C-139/95

BALESTRA ν INPS

OPINION OF ADVOCATE GENERAL ELMER delivered on 17 October 1996

1. In this case, the Pretura Circondariale di The relevant rules of national law Genova (District Magistrate's Court, Genoa) (Italy), has referred to the Court a number of questions on the interpretation of Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards 3. Under Article 9 of Law N o 218/1952, access to employment, vocational training male employees are entitled to a retirement and promotion, and working conditions 1 pension on reaching the age of 60, while ('Directive 76/207') and of Council Directive female employees are so entitled on reaching 79/7/EEC of 19 December 1978 on the pro­ the age of 55. For each group, entitlement is gressive implementation of the principle of conditional on the person concerned being equal treatment for men and women in mat­ credited with at least 180 monthly contribu­ ters of social security 2 ('Directive 79/7'). tions or 780 weekly contributions.

4. In its Judgment N o 371 of 6 July 1989, 3 the Italian Corte Costituzionale (Constitu­ tional Court) held that both men and women are entitled to work until they reach the age of 60. A woman who chooses not to retire on reaching the age of 55 is entitled to con­ tinue to pay contributions and thus obtain a larger pension when she finally leaves the 2. Those questions have been submitted in labour market. the context of national legislation under which women employed in an undertaking declared to be in critical difficulty may take early retirement on reaching the age of 50 and receive credit for pension contributions for the period until they reach the age of 55, while the corresponding age-limits for men 5. Article 16 of Law N o 155 of are 55 and 60 respectively. 23 April 1981 4 (hereinafter 'the Law') sets out the rules on early retirement for

Facts of the case

6. Livia Balestra, an employee in an under­ The relevant rules of Community law taking declared by the CIPI to be in critical difficulty, applied to the Istituto Nazionale della Previdenza Sociale (National Institute of Social Security, hereinafter 'the INPS') for an early-retirement pension in accordance with Article 16 of the Law. She was at that time 54 years and seven months old, and was 10. The first paragraph of Article 119 of the credited by the INPS with five months' con­ Treaty sets out the principle that men and tributions corresponding to the period by women should receive equal pay for equal which, when her employment relationship ended, she fell short of the age of 55 and, thus, entitlement to a retirement pension. 5 — Giust. Civ. 1994, p. 8.

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BALESTRA ν INPS

work. According to the second paragraph of Article 2 Article 119, 'pay' means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives, directly or indi­ 1. For the purposes of the following provi­ rectly, in respect of his employment from his sions, the principle of equal treatment shall employer. mean that there shall be no discrimination whatsoever on grounds of sex either directly or indirectly by reference in particular to marital or family status.

11. Directive 76/207 includes the following provisions:

security and other elements of social protec- — unemployment; tion provided for in Article 3, of the prin- ciple of equal treatment for men and women in matters of social security, hereinafter referred to as "the principle of equal treat- ment".

Article 2 Article 4

This Directive shall apply to the working population — including self-employed per- 1. The principle of equal treatment means sons, workers and self-employed persons that there shall be no discrimination whatso- whose activity is interrupted by illness, acci- ever on grounds of sex either directly or dent or involuntary unemployment and per- indirectly by reference in particular to mari- sons seeking employment — and to retired tal or family status, in particular as concerns: or invalided workers and self-employed per- sons.

— the scope of the schemes and the condi- Article 3 tions of access thereto,

1. This Directive shall apply to: — the obligation to contribute and the cal- culation of contributions,

(a) statutory schemes which provide protec- tion against the following risks:

