CASE NAME AND NUMBER; DATE OF JUDGMENT Case C-‐514/12 Zentralbetriebsrat der gemeinnützigen Salzburger Landeskliniken Betriebs GmbH (v Land Salzburg, judgment of 5 December 2013, n.y.r. TYPE OF PROCEDURE Preliminary ruling under Art. 267 TFEU, request by the Landesgericht Salzburg (Austria) KEY WORDS Freedom of movement for workers – Art. 45 TFEU and Regulation 492/2011/EU – Pay linked to length of service – National legislation providing for account to be taken only of a proportion of the periods of service completed with employers other than the Land Salzburg – Rewarding loyalty – Administrative simplification and transparency OPERATIVE PART OF THE JUDGMENT Article 45 TFEU and Article 7(1) of Regulation (EU) No 492/2011 of the European Parliament and of the Council of 5 April 2011 on freedom of movement for workers within the Union must be interpreted as precluding national legislation under which, in determining the reference date for the purposes of the advancement of an employee of a local or regional authority to the next pay step in his grade, account is to be taken of all uninterrupted periods of service completed with that authority, but of only a proportion of any other periods of service.
PRESS RELEASE COURT As far as I can see, there is none. Instead, here is a BRIEF SUMMARY of the case: The Gemeinnützige Salzburger Landeskliniken Betriebs GmbH (SALK) is a holding company for, among others, three hospitals in the Province of Salzburg, Austria. The Land Salzburg is its sole shareholder, and SALK employees are regarded as Salzburg officials or contractual agents. In 2012, SALK brought an action against the Land Salzburg for a declaration that its employees have the right to have all periods of relevant professional service completed in the EEA taken into account, independent of the nature of the previous employer. The reason for this action was the fact that, for the purposes of calculating their remuneration (namely advancement to the next pay step), the Land Salzburg took into account only a proportion of the periods of service completed by its employees with another employer (as opposed to the full periods of service with the Land Salzburg). In other words, there was different treatment based whether or not the employee in question has always worked for the Land Salzburg (i.e. based on the type of employer). This was based on the relevant regional law, namely the Salzburger Landesbediensteten-‐Zuweisungsgesetz. Under this law, advancement on the pay scale happened
every second year, depending on length of service. This was calculated on the basis of a backdated date of recruitment, which served a reference date (the so-‐called Vorrückungsstichtag). There are two versions of the law, pre and post amendment. According to the national court, the pre-‐ amendment version is applicable to the case at issue. Under this version, the determining factor for the reference date in cases of previous employment outside the Land Salzburg was age, namely 18 years of age, and in the case of more senior positions 22 years. For the time as of the relevant birthday (18 / 22) and up to the date of employment with the Land Salzburg, 60 % of the time of previous employment was taken into account in order to calculate the reference date (see paras. 6 and 7 of the judgment). According to the national court, the rule only relates to “relevant” previous service, i.e. relevant in terms of the duties performed (para. 39 of the judgment). The national court found that the rule in question (pre-‐amendment) does not constitute direct discrimination on grounds of nationality. However, it was uncertain whether there is nevertheless a problem with Art. 45 TFEU and Art. 7(1) of Regulation 492/2011 (para. 15 of the judgment). The Land Salzburg raised an objection of inadmissibility based on the irrelevance of the question, claiming that the post-‐amendment version of the law is relevant. The amendment was made in 2012 with retroactive effect as of 1 January 2004. Under this version, the reference date is no longer explicitly based on age, but rather on “periods of service beginning after 30 June of the year in which, following commencement of secondary education, nine years of study have been or should have been completed.” This time period is then taken into account for 100% for service up to 3 years and for 60 % for longer periods (para. 8 of the judgment). According to the national court, the amended version does not affect the relevance of the question, as the new version maintained the taking into account of only part of previous employment with an employer different from the Land Salzburg (see para. 20 of the judgment). (Note: Whilst the post-‐amendment version does not explicitly refer to “other periods of service”, i.e. with an employer other than the Land Salzburg, it seems clear that the issue of backdating can only apply in this latter context.] AG: There is no Advocate-‐General’s opinion on this case. CJEU on admissibility: Accepts the national court’s interpretation of the post-‐amendment law. CJEU on substance: a) Relevant law: as it concerns the remuneration of workers, the case clearly falls within the scope of Art. 45 TFEU. Art. 7(1) of Regulation 492/2011 constitutes merely the specific expression of the principle of non-‐discrimination laid down in Art. 45(2) TFEU within the specific field of conditions of employment and work and must therefore be interpreted in the same way (para. 23 et seq.). b) Free movement: aa) Prohibition of both overt (direct) and covert (indirect) discrimination, quoting among others the landmark case of O’Flynn and pointing to the requirements for indirect discrimination in terms of the effect of the measure in question. In particular, it is not necessary that the measure disadvantage only foreign EU nationals. Rather, the fundamental issue is that there is no disadvantage for EU nationals if they wish to pursue an economic activity in another Member State (para. 25, 26 and 32). To refuse to take into account in their entirety any relevant periods of service that a migrant worker has completed with an employer established in a Member State other than Austria, is liable to affect
