Österreichischer Gewerkschaftsbund v Verband Österreichischer Banken und Bankiers (Advocate Generals opinion) [2014] EUECJ C-476/12 (13 February 2014)

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(Framework Agreement on part-time work – Principle of non-discrimination – Collective agreement providing for a dependent child allowance – Allowance paid pro-rata to part-time workers)

1. A collective agreement between a trade union and an employers’ federation requires contracts of employment in a particular economic sector to contain provision for the payment of a ‘dependent child allowance’ by the employer to meet part of the employee’s expenses for the maintenance of his or her child. May the principle of pro rata temporis contained in Clause 4.2 of the Framework Agreement on part-time work (‘the Framework Agreement’) annexed to Council Directive 97/81 (2) be applied to that allowance? If not, can the disadvantage to part-time workers that results from making a proportionate reduction in the dependent child allowance paid (to reflect their shorter working hours) be objectively justified under Clause 4.1 of the Framework Agreement? Finally, if on a proper reading of the Framework Agreement such proportionate reduction of the dependent child allowance is unlawful, does Article 28 of the Charter of Fundamental Rights of the European Union (‘the Charter’) render invalid certain parts of the collective agreement in question?

2. These are, in essence, the questions referred to the Court by the Oberster Gerichtshof (Supreme Court), Austria, arising out of litigation between the Österreichischer Gewerkschaftsbund (Austrian Federation of Trade Unions, ‘the ÖGB’) and the Verband Österreichischer Banken und Bankiers (the Association of Banks and Bankers, ‘the VÖBB’) concerning the proper interpretation of the collective agreement negotiated between them (‘the banking sector collective agreement’).

3. The right of collective bargaining and action is guaranteed by Article 28 of the Charter, which provides that:

‘Workers and employers, or their respective organisations, have, in accordance with Union law and national laws and practices, the right to negotiate and conclude collective agreements at the appropriate levels and, in cases of conflicts of interest, to take collective action to defend their interests, including strike action’.

4. Article 157(2) TFEU contains a definition of ‘pay’ for the purposes of the principle of equal pay for male and female workers for equal work or work of equal value. According to that definition, ‘“pay” means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment, from his employer’.

5. The purpose of Directive 97/81was to implement the Framework Agreement on part-time work, which is annexed to that directive. (3)

6. The Framework Agreement itself was concluded with a view to setting out the general principles and minimum requirements for part-time working, creating a general framework for eliminating discrimination against part-time workers and developing the potential for part-time work on a basis acceptable to employers and workers alike. (4)

(a) to provide for the removal of discrimination against part-time workers and to improve the quality of part-time work;

(b) to facilitate the development of part-time work on a voluntary basis and to contribute to the flexible organisation of working time in a manner which takes into account the needs of employers and workers’.

‘1. In respect of employment conditions, part-time workers shall not be treated in a less favourable manner than comparable full-time workers solely because they work part-time unless different treatment is justified on objective grounds.

9. Paragraph 54(2) of the Arbeits- und Sozialgerichtsgesetz (Labour and Social Courts Law, ‘the ASGG’) contains a special procedure that may be invoked to obtain a definitive ruling as to the meaning of a substantive legal provision whose proper interpretation is of importance to at least three employees or employers. The resulting declaratory judgment has legally binding effect.

10. Paragraph 19d of the Arbeitszeitgesetz (Austrian law on working time, ‘the AZG’) provides:

‘1. Work is “part-time” when the number of hours of agreed work per week is, on average, less than the normal statutory number of hours worked each week or less than the number of normal hours worked each week as provided for by the applicable collective agreement.

6. Part-time workers may not suffer a disadvantage compared with full-time workers on the ground that they work part-time, unless there are objective reasons to justify a difference in treatment.

7. In litigation, the employer must prove that any less favourable condition is not based on the activity being done on a part-time basis.’

11. As far as can be ascertained from the order for reference, there is no statutory obligation in national law requiring an employer to include, in a contract of employment, provision for the payment of a dependent child allowance. Any obligation to do so derives from the collective agreements that are negotiated between the trades union(s) and an employer (or group of employers) in a particular economic sector; or arises from individual negotiation between employer and (prospective) employee.

12. Chapter III of the banking sector collective agreement, entitled ‘Social Benefits’, states that ‘household allowances and child allowances are granted as a social benefit’.

‘Workers are entitled to a dependent child allowance for each child in respect of whom they are entitled to a statutory family allowance and provide evidence of its receipt. The dependent child allowance is due for the first time (or last time) for the calendar month in which the condition for its payment is met/ceases to be met.’

