Abstract
Providing family benefits in cross-border situations is one of the most complex chapters of the EU social security coordination law. Not only is there a great variety of family benefits, but also family structures are very distinct. The CJEU does not have an easy task in protecting the EU values. As a rule, it tries to construe the EU law as a whole, making it more internally coherent, rather than giving priority to one or another secondary legislative act. In the present case, it had to test national legislation against the EU law on social security coordination and freedom of movement. However, the question is whether the direct EU definition of a family should have priority over the EU definition referring to national law, hence depriving Member States of their own family policy concepts. The Court has not only emphasized the importance of equal treatment of (frontier) cross-border workers, but also respect of family and private life. Decision in the present case might play an important role also in others to follow (e.g. against adjusted export of Austrian family benefits).
Keywords
1. Introduction
Providing family benefits in cross-border situations is one of the most complex chapters of the EU social security coordination law. 1 Not only is there a great variety of family benefits, 2 but also family structures are very distinct.
When defining the notion of family, the EU social security coordination law refers to the national law of the Member States. For family benefits, the relevant definition is the one of family by the legislation under which the benefits are provided. 3 Because of such interdependence of national and EU law, national definitions are also essential for EU law. However, they are far from being uniform. They reflect distinctive historical and cultural elements, even ideological convictions, which influence policy choices and find their expression in legislative acts. Distinctive definitions may have implications for the coordination of national social security systems, if they have to be applied directly. 4
However, Member States are not completely free when doing do, since the EU law has to be respected as well. The way of living is not so static anymore. Although perceptions of family and family members change in time and in place, another element has to be added, i.e. the promotion of mobility within the EU, especially the freedom of movement of workers. Many people live in one Member State and work in another. 5 In 2018, among the largest number of cross-border workers among the Member States were for those living in France and working in Luxembourg (approximately 88.000). 6 Luxembourg seems to be exporting almost half of its family benefits to other Member States. 7
It might be noted that many receiving Member States, i.e. Member States where workers perform economic activity, try to limit family benefits for children of such workers, who are living in another Member State.
The most far-reaching limitation seems to be legislated by Austria. Since the beginning of 2019, family benefits (and tax relief for children) are being adjusted to the standard of living in the Member State where children reside, arguing that children should be treated equally in the Member State of their residence and that Staff Regulations also provide for adjustment of pay and benefits. Hence, prices among Member State should be compared according to Eurostat findings. Only monetary amount but not the value of family benefits might be distinct. However, Austrian Federal Financial Court asked the CJEU for a preliminary ruling whether such national law is in line with the EU law, in particular with prohibition of discrimination (of workers), providing equal social advantages to them and coordination of social security (in this case family) benefits. 8 Moreover, the European Commission started an infringement procedure 9 and in May 2020 lodged a claim against Austria before the CJEU. 10 The main argument is discrimination on the grounds of nationality. Austria provides family benefits for Austrian workers (even if they work for an Austrian public authority, whose children also reside in another EU Member State), but not for workers from other Member State in Austria, whose children reside in another Member State. Moreover, also the Commission argues in favour of equal social and fiscal advantages for all workers in Austria.
The questions and arguments seem very similar to the ones in the case C-802/18 Caisse pour l’avenir des enfants. Also Luxemburg amended its legislation, with effect as of August 2016, with the aim of focusing more on children by granting them individual rights, rather than perceiving them as family members of a (frontier) worker. Luxembourg had already previously adopted in 2008 a new approach concerning the welfare of children. Through reforms in fiscal matters and family benefits, 11 the government recognized the child as an individual. In 2010, it abolished the right to family benefits (including child bonus) for young people, who reached their majority, unless they were still in secondary education. Instead, the government introduced financial aid for young people in higher education residing in Luxemburg, as an individualized and universal right. 12 In 2016 the next step was taken by abolishing all references to the ‘family group’. Since 2016, a new universal benefit, named benefit for the future of the children, replaced the traditional family benefit and the child bonus. 13
The Luxembourg case considered here is interesting also due to the composition of a family. Families are no longer composed only of (biological) parents and minor children (as the definition of a standard beneficiary according to the ILO Convention 102 would indicate). Less traditional types of family have to be considered as well. Among them are e.g. adoptive families, families with same-sex parents, single-parent or lone-parent families, and reconstituted families. 14
2. Case C-802/18 Caisse pour l’avenir des enfants
The present case 15 is about family benefits to a frontier worker 16 who was working in Luxembourg but living in France with his wife and three children in a reconstituted family. One of the problems seems to be that one of three children was his wife’s child from her previous marriage, for whom Luxembourg authorities denied family benefits as of August 2016 when the Social Security Code was amended. Since then the entitling person 17 has been limited to biological (born within or outside marriage) and adoptive children. Living in a common household and de facto caring for a child has been disregarded in a cross-border situation. Conversely, all children (including stepchildren) of a Luxembourg worker were entitled to the family benefit at issue.
The Court of Justice of the EU (CJEU) tested the legislation of Luxemburg against the EU law on the freedom of movement of workers, based on Article 45 TFEU, in two respects. The first was whether family benefits may be considered to be social advantages of mobile workers in accordance with Regulation (EU) 492/2011, 18 and the second was whether they may be considered a social security benefit in accordance with Regulation (EC) 883/2004.
