduction of a licensing system in the following terms: I — Facts and written procedure "If . . . the interests of good relations in the labour market or those of the workers affected so require then, by 1. Legislation in the Netherlands makes means of a general administrative the provision of manpower subject to a measure, in general or in cases belonging system of licensing. to categories indicated for that purpose in the measure: Article 1 (1) (b) of the Wet op het ter Beschikkingstellen van Arbeidskrachten . . . the provision of manpower may be [Law on the provision of manpower] of prohibited unless a licence is granted by 31 July 1965, as amended by the Law of our Minister". 30 June 1967, defines the provision of manpower as follows: Article 6 (1) of the Law provides that:

might harm good relations in the labour the United Kingdom, hereinafter to as market or if for that reason the interests "the Company". of the labour force affected are insufficiently safeguarded." The Company's principal business is supplying technical staff to the Netherlands, the staff being recruited by Licensing was in fact introduced by the Company and supplied for means of the Royal Decree of 10 consideration and for a fixed period to September 1970 adopted in pursuance of businesses located in the Netherlands, the opening words of Article 2 (1) of the without any contract of employment aforementioned Law. According to being entered into with such businesses. Article 1 of the decree: Hence the staff are and remain exclusively employees of the Company. The latter holds a licence as provided for "No person shall provide manpower by United Kingdom legislation but unless he is in possession of a licence pursues its business without being in issued by the Minister for Social possession of a Netherlands licence. Affairs". In the case at issue the court which decided the facts found that on three occasions between 20 February 1978 and 2. In the main proceedings, which 24 February 1979 International concerned criminal charges brought Engineering Services made staff against Alfred John Webb, the accused available, for consideration, to businesses was sentenced by a judgment of 17 April in the Netherlands for the performance 1978 of the Economische Politierechter in those undertakings of regular work in [Magistrate dealing with commercial conditions other than those laid down by matters] at the Arrondissementsrecht- a contract of employment entered into bank [District Court], Amsterdam, to with the latter, without being in three fines of HFL 6 000 each or 60 possession of a licence issued by the day's imprisonment, of which HFL 3 000 Minister for Social Affairs. and 30 days' imprisonment were suspended in each case for two years. The judgment was confirmed on appeal The accused sought to have the by a decision of the Commercial conviction quashed on the ground inter Chamber of the Gerechtshof [Regional alia that the Gerechtshof had failed to Court of Appeal], Amsterdam, on 14 observe Articles 59 and 62 of the EEC February 1980. The Gerechtshof Treaty. His argument was that where the described the offence as "counselling or business of providing manpower is procuring the contravention on three dependent in a Member State on the occasions by a legal person of a issue of a licence, that State may not provision.adopted pursuant to Article 2 require those who provide such services (1) of the Wet op het ter and who are established in another Beschikkingstellen van Arbeidskrachten". Member State to fulfil that condition if they hold in the Member State in which they are established a licence issued on According to the case-file the accused, conditions comparable to those imposed who resides in the United Kingdom, by the State in which the services are is the manager of International provided and when such activities are Engineering Services Bureau (UK) duly supervised in the first State. It was Limited, an English company based in submitted on his behalf that the

