Important legal notice

61985C0030

European Court reports 1987 Page 02497

Opinion of the Advocate-General

Mr President, Members of the Court, 1 . These proceedings concern a dispute between Mrs J . W . Teuling-Worms and the Bedrijfsvereniging voor de Chemische Industrie ( Professional and Trade Association for the Chemical Industry, hereinafter referred to as "the Association "). The Raad van Beroep ( Social Security Court ) Amsterdam has asked the Court to interpret Council Directive 79/7/EEC of 19 December 1978 on the progressive implementation of the principle of equal treatment for men and women in matters of social security ( Official Journal 1979, L*6, p . 24 ) and Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions ( Official Journal 1976, L*39, p . 40 ), in conjunction with Article 5 of the EEC Treaty .

The national court is in doubt as to whether the rules applicable in the Netherlands to social security benefits in respect of incapacity for work are compatible with Community law . Under those rules the amount of the benefit is determined taking into account : ( a ) the civil status and the remuneration and other income of the spouse; and ( b ) the existence of dependent children . In particular, the Raad van Beroep asks the Court to clarify the scope of the prohibition of discrimination on grounds of sex laid down in the two directives and to rule on an interesting question of principle concerning the extent to which those directives take effect before the period within which Member States must comply therewith has expired .

2 . The case which gave rise to the questions referred to the Court cannot be properly understood without referring to the complex set of rules governing benefits for incapacity for work in the Netherlands . Those rules are contained in four laws : ( 1 ) the Wet op de Arbeidsongeschiktheidsverzekering ( Law on Insurance against Incapacity for Work, hereinafter referred to as "the Insurance Law ") of 18 February 1966 ( Staatsblad 84 ), which has been in force since 1 July 1967; ( 2 ) the Algemene Arbeidsongeschiktheidswet ( General Law on Incapacity for Work, hereinafter referred to as "the General Law ") of 11 December 1975, which came into force on 1 October 1976 ( Staatsblad 674 ); ( 3 ) the Wet invoering Gelijke Uitkeringsrechten voor Mannen en Vrouwen ( Law on Equal Benefits for Men and Women, hereinafter referred to as "the Equal Benefits Law "), which took effect retroactively from 1 October 1978 ( Staatsblad 708 ); and ( 4 ) the Wet Afschaffing Minimumdagloon WAO ( Law abolishing the minimum daily wage provided for in the Insurance Law ) ( Staatsblad 737 ). The four laws are not always coordinated in the same way and an analysis of the system which they establish is made more difficult by the fact that numerous new laws and provisional measures have superseded the original provisions .

Nevertheless, I propose to consider the texts in order and to begin by examining the Insurance Law . That law governs the compulsory insurance of workers against loss of salary arising from incapacity to work for periods of more than one year . The benefits are calculated, irrespective of the personal circumstances of the worker, on the basis of the degree of incapacity and the last remuneration received prior to the event giving rise to the incapacity . However, in order to ensure that persons in receipt of the pension whose remuneration had been particularly low were not paid a benefit lower than that payable under the Invaliditeitswet ( the Law on Invalidity ), Article 14*(3 ) provided that the basis for calculating the benefit was to be the minimum daily wage which is fixed and periodically revised by the Social Security Council . By a law of 25 June 1975 ( Staatsblad 377 ) that wage was linked to the statutory minimum wage provided for in Article 8*(1 ) of the Law of 27 November 1968 ( Staatsblad 657 ). It follows that from that date the amount of the benefit payable under the Insurance Law was equal to the statutory minimum wage, irrespective of the family circumstances of the beneficiary ( sex, family status, position as head of family, and income ).

I now turn to the General Law . It, too, provides for compulsory insurance against the same risk . However, it applies only to persons resident in the Netherlands ( except married women, according to the version in force on 31 December 1977 ) and the basis for calculating the benefits differs from that used under the Insurance Law . The benefit is calculated by reference to a minimum subsistence level and takes account of the personal and family circumstances of the person entitled . The relationship between the two laws is complicated . To put it very simply it may be said that the main benefit is awarded under the General Law and that an additional benefit is payable under the Insurance Law when the worker' s last remuneration exceeds the basis for calculation laid down in the other law ( Article 46*(a ) of the Insurance Law ). It must, however, be borne in mind that the amendments to both those laws - by the Laws of 30 December 1983 ( Staatsblad 698 ), 28 June 1984 ( Staatsblad 271 ) and 19 December 1984 ( Staatsblad 633 ) - came into force at different times so that the effects of the General Law varied from 1979 to 1984 and those of the Insurance Law from 1982 to 1986 .

