C-23/83

JUDGMENT OF 18. 9. 1984 — CASE 23/83

where husband and wife are both civil Treaty that men and women should servants, the authority employing the receive equal pay for equal work, in husband is primarily responsible for so far as the resultant differences paying the contributions and the between the gross salary of a female authority employing the wife is civil servant whose husband is also a required to pay the contributions only civil servant and the gross salary of a in so far as the upper limit is not male civil servant directly affect the reached by the contributions paid on calculation of other benefits depen- behalf of the husband, dent on salary, such as severance pay, is incompatible with the principle laid unemployment benefit, family down in Article 11'9 of the EEC allowances and loan facilities.

In Case 23/83

REFERENCE to the Court under Article 177 of the EEC Treaty by the Centrale Raad van Beroep [Court of last instance in social security matters], Utrecht, for a preliminary ruling in the case pending before that court between

W . G. M . LlEFTING AND OTHERS

and

LIEFTING v ACADEMISCH ZIEKENHUIS BIJ DE UNIVERSITEIT VAN AMSTERDAM

JUDGMENT

Facts and Issues

JUDGMENT OF 18. 9. 1984 — CASE 23/83

Obviously that meaning of Article 119 of the EEC payment (called "compensation") is Treaty and that consequently the ending financially advantageous for the official of the transfer of "over-compensation" for whom the public authority has was contrary to that article as it largely always transferred contributions. affected contributions payable in respect of married female officials. The recipients of "over-compensation" were mostly officials who worked at Their applications were dismissed at first different State institutions at the same instance. They then appealed to the

Must the term 'pay' appearing in transferred for both spouses exceeded Article 119 of the EEC Treaty be the maximum. construed as including the 'com- pensation' or, in certain cases, the In 1972 and 1973 legislation^ was amount referred to as 'the over- introduced to end the so-called "over- compensation' which the employing compensation". It consisted of the public authority used to pay to the Wet Gemeenschappelijke Bepalingen tax authorities in excess of the Overheidspensioenwetten [Law laying maximum contributions due under down common provisions with regard to the Algemene Ouderdomswet and laws governing the pensions of public the Algemene Weduwen en officials], the Uitvoeringsbesluit Be- Wezenwet but which now no longer perking Meervoudige Overneming need be transferred by such an A O W / A W W — Premie [order re- authority?

Once the should receive equal pay for equal maximum contributions have been work laid down in Article 119 transferred in respect of one em- because, under that system, in ployment, no further contributions are those cases in which the joint contri- transferred in respect of another. butions due under the Algemene

Ouderdomswet and the Algemene employee, in this case a public official, Weduwen en Wezenwet for a by his employer at or about the same married couple employed in the time as the rest of his salary for the public service exceed the maximum disadvantage of having his pension rights amounts of contributions due, the reduced is actual pay for salary purposes contributions are primarily paid by and for social security and tax purposes. the husband's employer while the wife's employer continues to transfer contributions only in so far as the The contributions payable under the maximum amount of contributions Old-Age Pensions Law and the Widows' due is not exceeded?" and Orphans' Benefits Law are social security contributions which should be called employee contributions. They are In accordance with Article 20 of the deducted at source just like income tax Protocol on the Statute of the Court of and paid by the employer to the tax Justice of the European Economic authorities which collect both income tax Community written observations were and social security contributions. The submitted by two plaintiffs in the main contributions payable under the two proceedings, Mrs W. G. M. Liefting, Laws are therefore an integral pan of an represented by R. A. A. Duk, of the official's pay. There is a parallel between Hague Bar, and Mrs W. A. van Plat- this case and Case 69/80 Worringham eringen-Doeksen, represented by O. W. and Humphreys v Lloyds Bank [1981] Brouwer, of the Amsterdam Bar, by the ECR 767 in which the Court held that: defendant in the main proceedings, the Board of the University of Amsterdam, represented by H. D. M. Mulder, of the " . . . a contribution to a retirement Rotterdam Bar, by the Netherlands benefits scheme which is paid by the Government, represented by I. Verkade, employer in the name of the employees Secretary General at the Ministry of by means of an addition to the gross Foreign Affairs, and by the Commission salary and which helps to determine the of the European Communities, rep- amount of that salary is 'pay' within the resented by its Legal Adviser, M. meaning of the second paragraph of Beschel, assisted by F. Herbert, of the Article 119 of the EEC Treaty". Brussels Bar. The situation in this case is in substance no different from that in which the State Upon hearing the report of the Judge- increases officials' salaries by the amount Rapporteur and the views of the of the contribution payable (normally by Advocate General, the Court decided to the employee) under the Old-Age open the oral procedure without any Pensions Law and then deducts the preparatory inquiry. contribution from salaries on the condition that no such increase in salary equivalent to the deduction will take place for those female officials in whose II — W r i t t e n o b s e r v a t i o n s sub- case "over-compensation" has now been mitted to the C o u r t stopped. The situation in the Netherlands is practically the same as that in Worringham and Humphreys. On the first question Mrs W. G. M. Liefting, a plaintiff in the main It is clear from the history of the proceedings, argues that compensation legislation in question that the paid directly or indirectly to an "compensation" was granted to prevent