Gerechtshof had failed to appreciate that another Member State to fulfil those the conditions are comparable in the conditions? sense relevant here if licences such as those issued in the Netherlands under 3. To what extent is the answer to the Wet op het ter Beschikkingstellen Question 2 affected if a foreigner van Arbeidskrachten are granted in providing the service possesses a another Member State subject to both licence to provide that service in the the need to maintain good relations on State in which he is established?" the labour market and the desire to guarantee to the workers concerned full enjoyment of their social rights. 3. The judgment containing the reference was lodged at the Court Registry on 30 December 1980. Considering that a decision in the dispute depended on questions Written observations were submitted concerning the interpretation of pursuant to Article 20 of the Protocol on provision of Community law, the Hoge the Statute of the Court of Justice of the Raad stayed the proceedings and EEC by the Netherlands Government, referred the following questions to the represented by C. H. A. Plug on behalf Court of Justice for a preliminary ruling of the Ministry of Foreign Affairs; by the under Article 177 of the EEC Treaty: Federal German Government, represented by Martin Seidel and Hans Hinrich Boie; by the United Kingdom " 1 . Does the expression 'services' in Government, represented by R. D. Article 60 of the EEC Treaty include Munrow of the Treasury Solicitor's the service of providing manpower Department; by the French Government, within the meaning of the opening represented by Thierry Le Roy on behalf words of the first paragraph of of the Secretary-General of the Inter- Article 1 and subparagraph (b) of the ministerial Committee on European same paragraph of the Wet op het Economic Cooperation; and by the ter Beschikkingstellen van Arbeids- Commission of the European krachten [Law on provision of man- Communities, represented by its Legal power]? Adviser, Robert Caspar Fischer, acting as Agent and assisted by Christine Berardis- Kayser, a member of the Commission's 2. If Question 1 is answered in the Legal Department. affirmative, does Article 59 of the Treaty always or only under certain On hearing the report of the Judge- conditions preclude a Member State Rapporteur and the views of the in which the provision of that service Advocate General the Court decided to is made dependent on the possession open the oral procedure without any preparatory inquiry. of a licence — that requirement being imposed in order that such a licence may be refused if there is reasonable cause to fear that the II — W r i t t e n o b s e r v a t i o n s provision of manpower by the applicant might harm good relations in the labour market or that the First question interests of the workforce affected are insufficiently safeguarded — 1. The Federal German Government, the from compelling a person providing United Kingdom Government and the the services who is established in Commission are of the opinion that the

reply to the first question should be in staff necessarily affect both the normal the affirmative. Their argument is that system of engaging salaried workers, the concept of "services" in Article 60 of from which it constitutes a derogation, the EEC Treaty includes the business of and the work of public employment hiring out manpower as described in the services. That is why such activities are Netherlands legislation at issue when regulated, or may become so as they such activity operates across borders, develop, not only in all the Member that is to say, when the business is States but also internationally. carried out from another Member State. Discussions are at present in progress at Community level on temporary work, including temporary work across The German Government adds that the frontiers. The discussions cover such hiring out of manpower as described in problems as the free movement of the Netherlands legislation represents an workers, social security for employed independent occupation provided for persons, the employment situation and remuneration within the terms of Article working hours. 60 of the Treaty. The French Government therefore The Commission explains that the suggests that the Court reply to the first expression "services" within the meaning question as follows: of the Treaty is a residual concept which embraces all services not regulated "The provision of manpower within the elsewhere. The service provided consists meaning of the opening words of the in the supply or "loan" of workers who first paragraph of Article 2 and sub- are and remain in the employ of the paragraph (a) of the same paragraph of "lender". They do not enter into any the Wet op het ter Beschikkingstellen contract of employment with their van Arbeidskrachten, though covered by "actual" employer but are made available the concept of "services" mentioned in to the latter on the basis of the legal Article 60 of the EEC Treaty, must be relationship which exists between them regarded as being in a special category and the "lender", which is normally a inasmuch as such activities may also be contract of employment. The "actual" covered by measures relating to social employer pays to the agency for policy and to the free movement of temporary staff, not the workers' re- persons." muneration, but the remuneration due to the lender for supplying the workers.

Thirdly, legislation in the Netherlands restricts the hiring out of temporary staff to a period not exceeding three months The Netherlands Government goes on to unless an authorization has been granted compare the licensing provisions in force by the Ministry of Social Affairs on in the Netherlands and the United grounds of the special status of the Kingdom. temporary staff or exceptional circums- tances obtaining in the undertaking to which the manpower is supplied. Those restrictions stem from the desire to restrict temporary employment to work In the Netherlands a licence may be which is itself strictly of a temporary withheld if there is reason to fear that nature. the provision of manpower by the applicant might prejudice good relations on the labour market of if, by reason of that fact, the interests of the workers Finally, where the hiring out of concerned are inadequately safeguarded. manpower supplants regular employment Those interests are defined by standard based on contracts with undertakings, provisions as follows. that is considered to have a disturbing effect on labour relations. The same applies when the activity which an applicant proposes to pursue would have the effect of depriving permanent First, in the absence of a collective employees of their work. agreement to the contrary effect, temporary staff may receive no more than the remuneration which is given to staff employed to perform identical or The Employment Agencies Act in the equivalent work in the undertaking to United Kingdom, by contrast, allows which the temporary staff is assigned. licences to be refused on grounds There are also strict rules governing the pertaining to the person of the applicant reimbursement of expenses and periodic or for reasons connected with the payments. The provisions are justified by management of the undertaking, or in the fact that large differences in pay the case of unsuitable premises. might well bring about serious distur- bances in labour relations by creating conflict with the permanent staff The systems existing in the Netherlands employed by the undertakings. They and the United Kingdom are thus not

