C-35/97

3. As a result of this special situation, the frontier workers living in Belgium receive a lower pension upon reaching retirement age than their former work-mates living in France. 2. One such collective agreement is the 'Con- Following complaints from those concerned vention Générale de Protection Sociale pour about this unfavourable situation, the Com- le Personnel des Sociétés Sidérurgiques de mission instituted proceedings for failure to l'Est et du Nord concernées par les Restruc- fulfil Treaty obligations. turations' of 24 July 1979 ('the CGPS'). It contains a provision whereby workers placed in early retirement qualify for supplementary pension points under the general supplemen- tary pension scheme until they reach normal retirement age. 1 Frontier workers living in Belgium are excluded from qualifying for these 'free supplementary points'. 2 This group The Commission claims that the Court should: of persons is governed by special rules which are set out in Annex VI to the CGPS. Article

* Original language: German. 1 — See Article 27(2), point 2.1, of the CGPS. (1) declare that, by excluding frontier workers 2 — 'Points gratuits de retraite complémentaire' within the meaning of Article 27(2X2.1) of the CGPS. residing in Belgium from qualifying for

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supplementary retirement pension points B — Submissions of the parties after being placed in early retirement, the French Republic has failed to fulfil its obligations under Article 48(2) of the EC Treaty and Article 7 of Regulation (EEC) N o 1612/68 of the Council of 15 October 1968 on freedom of movement for workers within the Community; 3

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6. The general supplementary pension scheme 9. Under Annex VI to the CGPS, frontier is itself founded on a collective agreement workers living in Belgium are covered by entered into by the social partners. The scheme benefits paid under the Belgian system, 8 which is compulsory, however. The terms were are also supplemented by additional allow- approved by the French State and declared to ances ('allocations complémentaires') from the be generally binding by a Law of 29 December French State. 9 1972. 5

8. The French Government first refers to the origins and objectives of the CGPS. One aim of the agreement was to guarantee a minimum 11. More generally, the French Government income ('ressource minimum garantie') 6 to maintains that the supplementary pension all workers dismissed, including frontier scheme falls outside of the scope of Regu- workers. This guaranteed rninirnum income is lation (EEC) N o 1408/71. Besides, at the time made up of various components. The first when the CGPS was concluded there was n o component is the unemployment benefit paid requirement under Community law for under the statutory social insurance system, topped up to a certain level by an additional payment from the French State. 7 8 — Annex VT, Article 2(1.1). 9 — See Article 2(1.2) and Article 3 of Annoi VI to the CGPS. 10 — Regulation (EEC) N o 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons, self-employed persons and members of their fami- 5 — Article L 731-5 of the Social Security Code. lies moving within the Community, OJ, English Special Edi- 6 — See Article 23 of the CGPS and Annei VI Article 2, point 1.2, tion 1971 (II), p. 416, as amended ana updated by Council third paragraph, of the CGPS. Regulation (EC) N o 1290/97 of 27 June 1997 (OJ 1997 L 7 — See Article 21 of the CGPS. 176, p. 1).

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periods of full unemployment to be taken C — Analysis into account for the purposes of retirement pension insurance. 11

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16. The scope of Regulation N o 1408/71 is defined in Article 4(1) as follows:

g) unemployment benefits,

'This Regulation shall apply to all legislation concerning the following branches of social security:

h) ...'.

19. Moreover, it is seriously open to question sentence, applies shall be taken into account whether the disputed recognition of periods by the competent institution of the Member of unemployment concerns one of the 'risks State in whose territory the worker concerned expressly listed'. It is not an unemployment resides in accordance with the legislation benefit within the meaning of Article 4(1)(g). administered by that institution, as if that leg- The case-law clearly defines unemployment islation applied to him during his last employ- benefits as benefits intended to replace the ment. remuneration which a person has lost by reason of unemployment and thereby to pro- vide for the maintenance of that person. 16 These conditions are not met.

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a Member State other than the competent other than, unemployment benefits under the State shall receive benefits in accordance with general system. the following provisions:

(a) 24. The question which now arises is there- fore whether the provision for the crediting of points constitutes discrimination prohib- ited under Community law within the meaning of Article 48(2) of the Treaty and (i) ... Article 7 of Regulation N o 1612/68. Article 48(2) of the Treaty provides:

(ii) A frontier worker who is wholly unem- ployed shall receive benefits in accord- 'Such freedom of movement shall entail the ance with the provisions of the legislation abolition of any discrimination based o n of the Member State in whose territory nationality between workers of the Member he resides as though he had been subject States as regards employment, remuneration to that legislation while last employed; and other conditions of work and employ- these benefits shall be provided by the ment.' institution of the place of residence at its own expense.'

