1. 

This case concerns a reference from the Social Security Commissioner in Belfast for a preliminary ruling on the interpretation of, first, Articles 4(1) and 73 of Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, self-employed persons and members of their families moving within the Community ( 1 ) and, second, Article 7(2) of Council Regulation (EEC) No 1612/68 of 15 October 1968 on freedom of movement for workers within the Community. ( 2 ) The questions put to the Court arose in a dispute between Rose Hughes, the appellant (whom I shall call Mrs Hughes) and the Chief Adjudication Officer in Belfast, the respondent, concerning Mrs Hughes' entitlement to Family Credit.

2.

Family Credit is a weekly cash benefit for low-income families provided for by the Social Security (Northern Ireland) Order 1986 and the Family Credit (General) Regulations (Northern Ireland) 1987. Article 21 of the Social Security (Northern Ireland) Order 1986 provides as follows:

(...)

Article 22 of the Order provides as follows:

‘(...)

(...)’

and Article 23(6) provides, finally:

‘No person shall be entitled to an income-related benefit if his capital or a prescribed part of it exceeds the prescribed amount.’

The Family Credit (General) Regulations, and in particular Regulations 28, 46, 47 and 48, lay down the rules governing the calculation of the amount of Family Credit. In order to be entitled to Family Credit the claimant's capital must not exceed £6000 and the applicable amount referred to above in connection with income (see Article 21(5)(a)) is determined as UK £51.45 per week. More generally, it should be noted that Family Credit is a noncontributory benefit.

3.

Mrs Hughes, the appellant in the main action, lives with her husband and three children in Ireland. She is not employed or self-employed. Her husband, a national of the United Kingdom, works in Northern Ireland for the Department of Agriculture and has never worked outside Northern Ireland. On 30 March 1988 Mrs Hughes applied to the United Kingdom authorities for Family Credit. Her application was refused first by the Adjudication Officer and later, on appeal, by the Enniskillen Social Security Appeal Tribunal on the ground that she did not satisfy the residence requirement laid down in Article 21(5) of the Social Security Order (cited above) as implemented by Regulation No 3(l)(a) and (b) of the Family Credit (General) Regulations. It is provided by the latter that:

‘A person shall be treated as being in Northern Ireland if, on the date of claim

(...)’

Mrs Hughes does not deny that neither she nor her spouse meets the residence requirement. However, she maintains that she is nevertheless entitled to Family Credit on grounds of Community law. She claims that Family Credit is a social security benefit within the meaning of Article 4(1 )(h) of Regulation No 1408/71 and that consequently that regulation, and in particular Article 73 thereof, applies. Article 73 provides that an employed (or self-employed) person who is subject to the legislation of a Member State ‘shall be entitled to the family benefits provided for by the legislation of the first Member State for members of his family residing in the territory of another Member State, as though they were residing in the territory of the first State’.

In the alternative, Mrs Hughes argues that Family Credit is a social advantage within the meaning of Article 7(2) of Regulation No 1612/68 ( 3 ) and that the residence condition provided for in the United Kingdom legislation constitutes disguised discrimination against migrant workers which is prohibited by that article.

The Chief Adjudication Officer, the respondent in the main action, contends that neither Article 73 of Regulation No 1408/71 nor Article 7(2) of Regulation No 1612/68 applies to the case.

4.

By a decision of 14 January 1991 the Social Security Commissioner, before whom the case came, referred the following questions to the Court of Justice for a preliminary ruling:

Before answering those questions I would first like to recall, as the Court did in its recent judgment of 20 June 1991, Newton, ( 4 ) that the Court has no jurisdiction in proceedings under Article 177 of the EEC Treaty to rule on the application of Community law to the specific case which has come before the national court. The Court cannot therefore rule on the question whether Family Credit is a benefit within the meaning of Article 4(1) of Regulation No 1408/71 (first question), or a social advantage within the meaning of Article 7(2) of Regulation No 1612/68 (third question). However, the Court may provide the national court with an interpretation of the relevant Community law which will enable it to decide those questions itself, and that is also how I propose that the Court of Justice should respond to the questions.

5.

It is well-established case-law that a benefit is a social security benefit within the meaning of Article 4(1) of Regulation No 1408/71 — and not social assistance within the meaning of Article 4(4) of that regulation — if the benefit is payable to the beneficiary by virtue of a situation which has been legally defined, without any individual and discretionary assessment of personal needs, and is connected with one of the risks exhaustively listed in Article 4(1). ( 5 ) Mrs Hughes and the Commission claim that Family Credit satisfies those conditions and is thus a social security benefit. The United Kingdom and the German Government do not share that view.