A number of other Member States recognize the need for applying certain Moreover, the authorities in the controls in the field of temporary work. Netherlands have no authority to Most of them have legislation covering exercise supervision within the United temporary work. Thus Italy, for Kingdom just as the United Kingdom example, prohibits it altogether, whereas authorities cannot check the provisions Luxembourg has a system which is of Netherlands law; they can only ensure wholly unrestricted within the that British law is observed in accordance Community. Most of the Member States with the principles laid down by United have specific rules grafted on to their Kingdom legislation. own labour legislation, usually imposing certain restrictions on the duration of the hiring. Besides the legislation in force in the Netherlands that is the position in The reply to the second and third Belgium, Denmark and France. questions might therefore be as follows:

(a) In principle the reply to the second exposed to greater risk. To that end the question should be in the negative. following measures have been adopted Article 59 of the Treaty does not prevent by the legislature: the introduction of this kind of compulsory licensing system in the Official authorization to pursue the circumstances in question when such a activity of hiring out staff is granted only licence is indispensable in order to to those able to provide the requisite safeguard the interests of the workers guarantees of good conduct.

The form of the legislation the opinion of the German Government which governs the hiring out of the control exercised by the State on the manpower differs widely from one business of providing manpower Member State to another. Hence if the constitutes rules for the conduct of rule requiring providers of services across business, justified by the general good, national frontiers to be in possession of a of the lund at issue in the case just cited, licence issued in the country where their which cannot be considered incompatible staff work were judged to be unlawful, with the Treaty at least in so far as such agencies for temporary staff would go control is essential for the protection of and establish themselves in each instance the social rights of tne workers in those Member States where the degree concerned. of protection was lowest in order to pursue their activities from that territory. The provision of manpower is governed in the Federal Republic of Germany Furthermore, the requirement of a by the Arbeitnehmerüberlassungsgesetz licence for the hiring out of manpower is [Law on agency work] of 7 August 1972. not unknown to Community law.

JUDGMENT OF 17. 12. 1981 — CASE 279/80

under Articles 54 and 132 (5) make it is issued on the same conditions as express allowance for the maintenance in those which must be met by its own force of similar national compulsory nationals." licensing provisions. Similarly, in the case of other activities which are no different, from the economic point of view, from the hiring out of manpower, such as that (b) The reply to the third question of private employment agencies, the should be that if the issue of a licence in Directive of 12 January 1967 concerning addition to a licence which has already the attainment of freedom of been granted is essential for overriding establishment and freedom to provide considerations of social policy the services (Official Journal, English Special restriction is not incompatible with the Edition 1967, p. 3) was based on the EEC Treaty within the meaning of assumption that in so far as national Articles 52 and 59 thereof but a systems of authorization apply in the restriction on the practical scope of those same way to nationals of the country and provisions which is recognized by to other Community citizens they Community law and which may be main- remain, in principle, in force. tained.

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very small part of the labour market and 18 January 1979 (Joined Cases 110 and arranging for a contract of employment 111/78 Van Wesemael [1979] ECR 35). to be made between the entertainer and the organizer. Conclusion of the contract signified the end of the agency's task so that it had no other social obligations (a) British legislation on the subject, towards the worker for whom it had namely the Employment Agencies Act found employment. 1973, makes the carrying on of employment agencies or businesses subject to the grant of a licence. Under the Act "employment agency" means In the case of temporary staff, however, "the business (whether or not carried on consideration must be given to their with a view to profit and whether or not social rights if they are sent from one carried on in conjunction with any other Member State to work for a user business) of providing services (whether established in another Member State. by the provision of information or The private temporary staff agency is otherwise) for the purpose of finding their employer for as long as their workers employment with employers or services are made available to others and of supplying employers with workers for by reason of that fact it has numerous employment by them". "Employment legal obligations incumbent upon it by business" means "the business (whether virtue of, inter alia, employment laws or not carried on with a view to profit and legislation on social insurance or and whether or not carried on in security of employment. conjunction with any other business) of supplying persons in the employment of the person carrying on the business, to act for, and under the control of, other The German Government therefore persons in any capacity". suggests that the answer to the third question might be as follows:

