EMPLOYMENT POLICY - UNEMPLOYMENT : GERMAN LAW ON PAYMENT FOR EMPLOYMENT AGENCIES MUST BE REVISED.

The Court of Justice of the European Communities has ruled against German legislation on payment by member states to private-sector recruitment agencies (judgement of 11 January, C-208/05).

In 2002, Germany introduced legislation encouraging private employment agencies to place persons receiving unemployment benefits or social aid. The FederalaEmployment Agency (Bundesagentur fur Arbeit) pays staff recruitment agencies for placing citizens on condition that the job found is in Germany. In this context, a private agency, Innovative Technology Center (ITC), agreed to find a job for Mr Halacz, unemployed at the time. And they were successful in finding a job for him in ... the Netherlands. The Federal Agency then refused to pay ITC the 1,000 it was due, on the grounds that the job found by ITC for the person seeking employment was not in Germany.

The Court ruled that this national regulation, requiring compulsory social security contibutions in a member state - is contrary to the principle of free movement of workers and the freedom to provide services. It also reminded the national judge of his obligations: "It is for the national court, to the full extent of its discretion under national law, to interpret and apply domestic law in accordance with the requirements of Community law" and "to the extent that such an interpretation is not possible in relation to the Treaty provisions conferring rights on individuals which are enforceable by them and which the national courts must protect, to disapply any provision of domestic law which is contrary to those provisions".

FREE MOVEMENT OF WORKERS

"Such legislation, which creates an obstacle which is capable of discouraging persons seeking employment, particularly those whose financial resources are limited, and, accordingly, private-sector recruitment agencies, from looking for work in another member state, is, in principle, prohibited by Article 39 EC," ruled the Court (Point 39), rejecting all attempts at justification by the German government.

1. Of course, promoting recruitment is "a legitimate aim of social policy,"a and "member states have a broad margin of discretion" in matters of employment. But this does not justify "undermining the rights granted to individuals by the Treaty provisions in which...