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Advocate General of the ECJ in favour of Dutch social security benefits for German mini-jobs

The Advocate General of the European Court of Justice (hereafter: A-G) E. Sharpston has come to the conclusion that Dutch frontier workers living in the Netherlands and working in so-called mini-jobs in Germany are still entitled to Dutch retirement pensions and child benefits. If the Member States follow the opinion of the A-G, this would be a positive development for the coordination of national social security and tax systems. However, this decision also raises some questions. In practice, as a result of this decision, it may become attractive for governments to encourage forms of employment with little social security. For example, governments would benefit financially from such forms of work, as they could share the burden of social services with other Member States. This could be a worrying development.

The case concerns three Dutch nationals, all of them with a mini-job across the border, either now or in the past. A mini-job in Germany means that one works for a limited number of hours per month and therefore a limited amount of wages (€450). On the basis of the Tax Treaty between Germany and the Netherlands and the regulation of social security coordination, the country of work principle applies. As a result, persons with a mini-job are liable to tax in the country where they work and are therefore also insured for the social security benefits in the same country, in this case Germany. However, due to the limited number of hours they work in Germany, it has been determined there that they are not entitled to social benefits, such as Altersrente (German retirement pension) and Kindergeld (German child benefit). The Sociale Verzekeringsbank (SVB) in the Netherlands is also of the opinion that in the Netherlands there is no entitlement to (full) retirement pension or child benefit since the subjects are employed in Germany and are liable to pay contributions to the national insurance schemes there. This results in a difficult situation in which frontier workers are not entitled to social security in either Germany or the Netherlands.

This unfavourable conjuction of national and European legislation and regulations for employees in cross-border situations has led to preliminary questions to the European Court of Justice after ambiguity in the national courts. The European right of free movement means that EU citizens can travel to other member states without restrictions. The Court was asked whether the European law on the free movement of persons has the effect of putting workers at a disadvantage. More specifically, the Court is asked to answer whether European legislation, which ensures that the state of employment is responsible for social security benefits and prescribes that only one national system may apply, prevents the national legislation of the State of residence from applying as well. This would mean that European legislation would ensure that, to the detriment of workers, national legislation does not apply. The referring court then asked whether, in answering the above question, it was important to know whether the workers were able to take out voluntary insurance or whether they were given the opportunity to apply to the SVB for an Article 17 agreement. Such an agreement establishes that an employee is insured in the Netherlands despite activities in another Member State. It is also unclear whether or not the right to a pension may be subject to conditions of employment or insurance.

A-G: repairs for the benefit of frontier workers

First of all, the A-G rules that the principle stating that only the legislation of one Member State can be applicable, in particular for the non-qualified Member State (the one of which the legislation is not applicable), is not that strict. The principle of proportionality is when considering if only one legislation can be applied and the amount of protection that must be offered to a migrating worker. The situation in this case deprives workers of any form of social security and treats them in a way that goes beyond the limits of the proportionality system. The A-G then takes the view that, with regard to voluntary insurance, the Dutch authorities could have asked for a voluntary contribution in order to admit the person concerned to their social security scheme or could have concluded an Article 17 agreement with Germany. The way in which the Netherlands excludes workers from social security benefits would therefore be contrary to the free movement of workers. 

Finally, the A-G concludes that every citizen is entitled to retirement pension, even during the period of employment in another Member State, as long as the subject is considered as insured according to national legislation. In conclusion, the A-G states that European legislation is violated when migrant workers are denied their social benefits in the state of residence as a result of limited activities in the State of employment. 

Consequences are manifold 

The European Court of Justice still has to judge about this, conjoined, case. In many cases the Court has followed the opinion of the A-G. At first the consequences of this case seem positive for the frontier worker. When a member state does not carry the social benefits, another will. With this the European Union avoids a European citizen being left without social security benefits. 

The risk that lies within is not to be underestimated. Mr. dr. Alexander Hoogenboom, researcher with the Institute for Transnational and Euregional cross border cooperation and Mobility (ITEM), with a PhD in European law, has his concerns following the Courts opinion. Mr. Hoogenboom points out that the Court’s opinion fits in a series of cases in which the Court of Justice grapples with the mini-job phenomenon. In an earlier case, the Court decided that a person who qualified as an EU worker nonetheless could be denied access to certain social advantages provided by Germany. Protecting the integrity of the domestic legal framework of mini-jobs in Germany thus leads to undermining basic principles of EU law (equal treatment and allocation of responsibility in social security), which, moreover, has a strong gender element: women still work part-time more often than men. 

Despite the noble and understandable goal, member states might see financial gain in encouraging forms of work with little social security to begin with, like the mini jobs or the self-employed, to then pass of the limited financial burden to another state. This is a development in line with the already existing decrease in social security for the worker. 

Want to know more about European social security legislation? Check out the ITEM Cross-border Portal.

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