C-406/93

1. Where, under national legislation, the amount of invalidity benefit depends upon the final salary of the claimant, is the compe­ tent institution of the Member State con­ cerned obliged to take into account a final salary earned in another Member State? 3. Belgium and Luxembourg have different That, in substance, is the issue raised in the types of legislation on invalidity benefits. present case, which comes to the Court by The Belgian legislation is of a kind known as way of a reference for a preliminary ruling 'Type A legislation', under which the from the Tribunal du Travail, Neufchâteau. amount of invalidity benefit does not depend on the length of insurance periods completed in Belgium; it depends instead upon the final salary earned by the claimant before becom­ ing unfit for work. Under the Luxembourg legislation ('Type B legislation'), on the other hand, the amount of invalidity benefit depends upon the length of the insurance periods completed. Council Regulation (EEC) No 1408/71 contains provisions coor­ dinating the award of invalidity benefits 2. The plaintiff in the main proceedings, Mr where a migrant worker has been subject to Reichling, is a Belgian national who worked schemes of both Type A and Type B. 1Arti- successively in Belgium (for a total of 7 569 cle 40(1) of the regulation provides that, days) and Luxembourg, where he worked where an employed person has been succes- for 734 days before being obliged, on 11 November 1989, to give up work on account of illness. Following an application made on 8 November 1990, Mr Reichling was 1 — Council Regulation (EEC) No 1408/71 of 14 June 1971 on awarded an invalidity pension by the defen­ the application of social security schemes to employed per­ sons, to self-employed persons and to members of their fam­ dant in the main proceedings, the Belgian ilies moving within the Community: sec the amended and updated version established by Council Regulation (EEC) No 2001/83 of 2 June 1983 (OJ 1983 L 230, p. 6). Although Articles 40, 45 and 46 of the regulation, referred to below, were subsequently amended by Council Regulation (EEC) No 1248/92 of 30 April 1992 (OJ 1992 L 136, p. 7), those * Original language: English. amendments are not material to the present case.

'The institution shall calculate the theoretical amount of benefit that the person concerned could claim if all the periods of insurance or , residence completed under the legislation of 4. Article 46(2) lays down the rules for the the Member States to which the employed or calculation of benefits where, as in this case, self-employed person has been subject had the conditions for entitlement to benefits are been completed in the Member State in ques­ satisfied only by virtue of the provisions of tion and under the legislation administered Article 45. Those rules are based on the prin­ ciple of aggregation of periods of residence and insurance completed in different Mem­ 2 — Joined Cases C-90/91 and C-91/91 Office National des Pen- ber States and apportionment of the resultant sions v Di Crescenzo and Casagrande [1992] ECRI-3851.

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REICHLING v INAMI

by it on the date the benefit is awarded. If, an invalidity allowance which is wholly or under that legislation, the amount of the partly payable by that scheme under an benefit does not depend on the length of the international convention or regulation on periods completed then that amount shall be social security shall be that referred to in taken as the theoretical amount referred to in Article 27(2).' this subparagraph.'

Since under the Belgian legislation the Article 27(2), which is in fact intended to amount of the benefit does not depend on cover cases in which the claimant has no the length of the periods completed, the sec­ earned income, provides that the 'remunera­ ond sentence of Article 46(2)(a) applies. The tion lost shall be equal to the minimum theoretical amount is therefore equal to the remuneration laid down for a category I amount of the invalidity benefit provided for employee by the Commission Paritaire by the Belgian rules. Nationale Auxiliaire pour Employés, having regard to the age of the person entitled at the date on which he becomes incapacitated for work'.

under the legislation applicable at the time 1 June 1992. The dispute before the national when the benefit was awarded, so that the court is therefore limited to the period competent institution could not rely on any from 11 November 1990 to 31 May 1992. period during which the person concerned was not subject to the social security system of the Member State in question in determin­ ing the amount of the benefit without taking account of the pay last received by the worker, that is to say in a different manner from that applicable to workers having ceased work on grounds of illness in the Member State in question?' 9. In his written observations to the Court Mr Reichling contends primarily that the INAMI ought to have calculated his benefit on the basis of his Luxembourg salary. He is supported in that contention by the Com­ mission, and their arguments are largely 8. It may be noted that the Belgian legisla­ identical. They maintain that Articles 45, tion was amended with effect from 1 46(2) and 47 of Regulation No 1408/71 June 1992 following the adoption of Council merely give effect to the principles laid down Regulation (EEC) No 1248/92. 3Point 9 of in Article 51 of the Treaty and point out that Annex VI A of Regulation No 1408/71, as under that article the principle of aggregation amended by Regulation No 1248/92, pro­ applies not only to acquisition and retention vides: of entitlement to benefits but also to calcula­ tion thereof. The migrant worker's benefit must, they argue, be calculated by ficti­ tiously transposing into Belgium the insur­ ance position of the worker in another Mem­ ber State; the theoretical amount is thus the 'In the calculation of the theoretical amount benefit which the worker would receive if he of an invalidity pension, as referred to in had spent his entire working life in Belgium. Article 46(2) of the regulation, the competent Belgian institution shall take as its basis the income received in the profession last exer­ cised by the person concerned.'