It is common ground that Family Credit is payable to the beneficiaries as a result of a situation which has been legally defined. The United Kingdom and the German Government consider, however, that Family Credit is nevertheless a measure of social assistance inasmuch as entitlement to Family Credit depends on the needs of the claimant. Entitlement is based on the claimant's capital, income, number of children and the age of the children. Mrs Hughes and the Commission rightly argue, however, that those are objective criteria and that entitlement to Family Credit arises independently of any individual and discretionary assessment of the personal needs of the claimant. In the light of the case-law of the Court of Justice I share the view that Family Credit satisfies the first of the abovementioned conditions. ( 6 )

6.

The United Kingdom has also pointed out that the main purpose of Family Credit is to supplement the incomes of low-paid workers with families whose income would otherwise be greater were they unemployed. In view of that purpose Family Credit, according to the United Kingdom, is not a supplementary social security benefit and has no link with the social security system as defined in the abovementioned Article 4(1). I do not share that view. Although I am willing to accept that Family Credit is intended to keep low-paid workers in employment, it cannot in my view be denied that Family Credit is a benefit intended to help meet the needs of the family. That is at least the manner in which the purpose invoked by the United Kingdom is achieved. The benefit thus falls within the category of Article 4(l)(h), family benefits, as defined in Article l(u)(i) of Regulation No 1408/71.

Finally, I would say that the argument put forward by the United Kingdom and the German Government that Family Credit cannot be regarded as a social security benefit because it does not depend on any requirement as to periods of contributions must also be rejected. It is in fact correct that Family Credit is a benefit awarded free of any obligation to contribute. However, Article 4(2) of Regulation No 1408/71 provides that noncontributory benefits dò not (necessarily) fall outside the ambit of the regulation. As the Court of Justice stated expressly in Giletti, that means that the classification of an allowance as a social security benefit does not depend on the manner in which the allowance is financed. ( 7 ) Moreover, as the Commission rightly pointed out, entitlement to Family Credit on the basis of Article 73 of Regulation No 1408/71 can only be claimed in respect of members of the family of a person who is compulsorily insured under the social security legislation of the Member State from which the benefit is claimed, so that there is in fact an obligation to contribute.

7.

Once it is accepted that Family Credit is a social security benefit and Regulation No 1408/71 thus applies, there remains the question whether Mrs Hughes is entitled to claim Family Credit on that basis. Article 73 of the regulation provides only that employed (or self-employed) persons Are entitled to family benefits for members of his or her family residing in the territory of another Member State. There is no mention of the spouse or other family members of the employed person. The German Government concludes that it is only Mr Hughes, and not his spouse, the claimant in the main action, who can rely on Article 73.

In that regard Mrs Hughes and the Commission rightly refer to Article 2(1) of Regulation No 1408/71, which defines the scope ratione personae of the regulation as follows:

‘This regulation shall apply to employed or self-employed persons who are or have been subject to the legislation of one or more Member States and who are nationals of one of the Member States or who are stateless persons or refugees residing within the territory of one of the Member States, as well as to the members of their families and their survivors.’

In its judgment of 23 November 1976 in Kermaschek v Bundesanstalt für Arbeit ( 8 ) the Court clarified that provision in paragraph 7 as follows:

‘It is evident from the juxtaposition indicated by the use of the words “as also” that this provision refers to two clearly distinct categories: workers on the one hand, and the members of their family and their survivors on the other.

(...)

Whereas the persons belonging to the first category can claim the rights to benefits covered by the regulation as rights of their own, the persons belonging to the second category can only claim derived rights, acquired through their status as a member of the family or a survivor of a worker, that is to say of a person belonging to the first category.’

and in paragraph 9

‘The members of the family of (...) workers are entitled only to the benefits provided by such legislation for the members of the family (.’). ( 9 )

Consequently, Mrs Hughes enjoys under Article 73 a derived right to family benefits if she is a member of the family of someone who fulfils the requirements of Article 73 and the relevant family benefits are also provided for in respect of members of the family by the national legislation. In the case before us it is not denied that Mrs Hughes' spouse satisfies the requirements of Article 73 and that the family benefits as provided for in the relevant national legislation are by nature intended for family members. In those circumstances Mrs Hughes has a derived right to Family Credit under Article 73. ( 10 ) ( 11 )

8.

Mrs Hughes argues in the alternative that Family Credit is a social advantage within the meaning of Article 7(2) of Regulation No 1612/68, and that the residence requirement laid down in the national legislation constitutes disguised discrimination against migrant workers which is prohibited by that article.

As the Court has repeatedly stated, it is apparent from all the provisions of Regulation No 1612/68 taken together, and from their purpose, that the social and fiscal advantages which according to Article 7(2) are to be extended to employed persons who are nationals of other Member States ‘are all those which, whether or not linked to a contract of employment, are generally granted to national workers primarily because of their objective status as workers or by virtue of the mere fact of their residence on the national territory and whose extension to workers who are nationals of other Member States therefore seems likely to facilitate the mobility of such workers within the Community’. ( 12 ) There is thus no doubt that in the light of that definition Family Credit must be regarded as a social advantage within the meaning of Article 7(2).