The third measure is the Law on Equal Benefits for Men and Women . That measure was intended to be a first step in the process of implementing Directive 79/7 . However, it profoundly altered the rules concerning the award and calculation of pensions under the General Law and instituted a system which for many beneficiaries was less favourable than the regime preceding it . In particular, the law did not take account of sex in awarding benefits, but laid down stricter requirements governing eligibility for the benefit and reduced the amount of the benefit to 70% of the statutory minimum wage . That amount could be increased only for persons having dependent families .

In particular, the law amended Article 10 of the General Law and introduced three different basic rates for the calculation of benefits : ( a ) the "general" rate is applicable to all beneficiaries over the age of 20; ( b ) the "middle" rate applies to persons with dependent families whose family incomes represent between 15 and 30% of a maximum amount; and ( c ) the "top" rate, in accordance with the new Article 10*(4 ) of the General Law, is payable to two types of beneficiaries : ( 1 ) married persons where the total income of the worker, whether self-employed or not, or his spouse on the date on which the right to the benefit arises is less than 15% of a given maximum; ( 2 ) unmarried persons with a dependent child or adopted child less than 18 years of age who is a member of that person' s household or is chiefly supported by that person, again where the income derived from the occupation of the person concerned on the date on which the right to the benefit arises does not exceed 15% of the same maximum amount .

I now come to the fourth measure, which is of particular importance in these proceedings . In order to reduce social security expenditure and as part of a general reform of the system, the Netherlands legislature decided at the beginning of the 1980s to repeal Article 14*(3 ) of the Insurance Law, which provided that the benefit should be calculated by reference to the statutory minimum wage . The new Law of 29 December 1982 fixed as the basis for calculating that benefit the daily remuneration of the incapacitated worker at the time at which the event giving rise to his incapacity occurred . That in general produced an amount which was lower than the minimum wage . The minimum wage remained the basis for calculation only for persons who satisfied the conditions laid down in the rule in Article 10*(4 ) which provides for the "top" rate .

However, so as to protect the beneficiaries from a sudden drop in income and to enable the social security authorities to recalculate the amount of pensions, transitional measures were adopted making the repeal of the provision in question effective only from 1 January 1984 . In addition, one of the measures adopted was intended to fill a gap left by the Law of 29 December 1982 . As I have just stated, that law provided for measures progressively altering the amount which beneficiaries received under the Insurance Law to the generally lower allowance fixed in accordance with the amendments made to the General Law by the Law of 20 December 1979 . Those measures did not, however, apply to beneficiaries under the Insurance Law who were not eligible for admission to the General Law scheme, in particular married women whose incapacity for work commenced before 1 October 1978 . The Law of 30 December 1983 therefore introduced a new Article 97 of the General Law which extended the benefits in question to women who had been in receipt of benefit under the Insurance Law, calculated on the basis of the statutory minimum wage, and whose invalidity preceded the abovementioned date . Consequently, married women have been eligible since 1 January 1984 for the General Law benefit with the result, however, that the amount of the benefit which they receive is lower than that to which they were entitled under the Insurance Law scheme .

3 . Having explained as far as possible the rules whose legality the national court questions, I now turn to the facts of the case . J . W . Teuling-Worms was born in 1928 and worked for various undertakings from the age of 27 to 13 September 1971, when she became unable to work . On 12 September 1972 she obtained a pension under the Insurance Law which was initially calculated on the basis of her last wage and which from 1975 equalled the statutory minimum wage . Her civil status and her assets were not taken into account . However, when on 1 October 1976 the General Law under which, it will be recalled, married women were not eligible for benefit ( Article 89*(3 ) in conjunction with Article 9*(1)*(a )*) came into force, Mrs Teuling-Worms was not entitled to benefit under it; moreover, since her incapacity commenced before 1 October 1978 she did not qualify under the Equal Benefits Law of 20 December 1979, which had removed that discrimination .

