JUDGMENT OF THE COURT (Sixth Chamber) 9 September 1999 *

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1 KRÜGER V KREISKRANKENHAUS EBERSBERG JUDGMENT OF THE COURT (Sixth Chamber) 9 September 1999 * In Case C-281/97, REFERENCE to the Court under Article 177 of the EC Treaty (now Article 234 EC) by the Arbeitsgericht, Munich, Germany, for a preliminary ruling in the proceedings pending before that court between Andrea Krüger and Kreiskrankenhaus Ebersberg, on the interpretation of Article 119 of the EC Treaty (Articles 117 to 120 of the EC Treaty have been replaced by Articles 136 EC to 143 EC) and Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions (OJ 1976 L 39, p. 40), * Language of the case: German. I-5141

2 JUDGMENT OF CASE C-281/97 THE COURT (Sixth Chamber), composed of: G. Hirsch (Rapporteur), President of the Second Chamber, acting for the President of the Sixth Chamber, J.L. Murray and H. Ragnemalm, Judges, Advocate General: P. Léger, Registrar: H.A. Rühl, Principal Administrator, after considering the written observations submitted on behalf of: Kreiskrankenhaus Ebersberg, by Annette Dassau, Referent at the Kommunaler Arbeitgeberverband Bayern ev, the Commission of the European Communities, by Peter Hillenkamp, Legal Adviser, and Marie Wolfcarius, of its Legal Service, acting as Agents, assisted by Thomas Eilmansberger and Stefan Köck, of the Brussels Bar, having regard to the Report for the Hearing, after hearing the oral observations of Kreiskrankenhaus Ebersberg and the Commission at the hearing on 12 November 1998, after hearing the Opinion of the Advocate General at the sitting on 3 December 1998, I

3 KRÜGER V KREISKRANKENHAUS EBERSBERG gives the following Judgment 1 By order of 3 July 1997, received at the Court on 1 August 1997, the Arbeitsgericht (Labour Court), Munich, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty (now Article 234 EC) a question on the interpretation of Article 119 of the EC Treaty (Articles 117 to 120 of the EC Treaty have been replaced by Articles 136 EC to 143 EC) and Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions (OJ 1976 L 39, p. 40). 2 That question was raised in proceedings between Ms Krüger and the Kreiskrankenhaus (district hospital) Ebersberg on the subject of the payment of a special annual bonus. 3 Ms Krüger was employed full-time by the defendant in the main proceedings, with effect from 1 October 1990, as a nurse. Her employment relationship was governed by the Bundesangestelltentarifvertrag of 1961 (Collective agreement for public sector employees, 'the BAT'). 4 After the birth of her child on 24 April 1995, Ms Krüger obtained, in accordance with the Bundeserziehungsgeldgesetz (Federal law on child-care allowance, 'the BErzGG'), child-care leave from 20 June 1995 to 23 April 1998 and a child-care allowance. I

4 JUDGMENT OF CASE C-281/97 5 Since 20 September 1995, Ms Krüger has worked for the defendant in the main proceedings in 'minor employment' within the meaning of Paragraph 8 of the Fourth Book of the Sozialgesetzbuch (Code of Social Law, 'the SGB IV). Such minor employment involves a normal working week of less than 15 hours and normal pay not exceeding a fraction of the monthly baseline. It is exempt from the obligation to pay social security contributions. 6 Ms Krüger asked her employer to pay the special annual allowance for 1995, which is a bonus, paid at Christmas and equivalent to one month's salary, which is provided for in the Zuwendungs-Tarifvertrag of 1973 (Collective agreement on allowances, 'the ZTV'). 7 The defendant in the main proceedings refused to grant that bonus on the ground that the ZTV applies only to persons whose employment relationship is governed by the BAT and that, under Article 3 n of the BAT, persons in minor employment within the meaning of Paragraph 8 of the SGB IV are excluded from the scope of that agreement. 8 On 14 June 1996, Ms Krüger brought an action before the Arbeitsgericht in order to obtain payment of the annual bonus. 9 According to the national court, Article 3n of the BAT constitutes indirect discrimination against women, since it must be presumed that over 90% of persons who receive benefits under the BErzGG are women. Furthermore, it takes the view that women who work while on child-care leave and are raising children are put in a worse position than women who, for that reason, give up their work. I

