C-135/99

2. The German social security system allows the periods which an employee devotes exclusively to the upbringing of children to be taken into consideration under the pension insurance scheme. 1 Under Paragraphs 56(1), and 249 of Book

* 3. The social security benefit as laid down Original language: Italian. 1 — in the context of this case, the term 'upbringing* refers to the by German law reflects choices in family raising by parents or their children. policy which seek to enable workers to

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OPINION OF MR SAGGIO — CASE C-135/99

bring up their children without compro- Relevant Community legislation mising their pension rights. In this context, child-rearing is treated as a service in the general interest, and the period devoted to it constitutes an autonomous source of pension rights, in order also to secure equal treatment for activities carried out within the family. 2

2 — See the written observations of the German Government, 3 — OJ, English Special Edition 1971 (II), p. 366. paragraph 6. 4 — OJ 1983 L 230, p. 6.

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ELSEN

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OPINION OF MR SAGGIO — CASE C-135/99

by virtue of Paragraph 6(1) of the Protec- ing that the 'period of child-rearing' tion of Mothers Law (Mutterschutzgesetz) between 1 September 1984 and 31 August or took parental leave under Paragraph 15 1985, and the 'period to be taken into of the Federal Child-rearing Allowance law account' for child-rearing from 22 August (Bundeserziehungsgeldgesetz) and did not 1984 to 31 August 1994, should be cred- engage in any minor (geringfügig) employ- ited as insurance periods. By decision of ment within the meaning of Paragraph 8 of 12 September 1995 the insurance organisa- SGB IV.' tion refused the application, and that refusal was confirmed by a further decision on the objection dated 21 August 1996.

Facts of the main proceedings

14. In the view of the referring court, point 19 of Section C of Annex VI to 13. The referring court explains the reasons Regulation No 1408/71, introduced by why the question submitted by it to the Regulation No 2195/91 with effect from Court should be considered relevant to a 1 January 1986 does not affect the decision decision in the main proceedings. In that to be given in this case. In fact, the period connection it points out that the German of child-rearing took place in the two years insurance organisation rejected the claim of prior to that date (1 September 1984 — the plaintiff for inclusion in the insurance 31 August 1995), and also the 10-year periods of the one-year period of child- period to be taken into account for child- rearing and the ten-year period to be taken rearing began on 22 August 1984, well into account for child-rearing, on the before the date on which the new rule ground that the relevant German regulation entered into force. In addition, notwith- at the time required that the child be standing those considerations, the plain- brought up in German territory, or that tiff's claim could not be accepted in full the parent concerned should reside in under these rules. As the referring court Germany, whereas in this case the parent itself explained, 'Paragraph 6 of the Mut- concerned (Mrs Elsen) had resided in terschutzgesetz (Protection of Mothers France with her husband since May 1981 Law)... applies only to persons who have and had brought her son up there, and also an employment relationship (a circum- on the ground that that child-rearing could stance which, in the case of the plaintiff, not be considered equivalent to child-rear- applied only up to March 1985)'; more- ing in Germany. Therefore, a fundamental over, 'parental leave under Paragraph 15 of condition, which was indisputably territor- the Bundeserziehungsgeldgesetz (Federal ial, for the allocation of the social benefit in Child-rearing Allowance Law) could be question was lacking. If that condition taken only as from 1 January 1986, were compatible with Community law, because that law entered into force only dismissal of the claim by the plaintiff would on that date'.

16. On that basis, it is now necessary to determine the status in August 1984 of a worker in the situation of the plaintiff in the main proceedings. When the child was born, Mrs Elsen unquestionably had the 15. In order to identify the Community law status of a 'frontier worker' within the provisions on whose interpretation the meaning of Article 1(b) of Regulation Court is asked to express an opinion, it is No 1408/71: in fact, she was employed as first necessary to determine the period to an employee in German territory, though which reference must be made in regard to residing in French territory, where she the insurance position of a worker in the returned 'daily or at least once a week'. situation of the plaintiff in the main That is not disputed by the Commission, or proceedings. I note that, according to the by the governments intervening in this case. order for reference, Mrs Elsen carried on Therefore, in August 1984, Mrs Elsen was her occupational activity in Germany until subject to the social security legislation of March 1985, and that this activity was the Federal Republic of Germany, of which interrupted between July 1984 and Febru- she was a national, thus fulfilling both the ary 1985, that is to say during the period in subjective conditions (application to her of which she gave birth to her baby and the legislation of a Member State and benefited from maternity leave as laid nationality of a Member State), to which down by German legislation. The birth of the application under Article 2(1) ratione the child and the need consequent thereon personae of Regulation No 1408/71 is to rear that child form the basis of the claim subject. 6Thus, the abovementioned provi- made by her in September 1994 to the sion in Article 13(2)(a) of Regulation competent German insurance organisation for 'the period of child-rearing' between 1 September 1984 and 31 August 1985, 6 — The Court stated in Case C-85/96 Martinez Sala [1998] and the 'period to be taken into account' ECR I-2691, paragraph 36, that a person is a worker in for child-rearing from 22 August 1984 accordance with Regulation No 1408/71 'when he is covered, even if only in respect of a single risk, compulsorily until 31 August 1994 to be credited as or on an optional basis, by a general or special social security scheme..., irrespective of the existence of an insurance periods. It follows that the period employment relationship'.