consideration of the suitability of the established (the first State), then Article applicant and the persons who are to be 59 does not preclude another Member involved in the activities of the agency as State in which the service is provided well as the suitability of the premises, but (the second State) from requiring a does not include considerations of a licence where the conditions under general kind such as good labour which licences are granted in the first relations or the interests of the workers. State are not comparable in that they do The United Kingdom system covers both not give substantially similar protection employment agencies and employment to that required by the second State to businesses whereas uader the system in persons affected by the conduct of the the Netherlands a general prohibition is business, as long as the conditions for placed on private employment agencies. the grant of such a licence by the second Finally, unlike the Netherlands system State are (a) non-discriminatory, and (b) the United Kingdom system is of general do not require the person providing the application and cannot be restricted to a service to set up an establishment in that specific industry or to a particular region State." or locality.

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possession of a licence in order to carry The requirement that a licence or auth- on the business of an agency for orization must be obtained may temporary staff applies without therefore be considered contrary to distinction to businesses established in Article 59 of the EEC Treaty it the the Netherlands and to businesses provider of services holds, in the established in any other Member State. It Member State in which he is established, may therefore be considered to be the a licence which was issued on result of the application of rules for the comparable conditions, and if his conduct of business which are justified activities are subject in that State to by the common good inasmuch as the appropriate supervision irrespective of intention is to preserve good labour the Member State in which the services relations or to safeguard the interests of are to be supplied. workers.

JUDGMENT OF 17. 12. 1981 — CASE 279/80

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the workers concerned, may be served to available, particularly if the allocation is a certain extent just as well by provisions not based on objective and compelling of a general nature and the exercise of criteria which have been published. supervision, methods which would prove less of a hindrance to the free supply of services.

JUDGMENT OF 17. 12. 1981 — CASE 279/80

Decision

1 By a judgment of 9 December 1980 which was received at the Court on 30 December 1980 the Hoge Raad der Nederlanden [Supreme Court of the Netherlands] referred to the Court for a preliminary ruling under Article 177

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of the EEC Treaty three questions concerning the interpretation of Articles 59 and 60 of the Treaty in connection with the Netherlands legislation governing the provision of manpower.

2 The questions arose in the course of criminal proceedings for offences against Article 1 of the Koninklijk Besluit [Royal Decree] of 10 September 1970 (Staatsblad 410). That article prohibits the provision of manpower without authorization from the Minister for Social Affairs.

3 The above-mentioned Royal Decree was adopted pursuant to the opening words of Article 2(1) and subparagraph (a) thereof of the Wet op het ter Beschikkingstellen van Arbeidskrachten [Law on the provision of manpower] of 31 July 1965 (Staatsblad 379), as amended by the Law of 30 June 1967 (Staatsblad 377). That article provides that the provision of manpower without authorization may be prohibited by means of a Royal Decree if required in the interests of good relations on the labour market or of the labour force affected. Article 6 (1) of the Law provides, however, that the authorization may be refused only when there is reasonable cause to fear that the provision of manpower by the applicant might harm good relations on the labour market or if the interests of the labour force in question are inadequately safeguarded.

" 1 . Does the expression 'services' in Article 60 of the EEC Treaty include the service of providing manpower within the meaning of the opening words of the first paragraph of Article 1 and subparagraph (b) of the same paragraph of the Wet op het ter Beschikkingstellen van Arbeids- krachten [Law on provision of manpower]?

2. If Question 1 is answered in the affirmative, does Article 59 of the Treaty always or only under certain conditions preclude a Member State in which the provision of that service is made dependent on the possession of a licence — that requirement being imposed in order that such a licence may be refused if there is reasonable cause to fear that the provision of manpower by the applicant might harm good relations in the labour market or that the interests of the workforce affected are insufficiently safeguarded — from compelling a person providing the services who is established in another Member State to fulfil those conditions?