5 KRÜGER V KREISKRANKENHAUS EBERSBERG 10 Accordingly, the Arbeitsgericht, Munich, decided to stay proceedings and refer the following question to the Court: 'Is a rule of national law in this case Article 3n of the BAT in conjunction with the Zuwendungs-TV of 12 October 1993 compatible with Directive 76/207/ EEC on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions, and with Article 119 of the EC Treaty, if it provides that employees who exercise an activity which is not subject to compulsory social insurance during child-care leave, by contrast with employees liable to compulsory social insurance, do not receive an annual special allowance under the relevant collective agreement? Is that rule compatible with the above provisions in particular if employees who are on child-care leave but are not working nevertheless receive the special allowance under the collective agreement in the first year?' 11 It must be stated at the outset, as the defendant in the main proceedings claimed and as the Advocate General noted in points 15 to 20 of his Opinion, that exclusion from entitlement to the special annual bonus of persons in minor employment within the meaning of Paragraph 8 of the S GB IV is the effect only of Article 3 of the BAT in conjunction with the ZTV, since the provisions of the BErzGG are immaterial in that regard. 12 It follows that the national court is asking essentially whether Article 119 of the Treaty and Directive 76/207 must be interpreted as meaning that exclusion by a collective agreement from entitlement to a special annual bonus provided for by that collective agreement of persons in employment which involves a normal working week of less than 15 hours and normal pay not exceeding a fraction of the monthly baseline and is, on that basis, exempt from compulsory social insurance constitutes indirect discrimination against women, where that exclusion affects a considerably higher percentage of women than men. I

6 JUDGMENT OF CASE C-281/97 Directive 76/ It is necessary, first, to determine whether Directive 76/207 is applicable in the main proceedings. 1 4 It is clear, in particular, from the second recital in the preamble to Directive 76/207 that it does not apply to pay within the meaning of Article 119 of the Treaty (see Case C-342/93 Gillespie and Others ν Northern Health and Social Services Board and Others [1996] ECR 1-475, paragraph 24). 15 In that regard, it should be borne in mind that, according to settled case-law, the concept of pay, within the meaning of the second paragraph of Article 119 of the Treaty, comprises any other consideration, whether in cash or in kind, whether immediate or future, provided that the worker receives it, albeit indirectly, in respect of his employment from his employer (see, in particular, Case 12/81 Garland ν British Rail Engineering [1982] ECR 359, paragraph 5; Case C-262/88 Barber ν Guardian Royal Exchange Assurance Group [1990] ECR , paragraph 12; and Case C-167/97 R v Secretary of State for Employment ex parte Seymour-Smith and Perez [1999] ECR 1-623, paragraph 23). 16 The Court made it clear in paragraph 10 of the judgment in Garland that the legal nature of that consideration is not important for the purposes of the application of Article 119 of the Treaty provided that it is granted in respect of the employment. 17 An end-of-year bonus which the employer pays to the worker under a law or a collective agreement is received in respect of the worker's employment, so that it constitutes pay within the meaning of Article 119 of the Treaty. It cannot therefore be covered by Directive 76/207. I

7 Article 119 of the Treaty KRÜGER V KREISKRANKENHAUS EBERSBERG 18 In that regard, it should be noted that Article 119 of the Treaty lays down the principle that men and women should receive equal pay for equal work, but it does not concern cases in which a group of workers is treated less favourably than another group of workers of the same sex. 19 On the other hand, that principle precludes not only the application of provisions leading to direct sex discrimination, but also the application of provisions which maintain different treatment between men and women at work as a result of the application of criteria not based on sex where those differences of treatment are not attributable to objective factors unrelated to sex discrimination (see, in particular, Seymour-Smith and Perez, paragraph 52). 20 It should next be pointed out that since Article 119 is mandatory in nature, the prohibition of discrimination between male and female workers not only applies to the action of public authorities, but also extends to all collective agreements designed to regulate employment relationships and to contracts between individuals (see, in particular, Case C-184/89 Nimz v Freie und Hansestadt Hamburg [1991] ECR 1-297, paragraph 11). 21 With regard to the refusal to grant the bonus at issue in the main proceedings, it is common ground that exclusion from the scope of the BAT of persons in minor employment within the meaning of Paragraph 8 of the SGB IV does not constitute direct sex discrimination. It is therefore necessary to consider whether such a measure can constitute indirect discrimination contrary to Article 119 of the Treaty. 22 According to settled case-law, Article 119 of the Treaty precludes a national provision or a term of a collective agreement which applies independently of the I

