ECJ confirms: mini-jobs remain uninsured and should be discouraged
In its judgment of 19 September 2019, the ECJ ruled that Dutch legislation excluding frontier workers residing in the Netherlands but working as a mini-jobber in Germany from the Dutch social security system is compatible with EU law. If the Hoge Raad follows the approach taken by the ECJ, the status-quo will be maintained. This would mean that these frontier workers remain uninsured in both Germany and the Netherlands, which is why such a situation must be dissuaded. For a more in-depth analysis of the judgment of the ECJ and its background, we kindly refer you to the ITEM Cross-border Portal.
The case concerned three Dutch residents who have or have had a mini-job in Germany. A mini-job is a special kind of employment in Germany, which allows a person to work a limited number of hours per month for a maximum monthly remuneration of EUR 450. Currently several forms of mini-jobs exist. Because of this limited income, German legislation excludes mini-jobbers from the German social security system. At the same time, Dutch legislation excludes them because the European rules on social security coordination identify the Member State of employment as the competent Member State. It is in the context of a situation where Dutch residents were not insured in Germany or in the Netherlands, that the Hoge Raad petitioned the ECJ for a preliminary ruling.
The judgment of the ECJ
First, the ECJ contemplated whether the Dutch legislation that excludes frontier workers resident in the Netherlands but exclusively working as a mini-jobber in Germany is compatible with EU law. The fact that the Member State of residence may grant social security benefits to a frontier worker who is covered by the social security system of the Member State of employment does not give that frontier worker the right to claim these social security benefits in the Member State of residence. This holds true even if that frontier worker is not entitled to the same social security benefits in the Member State of employment. Thus, Dutch legislation that excludes these frontier workers from the Dutch social security system is not contrary to EU law. If the ECJ were to rule otherwise, this would shift the burden from the Member State of employment to the Member State with the highest social security benefits, which would disrupt the European system of social security coordination, as ITEM concluded earlier on the basis of the Opinion of the Advocate-General of the ECJ.
Second, the ECJ considered if Dutch legislation may make the right to an old-age pension conditional upon mandatory insurance in the Netherlands and the corresponding duty to pay contributions. Domestic legislation cannot make entitlements to social security benefits conditional upon the duty to be socially insured in the Member State of residence if the frontier worker is not insured there. However, frontier workers can be socially insured for the social security system of the Member State of residence, if the domestic legislation provides for such a possibility without requiring insurance there and the corresponding payment of contributions. Thus, the ECJ held that Dutch legislation that makes the right to an old-age pension conditional upon mandatory insurance and the duty to pay contributions in the Netherlands is incompatible with EU law. This only relates to the situation in the Netherlands prior to 1989.
Maintaining the status quo
It is especially the first part of the judgment that is problematic from the point of view of the Dutch mini-jobber. The ECJ follows reaffirms the position of the Sociale Verzekeringsbank and upholds the Dutch legislation that excludes these frontier workers from the Dutch social security system. The Dutch mini-jobbers will therefore remain uninsured in both Member States and will not be entitled to social benefits in either Member State. This judgment leaves these mini-jobbers in the same deplorable situation as before, with only very limited options at their disposal.
Either they remain uninsured, or they take out voluntary insurance that would pose a substantial burden on their limited income, thereby taking away the incentive for working in a mini-job. Another option would be to request the Dutch and German competent authorities to conclude an agreement in accordance with Article 16 of Regulation 883/2004. In such an Article 16 agreement, the competent authorities can deviate from the European rules on social security coordination and identify the Netherlands as the Member State responsible. This would result in coverage by the Dutch social security system, but would still entail some drawbacks. Both the Dutch employee and the German employer would need to pay contributions in the Netherlands, which the German employer would not be inclined to do, and the competent authorities would first need to reach such an agreement.
The above considerations apply only to those persons who worked as mini-jobbers during the period covered by the present judgment, and apply only to a certain extent to today's mini-jobbers. At present, the position of a mini-jobber in Germany has improved. Nowadays, mini-jobbers build up an old-age pension in Germany in principle, but they can also choose not to do so. However, that old-age pension will be lower than the AOW, because the German old-age pension depends on the level of income, and mini-jobs only earn limited salary. In addition, mini-jobbers are entitled to the German child benefits if they work at least 8 hours per week. If they work less, it will be assessed per case whether there is a right to these child benefits. Nevertheless, they remain uninsured for health insurance.
The mini-jobbers living in the Netherlands will therefore have to make a choice. They can choose not to take out additional insurance, which means that their income will remain the same. However, if they choose to take out voluntary insurance or on the basis of an Article 16 agreement, they will have to pay expensive premiums. Of course, the Hoge Raad has yet to apply the ECJ's ruling to the facts of the pending cases, but it is to be expected that the Hoge Raad will follow the instructions of the ECJ. This would result in the status quo being maintained. Dutch residents who are considering working as mini-jobbers in Germany should therefore be well informed about the negative consequences that could be overlooked in the first instance. In light of these negative consequences, working in a mini-job should be dissuaded in most situations, as advised earlier by the GrensInfoPunt and ITEM.