3. ... 26. The French Government has also sug- gested that Regulation N o 1612/68 could not be relied upon as the persons concerned were no longer active and had consequently relin- quished the status of worker. 4. Any clause of a collective or individual agreement or of any other collective regu- lation concerning eligibility for employment, employment, remuneration and other condi- tions of work or dismissal shall be null and void in so far as it lays down or authorises discriminatory conditions in respect of 27. This approach seems inappropriate since workers who are nationals of the other the advantages in question are clearly based Member States.' on the status of worker in a specific employ- ment relationship. Moreover, the Court has expressly recognised 'that migrant workers are guaranteed certain rights linked to the status of worker even when they are no longer in an employment relationship'. 20 25. A number of preliminary issues must be resolved in relation to the applicability of Regulation N o 1612/68. With regard to any doubts as to whether it applies to frontier workers, reference may be made to the judg- ment in Meints in which this issue was also raised. 18 In that case the Court found that 28. Article 7(1) of Regulation N o 1612/68 the attribute of being a frontier worker did expressly makes conditions of dismissal a not prevent the application of the Regulation matter of equal treatment. The CGPS is and expressly referred to the fourth recital to nothing other than a collective agreement set- the Regulation, which states: 'Whereas such ting out the negotiated conditions of a mass right [of freedom of movement] must be dismissal. In that respect the workers are thus enjoyed without discrimination by perma- all in a similar situation. They are employees nent, seasonal and frontier workers and by of the same employer who is simultaneously those who pursue their activities for the pur- dismissing approximately 21 000 workers on pose of providing services', and to Article 7 economic grounds. of the Regulation which refers, without res-

32. The remainder of this discussion will pro- ceed on the assumption that the crediting of 'free points' in the general supplementary pension scheme under the CGPS constitutes a condition of dismissal within the meaning of Article 7(1) of Regulation N o 1612/68.

30. Since the provision at issue is linked to existing employment relationships — as is, for that matter, the CGPS as a whole — there is an indissoluble link to the objective status as workers of the persons concerned. Any provision which introduces or enhances social security cover for workers is by its nature 33. That provision prohibits all unequal treat- likely to facilitate the mobility of workers. ment of workers on grounds of nationality. The unequal treatment in this case is not, of course, based expressly on nationality. But 21 — Cise 65/81 Reimt [1982] ECR 33, paragraph 12, Case 249/83 Hoeckx [1985] ECR 973, paragraph 20 and Case 157/84 Frascogna [1985] ECR 1739, paragraph 30; Lair (cited in footnote 20), paragraph 21; Case C-310/91 Schmid [1993] ECR I-3011, paragraph 18, and Meints (cited in footnote 22 — Cited in footnote 16, paragraph 3 of the operative part of the 16), paragraph 39. judgment.

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36. But it is not necessary to take this detour, since it is the CGPS which directly discrimi- nates according to residence. The unequal treatment flows from the CGPS — and not for example from the applicable legislation — by virtue of the fact that Annex VI to the 35. The French Government further argues CGPS lays down special rules for frontier that it is the payment of benefits by an Assedic, workers resident in Belgium which exclude rather than residence, which is the deter- them from the supplementary pension advan- mining factor, but this merely masks the mate- tage negotiated for workers resident in France. rial facts. The CGPS does not actually pro- vide that entitlement to receive French unemployment insurance benefits is a con- 24 — Point 2.1 provides, under the heading 'Régimes généraux de dition for the award of 'free points'. Article retraite complémentaire': 'L'attribution aux intéressés de 27(2), point 2.1, simply provides, in substance, point gratuits de retraite complémentaire jusqu'à l'âge de départ en retraite normale, s'opère conformément aux règle- ments en vigueur dans les caisses de retraite complémentaire dont ils relèvent'. (The award of free supplementary retire- ment pension points to those concerned until they reach normal retirement age shall be governed by the rules in force in the supplementary pension funds to which they belong.') 23 — Case 152/73 Sotgiu [1974] ECR 153, paragraph 11, and Case C-175/88 Biehl [1990] ECR I-1779, paragraph 13. 25 — See Meints (cited in footnote 16), paragraph 43 et seq.