10. The INAMI argues that the second sen­ mally payable under its legislation to a per­ tence of Article 46(2)(a) contains an unequiv­ son in the migrant worker's situation, differ­ ocal reference to the national legislation. The ent wording might have been expected. INAMI calculated Mr Reichling's benefit in accordance with the national rules which apply where no actual salary figure is avail­ able. This was not discriminatory since the same method is used for workers who have been subject solely to the Belgian legislation. The principle of aggregation of insurance periods does not apply to the calculation of benefits in the case of Type A legislation. 12. That view is supported by the aims and scheme of the regulation. As is apparent from Article 51 of the Treaty, Regulation No 1408/71 is intended to play a part in ensuring freedom of movement for workers by securing for migrant workers and their families 'aggregation, for the purpose of acquiring and retaining the right to benefit and of calculating the amount of benefit, of all periods taken into account under the laws of the several countries'. That aim is simi­ larly expressed in the preamble to the regu­ lation: see the sixth recital. The regulation thus seeks to ensure that migrant workers 11. In my view, where under the legislation suffer neither a loss of entitlement to social of a Member State the amount of invalidity security benefits, nor a reduction in the benefit does not depend on the length of amount of such benefits, as a result of work­ insurance periods completed, the second sen­ ing in more than one Member State. tence of Article 46(2)(a) requires the compe­ tent institution of the Member State to calcu­ late the theoretical amount of invalidity benefit on the same basis as it calculates such a benefit in a purely domestic situation. That is suggested first of all by the wording of the provision, which states that the theoretical amount is the invalidity benefit payable under the legislation of the Member State 13. In the case of invalidity benefits the reg­ concerned. That provision does not, as the ulation in fact lays down separate rules for INAMI seems to suggest, simply state that two different types of situation: the theoretical amount is to be determined by national law but links the theoretical amount to the amount of the invalidity ben- efit provided for by national law. If it had been the intention to allow a Member State applying Type A legislation to calculate the theoretical amount of a migrant worker's (a) where the claimant has worked only in benefit in a manner which led to a substan­ Member States with Type A legislation tially different result from the benefit nor­ (Articles 37 to 39);

14. Case (a) is relatively straightforward. The primary rule is that the worker receives benefits solely from the State whose legisla­ tion was applicable at the moment when the incapacity, followed by invalidity, occurred (Article 39(1) and (2)). Pursuant to Article 38 periods of insurance or residence in other Member States are aggregated where neces­ sary, but only for the purposes of acquisi­ tion, retention or recovery of entitlement. Detailed provisions on calculation of the amount of benefit are unnecessary since the 16. As regards calculation of the benefit, it is worker simply receives the appropriate true that, as the INAMI points out, calcula­ amount of benefit for a person in his situa­ tion of the amount of benefit is not based on tion under the applicable national legislation. aggregation of insurance periods in the case of a Member State with Type A legislation. The underlying aims and principle are never­ theless the same for both types of legislation. Under Article 46 each State calculates the full amount of benefit due under its legisla­ tion for a person in the migrant worker's position (the theoretical amount) and then reduces it in proportion to the period of insurance or residence in its territory (the actual amount). The different calculations of 15. The position is more complicated in case the theoretical amount in Article 46(2)(a) (b). Aggregation of periods of insurance and simply reflect the different characteristics of residence is necessaiy not only for the pur­ Type A and Type B legislation. A State pose of acquisition, retention or recovery of applying Type B legislation calculates bene­ entitlement to benefit but also, in some cases, fits by reference to periods of insurance or for the purpose of calculating the amount of residence and must necessarily therefore benefit. As regards entitlement, Article 45(1) undertake a Community-wide calculation. A requires Member States — whether their leg­ State applying Type A legislation does not islation is of Type A or Type B — which need to do this. The theoretical amount is

17. The foregoing outline of the relevant rules indicates that the scheme of the regula­ tion is, as Mr Reichling and the Commission contend, to require each Member State to transpose the insurance position of the migrant worker into its territory for the pur­ poses of both entitlement and calculation of the benefit. In case (a) the worker is entitled by virtue of the regulation to the appropriate invalidity benefit for a person in his situation from a single Member State. In case (b) the 19. In support of its view the Commission theoretical amount of benefit is similarly refers to a number of cases in which the intended to represent the amount to which Court has held that facts or events in other the worker would be entitled if he had spent Member States are to be assimilated to his entire working life in the Member State domestic facts or events: see for example the concerned. The amount is then reduced in judgment in Galati, 4 in which the Court proportion to the periods of insurance or held that, where for the purposes of invalid­ residence in the Member State to produce ity benefits an insurance period of less than the actual benefit due. The aims and scheme one month completed in Germany had to be of the regulation would be seriously under­ rounded up to one month under German mined if, in the case of a migrant worker, a law, the same applied to insurance periods Member State applying Type A legislation completed under the legislation of other were permitted to replace the normal calcu­ Member States; see also the judgments in lation by a wholly artificial one which led to 5 Bronzino and Gatto where the Court held a much lower theoretical amount than the that a condition of entitlement to family amount of benefit payable to a worker in an benefits whereby a worker's child had to be equivalent situation who had been subject to registered as unemployed with the employ­ the legislation of that State alone. That is ment office of the Member State providing precisely the case here. Instead of calculating the benefits had to be considered to be ful­ Mr Reichling's benefit on the basis of his filled where the child was registered as final salary as it would do in the case of a worker still subject to the Belgian legislation, the INAMI equated Mr Reichling with a person who had no earned income and cal­ 4 — Case 33/75 Galati v Landesversicherimgsanstalt Schwaben [1975] ECR 1323. culated his benefit by reference to a collec­ 5 — Case C-228/88 Bronzino v Kindergeld/nun: [1990] ECR tively agreed minimum wage. I-531 and Case C-12/89 Gatto v Bundesanstalt für Arbeit [1990] ECR I-557.

