W.G.M. Liefting and others v Directie van het Academisch Ziekenhuis bij de Universiteit van Amsterdam and others (23/83)

II —Written observations submitted to the Court

On the first question Mrs W. G. M. Liefting, a plaintiff in the main proceedings, argues that compensation paid directly or indirectly to an employee, in this case a public official, by his employer at or about the same time as the rest of his salary for the disadvantage of having his pension rights reduced is actual pay for salary purposes and for social security and tax purposes.The contributions payable under the Old-Age Pensions Law and the Widows' and Orphans' Benefits Law are social security contributions which should be called employee contributions. They are deducted at source just like income tax and paid by the employer to the tax authorities which collect both income tax and social security contributions. The contributions payable under the two Laws are therefore an integral pan of an official's pay. There is a parallel between this case and Case 69/80 Worringham and Humphreys v Lloyds Bank [1981] ECR 767 in which the Court held that:“... a contribution to a retirement benefits scheme which is paid by the employer in the name of the employees by means of an addition to the gross salary and which helps to determine the amount of that salary is ‘pay’ within the meaning of the second paragraph of Article 119 of the EEC Treaty”.The situation in this case is in substance no different from that in which the State increases officials' salaries by the amount of the contribution payable (normally by the employee) under the Old-Age Pensions Law and then deducts the contribution from salaries on the condition that no such increase in salary equivalent to the deduction will take place for those female officials in whose case “over-compensation” has now been stopped. The situation in the Netherlands is practically the same as that in Worringham and Humphreys.It is clear from the history of the legislation in question that the “compensation” was granted to prevent the public officials concerned from suffering any disadvantage. It was subsequently stopped because pension rights under the Old-Age Pensions Law can be acquired “built into” the pensions without full payment of contributions.The cases in which the female public officials concerned have husbands who are not public officials show that the compensation is unmistakably “pay”. If those husbands are liable to pay the maximum contribution in respect of their employment they retain a right to repayment and this amount is part of disposable income.The plaintiffs in the main proceedings argue that in view of the purpose of the legislation in question the contribution due under the Old-Age Pensions Law and the Widows' and Orphans' Benefits Law is an employee contribution and therefore simply part of the pay of the employee concerned. The only difference that exists in this regard between employers in the public and private sectors is that in the public sector the contributions payable under the Old-Age Pensions Law and the Widows' and Orphans' Benefits Law are not incorporated in salary scales and in consequence the State literally bears their cost. The true nature of the amount which the State pays is clear from the annual statements of salary issued to public officials in which the contributions it transfers are quite rightly included in the amount of the salary.On the second question the plaintiffs in the main proceedings maintain that if the “compensation” is regarded as part of public officials' pay it seems clear that there is a difference in pay between men and some women. Since the only officials who do not receive the compensation, at any rate not in full, are women (married to public officials), the fact that not all women are discriminated against does not preclude the application of the principle of nondiscrimination.The discrimination in question is not due to the application of a social security scheme of the kind at issue in Case 80/70 Defrenne [1971] ECR 445 but is meant to be a corrective to the scheme established by the Old-Age Pensions Law. A difference in pay is not a proper corrective.Mrs van Plateringen-Doeksen observes that in the first Defrenne case the question was whether the term “pay” in Article 119 should be construed as also covering a retirement pension granted under a social security scheme financed by contributions from employees and employers and by State subsidy.In view of the judgment in that case, pension rights are “pay” within the meaning of Article 119 only if they are not directly based on statute but arise under provisions which leave the contracting parties a degree of latitude and are thus private in nature.The provisions in this case are considerably different from those at issue in the first Defrenne case because they relate to:The payment of contributions and not to the grant of (or entitlement to) benefits and, secondly, since 1963 those contributions have been paid in full by the employer which happens to be the State.In this case the question is quite different, for it is whether the employee's contribution, the cost of which is borne by the