37. As a further ground of objective justifica- schemes, this in itself is not sufficient to jus- tion, the French Government raises the tify the unequal treatment. problem of financing the advantage in ques- tion. It must, of course, be assumed that the additional supplementary pension points awarded in respect of periods of unemploy- ment or early retirement are awarded free — with no payment in return. The CGPS spe- cifically refers to 'points gratuits'. 39. The question to be considered now is what legal techniques could be used to bring about a situation of equal treatment. The impugned unequal treatment flows from a collective agreement. Article 7(4) of Regu- lation N o 1612/68 directly provides that dis- criminatory clauses contained in any form of employment agreement shall be null and void. 38. The French Government argues that the The unequal treatment in this case is the result various schemes are interdependent. It states of an omission. The enumeration of social that the unemployment insurance institution security benefits in Annex VI to the CGPS entered into agreements with the general sup- fails to include a reference to the general plementary pension schemes (ARRCO and supplementary pension schemes. So nullity AGIRC). According to the French Govern- can be of no help. ment's submissions at the hearing, a deduc- tion from unemployment insurance payments is passed on to the supplementary pension schemes. But this cannot justify the unequal treatment either. Even if a certain percentage of the benefit is diverted, it still represents only a part of the income received by workers 40. But, according to the Court's settled case- covered by the CGPS. If the benefits from law, 28 in a case of unequal treatment contrary public social insurance institutions fall short to Community law the advantage sought must of the minimum income laid down in the be made available on the same conditions. CGPS, 26 the French State always makes up The frontier workers resident in Belgium must the deficiency. This applies without distinc- therefore be allowed to enjoy the advantage tion to all benefit recipients, whether they by applying Article 27(2), point 1.2, of the live in France or in Belgium. 27 The French CGPS to them by analogy. State's obligation to ensure maintenance of the income and benefits in lieu of income of the persons concerned is thus an integral part of the system. Even if the French unemploy- ment insurance institution were to make pay- ments to the general supplementary pension 41. Lastly, the French Government submits that if 'free points' were to be awarded to the frontier workers resident in Belgium, the 26 — See Article 23 of the CGPS and Annex VI, Arride 2(1.2)(3) CGPS. 27 — See Article 21 of the CGPS for French residents 2nd Annex VI Article 2, point 1.2, ind Article 3 of the CGPS for Bel- gun residents. 28 — See, for example, Reina (cited in footnote 21), paragraph 18.

42. At the hearing, the French Government's representative stated that, of the 21 000 indi- viduals covered by the CGPS, 665 were Bel- gian. Given the fact that between 1977 and 44. Moreover, a transfer of funds by the 1987 seven similar agreements were negoti- French State would not be contrary to the ated in the steel industry, the total number of system since the compulsory supplementary Belgian steel workers involved would come pension schemes are not funded exclusively to 1 109. There were various methods b y by contributions. In so far as the State has an which supplementary pensions for these indi- obligation to maintain the schemes, it is also viduals could be funded. One possibility bound to finance liabilities not originally fore- would be to pay in a sum equivalent to the seen but which have arisen on legal grounds. contributions — as no contributions have in fact been paid. Another would be to inject a capital sum to ensure pension payments to the persons concerned. Depending on which of these two options were chosen and o n whether account was taken only of those covered by the CGPS or also of those former steel workers covered by similar agreements, the costs would come to FRF 75 000 000, 115 000 000, 124 000 000 or 192 000 000 45. As regards the foreseeability of the ben- respectively. efit liabilities and the question whether there is a legitimate expectation worthy of protec- tion, it should be borne in mind that the competent State, 29 under social security law, is normally the State of employment. This is the case for old-age benefits in the form of retirement pensions. Prima facie, it is also the 43. This argument, of course, is based on an case for compulsory supplementary pension estimate of the possible financial consequences. schemes, even if they are not covered by But financial consequences are a matter which Regulation N o 1408/71. The frontier workers can properly be taken into account in the resident in Belgium also have actual pension legal appraisal of a case. It cannot be denied claims against the general supplementary pen- that, if the Court were to find against the French State, the general supplementary pen- sion schemes could be faced with consider- able unforeseen liabilities. But it should also 29 — In the context of Regulation No 1408/71, see Article 1(q), which refers to the 'competent institution', as defined in not be forgotten, as the Commission rightly Article 1(o).

Costs 47. While one can understand the French Government's suggestion that, in the event of judgment being given for the applicant, the Court should limit the temporal effects of its ruling in view of the estimated financial con- Under the first paragraph of Article 69(2) of the Rules of Procedure, the unsuccessful party 30 — Proposal for a Council Regulation amending, for the benefit is to be ordered to pay the costs if they have of beneficiaries of pre-retirement benefits, Regulation (EEC) N o 1408/71 on the application of social security schemes to been applied for. Since, under the solution employed persons, to self-employed persons and to the members of their families moving within the Community, suggested here, the defendant would be unsuc- and Regulation (EEC) N o 574/72 laying down the pro- cessful, it should therefore have to bear the cedure for implementing Regulation (EEC) N o 1408/71 (OJ 1996 C 62, p. 14, see Article 71b(2)(a)). costs of the proceedings.

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D — Conclusion

In the light of the foregoing, I suggest that the Court rule as follows:

(1) By excluding frontier workers residing in Belgium from qualifying for supple- mentary retirement pension points after being placed in early retirement, the French Republic has failed to fulfil its obligations under Article 48(2) of the E C Treaty and Article 7 of Regulation (EEC) N o 1612/68 of the Council of 15 October 1968 on freedom of movement of workers within the Community;