The questions submitted for a preliminary 14. Those questions are not very clearly for­ ruling mulated. The first question appears very gen­ erally to concern the scope of the principle of equal treatment in relation to dismissal, entitlement to early retirement and the rules on the calculation of benefits. The second 13. By order of 19 April 1995, the Pretura question covers in large measure the same Circondariale di Genova submitted the fol­ ground as the first question, particularly lowing questions to the Court for a prelimi­ with regard to entitlement to early retire­ nary ruling: ment and the calculation of benefits, but specifies that it is being posed in the context of a legal system, such as the Italian, under which both men and women are entitled to remain at work until they reach the age of 60. '(a) Is it contrary to the abovementioned EEC directives (Articles 1, 2, 3, 4 and 5 of Council Directive 79/7/EEC of 1978 and Articles 1, 2 and 5 of Council Directive 76/207/EEC of 1976) to establish different age-limits for the 15. In this connection, however, I would working lives of men and women for stress that it is clear from the case that the purposes of entitlement to early Mrs Balestra has not claimed that she was

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17. Similarly, it is, in my view, difficult to see how it can be of relevance to the main pro­ ceedings to obtain a reply to the question

If the Court should, however, wish to address that matter, in the light of its case- 6 — Emphasis added. 7 — See also Case C-328/91 Thomas [1993] ECR I-1247, para­ law, according to which it is in principle for graph 17; Case 262/84 Beets-Proper [1986] ECR 773, para­ graph 40; and Case 151/84 Roberts [1986] ECR 703, para­ the national court to assess whether the graph 37. questions which it submits are relevant, it 8 — See, in this connection, paragraph 32 of the judgment in might be pointed out that the Court ruled, at Roberts, cited in footnote 7. 9 — See the judgment in Marshall, cited above, paragraphs 36 paragraph 38 of its judgment in Case 152/84 and 37.

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OPINION OF MR ELMER — CASE C-139/95

21. The Commission argues that this case reply to the question submitted, as reformu- involves social security and not pay, as dealt lated above. with in Article 119 of the Treaty, and that Directive 79/7 is the relevant measure in so far as early retirement constitutes a real choice. Directive 79/7 covers early retire- ment. In the Commission's opinion, the scheme set out in Article 16 of the Law involves discrimination against female employees. After reaching the age of 55, 23. According to Article 5(1), Directive women, in contrast to men, are not entitled 76/207 covers working conditions, including to be credited with pension contributions. the conditions governing dismissal. Pay, All other things being equal, male employees which is a fundamental working condition, who elect, at the age of 55, to take early is, however, not covered by Directive 76/207, retirement will receive a higher pension than since, apart from being covered by Article 55 year-old women who elect to receive the 119 of the Treaty, it is dealt with separately old-age pension. A woman must thus work in Directive 75/117 of 10 February 1975 on until she reaches the age of 60 in order to the approximation of the laws of the Mem- receive the same pension as the male ber States relating to the application of the employee. In the view of the Commission, principle of equal pay for men and this difference in treatment is not covered by women, 10 which fleshes out the above the derogating provision in Article 7(l)(a) of Treaty provision. In its case-law, the Court Directive 79/7 since it is not objectively and has interpreted 'pay' as also including ben- necessarily connected to the difference in efits which, as a result of an employment pensionable age. Female employees must relationship, are paid after that relationship therefore, in the Commission's view, be ceases, for instance in the form of redun- entitled, in the same way as male employees, dancy payments or the grant of a pension. 11 to be credited with up to five years' pension The fact that the benefit is statutory is not contributions for the period from age 55 to conclusive. 12 age 60.

Directive 79/7. It also follows from the issue of the fixing of an age-limit with regard Court's case-law that social-security benefits to the termination of the employment rela­ which are directly governed by legislation tionship (Directive 76/207). and obligatorily applicable to general catego­ ries of workers are not covered by Article 119 of the Treaty, since such benefits are determined less by the employment relation­ ship than by considerations of social policy. 13 It is for that reason necessary to choose between those measures. 27. It can, in my opinion, be inferred from this case-law that Article 119 of the Treaty applies to all benefits (whether in cash or in kind), including pension benefits and redun­ dancy compensation, which result from the employment relationship between the employee and the employer, whereas Direc­ 25. Concerning the relationship between tive 79/7 covers benefits (whether in cash or Article 119 of the Treaty and Directive in kind) under general statutory schemes and 76/207, the Court, in its judgment in Case primarily attributable to considerations of 19/81 Burton, 14 a case concerning a volun­ social policy. Directive 76/207 is thus a tary redundancy scheme, attached impor­ residual measure, which, inter alia, covers tance to whether the question submitted conditions of engagement and dismissal related to the redundancy compensation relating to benefits other than those in cash itself or whether it involved the issue as to or in kind, whether statutory or contractual whether the conditions of access to the in origin. scheme — that is to say, the age-limits — were discriminatory.