14. Article 22(4) states that Article 21(2), which relates to the calculation of a household allowance, applies by analogy to the dependent child allowance. Article 21(2) provides that for part-time workers the allowance ‘is calculated by dividing the amount payable to full-time workers by the number of weekly working hours on a full-time basis as provided by the collective agreement (that is, 38.5 hours) and by multiplying the result by the number of weekly working hours of the part-time worker concerned’.

15. The ÖGB, acting on behalf of part-time employees whose contracts of employment are governed by the banking sector collective agreement, brought proceedings before the Oberster Gerichtshof under Article 54(2) of the ASGG seeking a declaratory judgment that such part-time employees were entitled to payment of the full dependent child allowance, rather than to a dependent child allowance reduced pro rata to reflect their actual hours of employment.

16. The Oberster Gerichtshof has stayed proceedings and referred the following questions to the Court:

‘(1) Is it appropriate for the principle of pro rata temporis under Clause 4.2 of the Framework Agreement … to be applied to a dependent child allowance provided for in a collective agreement – such allowance being a social benefit provided by the employer in order to meet part of the parents’ expenses for the maintenance of the child in respect of whom the allowance is obtained?

Is Clause 4.1 of the Framework Agreement … to be interpreted as meaning that the disadvantage suffered by part-time workers, due to the reduction in their entitlement to dependent child allowance in proportion with their working time, is – having regard to the social partners’ wide discretion in the determination of a particular social and economic policy objective and of the measures capable of achieving it – objectively justified on the basis that a prohibition of a proportionate grant:

(a) makes part-time work in the form of parental part-time working (Elternteilzeit) and/or minor activity during a period of parental leave (Elternkarenzurlaub) more difficult or impossible; and/or

(b) leads to distortion of competition on account of the greater financial burden placed on employers who employ a larger number of part-time workers, and to a lesser willingness on the part of employers to take on part-time workers; and/or

(c) leads to more favourable treatment of part-time workers who have additional part-time work and multiple entitlement to a benefit – such as a dependent child allowance – under a collective agreement; and/or

(d) leads to more favourable treatment of part-time workers, because they have more free time than full-time workers and thus have better childcare options available to them?

(3) If Questions 1 and 2 are answered in the negative: is Article 28 of the Charter of Fundamental Rights to be interpreted as meaning that where, in a system of employment law in which minimum employment standards are largely established by the agreed social policy assessments of specially selected and qualified parties to a collective agreement, a subordinate provision of a collective agreement – in this case, the proportionate grant of the dependent child allowance to part-time workers – breaches the principle of non-discrimination and is invalid (according to national practice), the penalty of invalidity extends to all the provisions of the collective agreement relating to that area (in this case, dependent child allowance)?’

17. Written observations were lodged by the ÖGB, the VÖBB and the Commission, all of whom attended the hearing and made oral submissions.

18. The following matters appear to be common ground between the parties to the main proceedings (any necessary verification is, of course, a matter for the national court).

19. First, the referring court itself describes the dependent child allowance in question as ‘a contractual benefit provided by the employer, which not only provides compensation for the additional financial burden of childcare incurred as a result of work, but is intended generally to offset the working parent’s maintenance expenses. The dependent child allowance is thus an employer’s allowance to supplement the statutory (State) family allowance.... As a supplement to the statutory family allowance, the dependent child allowance has a similar purpose to that of the statutory family allowance’. The referring court makes it clear, however, that the dependent child allowance paid under the banking sector collective agreement is not a social security payment. (5)

20. Second, it is common ground (6) that the dependent child allowance is ‘pay’ within the meaning of (what is now) Article 157 TFEU.

21. Third, precisely because the dependent child allowance is a monetary payment, it can be used by the employee to defray not only the costs of childcare but other expenses that having a child entails (such as paying for food, clothing and toys) or indeed household expenses generally.

22. Fourth, since 1979 an employee has had to prove an entitlement to statutory family allowance in order to obtain the contractual dependent child allowance under the banking sector collective agreement. In its written observations the VÖBB has explained that, prior to that date, much more proof was required to be produced annually and that the link to entitlement to the statutory family allowance was made primarily in order to simplify the administrative burden of proving entitlement to the dependent child allowance.

The relationship between Clauses 4.1 and 4.2 of the Framework Agreement and the case-law of the Court on pro rata temporis

23. Part-time workers, by definition, work fewer hours than their full-time counterpart, the (actual or hypothetical) ‘full time equivalent’ worker (often known in the jargon as ‘the f.t.e.’). They also generically receive a lesser salary. If they receive less per hour than the f.t.e., this is clearly discriminatory treatment. If they receive exactly the same hourly rate but – because they work (for example) 20 hours a week rather than 40 – take home a smaller pay packet, this reduction in salary pro rata temporis excites no adverse comment. It is deemed implicitly to be ‘objectively justified’.