employer, must be regarded as “pay” within the meaning of Article 119. The Court has answered that question in the affirmative in Worringham and Humphreys in which it held that a contribution paid by an employer on behalf of an employee is “pay” within the meaning of Article 119. It is a benefit which must be regarded as “pay” as it amounts to a saving for the employee because he does not need to pay the employee's contribution himself.The rules at issue in this case provide that in its capacity of employer the State is to assume on behalf of its officials theobligation to pay contributions due under the Old-Age Pensions Law and the Widows' and Orphans' Benefits Law and this amounts to a benefit similar to that in question in Worringham and Humphreys. The gross salary of officials is in effect increased by the amount which the State pays on their behalf. As in Worringham and Humphreys, gross salary helps to determine certain other benefits, such as mortgage and credit facilities for example, in the Netherlands, too. Furthermore, married female officials lose a certain advantage in so far as the refund of contributions or the “over-compensation” has in fact been stopped by the provisions in question.The fact that the contribution borne by the State in its capacity of employer must be paid under a social security scheme does not make their payment any the less “pay”.According to the judgment in Case 12/81 Eileen Garland v British Rail Engineering Limited [1982] ECR 359, a benefit granted in respect of employment need not be based on a contractual obligation. The determining factor is that the employment makes the employee eligible for the benefit. It does not therefore matter what the benefit is based upon. All that matters is that by reason of the employment the obligation to pay contributions is assumed by the State on behalf of its officials.In conclusion Mrs van Plateringen-Doeksen submits that the payment by Netherlands public bodies on behalf of officials of the employee's contributions due under the Old-Age Pensions Law and the Widows' and Orphans' Benefit Law forms part of gross salary and as such is covered by the term “pay” in Article 119 as being salary in the strict sense of the word. Since in each case the assumption of payment of the contributions amounts to a benefit for the official and, as is clear from consideration of the Court's rulings, the conditions laid down in this regard are fulfilled, it is also covered in other respects by the term “pay” in Article 119. The benefit is in fact paid directly by the employer and also arises directly from employment in the public service.On the second question Mrs van Plat-eringen-Doeksen states that, according to the judgment in Worringham and Humphreys, inequality in gross salaries between men and women amounts to discrimination contrary to Article 119 of the EEC Treaty.The aim of the rules applied by the State is clear: it is to ensure that in a given situation the contributions it transfers are as far as possible directly in line with the amount of contributions eventually payable by the official. That aim cannot however be obtained by paying for the husband and not partly for the wife, or vice versa.In its capacity of employer the State may, of course, change officials' remuneration by legislative process. But it may no longer act in a way which involves sex discrimination.On the direct effect of Article 119 of the EEC Treaty Mrs van Plateringen-Doeksen states that the discrimination at issue in this case is direct and overt, for it involves unequal pay for men and women (married to officials) for equal work in the same service and is moreover provable by legal analysis alone since it arises from statutory and administrative provisions.The Board of the University of Amsterdam observes first of all that Article 119 is directly applicable in this case but then points out that it is clear from the first Defrenne case that the transfer made under Article N 9 of the General Civil Pensions Law is not part of the plaintiff's pay within the meaning of Article 119 of the EEC Treaty.The reasoning behind Article N 9 is that in incorporating the pension payable under the Old-Age Pensions Law in the pension payable under the General Civil Pensions Law it would not be appropriate to burden public officials with the payment of contributions due under the Old-Age Pensions Law. Consequently the employer assumes the burden of paying the contributions. What an institution pays pursuant to Article N 9 is not therefore pay for work performed but the assumption of a debt. There is no discrimination between men and women as regards this assumption of debt.The Netherlands Government considers that the provisions of Netherlands law are not contrary to Article 119 of the EEC Treaty or Directive No 75/117/EEC in which the principle that men and women should receive equal pay for the same work is laid down.The assumption of payment of contributions due under the Old-Age Pensions Law and the Widows' and Orphans' Benefits Law is laid down in a statutory provision which was enacted by the legislature to cover all public employees (as well as those having the same status in law).The