By a letter dated 18 June 1984 the Association informed Mrs Teuling-Worms that, following amendments to the social security rules introduced by the Law of 29 December 1982, from 1 January 1984 her benefit would no longer be calculated on the basis of the statutory minimum wage, but on her last wage . The resulting reduction was, however, to be progressive .

Mrs Teuling-Worms challenged that decision before the Raad van Beroep, Amsterdam . She claimed inter alia that by introducing a system of variable benefits the Law of 29 December 1982 had prevented her from continuing to receive a benefit equalling the net amount of the statutory minimum wage . In her view such a system, which is essentially based on the existence of a dependent family, constitutes indirect discrimination against women and is therefore incompatible with the Community rules and in particular with the principle of equal treatment laid down in Article 4*(1 ) of Directive 79/7 .

By an order of 4 February 1985 the Raad van Beroep stayed the proceedings and pursuant to Article 177 of the EEC Treaty referred four questions to the Court of Justice for a preliminary ruling . In substance those four questions are as follows :

"1 . Is a system of entitlement to benefits in respect of incapacity for work under which the amount of the benefit is determined in part by marital status and by the income earned from or in connection with the spouse' s work, or by the existence of dependent children, consistent with Article 4*(1 ) of Council Directive 79/7/EEC of 19 December 1978?

2(a)*Is the Law of 29 December 1982 ( Staatsblad 737 ) whereby the guarantee for all persons covered by the Insurance Law scheme of ( net ) benefits at least equal to the ( net ) statutory minimum wage was abolished, except for persons who satisfy the conditions of Article 10*(4 ) of the General Law, consistent with Article 4*(1 ) of the directive referred to in Question 1?

2(b)*Having regard to the period referred to in Article 8 of the directive and to the provisions of Article 5 thereof and Article 5 of the EEC Treaty, is it relevant to the answer to be given to Question 2(a ) that the said law was adopted on 29 December 1982 and entered into force partially on 1 January 1983, whilst provision is made for its material consequences to take effect in stages both before and after the expiry of the abovementioned period?

3 . Are the provisions of Council Directive 76/207/EEC of 9 February 1976 also relevant as regards the answers to the foregoing questions?

The Member States were required to comply with the directive within six years of its notification ( Article 8 ). That period expired on 22 December 1984 . In addition, in accordance with Article 5 they were to "take the measures necessary to ensure that any laws, regulations and administrative provisions contrary to the principle of equal treatment are abolished ".

5 . The national court seeks to establish in the first place whether a system of benefits in respect of incapacity for work under which the amount of the benefit is calculated taking into account either the civil status and any remuneration or other income of the spouse of the person entitled, or the existence of dependent children, constitutes indirect discrimination and is therefore contrary to the principle laid down in Article 4*(1 ) of the directive .

It is easy to see what led the Raad van Beroep to raise this question . The provisions which it has to apply - as we have seen - provide for an increase in the benefit for persons with dependent families . It is well known that arrangements of that type, even if framed in terms of absolute equality of treatment between men and women, are ultimately chiefly to the advantage of men . In practice all men who have not been injured, or who are not sick or unemployed, have an occupation . On the other hand, there are still a great many women who, whether or not by choice, stay at home and for that very reason will be unable to claim that they have a dependent spouse or dependent children . Linking an increase in benefits to the existence of a dependent family more often benefits men and generally results in indirect discrimination against women .

The notion of indirect discrimination based on marital or family status is not defined in the Community directives on equal treatment and no useful criteria for determining its scope emerged during the preparation of those measures . Light was, however, shed on it by the Commission of the European Communities in 1981 . Replying to Written Question No 2295/80 submitted by Mrs Lizin, Mr Richard, the Member of the Commission with responsibility for social affairs, stated that indirect discrimination meant "hidden discrimination" which might "in practice affect workers of one sex as a result of marital or family status being taken into account in determining the rights being covered by the two directives" ( Official Journal 1981, C*129, p . 22 ). Thus indirect discrimination is discrimination which, although it does not actually refer to sex, has effects in practice which are no different to unequal treatment which is expressly linked to sex .