to be in critical difficulty. The scheme is 32. According to the Court's case-law, designed to enable an undertaking in critical Article 3(1) covers benefits which constitute difficulty to shed redundant employees who the whole or part of a statutory scheme pro­ add to its costs. The benefit is thus condi­ viding protection against the risks speci­ tional on the recipient's quitting his or her 1 fied. 7 A benefit ensures protection against job in a specific undertaking declared to be one of the risks specified if it is directly and in critical difficulty. There is therefore a con­ effectively linked to the protection provided nection with a specific employment relation­ 18 against the risk in question. The Court has ship. If, that notwithstanding, I take the view most recently set out its views on the specific that a scheme such as that contained in content of that criterion in its judgment of Article 16(1) of the Law must be classified as 11 July 1996 in Case C-228/94 Atkins, which social security, this is because it constitutes concerned concessionary travel fares fixed by an integral part of the social-security sys­ a local authority for elderly and invalid users tem. 1 6 The benefit consists in an advance of public transport. Paragraphs 16 to 19 of payment of the normal statutory retirement the judgment set out the following reasons pension and it is therefore only with diffi­ why the Court took the view that such a culty that the benefit can be distinguished benefit did not come within the scope of from the ordinary social-security system. Directive 79/7: Moreover, the employer's portion of the costs associated with the credit is paid to the national Treasury as a fiscal charge.

Old age and invalidity, which are among the risks listed in Article 3(1 )(a) of Directive 79/7, are only two of the criteria which may be applied to define the classes of beneficia­ 34. The decision in Atkins cannot be said to ries of such a scheme of concessionary public have particularly clarified the issue of the transport fares. demarcation of the scope of Directive 79/7, but, on the contrary, has left national legisla­ tures with a certain latitude to implement arrangements in favour of the groups at risk covered by the Directive without complying with the fundamental principle of equality if the benefit does not form part of the social- security system, which the judgment inter­ prets narrowly. The decision must therefore The fact that the recipient of a benefit is, as a be read as expressing the view that Directive matter of fact, in one of the situations envis­ 79/7 applies only to benefits which, consid­ aged by Article 3(1) of Directive 79/7 does ered objectively, lie at the heart of social not suffice to bring that benefit as such security. In order to come within the scope within the scope of the Directive (see Joined of the Directive, a benefit must therefore be Cases C-63/91 and C-64/91 Jackson and inseparably linked to protection against one Cresswell [1992] ECR I-4737, paragraphs 18 of the risks listed in Article 3(1 )(a) of the and 19).' Directive. As an example of such a benefit, one might refer to that of exemption from prescription charges, which formed the subject-matter of Case C-137/94 Richard­ son. 1 9 Such a benefit is inseparably linked to the risk of sickness since very few people are inclined, or have the opportunity, to obtain medicaments subject to prescription charges unless they are ill. More difficult problems 33. The Court thus attaches conclusive arise in so far as the benefit consists of cash weight to the primary objective of the ben­ efit, in Atkins the reduction in the cost of public transport. It is not sufficient in itself that the criteria laid down for the granting of 19 — Cited in footnote 18.