9.

The United Kingdom and the German Government, and also the Commission, nevertheless consider that Article 7(2) does not apply in this case. That is because Article 7(2) is intended to abolish provisions in the legislation of the Member State of employment which subject a worker who is a national of another Member State to stricter treatment, as regards social and fiscal advantages, or which place him in a less advantageous position of law or of fact compared to nationals of the Member State of employment in similar circumstances. ( 13 ) As already stated, the spouse of Mrs Hughes is, on the contrary, a national of the United Kingdom who works in the United Kingdom and has always done so. Since he is thus not a national of a Member State other than the Member State of employment Article 7(2) does not apply. I agree, particularly as the Court has consistently held that the Treaty provisions regarding free movement of workers ( 14 ) and secondary legislation adopted in order to implement those provisions ( 15 ) cannot be applied to situations in which there is no connection with the situations governed by Community law. That is certainly the case of workers who, like Mr Hughes, have never exercised their right of free movement within the Community and whose mobility within the Community has thus not been hindered by not having been granted social or fiscal advantages.

Certainly there is no doubt that the residence condition for obtaining Family Credit makes it more difficult for United Kingdom nationals who work in Northern Ireland to go to live in Ireland. However, as Community case-law stands at present Community law does not in fact guarantee the right of employed persons who are nationals of the Member State of employment to go to reside outside that Member State.

10.

Should the Court nevertheless take the view that Regulation No 1612/68 does apply, the Social Security Commissioner wishes to know whether and under what conditions Mrs Hughes, as the spouse of an employed person, may also claim under Article 7(2) the same social advantages as national employed persons. The United Kingdom is of the opinion in that connection that Mrs Hughes, as a dependent family member of an employed person, may only rely on Article 7(2) if she lives with the employed person in the relevant Member State. I do not think that that is correct.

In Lebon the Court expressly declared that members of the employed person's family within the meaning of Article 10 of Regulation No 1612/68, which includes the employed person's spouse, are indirectly entitled to the treatment accorded to the employed person himself under Article 7. ( 16 ) Article 7 does not in fact make the right to equal treatment of the employed person dependent on his being resident in the Member State of employment. It is thus also logical for the indirect right to equal treatment for members of the employed person's family recognized by the Court not to be bound to a requirement that those family members be resident in the employed person's Member State of employment. The recent judgment in Bernini actually makes it clear that there is no such residence condition for the application of Article 7. ( 17 ) The question raised by the Social Security Commissioner may thus be answered to the effect that if an employed person is entitled under Article 7(2) to a social advantage, his or her spouse is indirectly entitled to that social advantage, regardless of the fact that the spouse does not reside in the Member State in which the employed person works.

Howsoever that may be, Article 7 guarantees only equal treatment. Strictly speaking, that means that if the legislation of the Member State of employment makes entitlement to a social advantage for nationals of that State, as in this case, conditional on the employed person and/or his family being resident in the territory of that Member State, that could also apply as a requirement for migrant workers and/or their families. ( 18 ) Here it must be added straight away, however, that the Court has consistendy held that rules regarding equal treatment prohibit not merely all open discrimination based on nationality but also any disguised forms of discrimination which with regard to the application of other criteria lead in fact to the same result. ( 19 ) Thus the Court held in its judgment of 8 May 1990Biehl that

‘Even though the criterion of permanent residence in the national territory referred to in connection with obtaining any repayment of an overdeduction of tax applies irrespective of the nationality of the taxpayer concerned, there is a risk that it will work in particular against taxpayers who are nationals of other Member States. It is often such persons who would in the course of the year leave the country or take up residence there.’ ( 20 )

In that case the Court therefore came to the conclusion that the residence requirement was incompatible with Community law. In this case, too, there is according to Mrs Hughes disguised discrimination inasmuch as the residence condition works principally against those who are not United Kingdom nationals. That argument, which is a matter for the Social Security Commissioner to decide, has not been raised in the questions referred for preliminary ruling. That is not surprising in view of the fact that in this case the employed person who (assuming that Regulation No 1612/68 applies) has acquired entitlement to Family Credit and from whose entitlement Mrs Hughes' entitlement is derived is a United Kingdom national.

11.

On those grounds I propose that the Court answer the questions as follows:

‘1.

A worker who is a national of a Member State may not, in the territory of another Member Sute, be treated differently from national workers by reason of his nationality in respect of any conditions of employment and work, in particular as regards remuneration, dismissal, and should he become unemployed, reinstatement or reemployment;

2.

He shall enjoy the same social and tax advantages as national workers.