Mrs van Plateringen-Doeksen observes The plaintiffs in the main proceedings that in the first Defrenne case the argue that in view of the purpose of the question was whether the term "pay" in legislation in question the contribution Article 119 should be construed as also due under the Old-Age Pensions Law . covering a retirement pension granted and the Widows' and Orphans' Benefits under a social security scheme financed Law is an employee contribution and by contributions from employees and therefore simply part of the pay of the employers and by State subsidy. employee concerned. The only difference that exists in this regard between employers in the public and private sectors is that in the public sector the contributions payable under the Old-Age In view of the judgment in that case, Pensions Law and the Widows' and pension rights are "pay" within the Orphans' Benefits Law are not incor- meaning of Article 119 only if they are porated in salary scales and in not directly based on statute but arise consequence the State literally bears their under provisions which leave the cost. The true nature of the amount contracting parties a degree of latitude which the State pays is clear from the and are thus private in nature. annual statements of salary issued to public officials in which the contributions it transfers are quite rightly included in the amount of the salary. The provisions in this case are considerably different from those at issue in the first Defrenne case because they relate to: On the second question the plaintiffs in the main proceedings maintain that if the "compensation" is regarded as part of public officials' pay it seems clear that The payment of contributions and not to there is a difference in pay between men the grant of (or entitlement to) benefits

and, secondly, since 1963 those contri- According to the judgment in Case butions have been paid in full by the 12/81 Eileen GarLnd v British Rail employer which happens to be the State. Engineering Limited [1982] ECR 359, a benefit granted in respect of employment need not be based on a contractual obligation. The determining factor is that In this case the question is quite the employment makes the employee different, for it is whether the employee's eligible for the benefit. It does not contribution, the cost of which is borne therefore matter what the benefit is by the employer, must be regarded as based upon. All that matters is that by "pay" within the meaning of Article 119. reason of the employment the obligation The Court has answered that question in to pay contributions is assumed by the the affirmative in Worringham and State on behalf of its officials. Humphreys in which it held that a contri- bution paid by an employer on behalf of an employee is "pay" within the meaning of Article 119. It is a benefit which must In conclusion Mrs van Plateringen- be regarded as "pay" as it amounts to a Doeksen submits that the payment by saving for the employee because he does Netherlands public bodies on behalf of not need to pay the employee's contri- officials of the employee's contributions bution himself. due under the Old-Age Pensions Law and the Widows' and Orphans' Benefit Law forms part of gross salary and as such is covered by the term "pay" in The rules at issue in this case provide Article 119 as being salary in the strict that in its capacity of employer the State sense of the word. Since in each case the is to assume on behalf of its officials the- assumption of payment of the contri- obligation to pay contributions due butions amounts to a benefit for the under the Old-Age Pensions Law and official and, as is clear from the Widows' and Orphans' Benefits Law consideration of the Court's 'rulings, the and this amounts to a benefit similar to conditions laid down in this regard are that in question in Worringham and fulfilled, it is also covered in other Humphreys. The gross salary of officials respects by the term "pay" in Article is in effect increased by the amount 119. The benefit is in fact paid directly which the State pays on their behalf. As by the employer and also arises directly in Worringham and Humphreys, gross from employment in the public service. salary helps to determine certain other benefits, such as mortgage and credit facilities for example, in the Netherlands, too. Furthermore, married female On the second question Mrs van Plat- eringen-Doeksen states that, according officials lose a certain advantage in so far to the judgment in Worringham and as the refund of contributions or the Humphreys, inequality in gross salaries "over-compensation" has in fact been between men and women amounts to stopped by the provisions in question. discrimination contrary to Article 119 of the EEC Treaty.