37. The fact that the purpose of this scheme is to facilitate reconstruction of undertakings in critical difficulty ought not, in my view, to be sufficient in itself to bring the scheme in question outside the scope of Directive 79/7, even though the Court's reasoning in Atkins points in that direction. This subjective 35. According to the case-law, the require- intention on the part of the legislature does ment in Article 3(l)(a) that there should be a not alter the fact that the effort to attain that statutory scheme means that the benefit must objective is made with the help of a social be provided for by statute. 20 However, no benefit intended to ensure for specific groups significance attaches to the actual financing of individuals, namely women aged between of the benefit. Directive 79/7 thus covers 50 and 54 and men aged between 55 and 59, both contributions-based benefits and ben- an income enabling them to leave the labour efits funded solely from State resources. 21 market up to five years before they become entitled to a retirement pension. Such a scheme for crediting pension contributions means in effect that the date on which an employee becomes entitled to a retirement pension is brought forward by five years and the person concerned is treated, for the pur- pose of the benefit, as if he or she had con- tinued to work until the date on which entitlement to a retirement pension would 36. As already mentioned, the scheme under normally have arisen. The retirement pension Article 16 of the Law was introduced to is accordingly brought forward by up to five years. The benefit thus has fundamental similarities and links with the ordinary retirement pension, which, after all, is also 20 — See Richardson, paragraph 11, and Atkins, paragraph 13, cited in footnote 18. intended to ensure that persons who have 21 — See Richardson, cited in footnote 18, which concerned a reached a certain age can leave the labour State-financed scheme for exemptions from prescription charges, and Case C-9/91 Equal Opportunities Commission market and continue to receive a certain [1992] ECR I-4297, which involved a contributions-based old-age pension scheme. income.

39. O n that basis, I take the view that a ben­ efit such as that provided for in Article 16 of the Law is directly and effectively linked to the risk of old age and must therefore be 41. It is obvious — albeit immaterial to the regarded as coming within the scope of main proceedings — that such a scheme dis­ Directive 79/7. criminates against male workers in so far as they become entitled to take early retirement only five years later than women. However, the scheme can also give rise to discrimi­ nation against women. Under it, a female employee who retires at the age of 55 will, all Does Article 16 of the Law discriminate other things being equal, receive a lower against female employees? pension than a 55 year-old male employee who elects to take early retirement, since the latter will have his pension increased by five years' contributions and will thus receive a higher pension, regardless of the fact that he has not paid any more contributions than the female employee. To put it another way: as a result of the fact that, unlike the man, she is 40. As mentioned above, the pensionable age not entitled to take early retirement, the in Italy is 60 for both men and women. woman will be obliged to work and pay pen­ However, unlike men, women are entitled to sion contributions until she reaches the age of 60 in order to receive the same retirement pension. The scheme therefore, in my view, involves discrimination against women 22 — Sec in this connection paragraph 24 of Drake, cited in foot­ note 17, which concerned an invalidity benefit payable to a within the meaning of Article 4(1) of Direc­ person caring for an invalid. The Court ruled that such a benefit was covered by Directive 79/7. tive 79/7.

43. According to the Court's case-law, that exception covers only discrimination that is objectively necessary in order to avoid dis- turbing the financial equilibrium of the pen- sion scheme or, in so far as other benefit schemes are concerned, to ensure that the 45. O n that basis, it seems logical to treat an financial equilibrium of the social-security early-retirement scheme, such as that pro- system as a whole is not disrupted and to vided for under Article 16 of the Law, as an ensure coherence between the retirement old-age and retirement pension. It must, pension scheme and other benefit schemes. 24 however, be borne in mind that this is a spe- It also follows from the Court's case-law cial benefit, payment of which is brought that it is not sufficient, in order to regard the forward in time in relation to the date on financial equilibrium as being disturbed, that which entitlement to an ordinary retirement the financial burden borne by the State pension accrues. It is for that reason neces- would be increased if the discrimination sary to consider whether the discrimination were to be removed. In defining their social is objectively necessary in order to ensure policy, the Member States are at liberty to coherence between early-retirement pensions and ordinary retirement pensions.

23 — See paragraph 8 of Thomas, cited in footnote 7. 24 — See paragraph 18 of Equal Opportunities Commission, cited in footnote 21; paragraph 12 of Thomas, cited in footnote 7; 25 — See Case C-343/92 De Weerd and Others [1994] Case C-92/94 Graham [1995] ECR 1-2521, paragraph 12; ECR I-571, paragraphs 28, 29 and 37, and paragraph 24 of and paragraph 19 of Richardson, cited in footnote 18. Richardson, cited in footnote 18.