24. Clause 4.2 of the Framework Agreement reflects this general understanding by stating, laconically, ‘Where appropriate, the principle of pro rata temporis shall apply’. Although the draftsman might have written (even more economically), ‘Pay may be pro-rated’, he did not. The use of the words ‘where appropriate’ presumably implies that the pro rata temporis principle may be applied somewhat more flexibly. I shall consider those words in more detail a little later. (7)

25. Some ‘conditions of employment’ within the meaning of Clause 4.1 (the term is not defined) cannot, because of their nature, ‘appropriately’ be pro-rated. An easy example is the provision by the employer of safety equipment, such as a protective helmet: it is not possible – or appropriate – to provide half a helmet. In such circumstances, if the employer differentiates between a part-time worker and the f.t.e. to the former’s disadvantage, Clause 4.1 of the Framework Agreement comes into play. The employer is required to prove that any less favourable treatment is justified on objective grounds. If he cannot, the difference in treatment is discrimination contrary to Clause 4.1 of the Framework Agreement.

26. Conceptually, the question whether differential treatment needs, as a separate step, to be ‘justified’ objectively is not addressed as such in Clause 4.2 (because it is implicitly accepted that the pro rata temporis principle incorporates its own objective justification). However, the Court has tested objective justification when asking whether it is ‘appropriate’ to apply that principle to something other than basic remuneration.

27. Thus far, the Court has interpreted Clause 4.2 of the Framework Agreement only in relation to the entitlement to paid annual leave, which comprises both a ‘time off’ component and a ‘remuneration’ component. In Zentralbetriebsrat der Landeskrankenhäuser Tirols (8) the Court held that it was ‘appropriate’ to apply the principle of pro rata temporis to paid annual leave so that leave was reduced in respect of a period of part-time employment. Such a reduction by comparison with full-time workers was justified on objective grounds. That judgment was followed in Heimann, (9) where the Court held that the application of the pro rata temporis principle was appropriate in respect of the paid annual leave of a worker on short-time working.

28. In a number of other cases (regarding not the Framework Agreement but the principle of equal treatment between men and women), the Court has considered whether indirect discrimination was objectively justified where part-time workers were treated differently as a result of the application of the pro rata temporis principle. Thus, the Court has held that it was objectively justified to apply that principle to a permanent invalidity pension so that the amount paid was reduced to take account of the fact that the employee had taken a period of part-time parental leave during which he made contributions and acquired pension entitlements in proportion to the (lower) salary received. (10) An employer was entitled to reduce a Christmas bonus pro rata temporis to reflect periods of parental leave taken. (11) Similarly, it was objectively justified to reduce pension entitlement proportionately to take account of periods of part-time work and unpaid leave so as to reflect the number of years of actual service completed by a civil servant official compared with an official who had worked on a full-time basis throughout his career. (12)

29. When Clause 4.2 says that the pro rata temporis principle is to be applied ‘where appropriate’, what does that mean?

30. The Court’s approach thus far has equated pay under the Framework Agreement with pay under the Treaty and has been that whatever is pay may be pro-rated: see the decisions in both the Framework Agreement and the sex discrimination case-law that I have just cited (Zentralbetriebsrat der Landeskrankenhäuser Tirols, (13)Heimann, (14)Gómez-Limón Sánchez-Camacho, (15)Lewen (16) and Schönheit and Becker (17)). In all those instances, what was being reduced pro rata fell within the (wide) Treaty definition of pay; and the Court accepted that such reduction was objectively justified. In the two Framework Agreement cases, Zentralbetriebsrat der Landeskrankenhäuser Tirols and Heimann, the Court specifically held that it was ‘appropriate’ (as well as objectively justified) to apply the pro rata temporis principle to paid annual leave.

31. From that it seems to follow that, where some benefit flowing from employment falls within the Treaty definition of pay, it is ‘appropriate’ to reduce that benefit pro rata temporis for a part-time worker.

32. By its first question, the referring court asks, essentially, whether Clause 4.2 of the Framework Agreement should be interpreted as meaning that it is appropriate to apply the principle of pro rata temporis to the payment of a dependent child allowance such as that at issue in the main proceedings.

34. It is true that – unlike pension entitlement or the number of days of paid annual leave – there is no objective link between the amount of the dependent child allowance, the ‘need’ on the part of the employee that the allowance addresses and the hours worked by that employee. As was stressed by the ÖGB, the existence of the child and the need to make provision for the costs associated with raising it are matters independent of whether the employee is working full- or part-time.

