D. P. W. Hendrix v Raad van Bestuur van het Uitvoeringsinstituut Werknemersverzekeringen.

• Jurisdiction: European Union
• Court: Court of Justice (European Union)
• Writing for the Court: Bonichot
• ECLI: ECLI:EU:C:2007:196
• Date: 29 March 2007
• Docket Number: C-287/05
• Procedure Type: Reference for a preliminary ruling

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 29 March 2007 ¹(1)

Case C-287/05

D.P.W. Hendrix

v

Raad van Bestuur van het Uitvoeringsinstituut Werknemersverzekeringen

(Reference for a preliminary ruling from the Centrale Raad van Beroep (Netherlands))

(Social security – Special non-contributory benefits – Freedom of movement for workers – Citizenship of the Union)

I – Introduction

1. Disabled young people resident in the Netherlands who are totally or partially incapable of work receive a cash benefit in accordance with the Wet arbeidsongeschiktheidsvoorziening jonggehandicapten (Law on the provision of incapacity benefit to disabled young people, ‘the Wajong’). The benefit replaces income from employment or supplements such earnings up to the amount of a minimum wage.

2. In Kersbergen-Lap and Dams-Schipper, (2) which was delivered after the order for reference was made in the present case, the Court has already held that the Wajong benefit constitutes a special non-contributory benefit within the meaning of Article 4(2a) of Regulation No 1408/71, (3) which in accordance with Article 10a of that regulation does not have to be paid to non-residents. The applicants in those proceedings were not in employment, however, so that the benefit in their case constituted a complete replacement for employment earnings.

3. By way of contrast, Mr Hendrix, the appellant in the main proceedings, is a worker. As his earnings were below the level of the statutory minimum wage, he received the Wajong cash benefit as a wage supplement as long as he continued to reside in the Netherlands. Following his transfer of residence to Belgium, payment of the benefit was terminated.

4. In addition to seeking an assessment of the benefit’s nature in accordance with the criteria of Regulation No 1408/71, the Centrale Raad van Beroep asks, therefore, whether a worker can rely on freedom of movement for workers against the Member State of which he is a national where he is employed in that State and has transferred only his place of residence to another Member State. Should freedom of movement for workers be applicable in that situation, the question arises to what extent the provisions of Regulation No 1408/71 on special non-contributory benefits are compatible with that principle. The referring court questions also the compatibility of such rules with the freedom of movement of Union citizens under Article 18 EC.

II – Legal framework

A – Community law

5. Article 7(1) and (2) of Regulation No 1612/68 (4) is worded as follows:

‘1. A worker who is a national of a Member State may not, in the territory of another Member State, be treated differently from national workers by reason of his nationality in respect of any conditions of employment and work, in particular as regards remuneration, dismissal, and should he become unemployed, reinstatement or re-employment;

2. He shall enjoy the same social and tax advantages as national workers.’

6. Article 42(2) of Regulation No 1612/68 provides:

‘This Regulation shall not affect measures taken in accordance with Article 51 of the Treaty.’

7. Article 4 of Regulation No 1408/71 provides:

‘1. This Regulation shall apply to all legislation concerning the following branches of social security:

(a) sickness and maternity benefits;

(b) invalidity benefits, including those intended for the maintenance or improvement of earning capacity;

…

2. This Regulation shall apply to all general and special social security schemes, whether contributory or non-contributory, and to schemes concerning the liability of an employer or shipowner in respect of the benefits referred to in paragraph 1.

2a. This Regulation shall also apply to special non-contributory benefits which are provided under legislation or schemes other than those referred to in paragraph 1 or excluded by virtue of paragraph 4, where such benefits are intended:

(a) either to provide supplementary, substitute or ancillary cover against the risks covered by the branches of social security referred to in paragraph 1(a) to (h);

or

(b) solely as specific protection for the disabled.

2b. This Regulation shall not apply to the provisions in the legislation of a Member State concerning special non-contributory benefits, referred to in Annex II, Section III, the validity of which is confined to part of its territory.

…

4. This Regulation shall not apply to social … assistance ... .’

8. Article 10a(1) of Regulation No 1408/71 makes provision for special non-contributory benefits according to Article 4(2a) as follows:

‘Notwithstanding the provisions of Article 10 and Title III, persons to whom this regulation applies shall be granted the special non-contributory cash benefits referred to in Article 4(2a) exclusively in the territory of the Member State in which they reside, in accordance with the legislation of that State, provided that such benefits are listed in Annex IIa. Such benefits shall be granted by and at the expense of the institution of the place of residence.’

