Volker Graf contra Filzmoser Maschinenbau GmbH.

• Jurisdiction: European Union
• Celex Number: 61998CC0190
• ECLI: ECLI:EU:C:1999:423
• Docket Number: C-190/98
• Court: Court of Justice (European Union)
• Procedure Type: Reference for a preliminary ruling
• Date: 16 September 1999

Important legal notice

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61998C0190

Opinion of Mr Advocate General Fennelly delivered on 16 September 1999. - Volker Graf v Filzmoser Maschinenbau GmbH. - Reference for a preliminary ruling: Oberlandesgericht Linz - Austria. - Freedom of movement of workers - Compensation on termination of employment - Refusal where a worker terminates his contract of employment in order to take a job in another Member State. - Case C-190/98.

European Court reports 2000 Page I-00493

Opinion of the Advocate-General

I - Introduction

1. The present case gives the Court an opportunity to define further the scope of its ruling in Bosman on the application of Article 48 of the EC Treaty (now, after amendment, Article 39 EC) to restrictions on the freedom of movement of workers which are not discriminatory on grounds of nationality. It raises the question whether a worker's loss, upon voluntary resignation in order to take up employment in another Member State, of a contingent statutory right to compensation by his employer payable upon forced resignation, dismissal or retirement is capable of constituting such a restriction, where the amount of any such compensation is related to the length of the worker's period of continuous service with his former employer. In addressing that question, a number of basic issues must be resolved, in particular: the definition of a prohibited non-discriminatory restriction on the freedom of movement of workers: whether its restrictive effects must be in some way conditional on the exercise of freedom of movement; whether it must affect access to an economic activity or can also arise from regulation of its exercise; whether its effect must be to prevent workers exercising their rights or simply to deter or hamper them in so doing; whether its restrictive effects must be of a certain level of gravity or intensity; whether its preventive or dissuasive effects must be direct or may be indirect; and whether these burdensome effects must be certain or may be merely contingent. In seeking to resolve these issues, particular regard must be had to the broader question whether the Court's more developed case-law on the free movement of goods, including the judgment in Keck and Mithouard limiting the application of some of its earlier pronouncements, can furnish useful guidance.

II - Factual and legal context

The national law

2. The relevant compensation provisions of Paragraph 23 of the Angestelltengesetz (Austrian Law on Employees; hereinafter the AngG) state as follows:

(1) If the employment relationship has continued uninterruptedly for three years, the employee shall be entitled to a compensation payment on termination of that relationship. That payment shall amount to twice the salary due to the employee for the last month's employment and after five years' service shall increase to three times, after ten years' service to four times, after 15 years' service to six times, after 20 years' service to nine times and after 25 years' service to 12 times the monthly salary. (...)

(7) There shall ... be no entitlement to compensation if the employee gives notice, leaves prematurely for no important reason or bears responsibility for his premature dismissal. (...)

3. Paragraph 23a of the AngG provides that a right to compensation shall also exist in the case of a continuous employment relationship of at least ten years' duration which ceases upon termination by the employee of the contract of employment because the employee has reached retirement age (65 years in the case of a man, 60 in that of a woman), because of early retirement, or due to incapacity or reduced capacity for work. It appears that compensation payments under Paragraphs 23 and 23a of the AngG are subject to favourable tax treatment, so that the sums actually received by beneficiaries considerably exceed the normal net salary for the number of months on the basis of which compensation is calculated.

4. Article 26 of the AngG sets out the circumstances in which the premature termination of the employment relationship by an employee does not deprive him of the right to compensation on the terms outlined immediately above. As the Court points out in its judgment in Gruber, delivered earlier this week, all of these important reasons for termination relate either to working conditions in the employing undertaking or to behaviour on the part of the employer by virtue of which continued work there is impossible.

The national proceedings

5. The plaintiff in the main proceedings, Mr Graf (hereinafter the plaintiff), is a German national. He was employed in Austria by the defendant, Filzmoser Maschinenbau GmbH (hereinafter the defendant), from 3 August 1992. He gave notice of termination of the employment relationship on 29 February 1996, with effect from 30 April 1996, and on 1 May 1996 he commenced employment with an undertaking in Germany. The plaintiff sought payment of two months' salary under the terms of Paragraph 23(1) of the AngG, which was refused by the defendant, in reliance on Paragraph 23(7). The plaintiff brought proceedings seeking the disputed payment before the Landesgericht Wels (Regional Court, Wels), which declined to grant the order sought, whereupon he appealed to the Oberlandesgericht Linz (Higher Regional Court, Linz, hereinafter the national court).

6. The plaintiff argued before the Landesgericht Wels that the limitation on the right to compensation in Paragraph 23(7) of the AngG principally affected migrant workers who voluntarily gave up existing employment in order to move to another Member State, thereby giving rise to indirect discrimination, and that it constituted, in any event, a disproportionate financial penalty amounting to a restriction on the mobility of workers which was not objectively justified. The defendant submitted that Paragraph 23(7) of the AngG was not discriminatory in effect, because most of those affected were and remained national residents. Furthermore, it was not designed to regulate access to the labour market, did not amount to a prohibition and did not prevent or deter persons from taking up employment in other Member States. It had, instead, the twin social aims of protecting workers from dismissal and of promoting employee loyalty.

7. The Landesgericht Wels found that Paragraph 23(7) of the AngG did not either discriminate on grounds of nationality or impose any impediment on the movement of persons across borders which was more severe than a restriction on comparable internal mobility. The loss of compensation in the present case did not result in a perceptible non-discriminatory restriction on mobility - it was not comparable to the transfer fee at issue in Bosman, which was fixed at so high a level that no employer would pay it, but was merely one factor to be included, in the same way as any other loss of social security benefits, in the overall assessment of the balance of financial advantage undertaken by a worker when deciding whether to change employment. Furthermore, any restrictive effect was objectively justified by the social aims of providing transition payments for employees who unexpectedly lose their jobs and of protecting older workers through the higher cost of dismissing them.

8. On appeal, the plaintiff submitted that the Court had not required in Bosman that restrictions of freedom of movement be perceptible. The national court stated that national residents were chiefly affected by the rule, so that there was no indirect discrimination against workers willing to migrate to work in other Member States. It doubted whether denial of compensation in cases of voluntary termination of employment by the employee was necessary to the achievement of the social-policy objectives mentioned by the Landesgericht, and observed that, on the one hand, employees were often neither faultless nor taken by surprise when dismissed by their employer and, on the other, workers might often have perfectly legitimate reasons voluntarily to change employment. It was also unsure of the test to be applied in identifying non-discriminatory restrictions on worker mobility which came within the scope of the Treaty - the Court stated in Bosman that a worker should not be preclud[ed] or deter[red] from exercising his fundamental right, but also referred to its judgment in Kraus, where it defined as restrictions any national rule which is simply liable to hamper or to render less attractive the exercise of such freedom of movement.

9. As a result of its doubts in this regard, the national court suspended the proceedings before it and referred the following question to the Court for a preliminary ruling pursuant to Article 177 of the EC Treaty (now Article 234 EC):

Does Article 48 of the EC Treaty preclude national provisions under which an employee who is a national of a Member State is not entitled to compensation on termination of his employment relationship simply because he himself gave notice terminating that relationship in order to take up...