35. That said, it seems to me, on the basis of the findings set out by the national court in its order for reference, that although the dependent child allowance is only paid to those showing entitlement to statutory family allowance, pursues a particular objective and is (of course) a separate line in the employee’s pay slip, it manifestly forms part of what is paid to the employee by virtue of his or her contract of employment.

36. In those circumstances, the dependent child allowance is clearly ‘pay’ within the meaning of (what is now) Article 157 TFEU, inasmuch as it is consideration that the worker receives, in cash, in respect of his employment from his employer. (18) Both the Court’s case-law and the definition of pay as it now stands in the Treaty text emphasise that the link between such cash payments and the worker’s employment may be direct or indirect.

37. In Garland, (19) the Court emphasised that where an advantage given to an employee is derived from the employment relationship, the precise legal character of the advantage is irrelevant for the purposes of determining whether it is ‘pay’. In Barber, (20) the Court held that, ‘[a]lthough it is true that many advantages granted by an employer also reflect considerations of social policy, the fact that a benefit is in the nature of pay cannot be called in question where the worker is entitled to receive the benefit in question from his employer by reason of the existence of the employment relationship’ (emphasis added).

38. Given that the dependent child allowance constitutes ‘pay’, it follows that it is ‘appropriate’ to apply the pro rata temporis principle to that aspect of pay, just as the Court has already held in respect of other aspects of remuneration. The fact that the dependent child allowance serves a social objective is praiseworthy but does not alter its legal classification as pay; and pay can be pro-rated. (21)

39. Does the drafting of the Framework Agreement leave scope for considering that there is some kind of ‘middle ground’, consisting of ‘social payments by the employer’, which – even though they are ‘pay’ within the classic definition contained in the Court’s case-law – are nevertheless not to be pro-rated for part-time workers in the way that pay is pro-rated?

40. I am not convinced that, strictly speaking, it is necessary to answer this question here. Although the dependent child allowance clearly serves a useful social purpose, the fact that it is included as part of the remuneration package is the result of negotiation between the two sides of industry. At the risk of oversimplification, it may perhaps be suggested that, within the overall ‘envelope’ of the total amount that employers in this sector are willing to pay as a salaries bill, the negotiating parties have agreed to provide extra help for employees with children, and that other components within the overall calculation may conceivably have been adjusted accordingly in order to accommodate that preference. (22) At the end of the day, however, the agreement between the social partners is about pay, not about social assistance. It follows that the resulting dependent child allowance, which is an integral part of pay, falls to be treated as pay. It is therefore open to the employer to apply the pro rata temporis principle to that allowance where the employee works part-time.

41. I emphasise that my conclusion is predicated upon the fact that there is no statutory obligation on the employer to pay the social benefits in question. If (for example) the national legislator had decided to place upon employers the burden of paying dependent child allowance to those in work (so that the State met the responsibility of paying such an allowance only to persons without employment), the employer would in effect be stepping into the shoes of the State and the conclusion might well be different. (23) I also add that, whilst here the part-time worker indubitably receives less money than the f.t.e. by way of dependent child allowance and is therefore in general terms less well off, he (or she) is not placed at some specific disadvantage by virtue of the fact that the dependent child allowance is pro-rated. I deliberately leave open the question of what the answer would be were some such specific disadvantage shown to arise in another case.

42. Finally, although Clause 4.2 is couched in mandatory terms – ‘Where appropriate the principle of pro rata temporis shall apply’ (emphasis added) – it should not in my view be interpreted as meaning that whenever the principle is appropriate, it must be applied. Put another way, ‘the principle shall apply’ does not mean ‘the employer shall be obliged to apply the principle even if he wishes to be more generous’ (he cannot, of course, pay a part-time worker less than results from application of the pro rata temporis principle). (24) The words ‘shall apply’ merely mean that, where it is appropriate to apply the pro rata temporis principle, that principle shall apply without the need for any further objective justification. The fact that the part-time worker works fewer hours than the f.t.e. worker suffices.

43. Accordingly, the first question referred should be answered to the effect that it is appropriate, within the meaning of Clause 4.2 of the Framework Agreement to apply the principle of pro rata temporis to a dependent child allowance provided for in a collective agreement, where there is no statutory obligation on the parties to make provision for such an allowance.

44. Essentially, this question asks whether, if the dependent child allowance cannot be pro-rated by applying Clause 4.2 of the Framework Agreement, the unequal treatment of part-time workers that results from paying them less than the full dependent child allowance may nevertheless be regarded as objectively justified under Clause 4.1 of the Framework Agreement for other reasons. The referring court’s question identifies four possible justifications which were, I presume, advanced before it.