sole aim of the measures in question was to end the previous situation in which the State transferred more contributions than were payable by officials by providing that in future it should pay contributions only up to the maximum limits specified in the Old-Age Pensions Law and Widow's and Orphans' Benefits Law. In this respect the sex of officials is not taken into account per se. Besides applying to female officials whose husbands are also employed in the public service the measures also apply to male and female officials who are employed by more than one public institution. It is true that in the case of a female official whose husband is employed in the public service the contributions in respect of the man's salary are paid first, and only then, if and so far as the maximum limit on contributions has still not been reached, are the contributions paid for the woman. Although in such a case a distinction is made between men and women for the purpose of applying the measures, it cannot be regarded as sex discrimination in the matter of pay, for it is entirely connected with the structure of the Old-Age Pensions Law and the Widows' and Orphans' Benefits Law. Under those Laws the married woman's income is regarded as that of her husband for the purposes of levying the contributions. In view of the rationale of the rules adopted to avoid the overcompensation of contributions due under the Old-Age Pensions Law and the Widows' and Orphans' Benefits Law (i.e. not to pay more contributions than are actually due) it cannot be said that in this regard the married woman is in a position comparable to that of the married man since for the purposes of the two laws the married woman's liability to pay contributions herself is limited.The Netherlands Government concludes that as a general social security scheme the Old-Age Pensions Law lies outside the ambit of Article 119 of the EEC Treaty. If, however, the Court should take the view that the compensation or overcompensation amounts to “pay” within the meaning of Article 119, the Netherlands Government points out that the “pay” in the form of compensation or overcompensation works out the same for men and women. Finally, no benefits in cash or in kind are linked to the compensation or overcompensation.The Commission's first point is that it is clear from the decisions of the Court that unlike Articles 117 and 118 of the EEC Treaty, which essentially lay down a programme, Article 119 is confined to the question of discrimination between men and women in the matter of pay and thus constitutes a special rule whose application is linked to specific factors. What matters in particular here is that it is not only a matter of “pay discrimination” but also a question of equal work.However, in the present case it must be noted that the complaint made by the plaintiffs in the main proceedings, namely that where the maximum limit on the household contribution is exceeded the woman's employers will simply transfer less contributions, always arises as soon as the man's income exceeds 50% of the maximum income on the basis of which the contribution is calculated.It therefore seems that it is not so much a question of directly granting preference to the man as of a consequence of the more general policy of preferring the married man to the married woman.It considers that the answer to the first question has already been given in the judgments in the first Defienne case and in Worringham and Humphreys.In the Court's decision in the first Defienne case the decisive factor for determining what is “pay” was the express requirement in the second paragraph of Article 119 that the direct or indirect benefit should be granted to the employee “in respect of his employment”.The Commission considers that the national court's description of the compensation scheme shows that, as in the first Defienne case, the facts of this case are outside the ambit of Article 119 as defined by the Court.The General Civil Pensions Law as well as the Old-Age Pensions Law and Widows' and Orphans' Benefits Law concern the statutory social security schemes which compulsorily apply to general categories of employees, are financed by employees, employers and the State and under which contributions are governed not so much by the employment relationship between employer and employee as by social policy considerations. The rules on the incorporation of the statutory pension payable under the Old-Age Pensions Law into the public official's pension, which is also governed by statute, as well as on compensation and exclusion of overcompensation are also laid down by statute and apply by law to all public employees, that is to say to a specific, abstractly defined category of workers.The Commission moreover draws the Court's attention to a point Mr Advocate General Dutheillet de Lamothe also made in his opinion in the first Defrenne case, namely that the contributions are collected by the tax authorities.In Worringham and Humphreys the Court held that “a contribution to a retirement benefits scheme which is paid by the employer in the name of the employees by means of an addition to the gross salary and which helps to