Försäkringskassan v Elisabeth Bergström – Case C-257/10

A serious blow to national sovereignty in the field of social security?

Facts of the case

In Case C-257/10 the plaintiff is Elisabeth Bergström, a Swedish national, who resided and worked in Switzerland from January 1994 until the birth of her daughter on 19 March 2002. In September 2002 Ms Bergström returned to Sweden with her husband and her daughter. While her husband immediately took up employment in Sweden, she remained unemployed in order to care for the couples’ daughter. As from 16 March 2003 she applied for parental benefit at the daily sick leave benefit level (‘PBDBL’), calculated on the basis of the income she had from her employment in Switzerland. The National Social Insurance Office however decided to grant Ms Bergström basic parental benefit (‘BPB’), because she was not entitled to claim PBDBL, due to the fact that she was not employed in Sweden 240 days before the birth of her daughter.

Elisabeth Bergström appealed against the decision, made by the National Social Insurance Office (Försäkringskassan), to the Stockholm District Court. The District Court however dismissed the appeal and held that PBDBL was an employment-related benefit and that it was not sufficient that Ms Bergström’s husband was employed in Sweden. Hence, in order to be entitled to PBDBL the insured person, him or herself, had to be employed in Sweden at a time sufficiently close to the period in respect of which that benefit was claimed.

As a result of the dismissal of her appeal in the District Court, Mrs. Bergström brought an appeal before the Court of Appeal in Stockholm, which held that she could claim PBDBL, calculated on the basis of her work in Switzerland. The National Social Insurance Office however appealed against the judgement in the Supreme Administrative Court asserting that the decision of the Stockholm District Court should be upheld, while the opposite was argued by Ms Bergström.

The Supreme Administrative Court asserted that Ms Bergström does not fulfill the requirements laid down by Swedish law for being able to claim parental benefit at the daily sick leave benefit level. Due to the fact that the question whether the income from Ms Bergströms employment in Switzerland should be taken into account when applying the provisions was unclear, the proceedings were put on stay and the case was referred  to the European Court of Justice for a preliminary ruling.

Questions of law

The questions of law referred to the ECJ were the following:

1. Under European Union law, in particular the Agreement with Switzerland on the free movement of persons and Article 72 of Regulation No 1408/71, can a qualification period for family benefit in the form of income-related benefit for childcare be completed in its entirety through employment and insurance in Switzerland?

2. Under European Union law, in particular the Agreement with Switzerland on the free movement of persons and Articles 3(1) and 72 of Regulation No 1408/71, is income earned in Switzerland to be equated with domestic income in the determination of entitlement to family benefit in the form of income-related benefit for childcare?

The ECJ’s judgement

Even though it is not clearly stated in the preliminary ruling, the European Court of Justice in its response to the questions of law referred by the Supreme Administrative Court, accepted the opinion of Advocate General Mazák. In regards to the first question, the ECJ found that the competent institutions of the Member State should take into account employment periods completed in the Swiss Confederation. With regards to the second question the ECJ, based on the principles of equal treatment and non-discrimination, held that the calculation of the benefits have to take into account the income of a person who has qualifications and experiences and who is similarly employed in the Members State in which that benefit is required.

Reasoning

According to the interpretation of the legal questions the ECJ stated that in order to solve the legal issue at hand, the Agreement with Switzerland on the free movement of persons and Article 72 of Regulation No 1408/71 must be interpreted as being applicable in the present case. The ECJ argued that both article 8(c) of the Agreement and Article 72 of the Regulation are completely explicit. The ECJ i.e. made a literal interpretation of the above mentioned articles, and asserted that the aggregation includes “all periods”, including “periods of insurance” completed in any other Member State, and that they have to be taken into account by the national law of the countries concerned.