46. As already mentioned, the undertakings providing for its cessation and replacement pay 50% of the costs involved in crediting by a retirement pension at the time when the contributions. An extension of the period for recipients would in any case have stopped which women are credited with contribu­ working because they had reached pension­ tions would consequently increase total pen­ able age. sion expenditure and thereby increase the overall burden of public costs, just as the undertaking's fiscal burden would also be affected. That, however, is in my opinion scarcely sufficient to justify the view that dis­ continuance of the discrimination, so that women aged between 55 and 59 can also be credited with up to five years' pension con­ tributions, would disrupt the financial equi­ In paragraphs 15 to 18, the Court added that librium of the pension scheme. the contrary result would limit a Member State's right to set different pensionable ages for men and women and would also mean that a Member State would be prevented from granting to men who become incapaci­ tated before reaching pensionable age inval­ idity benefits greater than the retirement pensions which would actually have been 47. So far as concerns the issue of coherence payable to them unless it granted to women between the ordinary retirement pension over pensionable age retirement pensions scheme and the early-retirement pension greater than those actually payable to them, scheme, it is particularly apposite to mention and that women aged between 60 and 65, the Court's decision in Graham,26 which thus over pensionable age, would receive a concerned an invalidity pension for persons higher retirement pension if they became under pensionable age, paid in the same incapacitated before reaching pensionable amount as the full State retirement pension. age than they would if this were not the case. Once the pensionable age, which was 60 for The Court, which found in those circum­ women and 65 for men, had been reached, stances that Article 7(1 )(a) was applicable, the benefit was reduced to the actual level of thus attached importance to the question the retirement pension, that is to say, taking whether the benefits were, in objective account of contributions paid. terms, intended to replace one another and whether the suppression of the discrimi­ nation might not give rise to a separate form of discrimination.

51. Furthermore, in my opinion, the legal position advocated by Mrs Balestra would in 49. The expression 'early-retirement pen- itself give rise to discrimination, namely sion' indicates that it relates to a benefit against male employees. A male employee which becomes payable prior to the date on who takes early retirement at the age of 58 which the recipient retires and thus begins to would, under the Italian scheme, be entitled receive a retirement pension. The benefit is to receive credit for two years' pension con- therefore intended to guarantee an income tributions, whereas female employees who for a person who leaves the labour market likewise leave work two years prior to the before becoming entitled to receive a retire- date on which they become entitled to a ment pension. There is a clear connection retirement pension, thus at the age of 53, between the age-limit for the grant of a would, if Mrs Balestra's submissions were to retirement pension and that for the grant of be accepted, be entitled to be credited with an early-retirement pension under Article 16 five years' contributions. of the Law. It is, however, necessary to examine whether it necessarily follows that women, who are entitled to work until they reach the age of 60, can be denied the right to be credited with pension contributions for the whole or part of the period subsequent to the date on which they reach the age of 55 52. O n that basis, I take the view that the and thereby become entitled to a retirement discrimination against women with regard to pension. the crediting of contributions resulting from a scheme such as that under Article 16 of the Law necessarily follows from the fact that women become entitled to a retirement pen- sion when they reach the age of 55, whereas men do not become so entitled until they 50. The connection between an early- reach the age of 60, and that the discrimi- retirement pension and an ordinary retire- nation is thus covered by the derogation in ment pension means that a woman aged over Article 7(1 )(a) of Directive 79/7. The scheme 55 will not be able to take early retirement guarantees that an employee, whether male but will be able only to receive a retirement or female, who takes early retirement will be pension. O n that basis, it does not appear credited with pension contributions which, logical that female employees who cease from the pension perspective, place that per- work at the age of 54 should be entitled to son in the position in which he or she would claim credit for five years' pension contribu- have been had he or she ceased work on tions and thereby obtain a larger pension becoming entitled to a retirement pension.