C-307/87

KLEIN v COMMISSION

OPINION OF MR ADVOCATE GENERAL JACOBS delivered on 7 December 1988 *

My Lords, entitled to a monthly allowance equal to 70% of the basic salary for the grade and step held at the time of departure' (Article 4(1)). Article 4(5) of the Regulation provides: 'Under the conditions set out in Article 67 of the Staff Regulations and Articles 1, 2 and 3 of Annex VII to the Staff Regulations, family allowances shall be 1. Mrs Klein was an official of the payable ... to the recipient of the allowance Commission in Grade LA 4 and her provided for in paragraph 1 ... ; the husband, Mr Lorentzen, was an official of household allowance shall be calculated by the Council in Grade LA 5. As they had no reference to that allowance'. On the other dependent children and the salary of each hand, Article 81 of the Staff Regulations of them was in excess of the specified provides: 'A person entitled to ... an inva­ minimum, they did not originally qualify for lidity pension . .. shall be entitled, under the household allowance under Article 67 of conditions laid down in Annex VII, to the and Annex VII, Article 1(3), to the Staff family allowances specified in Article 67; the Regulations. With effect from 1 May 1986 household allowance shall be calculated by the Commission awarded Mrs Klein an reference to the pension of the recipient'. invalidity pension under Article 78 of the The question therefore arose whether the Staff Regulations, whereupon her husband household allowance should continue to be became entitled to household allowance, paid to the husband on the basis of his which was duly paid to him by the Council allowance under Regulation No 3518/85 or from then on. whether that payment should cease and the household allowance should be paid to the wife by reference to the amount of her inva­ lidity pension. The latter would have resulted in a significantly higher payment.

notified by a letter dated 10 July 1987 the entitled to the household allowance, this Commission rejected that complaint. By an shall be payable only to the person whose application lodged at the Court on 8 basic salary is the higher.' October 1987 Mrs Klein claimed the annulment of the Commission's decision of 17 December 1986 refusing her the household allowance and, so far as necessary, the annulment of the decision of 1 July 1987 rejecting her complaint, and she 5. Applying Article 1(4), mutatis mutandis, asked for costs. to the case of herself and her husband, Mrs Klein argues that because her invalidity pension is higher than her husband's allowance under Regulation No 3518/85, the household allowance should be paid to her by reference to her invalidity pension as 4. The entitlement of both husband and from 1 October 1986, the date when her wife to household allowance is governed by husband became entitled to an allowance Article 1 of Annex VII to the Staff Regu­ under Regulation No 3518/85. lations, which applies to the wife by virtue of Anicie 81 of the Staff Regulations and to the husband by virtue of Article 4(5) of Regulation No 3518/85. Article 1(3) of Annex VII provides:

6. The Commission, on the other hand, argues in substance that Mr Lorentzen has to be treated as 'gainfully employed' within the meaning of Article 1(3) of Annex VII 'If the spouse of an official is gainfully with the result that Article 1(3) operates to employed, with an annual income before bar Mrs Klein's entitlement to the deduction of tax, of more than the basic household allowance. The issue in the case annual salary of an official in the third step is therefore whether being in receipt of an of Grade C3, weighted at the rate for the allowance under Regulation No 3518/85 country where the spouse carries out his or can be considered as being 'gainfully her occupation, the official entitled to the employed' within the meaning of Article household allowance shall not receive this 1(3) of Annex VII to the Staff Regulations. allowance save by special decision of the appointing authority . . . '.