The above mentioned interpretation of the articles ensures the free movement of persons between the Swiss Confederation and the Union and is thereto, according to the ECJ consistent with the aim of the Agreement. The ECJ furthermore asserted that the interpretation is also in accordance with Article 8 (a) of the Agreement, i.e. with the principle of equal treatment. Hence, its aim is to ensure that the exercise of the right to freedom of movement does not result in the deprivation of social security benefits of a migrant worker, as compared with other workers who have not exercised that right. Using this basis for its decision the ECJ declared that the competent institution of the Member State, in this case the National Social Insurance Office of Sweden, cannot demand that an insurance period must have been completed in its own territory in addition to a period of employment or self-employment completed in Switzerland, i.e. in another Member State.

As regards the second question, the ECJ shared the opinion of the Advocate General that because Regulation No 1408/71 does not contain specific provision for calculating family benefits, if these fall within the scope of the Regulation, they must be calculated on the basis of the legislation of the competent Member State. The conditions adopted may however not give rise to direct or indirect discrimination between the European Union workers. Consequently, the national rules governing the calculation of the family benefit are applicable, if they comply with Article 3(1) of the above mentioned regulation. Both the Advocate General and the Court stated that the Agreement and Articles 3(1) and 72 of the Regulation 1408/71 do not require the income earned in Switzerland to be equated with the domestic income when determining the entitlement to family benefit. The national courts should however take account of the income of a worker in that Member State in a comparable profession, with comparable professional qualifications and experience when calculating the amount of the family benefit at the sick leave benefit level.

Answering the second question referred by the Supreme Administrative Court, the ECJ based its preliminary ruling on relevant rules in Regulation 1408/71 concerning the social security “sickness provision” in order to determine the amount of the family benefits.  According to the ECJ’s interpretation of the rules set forth in article 23 (1) and (2) of the Regulation, the qualifying income for calculating economic benefits could be established either by reference to earnings during periods completed under the legislation of the competent institution or by reference to standard earnings or, where appropriate like in this present case, the average of standard earnings for the period completed under that legislation. The ECJ determined that the above mentioned approach is compatible with the rules laid down in Part N.1 of Annex VI to Regulation 1408/71 and found, just as the Advocate General, that persons are entitled to parental benefit for periods completed in another Member State as being based on the same average income as insurance periods completed in Sweden.

Even though Ms Bergström did not have an income in Sweden during the 240-day qualifying period, the ECJ held that her qualifying income must be calculated by taking into account the income of a person who is employed, in Sweden, in a comparable situation to her and has similar professional qualifications and experiences. The ECJ justified the above mentioned argumentation by asserting that such a conclusion is needed for Article 8(c) of the Agreement and Article 72 of the Regulation to be effective, and in order to satisfy the requirement of equal treatment set forth in Article 8(a) and Article 3(1) of the Agreement.

The ECJ refused the arguments of the Swedish Government and the other intervening governments (the United Kingdom and Finland), asserting that if the right to social benefits for migrant workers is not guaranteed, the right of free movement of persons will never be achieved. Another argument asserted by the Court was that the above mentioned Regulation adopted on the basis of Article 51 EEC (now Article 48 TFEU) empowered the Council of the European Union to take the measures and arrangements to secure the aggregation for migrant workers and their dependants in the social security field. This means that the Members States knew they should have provided conditions and budget for that.

In the present case the ECJ has extended social benefits by declaring that parental benefit is included in the social security system. By asserting that family benefits are included in the interpretation of Article 72 of Regulation No 1408/71, the ECJ contributed to the development of law since an extension and clarification was made in regards to this Article. From a European perspective this case has contributed to “the development of law”, from a national point of view this case clearly may be considered as a serious blow to national sovereignty, based on the fact that yet another national matter has been taken from national level to EU level. Since the preliminary ruling of the ECJ was issued on 15 December 2011, it will also be interesting to see what the outcome of it will be in the case before the Swedish Supreme Administrative Court, when the final decision will be delivered.