migrant workers more than national workers. There is no de minimis rule in free movement (paras. 25-‐28 and 31 et seq.). bb) Restriction: For employees leaving the employ of the Land Salzburg and returning later, as they will then fall under the 60 % rule (paras. 29 and 30 of the judgment). b) Objective justification (legitimate aim, suitable and requisite measure; para. 36 et seq. of the judgment): aa) According to the national court, the case concerns a loyalty reward for workers who spend their entire career with the same employer, which is disputed by the Land Salzburg and Austria. CJEU leaves it open and states that in any event the measure is not suitable. Given the large number of potential employers coming under the authority of the Land Salzburg, the pay scheme is intended to allow mobility within a group of distinct employers (rather than reward loyalty to one particular employer). bb) According to the Land Salzburg, Austria and Germany, the issue is that of administrative simplification. According to the CJEU this cannot be accepted as an overriding reason in the public interest, and certainly not in its economic aspect. cc) According to the Land Salzburg, Austria and Germany, the issue is also that of greater transparency. CJEU: this is disproportionate, as there are less restrictive possibilities. TO BE NOTED: Legal question to be answered The question itself is not revolutionary, namely simply the interpretation of Art. 45 TFEU and of Art. 7(1) of Regulation 492/2011. Why is the case important? The challenge of the case lies in the facts and the application of EU law to them. The case presents an excellent opportunity for practicing the analysis of complex facts and of different versions of important elements of these facts (here, the two different versions of the Salzburg law). On the legal level, the case can serve as a textbook case for fundamental issues related to the free movement of workers (direct and indirect discrimination, restriction, rationale behind them, lack of a de minimis rule in free movement law, objective justification, no purely economic reasons and so forth). Relevance for practice 1) The case concerns a fundamental rule on free movement. 2) The identification of the relevant law: one might be tempted to regard the pre-‐amendment rule as leading to age discrimination (meaning that then Directive 2000/78 would be relevant). However, the basic difference was not on grounds of age but rather on grounds of the type of employer, which was determined geographically. Relevance for theory 1) The relationship between primary and secondary law in terms of which level applies: The case does not follow the traditional Tedeschi principle, according to which more specific secondary law
applies to the exclusion of the in comparison more general primary law. Instead, it concerns the special case where primary law and secondary law mean the same and apply side by side (here, Art. 45 TFEU and Art. 7(1) of Regulation 492/2011). Another example of this would be Art. 157(1) and (2) TFEU on equal pay for men and women and the provisions in Directive 2006/54 on equal pay (Jenkins, with respect to previous law). 2) The definition of indirect discrimination and its rationale – in this respect, the case appears to reflect an important evolution of the concept: a) When originally developing the legal concept of indirect discrimination, the Court appeared to focus on numerical differences between the two groups of persons that are treated differently. In the field of sex discrimination in particular, this led to the importance of statistical proof of the different effect on the two groups of persons. As AG Léger noted in his opinion on the Nolte case, the requirement of statistical proof is a tricky issue that can lead to a veritable battle with numbers. However, in the area of free movement the situation was different, in particularly following the landmark decision of O’Flynn (referred to by the CJEU in the case under discussion). As of the adoption of Directives 2000/43 and 2000/78, the approach in the context of social law also changed. In the present case, it is interesting to note the composition of the workforce of SALK, which on 31 May 2012 consisted of 716 doctors, of whom 113 were from an EEA State other than Austria and 2) 2850 non-‐medical healthcare professionals, of whom 340 were from an EEA State other than Austria (see para. 10 of the judgment). Depending on how many of the others were Austrians, and further depending on the ratio of Austrian and EEA foreigners in the two groups that were treated differently under the Salzburg law (i.e. those who always worked for the Land Salzburg, on the one hand, and those who at some point worked for someone else), this situation might be interpreted as not looking like indirect discrimination on grounds of nationality. However, note that the relevant work force in the present case is not that of SALK, but that of the Land Salzburg. We do not have any figures in this respect. This leads to an interesting question: would the Court have accepted prima facie indirect discrimination if the figures had been like those of SALK? Can it be argued that the Court’s approach to indirect discrimination has moved from disparate effect (US terminology) to a disadvantage approach (rather alternative Canadian approach to non-‐discrimination law, based on the seminal Andrews judgment of the Supreme Court) which is independent of figures altogether, even if they are readily available and if they, based on an “old”, statistical approach, would seem to go against a finding of indirect discrimination? b) Regarding the statement that it is not necessary that the measure in question hits all the nationals of the Member State in question or only nationals of other States: remember that in such cases and in the context of discrimination on grounds of sex and sexual orientation, the Court has found direct discrimination (Nikoloudi, Maruko, Römer). Why did the Court decide the way it did? It followed its usual approach of looking at a measure from different angles (here leading to findings of indirect discrimination on grounds of nationality plus of a restriction). Any other interesting element to be noted 1) In the context of scope, the Court does not address the issue of a cross-‐border element. It may be implied in the fact that the SALK did have foreign EEA nationals in its workforce (para. 10 of the
judgment). It is also implied in the reference to the possibility that workers may leave Austria and then re-‐enter (remember Singh, and more recently also Eind). 2) In the context of discrimination, note how the Court in para. 28 speaks about “periods of service that a migrant worker has completed with an employer established in a Member State other than the Republic of Austria.” In fact, that is not what the national law said, since it did not refer to countries but to a regional employer (i.e. the Land Salzburg). However, for the purposes of free movement law, obviously the effect of such a rule is relevant only insofar as it has to do with another Member State. 3) Remember that the legal concept of restrictions of free movement of persons and services can also be used against one’s own Member State (e.g. Kranemann). For discrimination on grounds of (foreign EEA) nationality, this is logically not possible (though the Court has not always been very consistent in its approach; e.g. Angonese). Christa Tobler, 12 March 2014