No 1408/71 applied to her; under that devoted entirely to raising children, and on provision 'a worker employed in the terri- the other, represents a form of financial tory of one Member State shall be subject support granted by the State to the worker to the legislation of that State even if he to cover family expenses. It is true that this resides in the territory of another Member benefit differs from the parental allowance State'. Therefore, on the date under con- laid down and regulated by the Bundeser- sideration, that is August 1984, a worker in ziehungsgeldgesetz, since, as the Court has the situation of Mrs Elsen was subject already held, it constitutes a financial exclusively to the German social security benefit, of a non-contributory nature, paid system, even though she was resident in to the worker who looks after and raises a another Member State. child and who for that reason is not engaged in full-time employment or profes- sional activity. 7Yet the benefit pursues the same aim of family policy as the parental allowance, which is to enable workers to devote themselves exclusively to raising children without having to face undue financial concerns, whilst at the same time maintaining an adequate income and a stable insurance situation in which contri- butions are made up notionally. 8 In any

the meaning of Article 4(1) of Regulation No 1408/71, these being construed as ben- efits in kind or in cash intended to cover family expenses. The referring court left the question open, upholding neither interpre- 18. It seems indisputable that a worker in tation: for my part, I consider that the the position of the plaintiff in the main social security benefit in question may be classified as both an old age benefit and a family benefit.

of Article 4(1) of Regulation No 1408/71. my view, exclude the possibility that this 8 — See paragraph 6 of the written observations of the German type of crediting may also be regarded as a Government in this case and paragraph 26 of the opinion of Advocate General Jacobs in Hoever and Zachoiv, cited social security benefit to cover family above. expenses: on the one hand, this is because 9 — It should he remembered that in Case C-78/91 Hughes [1992] ECR I-4839, paragraph 15, the Court stated, with the benefit in question forms part of the reference to preceding case-law, that a 'benefit may be regarded as a social security benefit insofar as it is granted, pension insurance scheme, under a mechan- without any individual and discretionary assessment of ism for crediting notional contributions for personal needs, to recipients on the basis of a legally defined position and provided that it concerns one of the risks periods which the insured person has expressly listed in Article 4(1) of Regulation No 1408/71.

proceedings will suffer a restriction to her as a social security benefit and provided for enjoyment of the benefit in question under in the German statutory pension insurance the territorial condition laid down by scheme, merely because she was not resi- Paragraph 56(1) of the SGB VI. That con- dent in Germany. dition makes entitlement to the social benefit subject to the condition that the children are raised in German territory or may be deemed to have been raised there. This means that the parent bringing up the child must have resided habitually in Ger- At this juncture it is reasonable to consider many with the child or resided habitually whether a situation of this kind is compa- abroad, but — during the period of child- tible with Community law. rearing or before the birth — must have carried on occupational activity subject to c o m p u l s o r y c o n t r i b u t i o n s (Para- graph 56(3) of the SGB VI). In the present case, the above condition meant that it was impossible for a worker like Mrs Elsen to benefit from the notional crediting of compulsory contributions to the statutory Views expressed during the course of the pension scheme as laid down by the Ger- written procedure man social security system to which she was subject, in relation to the period spent raising her child. In fact, Mrs Elsen did not reside with her son in Germany, but lived in France, where she did not carry on any 20. The Commission and the German occupational activity. It can therefore be Government consider that the situation stated that a territorial condition of this described above is not incompatible with kind entails loss of the benefit by the person Community law. The possibility of making concerned, because the period devoted by certain benefits conditional upon criteria of her to raising her child in France cannot be a territorial nature falls, it is argued, within taken into consideration in the calculation the scope of State authority in social of the old age pension to which she is security matters, in light of the social and entitled under German legislation. financial objectives pursued by the national insurance systems. In addition, the Com- mission points out that this case is a purely internal matter, since the plaintiff in the main proceedings is a German national who is claiming an insurance benefit laid down and regulated by the social security legislation of the Member State of which she is a national.

23. Having stated the above, I am not convinced by the argument supported by the Commission and the German Govern- ment to the effect that the possibility of making entitlement to certain social secur- ity benefits subject to territorial conditions falls fully within the decision-making Opinion of the Advocate General authority of the Member States in social security matters. I recognise that, on the basis of current Community law, 'the Member States retain their powers to organise their social security systems', 11 and therefore can determine the rules for financing those schemes. 12 But it should also be borne in mind that, as the Court has 22. As the referring court rightly points consistently held, in exercising the afore- out, the present case does not merely have a mentioned powers of organisation the national dimension. It concerns the situa- Member States must comply with Commu- tion of a frontier worker who is refused a nity law, and in particular the rules of the social benefit in the Member State in which she works because she resides in another Member State. There is therefore a con- 10 — Joined Cases C-29/94 to C-35/94 Aubertin and Others necting factor with a situation (that of the [ 1995] ECR I-301, paragraph 9. The Commission refers in its written observations to this judgment, and to the case- frontier worker) regarded by Community law referred to (paragraph 43). But this case does not present any analogy with the situation of frontier workers. law as a source of law for migrant workers The judgment concerns the compatibility with the Com- as against the Member State to whose munity prohibition of a French regulation which provides that, for the management of a hair salon, its own nationals social security system they are affiliated, are required to satisfy stricter rules (in particular, to hold a diploma) than those required of nationals from other to which both the provisions of the EC Member States, thereby giving rise to 'reverse discrimina- Treaty on freedom of movement for per- tion'. 11 — C a s e C-238/94 Garcia and Others |1996| ECR I-1673, sons and the provisions of Regulation paragraph 15. No 1408/71 apply in this case. It follows 12 — Case C-18/95 Terhoeve [1999| ECR I-345, paragraph 33.