9. Section Q of Annex IIa to Regulation No 1408/71 lists the Netherlands law on the provision of incapacity benefit to disabled young people.

10. Article 95b(8) of Regulation No 1408/71 provides:

‘The application of Article 1 of Regulation (EEC) No 1247/92 may not result in the withdrawal of benefits which are awarded before 1 June 1992 by the competent institutions of the Member State under Title III of Regulation (EEC) No 1408/71 to which Article 10 of the latter Regulation is applicable.’

B – National law

11. As of their first day at work, persons employed in the Netherlands are insured against incapacity for work under the Wet op de arbeitsongeschiktheidsverzekering (Law on insurance against incapacity for work, ‘the WAO’). If persons by reason of disability are wholly incapable of work or from the outset are only partially capable of work, to that extent they receive no benefits under the WAO.

12. Until the beginning of 1998 the Algemene Arbeidsongeschiktheidswet (Law providing for general insurance against incapacity for work, ‘the AAW’) was in force in the Netherlands and provided for insurance against incapacity for work for all residents of the Netherlands who were not insured under the WAO. Under the AAW, persons, inter alia, who were already incapacitated for work at the time of their 17th birthday could claim a minimum benefit for disabled young persons from the age of 18. Benefits under the AAW were funded by contributions paid by insured persons, the level of which depended on their taxable income.

13. As of 1 January 1998, in so far as is relevant here, the AAW was replaced by the Wet arbeidsongeschiktheidsvoorziening jonggehandicapten (Law on provision of incapacity benefit to disabled young people, ‘the Wajong’) of 24 April 1997. For the specific group of disabled young people the Wajong provides for a benefit which corresponds to the assumed minimum means of subsistence needed in the Netherlands.

14. Entitlement to benefits under the Wajong, which are almost entirely financed through public funds, does not depend on personal needs. Benefits are reduced, however, if the claimant earns income from employment.

15. Unlike the earlier AAW, benefits under the Wajong are granted only to disabled persons resident in the Netherlands. Since 1 September 2002 the Wajong has contained a hardship clause, according to which the residence requirement can be dispensed with to the extent that loss of benefit results in unreasonable hardship. Such hardship is assumed to exist, for example, if the disabled young person has to undergo medical treatment abroad, if he can take up employment abroad offering a certain prospect of reintegration, or if the person on whom he depends for care is forced to live outside the Netherlands.

16. Under the Wet op de (re)integratie arbeidsgehandicapten (Law on the (re)integration of disabled workers, ‘the REA’) employers can be exempted from the requirement to pay the statutory minimum wage to disabled workers whose performance falls substantially below the normal level.

III – Facts and procedure

17. Mr Hendrix, a Netherlands national, was born on 26 September 1975. He has a mental disability which results in him being regarded as 80% to 100% incapacitated for work. With effect from 26 September 1993 he was granted a benefit under the AAW.

18. Commencing on 1 February 1994 Mr Hendrix was employed at a DIY retail store in the Netherlands. Under the REA, his employer was exempted from its obligation to pay Mr Hendrix the statutory minimum wage. As a result, Mr Hendrix earned only 70% of the statutory minimum wage and accordingly received Wajong benefit as if he were 25% to 35% incapacitated for work.

19. On 1 June 1999 Mr Hendrix moved to Belgium, retaining, however, his employment in the Netherlands. By decision of 28 June 1999 the Raad van Bestuur van het Uitvoeringsinstituut Werknemersverzekeringen (‘the defendant’) terminated Mr Hendrix’s Wajong benefit as from 1 July 1999. Since the minimum pay exemption granted to Mr Hendrix’s employer remained in force and the employer declined to increase Mr Hendrix’s wages, his employment was terminated. Since 5 July 1999 Mr Hendrix has been employed by a different DIY retail store, where he receives the statutory minimum wage. (5) In 2001 Mr Hendrix moved back to the Netherlands.

20. Following an unsuccessful administrative appeal, Mr Hendrix brought proceedings challenging the termination of his Wajong benefit before the Rechtbank Amsterdam (Amsterdam District Court), which by judgment of 16 March 2001 dismissed the action. On appeal to the Centrale Raad van Beroep, the latter court, by order of 15 July 2005, referred the following questions to the Court of Justice for a preliminary ruling in accordance with Article 234 EC:

‘(1) Must a benefit under the Wajong, listed in Annex IIa to Regulation No 1408/71, be regarded as a...