amount of contributions eventually The Netherlands Government considers payable by the official. That aim cannot that the provisions of Netherlands law however be obtained by paying for the are not contrary to Article 119 of husband and not partly for the wife, or the EEC Treaty or Directive No 75/117/EEC in which the principle that vice versa. men and women should receive equal pay for the same work is laid down. In its capacity of employer the State may, of course, change officials' remune- ration by legislative process. But it may no longer act in a way which involves sex discrimination. The assumption of payment of contri- butions due under the Old-Age Pensions Law and the Widows' and Orphans' On the direct effect of Article 119 of the Benefits Law is laid down in a statutory EEC Treaty Mrs van Plateringen- provision which was enacted by the Doeksen states that the discrimination at legislature to cover all public employees issue in this case is direct and overt, for (as well as those having the same status it involves unequal pay for men and in law). women (married to officials) for equal work in the same service and is moreover provable by legal analysis alone since it arises from statutory and administrative provisions. The sole aim of the measures in question was to end the previous situation in The Board of the University of Amsterdam which the State transferred more contri- observes first of all that Article 119 is butions than were payable by officials by directly applicable in this case but then providing that in future it should pay points out that it is clear from the first contributions only up to the maximum Defrenne case that the transfer made limits specified in the Old-Age Pensions under Article N 9 of the General Civil Law and Widow's and Orphans' Benefits Pensions Law is not part of the plaintiff's Law. In this respect the sex of officials is pay within the meaning of Article 119 of not taken into account per se. Besides the EEC Treaty. applying to female officials whose husbands are also employed in the public service the measures also apply to male The reasoning behind Article N 9 is that and female officials who are employed in incorporating the pension payable by more than one public institution. It is under the Old-Age Pensions Law in the true that in the case of a female official pension payable under the General Civil whose husband is employed in the public Pensions Law it would not be appro- service the contributions in respect of the priate to burden public officials with the man's salary are paid first, and only payment of contributions due under the then, if and so far as the maximum limit Old-Age Pensions Law. Consequently on contributions has still not been the employer assumes the burden of reached, are the contributions paid for paying the contributions. What an the woman. Although in such a case a institution pays pursuant to Article N 9 is distinction is made between men and not therefore pay for work performed women for the purpose of applying the but the assumption of a debt. There is no measures, it cannot be regarded as sex discrimination between men and women discrimination in the matter of pay, for it as regards this assumption of debt. is entirely connected with the structure

It considers that the answer to the first The Netherlands Government concludes question has already been given in the that as a general social security scheme judgments in the first Defienne case and the Old-Age Pensions Law lies outside in Worringham and Humphreys. the ambit of Article 119 of the EEC Treaty. If, however, the Court should take the view that the compensation or In the Court's decision in the first over-compensation amounts to " p a y " Defienne case the decisive factor for within the meaning of Article 119, the determining what is "pay" was the Netherlands Government points out that express requirement in the second the " p a y " in the form of compensation paragraph of Article 119 that the direct or over-compensation works out the or indirect benefit should be granted same for men and women. Finally, no to the employee "in respect of his benefits in cash or in kind are linked to employment". the compensation or over-compensation.