24. On this point, I would emphasise that in its case-law the Court has interpreted Article 13 (2) (a) of Regulation No 1408/71, under which a person employed in the territory of a Member State is subject to the legislation of that State 'even if he resides in the territory of another Member State', as meaning that the provision would have no practical effect 'if the residence condition laid down by the legislation of the Member 25. More generally, I consider that the condition in question conflicts with the 13 — I refer particularly to Case C-120/95 Decker [1998] principle of the freedom of movement for ECR I-1831, paragraph 23, and Case C-158/96 Kohll [1998] ECR I-1931, paragraph 19. workers established by Article 48(1) of the 14 — For example, the direct taxation sector. In Case C-279/93 Treaty, since the German legislation places Schumacher [1995] ECR I-225, paragraph 21, the Court noted that 'although, as Community law stands at present, migrant workers at a disadvantage, in direct taxation does not as such fall within the purview of regard to the social security benefits with the Community, the powers retained by the Member States must nevertheless be exercised consistently with Commu- which we are concerned, as compared with nity law'. workers who do not avail themselves of 15 — In support of its argument, the Commission also refers to freedom of movement. I should point out Case C-2755/96 Kuusijärvi [1998] ECR I-3419, arguing that it confirmed that a person who does not carry out any occupational activity is generally subject to the legislation that the fact that Mrs Elsen is a German of the Member State of residence. I do not think that this national is not relevant for the purpose of reference is appropriate. In fact, in August 1984, Mrs El- sen was certainly considered to be a frontier worker entitled to maternity leave under German legislation. Therefore, the legislation of Germany, the country where she worked and was subject to the statutory pension 16 —Case C-2/89 Kits van Heijningen [1990] ECR I-1755, insurance scheme was applicable to her rather than that of paragraph 21. See also the subsequent Kuusijärvi case, France where she lived. cited above, at paragraph 31.

reaching a decision on the question. In my the main proceedings must be held to suffer Opinion of 29 September 1998 in Case a restriction in exercising a fundamental C 90/97 Swaddling, 17 I already had occa- right, that of freedom of movement, insofar sion to observe that the principle of equal- as before 1 January 1986 the German ity of treatment as between migrant work- legislation made entitlement to certain ers and persons who do not avail them- social security benefits whose purpose was selves of freedom of movement may be to encourage child-rearing subject to the inferred from Article 48 of the Treaty; that condition that the children be raised in equality must be understood as meaning Germany and that, therefore, the worker that, save for exceptions which are plainly concerned had to reside in Germany with based on nationality and therefore prohib- the children. ited, it is compatible with differentiated treatment only if such treatment is justified by requirements which are in conformity with Community law and fully comply with the principle of proportionality. 18 Moreover, the Court has stated on several occasions that the aforementioned Arti- cle 48 implements a fundamental principle enshrined in Article 3(c) of the EC Treaty (now Article 3(1 )(c) EC), which provides that the activities of the Community are to include 'the abolition, as between Member States, of obstacles to the freedom of 26. The argument which I have put for- movement for persons'. 19 In that respect, ward does not contradict point 19 of the EC Treaty certainly precludes national Section C of Annex VI to Regulation legislation which places Community No 1408/71, introduced by Regulation nationals at a disadvantage when they seek No 2195/91 with effect from 1 January to carry on economic activities in the 1986. For the purpose of calculating territory of a Member State: therefore, notional compulsory contributions to the any national provisions which deter work- pension insurance scheme, that provision ers from exercising their right to freedom of allows the period during which the worker movement constitute 'obstacles to that concerned brings up a child in another freedom even if they apply without regard Member State to be taken into considera- to the nationality of the workers con- tion, but makes that possibility subject to cerned'. 20 If these principles are applied, specific conditions: it is necessary for the a worker in the situation of the plaintiff in worker to be on maternity leave or parental

No 1408/7! . The Court did not examine the possible effect in this regard of Article 48 of the Treaty. not previously provided for; rather it reg- 19 — Terhoeve case, cited above, paragraph 36. ulates in detail the system applicable to a 20 — Terhoeve case, cited above, paragraph 39. See also Case C-10/90 Masgio [1991] ECR I-1119, paragraphs 18 and situation which previously gave rise to some uncertainties in interpretation (as is

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