In its judgment of 31 March 1981 in Case 96/30 Jenkins v Kingsgate (( 1981 )) ECR 911 the Court considered a case of indirect discrimination against women at work . A United Kingdom national who worked part-time charged her employer with paying her a lower hourly wage than that received by a male colleague who worked full-time doing the same job . The case came before the Employment Appeal Tribunal which asked the Court of Justice to interpret Article 119 of the EEC Treaty . The Court replied as follows : "A difference in pay between full-time workers and part-time workers does not amount to discrimination prohibited by Article 119 of the Treaty unless it is in reality merely an indirect way of reducing the level of pay of part-time workers on the ground that that group of workers is composed exclusively or predominantly of women" ( paragraph 15 of the decison ).

I would add that on the basis of that judgment the Commission subsequently drew up a more precise definition of indirect discrimination . It considered that "the fact that a measure affects persons of one sex plays an important role, whether it affects them exclusively or simply predominantly ". That "statistical" fact, in other words the simple "predominance" of women in the group discriminated against, may even be decisive . Its importance, is, however, less where the measure appears objectively justified, since it is clear that, if that is the case, the result obtained reflects the intended objective . It follows that "indirect discrimination may be presumed where a measure which is apparently neutral in fact predominantly affects workers of one sex, without it being necessary to establish that discrimination was intended . On the contrary, it is for the person applying the measure ... to provide proof that it was objectively justified and did not involve any intention to discriminate" ( Interim Report on the application of Directive 79/7/EEC, COM(83)*793 final of 6 January 1984, p . 7 ).

In the light of those observations, it is in my view clear that in order to resolve the question raised by the national court it is necessary to determine : ( a ) whether the effect of the rules in question is more unfavourable to women than to men; and ( b ) whether they are objectively justified .

The answer to the first question must clearly be in the affirmative . On 16 June 1983 two members of Emancipatieraad, the body with responsibility for problems concerning female emancipation, complained to the Commission that the amendment introduced by the Law of 29 December 1982 to the Netherlands system of invalidity benefits discriminated against women . The Commission then requested the Netherlands Government to provide statistics on the consequences which that reform had had for persons in receipt of benefits under the Insurance Law with reference to the sex of the persons involved . Those statistics revealed that the award of an increase solely to beneficiaries with dependent families represents for the persons insured a measure which is almost twice as disadvantageous for women as it is for men .

The second question must also be answered in the affirmative . The Commission dealt expressly with increases for dependent spouses in its Interim Report . It considered such increases justified where the benefits are equal to the minimum wage since such benefits are intended to compensate for the expenditure incurred by a family, which is clearly greater than that incurred by individuals . In my view that is the position in the case before the Court . The contested rules give rise to discrimination but they are founded in equity and based on reasonable grounds . Their purpose is to protect an interest which is justifiably regarded as having priority ( namely that of persons for whom, since they have families to support, the calculation of benefits on the basis of the last remuneration would reduce the benefit to below the minimum subsistence level ). Moreover, in accordance with the principle of proportionality, the derogation from the principle of equal treatment which that establishes is limited to what is strictly necessary .

6 . By Question 2(a ) the Raad van Beroep seeks to establish whether Article 4 of Directive 79/7 prevents the Member States from amending their rules on invalidity benefits in such a way as to reduce the amount of benefit payable to the persons insured where they do not satisfy certain requirements .

In my view the reply is dictated by the conclusions which I have just reached . If a scheme such as that operating in the Netherlands is to be regarded as objectively justified and therefore not contrary to the principle of equal treatment, the fact that the scheme involved a reduction in the amount of benefit for certain beneficiaries is immaterial .

With regard to the first problem I agree with the views expressed by the Commission in its written observations . The Commission takes up and develops a view which has received authoritative support in academic circles according to which even where the directive does not contain an express standstill clause, its notification generates a "blocking effect" inasmuch as it prohibits Member States from adopting measures contrary to its provisions . As is well known, the particular objective of the directive in question is to harmonize the laws of the Member States by removing existing legislative and administrative differences . Clearly, therefore, the very fact of its adoption places an obligation on the Member States to refrain from introducing new measures which may increase those differences .

It may be suggested that such a proposition conflicts with the judgment of 5 April 1979 in Case 148/78 Ratti (( 1979 )) ECR 1629 . In paragraph 44 of the decision in that case the Court held that until the expiry of the period prescribed for the implementation of the directive "the Member States remain free in that field ". As with all freedoms, however, that freedom too is subject to limits, and primarily to limits dictated by common sense . Thus there is no doubt that it entails the power to retain in force rules or practices which do not comply with the directive . However, as I have just stated, it is equally certain that such freedom does not include the power to aggravate the defect which the directive is intended to remedy . Indeed it may be that measures adopted during the prescribed period must of necessity be measures intended to transpose the Community provisions . Such measures must at least not conflict with the requirements laid down in those provisions .