8 JUDGMENT OF CASE C-281/97 sex of the worker, but actually affects a considerably higher percentage of women than men, unless that provision is justified by objective reasons unrelated to any discrimination on grounds of sex (see, to that effect, Seymour-Smith and Perez, paragraph 67; and Case 171/88 Rinner-Kühn ν FWW Spezial-Gebäudereinigung [1989] ECR 2743, paragraph 12). 23 The exclusion of persons in minor employment from social insurance, which is laid down by the SGB, is intended to meet a social demand for minor employment which the German Government considered it should respond to in the context of its social and employment policy (see Case C-317/93 Nolte ν Landesversicherungsanstalt Hannover [1995] ECR I-4625, paragraph 31; and Case C-444/93 Megner and Scheffel ν Innungskrankenkasse Rheinhessen-Pfalz [1995] ECR I-4741, paragraph 27). 24 In that regard, pursuant to Article 3n of the BAT, persons in minor employment are excluded from the scope of that agreement, so that they are not entitled to the special annual bonus for which it provides. 25 However, exclusion from the scope of the BAT cannot alter the principle that men and women should receive equal pay for equal work as laid down in Article 119 of the Treaty. According to settled case-law, that is a fundamental principle of Community law under which a national rule cannot have the effect of rendering it meaningless (Seymour-Smith and Perez, paragraph 75). 26 The exclusion of persons in minor employment from a collective agreement providing for the grant of a special annual bonus constitutes treatment which is different from that for full-time workers. If the national court, which alone has jurisdiction to assess the facts, were to find that that exclusion, although it applies independently of the sex of the worker, actually affects a considerably higher percentage of women than men, it would have to conclude that the collective I-5148

9 KRÜGER V KREISKRANKENHAUS EBERSBERG agreement concerned constitutes indirect discrimination within the meaning of Article 119 of the Treaty. 27 The defendant, referring to Nolte, contends, however, that the aim of social and employment policy which is objectively unrelated to any discrimination on the ground of sex justifies in this case the exclusion of minor employment from the scope of the collective agreement. 28 It is true that the Court has held that, as Community law now stands, social policy is a matter for the Member States. Consequently, it is for the Member States to choose the measures capable of achieving the aims of their social and employment policy. In exercising that competence, the Member States have a broad margin of discretion (see Nolte, paragraph 33; and Megner and Scheffel, paragraph 29). 29 However, the main proceedings concern a situation which is different from those in Nolte and Megner and Scheffel. In this case, it is not a question of either a measure adopted by the national legislature in the context of its discretionary power or a basic principle of the German social security system, but of the exclusion of persons in minor employment from the benefit of a collective agreement which provides for the grant of a special annual bonus, the result of this being that, in respect of pay, those persons are treated differently from those governed by that collective agreement. 30 In the light of the foregoing, the answer to the question must be that Article 119 of the Treaty must be interpreted as meaning that exclusion by a collective agreement from entitlement to a special annual bonus provided for by that collective agreement of persons in employment which involves a normal working week of less than 15 hours and normal pay not exceeding a fraction of the monthly baseline and is, on that basis, exempt from compulsory social insurance I

10 JUDGMENT OF CASE C-281/97 constitutes indirect discrimination based on sex, where that exclusion applies independently of the sex of the worker but actually affects a considerably higher percentage of women than men. Costs 31 The costs incurred by the Commission, which has submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. On those grounds, THE COURT (Sixth Chamber), in answer to the question referred to it by the Arbeitsgericht, Munich, by order of 3 July 1997, hereby rules: Article 119 of the EC Treaty (Articles 117 to 120 of the EC Treaty have been replaced by Articles 136 EC to 143 EC) must be interpreted as meaning that exclusion by a collective agreement from entitlement to a special annual bonus provided for by that collective agreement of persons in employment which involves a normal working week of less than 15 hours and normal pay not exceeding a fraction of the monthly baseline and is, on that basis, exempt from I

11 KRÜGER V KREISKRANKENHAUS EBERSBERG compulsory social insurance constitutes indirect discrimination based on sex, where that exclusion applies independently of the sex of the worker but actually affects a considerably higher percentage of women than men. Hirsch Murray Ragnemalm Delivered in open court in Luxembourg on 9 September R. Grass Registrar RJ.G. Kapteyn President of the Sixth Chamber I-5151

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