unemployed with the employment office of late the benefit taking account of the final the Member State where he resided. salary received by the frontier worker in the Member State in which he was last employed. It reasoned that the provisions of Article 68(1) did not contemplate the case of frontier workers, who by reason of being resident and employed in different Member States would always fall within the exception 20. A closer analogy is perhaps to be found under the second sentence of Article 68(1) 6 in the Fellinger case, in which the Court and would never be able to receive unem­ required the State of residence of a frontier ployment benefit on the basis of the salary worker to base the calculation of his unem­ earned in their last employment. The Court ployment benefit on his final salary earned in concluded that a literal interpretation of the another Member State. By virtue of Arti­ provisions would conflict with the require­ cle 71(1)(a)(ii) of the regulation the frontier ments of the free movement of workers and worker's State of residence was responsible that the provision should therefore be inter­ for payment of the benefit. The first sentence preted in the light of Article 51 of the Treaty of Article 68(1) of the regulation required and the general principle underlying the reg­ the State of residence, where its legislation ulation. provided that the calculation of benefits should be based on the amount of the previ­ ous wage or salary, to 'take into account exclusively the wage or salary received by the person concerned in respect of his last employment in the territory of that State'. However, by virtue of the second sentence, where the claimant had been in his last employment for less than four weeks, the benefits were to be calculated on the basis of the normal wage or salary corresponding, in the place where the unemployed person was residing or staying, to an equivalent employ­ 22. It seems to me that similar consider­ ment in the territory of another Member ations apply here. Prior to its amendment the State. Belgian legislation constituted no less an impediment to the free movement of work­ ers. Indeed its effect in this case would be to deprive Mr Reichling of the right which he would otherwise have to invalidity benefit based on his final salary solely because he spent the last few years of his working life in 21. Notwithstanding the wording of the another Member State. Moreover, whereas in provision, the Court held that the first sen­ Fellinger the Court was obliged to go tence of Article 68(1) was to be interpreted beyond the literal wording of the provision as requiring the State of residence to calcu­ in order to supply a lacuna in the Commu­ nity legislation, in this case the interpretation which I have proposed is, as already stated, entirely consistent with the wording of the 6 — Case 67/79 Fellinger v Bundesanstalt für Arbeit [1980] provision itself. ECR 535.

24. In my view the Court's judgment in Weber 7clearly indicates that Article 47 of the regulation is inapplicable in a case such as the present. The Weber case concerned the Netherlands legislation on invalidity benefits which, like the Belgian legislation at issue 'For the calculation of the theoretical here, was of Type A. Invalidity benefit was amount referred to in Article 46(2)(a), the based on the daily wage which the claimant following rules shall apply: could have earned in the year following the date of his invalidity, which in the case of a single occupation meant in practice his aver­ age wage during the year preceding his inval­ idity. Mr Weber, who had previously worked in the Netherlands, moved to work in Ger­ many before becoming unfit for work. Unlike the Belgian INAMI in this case, the (a) where, under the legislation of a Member Netherlands institution calculated the theo­ State, benefits are calculated on the basis retical amount of Mr Weber's benefit on the of average earnings, an average contribu­ basis of his salary in the other Member State, tion, an average increase or on the ratio i. e. his German salary. Mr Weber contended which existed, during the periods of however that it should have calculated the insurance, between the claimant's gross theoretical amount on the basis of his aver­ earnings and the average gross earnings of age earnings in the Netherlands under Arti­ all insured persons other than appren­ cle 47(1). The Court held that the cases tices, such average figures or ratios shall envisaged by Article 47(1) did not include a be determined by the competent institu­ system of disability benefits under which the tion of that State solely on the basis of amount of benefit did not depend on the the periods of insurance completed under length of insurance periods completed and the legislation of the said State, or the which, for the calculation of the loss of earn­ gross earnings received by the person ings, took into account the last fixed wage concerned during those periods only ....' received by the person concerned in his usual occupation before becoming incapaci­ tated for work or the average wage received by him for a specific period of not more than two years. In my view that ruling is equally applicable to the Belgian legislation, which calculates invalidity benefit by reference to the claimant's final salary.

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