That is not, however, sufficient . Further support for the solution which I propose is to be found in the Treaty . The second paragraph of Article 5 requires Member States to abstain from adopting measures liable to "jeopardize the attainment of the objectives" of the Treaty . The failure to fulfil that general obligation, the lack of the cooperation and solidarity which form the substance of that obligation, is in fact the first ground on which the Commission should rely as against Member States which it charges under Article 169 of the EEC Treaty with having disregarded the "blocking effect", and thus the prohibition of the adoption of retrograde measures, which follows the notification of the directive . Moreover, the Court has often referred to the second paragraph of Article 5 and clarified the limits of Member States' powers in connection with Community measures which are not directives, but which, like them, generate rights and obligations at the end of a prescribed period : see, most recently, the judgments of 14 February 1978 in Case 61/77 Commission v Ireland (( 1978 )) ECR 417; 4 October 1979 in Case 141/78 France v United Kingdom (( 1979 )) ECR 293; 10 July 1980 in Case 32/79 Commission v United Kingdom (( 1980 )) ECR 2403; and 5 May 1981 in Case 804/79 Commission v United Kingdom (( 1981 )) ECR 1045 .

The other questions of principle raised by the national court would appear to be less problematic . They concern ( a ) the direct effect of Article 4 of Directive 79/7, and ( b ) the rights of private individuals during the period prescribed for the implementation of the directive to rely before the courts on subjective rights arising under such legislation in order to challenge national measures which have not been amended and which conflict with the principle of equal treatment .

On the first point I would refer to the Opinion which I delivered on 9 July 1986 in Case 71/85 Netherlands v Federatie Nederlandse Vakbeweging ((( 1986 )) Judgment of 4 December 1986, ECR pp . 3855 and 3864 ). In that Opinion I expressed the view that the provision had direct effect and stressed in particular the weakness of the opposing argument concerning the discretion left to Member States with regard to the means of implementing the principle of equal treatment in social security matters . As regards the second problem it is sufficient to refer once again to the judgment in Ratti and to cite the judgment of 19 January 1982 in Case 8/81 Becker (( 1982 )) ECR 53 . In both those decisions the Court held that the direct effect of a directive may be relied upon only after the expiry of the period prescribed for its transposition . To accept the opposing view would amount to disregarding the distinction which Article 189 of the EEC Treaty draws between directives and regulations .

8 . The third question is intended to establish whether Directive 76/207 concerning equal treatment in employment relationships is relevant to the rules in question . The answer is in the affirmative in so far as it is established that those rules discourage women, in particular, from seeking access to the employment market . However, that effect is of no importance since, for the reasons set out under point 5, the rules must be considered objectively justified and therefore not discriminatory .

9 . In the light of the foregoing considerations I propose that in reply to the questions submitted by the Raad van Beroep Amsterdam by an order of 4 February 1985 in the proceedings between J . W . Teuling-Worms and the Bedrijfsvereniging voor de Chemische Industrie the Court should rule as follows :

1 . The notion of "indirect discrimination" referred to in Article 4*(1 ) of Council Directive 79/7/EEC of 19 December 1978 on the progressive implementation of the principle of equal treatment for men and women in matters of social security should be interpreted as applying to a measure forming part of a social security scheme which is based on an apparently neutral criterion of differentiation but which affects primarily women and which operates more to their disadvantage than to that of men, unless such a criterion is based on objective reasons capable of justifying the difference in treatment .

2 . Directive 79/7 read in conjunction with Article 5 of the EEC Treaty requires the Member States during the period prescribed for the implementation of the directive to abstain from adopting measures which make the situation existing at the time of the notification of the directive worse and consequently are liable to jeopardize the attainment of the objective pursued by the directive . However, private individuals may rely on the provisions having direct effect only after the expiry of the period within which the directive is to be transposed into national law .

3 . The notion of "indirect discrimination" referred to in Article 2 of Council Directive 76/207 of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions, must be interpreted as applying to a measure liable to discourage primarily women from seeking access to the employment market unless it is based on reasons justifying the difference in treatment .

(*) Translated from the Italian .