employment relationship between em- payment by the employer of the ployer and employee as by social policy compulsory contributions due under the considerations. The rules on the incorp- Old-Age Pensions Law, but obviously oration of the statutory pension payable only up to the statutory limits. It clearly under the Old-Age Pensions Law into falls within the ambit of Directive N o the public official's pension, which is also 79/7/EEC on the progressive im- governed by statute, as well as on plementation of the principle of equal compensation and exclusion of overcom- treatment for men and women in matters pensation are also laid down by statute of social security (Official Journal 1979, and apply by law to all public employees, L 6, p. 24). that is to say to a specific, abstractly defined category of workers. According to Article 3, the directive is to apply to : The Commission moreover draws the "(a) statutory schemes which provide Court's attention to a point Mr Advocate General Dutheillet de Lamothe also protection against the following made in his opinion in the first Defrenne risks : case, namely that the contributions are collected by the tax authorities.

In Worringham and Humphreys the Court held that "a contribution to a retirement old-age, benefits scheme which is paid by the employer in the name of the employees 99

by means of an addition to the gross salary and which helps to determine the According to Article 4 of the directive, amount of that salary is ' p a / within the "the principle of equal treatment means meaning of the second paragraph of that there shall be no discrimination Article 119 of the EEC Treaty". whatsoever on grounds of sex either directly, or indirectly by reference in The Commmission considers that particular to marital or family status, in precisely that judgment provides confir- particular as fas as concerns : mation a contrario of the first Defrenne case and of the negative reply which must be given to the first question in the present case. The obligation to contribute and the calculation of contributions, The Worringham and Humphreys case concerned two different pension schemes 5J

In view of its proposed answer to the prohibition laid down in Article : 11.9.' of first question, the Commission considers the EEC Treaty also applied to a scheme that the second question need not be which had the effect of giving.; men answered. higher (gross) pay because' the obligations to pay contributions applied only to men and not to women and the However, in case the Court should take contributions payable by men were paid the view in its answer to the first by the employer in their name by means question that Article 119 of the EEC of an addition to gross salary. Treaty does apply, the Commission considers that the obvious precedent in its case-law is Worringham and Humphreys. But that case differed from The reference to the absence of any the present case inasmuch as in obligation upon women to pay contri- Worringham and Humphreys a clear and butions is an application of the rule valid explicit distinction was drawn between for all types of discrimination prohibited male and female employees whereas in by Community law (in Articles 7, 48, 52, the present case the differences in 59, 85, 86 and 95) that prohibited treatment complained of affect only a discrimination exists only where facts or limited category of female public officials situations that are at least comparable and only in very specific circumstances. are treated differently.

JUDGMENT OF 18. 9. 1984 — CASE 23/83

on the benefits she subsequently receives, Doeksen, represented by O. W. Brouwer particularly where her marriage comes to and P. Roorda of the Amsterdam Bar, an end through her husband's death or and the Commission, represented by its through divorce. Legal Adviser, M. Beschel, assisted by F. Herbert of the' Brussels Bar, presented oral argument at the sitting on 21 March I l l — Oral procedure 1984.

One of the plaintiffs in the main The Advocate General delivered his proceedings, Mrs van Plateringen- opinion at the sitting on 8 May 1984.

Decision

, By order of 20 January 1983, received at the Court Registry on 16 February 1983, the Centrale Raad van Beroep, Utrecht, submitted to the Court tor a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation of Article 119 of the EEC treaty.

2 That order was made in the context of nine actions brought by the plaintiffs in the main proceedings against the various public authorities which employ them.