8. The Commission argues, however, that of the principle of equality, as the Article 1(3) was designed to make an Commission contends. That would be the official's entitlement to household allowance case where similar situations were treated subject to the condition that the official's differently, but in the examples given by the spouse should not be in receipt of income Commission the situations are different: exceeding a certain amount from an occu­ whether as an official or in the private pational origin. It submits that in sector, the spouse in the examples is in accordance with that purpose Article 1(3) active employment, whereas the measure should be read as extending, beyond income adopted under Regulation No 3518/85 in arising from actual present employment, to relation to the spouse in the present case include income relating to work although is one which definitively terminates not directly arising from work, such as employment. social security sickness benefits, salary paid while an official is on sick leave, unem­ ployment benefit, redundancy benefit, early retirement pension or allowances paid to officials in the context of special measures terminating the service of officials as a result of the accession of new Member States. The true intention of the legislator was to withhold the household allowance from officials without dependent children where their spouse had occupational income exceeding a certain amount. The phrase 'gainfully employed' refers to the most frequent case of occupational income, but was not intended to exclude rarer cases such as sick pay, early retirement pension or allowances like those under Regulation No 3518/85. A literal reading of Article 1(3) would lead to results contrary to the intention of the legislator and to the principle of equality. For example, on a literal reading, a married couple of officials 10. Whilst I can see some force in the in Category A and without dependent argument that Article 1(3) was intended to children would not be entitled to household catch some forms of income other than allowance while both were on active income arising from actual present employment but would become entitled to it employment, it is my view that a reading as if one of them took an allowance under broad as that contended for by the Regulation No 3518/85, although the Commission cannot stand in the face of the couple would still be earning far more than clear wording of that provision. Article 1(3) a couple of officials in Grade C4 or a refers in the English version to a person couple where the spouse was earning, in the being 'gainfully employed' and in the private sector, a salary slightly above the French version to a person who 'exerce une threshold specified in Article 1(3). activité professionnelle lucrative'. As I read them, those expressions clearly put exclusive emphasis on the present and actual carrying out of work as the source of the income. The words are too clear to be overridden by 9. I do not consider that interpreting an interpretation such as that advanced by Article 1(3) literally would result in a breach the Commission.

11. Even if it were accepted that Article 'replacement income' as I understand that 1 (3) should be deemed to extend to some term. The regulation provides for 'measures forms of what the Commission describes as terminating the service of officials', i.e. the 'replacement income', the proper scope of definitive termination of work, as the such an extension is quite unclear. Whilst it French version ('cessation définitive de might be possible to maintain that sick pay fonctions') makes particularly clear.

Argument has been addressed in this case to possible similarities and possible differences between retirement 13. The Commission also suggests that pensions and early retirement payments for Article 1(3) of the Annex should not be read the purposes of national law and for the literally because it was drafted before purposes of Regulation No 1408/71, but it measures terminating the service of officials is unclear how far they are relevant in the upon accession of new Member States (such different context of the Staff Regulations. as those in Regulation No 3518/85) had These difficulties indicate to my mind that ever been adopted, as the rule which is now redefinition of the scope of Article 1(3), if contained in Article 1(3) was first enacted in appropriate, is a matter to be dealt with by the Staff Regulations in 1962.

That amendment was adopted shortly after the first enlargement of the Communities when a regulation providing for special measures to terminate the service of officials upon the accession of new Member States had just been adopted for the first time: Regulation 12. In any event, I would not accept that No 2530/72 of 4 December 1972 (Official the allowance paid under Council Regu Journal, English Special Edition 1972 (1-8 lation No 3518/85 could be categorized as December), p. 11).

KLEIN v COMMISSION

quite possible to provide for the situation in antiquity of the rule in question has no the 1973 amendment of Article 1(3) or in force. subsequent amendments to the Staff Regu­ lations, particularly on the occasion of the 14. The decisive consideration, in my two subsequent enlargements of the opinion, is that the language of Article 1(3) Communities in 1981 and 1986. Alter­ of Annex VII is clear and unambiguous, and natively, special provision could have been that officials are entitled to rely on the clear made, had that been thought necessary, in terms of the regulations as they stand. In my the regulations providing for special view, an official, such as Mr Lorentzen, in measures terminating the service of officials receipt of an allowance under Regulation as a result of the accession of new Member No 3518/85 cannot be treated as being States, in particular Regulation No 3518/85 'gainfully employed' so as to fall within the at issue in the present case. Neither type of ambit of Article 1(3) of Annex VII. That amendment has been adopted, notwith­ provision is inapplicable to the present case, standing the numerous opportunities to do which therefore falls to be dealt with so which there have been since measures for pursuant to Article 1(4) of the Annex, under terminating the service of officials on the which Mrs Klein is entitled to the accession of new Member States were first household allowance calculated by reference introduced. Accordingly, it seems to me that to the amount of her invalidity pension as the Commission's argument based on the from 1 October 1986.