3. To what extent is the answer to Question 2 affected if a foreigner providing the service possesses a licence to provide that service in the State in which he is established?"

First q u e s t i o n

7 The substance of the first question raised by the national court is whether the concept of "services" contained in Article 60 of the Treaty extends to the supply of manpower within the meaning of the Netherlands legislation cited above.

8 According to the wording of the first paragraph of Article 60 of the Treaty the expression "services" means services which are normally provided for remuneration, in so far as they are not governed by the provisions relating to freedom of movement for goods, capital and persons. In the second

10 The French Government has sought to emphasize in this connection the special nature of the activity in question, which although covered by the expression "services" in Article 60 of the Treaty ought to receive special consideration inasmuch as it may be covered as well both by provisions concerning social policy and by those concerning the free movement of persons. Whilst employees of agencies for the supply of manpower may in certain circumstances be covered by the provisions of Articles 48 to 51 of the Treaty and the Community regulations adopted in implementation thereof, that does not prevent undertakings of that nature which employ such workers from being undertakings engaged in the provision of services, which therefore come within the scope of the provisions of Article 59 et seq. of the Treaty. As the Court has already declared, in particular in its judgment of 3 December 1974 (Case 33/74 Van Binsbergen [1974] ECR 1299), the special nature of certain services does not remove them from the ambit of the rules on the freedom to supply services.

1 1 The reply to the first question must therefore be that the expression "services" in Article 60 of the Treaty includes the provision of manpower within the meaning of the Wet op het ter Beschikkingstellen van Arbeids- krachten.

S e c o n d and t h i r d q u e s t i o n s

12 The second and third questions ask in substance whether Article 59 of the Treaty precludes a Member State from making the provision of manpower within its territory subject to possession of a licence in the case of an under- taking established in another Member State, in particular when that under- taking holds a licence issued by the latter State.

16 The principal aim of the third paragraph in Article 60 is to enable the provider of the service to pursue his activities in the Member State where the service is given without suffering discrimination in favour of the nationals of that State. However, it does not mean that all national legislation applicable to nationals of that State and usually applied to the permanent activities of undertakings established therein may be similarly applied in its entirety to the temporary activities of undertakings which are established in other Member States.

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17 In the above-mentioned judgment of 18 January 1979 the Court held that, regard being had to the particular nature of certain services, specific re­ quirements imposed on the provider of the services cannot be considered incompatible with the Treaty where they have as their purpose the application of rules governing such activities. However, the freedom to provide services is one of the fundamental principles of the Treaty and may be restricted only by provisions which are justified by the general good and which are imposed on all persons őr undertakings operating in the said State in so far as that interest is not safeguarded by the provisions to which the provider of the service is subject in the Member State of his establishment.

18 It must be noted in this respect that the provision of manpower is a parti­ cularly sensitive matter from the occupational and social point of view. Owing to the special nature of the employment relationships inherent in that kind of activity, pursuit of such a business directly affects both relations on the labour market and the lawful interests of the workforce concerned. That is evident, moreover, in the legislation of some of the Member States in this matter, which is designed first to eliminate possible abuse and secondly to restrict the scope of such activities or even prohibit them altogether.

21 The reply to the second and third questions raised by the Hoge Raad is therefore that Article 59 does not preclude a Member State which requires agencies for the provision of manpower to hold a licence from requiring a provider of services established in another Member State and pursuing such activities on the territory of the first Member State to comply with that condition even if he holds a licence issued by the State in which he is established, provided however, that in the first place when considering applications for licences and in granting them the Member State in which the service is provided makes no distinction based on the nationality of the provider of the services or his place of establishment, and in the second place that it takes into account the evidence and guarantees already produced by the provider of the services for the pursuit of his activities in the Member State in which he is established.

Costs

The costs incurred by the Governments of the Netherlands, the Federal Republic of Germany, the United Kingdom, France and Denmark and by the Commission, which have submitted observations to the Court, are not recoverable. As the 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.

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On those grounds,

T H E COURT