6 Before 1972, if the amounts paid by the public authority exceeded that maximum limit, the surplus (called "over-compensation") was paid back by the collector of taxes, not to the public authority which paid it but to the civil servants concerned. Obviously, that payment was financially advan- tageous for them. The recipients of "over-compensation" were mostly civil servants who worked at the same time for different public authorities, each of which paid separate contributions under the Old-Age Law and the Widows and Orphans Law, and the wives of civil servants employed by an authority other than the one for which their husbands worked.

" 1 . Must the term ' p a / appearing in Article 119 of the EEC Treaty be construed as including the 'compensation', or, in certain cases, the amount referred to as 'the overcompensation' which the employing public authority formerly paid to the tax authorities in excess of the maximum contributions due under the Algemene Ouderdomswet and the Algemene Weduwen en Wezenwet but which now no longer need be paid by such an authority? 2. If the answer to the first question is in the affirmative, must Article 119 of the Treaty be construed as meaning that the system in force in the Netherlands based on the Wet Gemeenschaappelijke Bepalingen Overheidspensioenwetten must be regarded as being contrary to the principle that men and women should receive equal pay for equal work laid down in Article 119 because, under that system, in those cases in which the joint contributions due under the Algemene Ouderdomswet and the Algemene Weduwen en Wezenwet for a married couple employed in the public service exceed the maximum amounts of contri- butions due, the contributions are primarily paid by the husband's employer while the wife's employer continues to pay contributions only in so far as the maximum amount of contributions due is not exceeded?"

io Those questions relate to a social security scheme under which :

1. the contributions are calculated on the basis of the employee's salary but may not exceed a certain limit. 2. a husband and wife are treated as one person, the contributions being calculated on the basis of their combined salaries, subject once again to the upper limit, 3. the State is bound to pay on behalf of its employee the contributions owed by him, and

u Consequently, the amounts which the public authorities are obliged to pay in respect of contributions owed to the social security scheme by persons working for the State and which are included in the calculation of the gross salary payable to civil servants must be regarded as pay within the meaning of Article 119 since they directly determine the calculation of other advantages linked to the salary.

JUDGMENT OF 18. 9. 1984 — CASE 23/83

H The principle that men and women should receive equal pay for equal work, as laid down in Article 119, has not therefore been complied with in so far as those other advantages linked to the salary and determined by the gross salary are not the same for male civil servants and for female civil servants whose husbands are also civil servants.

is The reply to the questions raised by the national court must therefore be that a social security scheme under which:

1. the contributions are calculated on the basis of the employee's salary but may not exceed a certain limit,

2. a husband and wife are treated as one person, the contributions being calculated on the basis of their combined salaries, subject once again to the upper limit,

On those grounds,

THE COURT in answer to the questions referred to it by the Centrale Raad van Beroep, Utrecht, by order of 20 January 1983, hereby rules: A social security scheme under which: 1. the contributions are calculated on the basis of the employee's salary but may not exceed a certain limit, 2. a husband and wife are treated as one person, the contributions being calculated on the basis of their combined salaries, subject once again to the upper limit, 3. the State is bound to pay on behalf of its employee the contributions owed by him, and 4. where husband and wife are both civil servants, the authority employing the husband is primarily responsible for paying the contri- butions and the authority employing the wife is required to pay the contributions only in so far as the upper Umit is not reached by the contributions paid on behalf of the husband, is incompatible with the principle laid down in Article 119 of the EEC Treaty that men and women should receive equal pay for equal work, in so far as the resultant differences between the gross salary of a female civil servant whose husband is also a civil servant and the gross salary of a male civil servant directly affect the calculation of other benefits dependent on salary, such as severance pay, unemployment benefit, family allowances and loan facilities.

Mackenzie Stuart Koopmans Bahlmann Galmot

Pescatore O'Keeffe Bosco Due Everling

Delivered in open court in Luxembourg on 18 September 1984.

P. Heim A. J. Mackenzie Stuart Registrar President