The main goal of Regulation (EU) 492/2011 is to ensure equal treatment of Union workers and promote their freedom of movement. The Court once more confirmed the broad interpretation of the notion of ‘social advantage’, which should be provided equally to workers of the Member State providing such advantage and all other Union workers working in that Member State. 19 Moreover, social advantages should be granted not only to workers residing in the host Member State, but also to frontier workers. Thus, the family benefit at issue here has to be considered a social advantage.
Such classification does not exclude its classification as a social security benefit under Regulation (EC) 883/2004. The Court established all classification elements, such as legally recognized position linked to one of the social risks established under Article 3 of Regulation (EC) 883/2004. More specifically, it is clearly a family benefit under this Regulation. Its applicability was confirmed not only ratione materiae, but also ratione personae.
The key question of the case was the determination whether a family bond between the claimant and his spouse’s child exists or not under the EU law. Clearly, such bond has been denied by the national law of Luxembourg, which could hardly pass the test of compliance with the EU law.
According to Directive 2014/54/EU facilitating the free movement of workers, 20 ‘members of their family’ should be understood as having the same meaning as under Directive 2004/38/EC, 21 which applies also to family members of frontier workers. 22 In the latter, family members are not only biological children, but also children (under 21 or dependants) of the spouse or partner, if maintained by the cross-border (including frontier) worker. Such children may also indirectly benefit from the provision on equal treatment of all Union workers. This has been confirmed by the CJEU in the Depesme case. 23 It seems that these were exactly the facts of the present case as well. The child was the responsibility of a frontier worker and his biological father was not maintaining him. 24 Hence, discrimination on the grounds of nationality when granting social advantage was rather obvious. All children residing in Luxembourg and living in the same household of the worker, including those of the worker’s spouse, could enjoy the family benefit at issue. Conversely, non-resident workers could only claim such benefit for their own, i.e. biological children, but not for the children of their spouse. National legislation based distinctive treatment solely on the grounds of residence, which may in fact be a requirement more demanding to meet for workers from other Member States. It is more likely that non-residents are also not nationals of Luxembourg.
Luxembourg authorities rather straightforwardly argued that the goal of national law was to endow a personal right on a child and to protect national administration, since broadening of personal scope of application would present a disproportionate burden for the family benefits system of Luxembourg, which exports approximately 48% of its family benefits.
The Court, however, rejected both arguments. It established that even if for national residents it might be a right of a child, there is no personal right of a child involved when granting it to biological children of non-resident workers. Moreover, even if granting a personal right to a child might be legitimate objective, indirect discrimination merely for budgetary and administrative reasons is neither suitable nor necessary to achieve such objective. Requirements for granting such family benefit might be linked to the common household or predominant maintenance of a child, without distinguishing between resident and frontier workers.
The Court concluded in Case C-802/18 Caisse pour l’avenir des enfants that Article 7(2) of Regulation (EU) 492/2011 precludes national legislation under which non-resident workers can only receive family benefit at stake for their biological children, excluding those of their spouse, while all children residing in this Member State are entitled to receive such family benefit. Regulation (EC) 883/2004 provides family benefits also to workers’ children who reside in another Member State, as if they were residing in the competent Member State. Even if defining family members remains in the competence of national law, Member States must still respect the law of the EU regarding free movement of workers.
3. Concluding remarks and possible influence on future decisions
Some Member States are trying to find a way to cut the costs of family benefits, especially for children not residing on their territory. The CJEU does not have an easy task in protecting the EU values. As a rule, it tries to construe the EU law as a whole, making it more internally coherent, rather than giving priority to one secondary legislative act over another. However, in the present case giving priority to one legislative act over another might be questioned.
Linking Regulations (EC) 883/2004 and (EU) 492/2011 25 or recognizing a non-resident stepchild as a family member of a frontier worker 26 is not new in the CJEU case law. What is new is combining both concepts and giving the direct EU definition of a family member priority over the EU definition referring back to national law to define family members. Article 36(2) of Regulation (EU) 492/2011 provides that this Regulation does not affect measures taken in accordance with Article 48 of the TFEU and hence Regulation (EC) 883/2004 based on this Article.
Nevertheless, the Court gave priority to regulation (EU) 492/2011 (related to Directives 2014/54/EU and 2004/38/EC). Hence, the powers that Member States wanted to retain in defining family members are overruled by the judgment in case C-802/18 Caisse pour l’avenir des enfants.
It seems that by doing so, the Court gave priority to workers and their freedom of movement rather than family policy considerations of a Member State. As a consequence of previous CJEU judgments, Luxembourg had to put an end to a universal right of young people and went back to a family model. 27
Workers still enjoy the best legal protection and their freedom has to be promoted, regardless of where their children reside. 28 Ensuring equal treatment of workers in the Member State of economic activity, rather than equal treatment of children in the Member State of their residence, might also be an essential element in the pending decision concerning Austrian family benefits, where EU values will be tested once again.
Moreover, with the present decision it is emphasized that not only distinctive treatment of Union workers, but also distinctive treatment of various family forms is scarcely acceptable in a modern European society. Both, the fundamental freedom of movement of workers and the fundamental right to private and family life have to be respected and protected.