determine the amount of that salary is ‘pay’ within the meaning of the second paragraph of Article 119 of the EEC Treaty”.The Commmission considers that precisely that judgment provides confirmation a contrario of the first Defrenne case and of the negative reply which must be given to the first question in the present case.The Worringham and Humphreys case concerned two different pension schemes which Lloyds Bank devised in collective bargaining with the trade unions and under which members contracted out of the earnings-related part of the State pension scheme and this part was replaced by a contractual scheme. The scheme in question was not a statutory scheme but a private contractual scheme.Unlike the Worringham and Humphreys case, this case involves the assumption of payment by the employer of the compulsory contributions due under the Old-Age Pensions Law, but obviously only up to the statutory limits. It clearly falls within the ambit of Directive No 79/7/EEC on the progressive implementation of the principle of equal treatment for men and women in matters of social security (Official Journal 1979, L 6, p. 24).According to Article 3, the directive is to apply to :(a) statutory schemes which provide protection against the following risks :......old-age,...”According to Article 4 of the directive, “the principle of equal treatment means that there shall be no discrimination whatsoever on grounds of sex either directly, or indirectly by reference in particular to marital or family status, in particular as fas as concerns :...The obligation to contribute and the calculation of contributions,...”The six-year period referred to in Article 8 which started from the notification of the direcitve does not expire until 22 December 1984.The Commission considers that only after that date will it therefore be possible to assess the compensation scheme with reference to Community law.In view of its proposed answer to the first question, the Commission considers that the second question need not be answered.However, in case the Court should take the view in its answer to the first question that Article 119 of the EEC Treaty does apply, the Commission considers that the obvious precedent in its case-law is Worringham and Humphreys. But that case differed from the present case inasmuch as in Worringham and Humphreys a clear and explicit distinction was drawn between male and female employees whereas in the present case the differences in treatment complained of affect only a limited category of female public officials and only in very specific circumstances.However, the Commission believes that the application of criteria which affect female employees, in this case public officials, only indirectly and to a partial extent may amount to prohibited discriminatory treatment just as much as the direct application of a criterion based on sex. Reference may be made in this regard to the Court's judgment in Case 20/71 Luisa Sabbatini, née Bertoni, v European Parliament [1972] ECR 345.Although no express reference was made to Article 119 of the EEC Treaty in that case, which concerned the Staff Regulations of Officials of the European Communities, the Court held that the fact that entitlement to the expatriation allowance had been made dependent on the status of “head of household” in the knowledge that under the Staff Regulations this normally meant the married male official amounted to prohibited discrimination.In Worringham and Humphreys the Court held that the directly applicable prohibition laid down in Article : 119 of the EEC Treaty also applied to a scheme which had the effect of giving.; men higher (gross) pay because' the obligations to pay contributions applied only to men and not to women and the contributions payable by men were paid by the employer in their name by means of an addition to gross salary.The reference to the absence of any obligation upon women to pay contributions is an application of the rule valid for all types of discrimination prohibited by Community law (in Articles 7, 48, 52, 59, 85, 86 and 95) that prohibited discrimination exists only where facts or situations that are at least comparable are treated differently.It is clear from Worringham and Humphreys that the Court, too, accepts that in a strict comparison of gross salaries the exemption of the married female official from the obligation to pay contributions is relevant and consequently makes it difficult to reach a finding of discrimination.However, the Court went on to point out that owing to the difference in gross pay men enjoyed greater benefits or social advantages than those to which women were entitled.Consequently, if it proves necessary to reply to the second question, that criterion could be decisive here, too. In that event it would be for the national court to investigate whether in this case the difference in gross salary affects entitlement to certain other benefits and their amount and whether the exemption of the married woman from liability to pay contributions has a negative effect on the benefits she subsequently receives, particularly where her marriage comes to an end through her husband's death or through divorce.