Mathieu Delsol, Marijela Kokalovic, Airton Valente, and Samiya Warsame

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About eulaworebro

Örebro Universitet (Sweden)
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2 Responses to Försäkringskassan v Elisabeth Bergström – Case C-257/10

  1. Stina says:

    In the ruling of the case the ECJ emphasized the importance of the purpose with free movement of workers, the principle of equal treatment and the necessity of the application of the aggregation rule under the Agreement between Switzerland and EU member states. The ECJ interpreted article 8 (c) of the Agreement that the word “aggregation” shall concerns “all periods”, including periods of insurance that have been completed in another member state. National authorities are bound to respect the provisions of free movement of workers and this cannot be done without a liberal approach that does not prevent nationals from one member state to move to another (or as in this case a state which the Union has an Agreement with). According to the ECJ the meaning of Article 72 of the Regulation is that periods of insurance, either as employed or as self-employed in another member state must be taken into consideration in the same way as if the periods of insurance would have been completed in the state. An authority of a member state that is responsible for making decisions regarding family benefits cannot require that an individual´s insurance period must have been completed within the territory of the state as the authority is residing in.

    Ms Bergström had not been working in Sweden during the “qualifying period” (the last 240 days) and could, according to the swedish national social insurance office, not be awarded the family benefit. In order to calculate a benefit the award should be decided upon the basis of a person wich is employed in a similar way in the state concerned, eg. the same profession and the same qualifications in order to avoid discrimination. If Ms Bergström would not be entitled the same benefits as other persons from Sweden that, in contrast to Ms Bergström, have been working in Sweden there would be a clear discrimination.

    I think that the main reasons for why the ECJ ruled in favour of Ms Bergström was to prove the importance of the free movement of workers, but also to prevent discrimination between workers who have decided to reside and to work in another member state. Article 8 (c) of the Agreement and Article 72 of the Regulation would probably not have any impact or influence if the ECJ would not have ruled in this way. It might be a step towards further market integration in relation to workers right, i.e. to make it easier for people to go and work in other member states and still be able to rely on the social insurance system in the member state of which the he or she is a national of. The EU is no longer only creating legislation in areas of pure economic matters, but also in other areas such as workers rights. Even though the EU might not have the competence to legislate in social security matters on a domestic level the EU has the competence to prohibit discrimination on cross boarding matters. In this case a national social insurance office refuses a person a certain benefit on the ground that the applicant had not been working in Sweden during the last 240 days. The Regulation does not states a certain amount of parental benefit. Instead the ECJ tried to calculate economic benefits on the ground of earnings during periods completed under the legislation of the competent institution or on the ground of a standard earning.

  2. Josefin says:

    Swedish Försäkringskassan is not willing to give Mrs Bergström parental benefits, claiming that she does not fulfil the requirements set out to be granted the higher level of benefits. The reasoning behind that decision, that she has not been working in Sweden during a 240-days period is in conflict with EU-law as it effects and interferes with one of the core concepts of the Union, the free movement. By using your right to move freely between member states and to work away from your home country, when you return you have lost the social benefits you should have had it you stayed. That system is not encouraging or supporting the right to free movement.

    With this said, I understand the Swedish point of view, with a very generous well-fare system, there needs to be rules regarding the right to benefits, especially those that are based on work and previous salaries. Sweden is worried that their system is going be misused and that it will lead to massive costs for the state. But there is no reason why a person would not be able to add up their workdays abroad to be able to claim the benefits require 240 working days. The court also states that this is something that the states should be aware of and calculate for. With the Union, it should not matter where a person is coming from, it is the state in which that person is living in, which should provide for him/her.

    I do agree that an important point for this system not to be abused is the idea that, even though days of work should be added together to fulfil national requirements to benefits, the amount should be calculated after what a person with the same job, taking experience and professional qualifications into account, would earn in the country where benefits are claimed. It would not be a very equal system if the benefits would be different for a person who worked in country with a different tax-system and higher salaries than for a person who worked in the same position but in Sweden. It will impose a bigger cost for the state, and there is a risk that the states with the most generous benefit-schemes would be abused, as you can work in a state with higher salaries and when in need of eg parental benefits, live in Sweden for those years. If benefits are calculated equally, you avoid that problem to some extent. This would be the best way to guarantee both the right to free movement and equal treatment, and at the same time respecting and caring for the states system of well-fare and benefits.

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