45. If the Court agrees with the answer that I propose to the first question, it becomes unnecessary to answer the second question. For the sake of completeness, I shall nevertheless address it briefly.

46. In principle, it is for the referring court to assess whether any of the reasons given amount to objective justification of the difference in treatment, having regard to the Court’s case-law. The Court has held that a national court must consider whether the measure chosen corresponds to a real need, is appropriate with a view to achieving the objective pursued and is necessary to that end. (25) Mere generalisations will not be sufficient to justify a difference in treatment; (26) and the avoidance of increased costs is not a reason that will objectively justify indirect discrimination. (27)

47. That said, however, it seems to me that where a part-time worker is treated disadvantageously as compared to the f.t.e. by using his or her hours worked as the basis for reducing a payment proportionately, either it is ‘appropriate’ to pro-rate or it is not. Where the fact that the part-time worker works fewer hours provides justification on objective grounds for pro-rating, the application of the pro rata temporis principle is ‘appropriate’ and is covered by Clause 4.2 of the Framework Agreement. Where it is not ‘appropriate’, there is no additional scope for examining whether pro-rating is nevertheless objectively justified on other grounds and therefore does not breach the principle of non-discrimination established under Clause 4.1.

48. For that reason, I take the view that the four possible grounds for objective justification canvassed before the national court cannot provide a basis under Clause 4.1 of the Framework Agreement for reducing pro rata temporis the amount paid to part-time workers by way of dependent child allowance.

49. By its third question, the referring court effectively seeks to ascertain whether, in the event that payment of a proportionately reduced dependent child allowance to part-time employees is unlawful, Article 28 of the Charter would preclude any payment of that allowance under the collective agreement.

50. Again, if the Court agrees with the answer that I propose to the first question, it becomes unnecessary to answer the third. For the sake of good order, I shall nevertheless address it briefly.

51. Article 28 of the Charter enshrines the right to collective bargaining. That right must be exercised ‘in accordance with Union law’. If a provision within a collective agreement is precluded by EU law, the national court must disapply that specific provision to the extent necessary to redress what is unlawful. Thus, if the Court were to hold that EU law precluded the application of the pro rata temporis to the dependent child allowance, the specific provision providing for the allowance to be pro-rated for part-time workers (here, Article 22(4) of the banking sector collective agreement) would have to be disapplied. As a result, the dependent child allowance would be payable in full under Article 22(1) of that agreement.

52. In my view, that limited and proportionate remedy would neither render the agreement ineffective nor alter it to such an extent that it no longer resembled what was agreed by the parties. There would thus be no breach of the right to collective bargaining enshrined in Article 28 of the Charter.

53. Accordingly, for the reasons that I have given I suggest that the Court should answer only the first question referred by the Oberster Gerichtshof, Austria, in the following terms:

It is appropriate, within the meaning of Clause 4.2 of the Framework Agreement annexed to Council Directive 97/81/EC concerning the Framework Agreement on part-time work concluded by UNICE, CEEP and the ETUC, to apply the principle of pro rata temporis to a dependent child allowance provided for in a collective agreement, where there is no statutory obligation on the parties to make provision for such an allowance.

2 – Council Directive 97/81/EC of 15 December 1997 concerning the Framework Agreement on part-time work concluded by UNICE, CEEP and the ETUC (OJ 1998 L 14, p. 9).

4 – Recital 11 in the preamble to Directive 97/81. See also points 4, 5 and 7 in the ‘General Considerations’ that serve as a preamble to the Framework Agreement.

5 – The Oberster Gerichtshof applied the criteria laid down by this Court in Joined Cases C-395/08 and C-396/08 Bruno and Others [2010] ECR I-5119, paragraphs 41 and 42, and Case C-268/06 Impact [2008] ECR I-2483, paragraph 131.

6 – The express words of the order for reference at page 15, point 2.4, are: ‘Unbestritten ist, dass es sich bei der zu beurteilenden Kinderzulage um Entgelt handelt’ (‘It is undisputed that the dependent child allowance at issue is pay’).

10 – Case C-537/07 Gómez-Limón Sánchez-Camacho [2009] ECR I-6525, paragraphs 62 and 63.

12 – Joined Cases C-4/02 and C-5/02 Schönheit and Becker [2003] ECR I-12575, paragraphs 90 and 91.

18 – See Case 12/81 Garland [1982] ECR 359, paragraph 5; Case C-262/88 Barber [1990] ECR I-1889, paragraph 12; and Case C-167/97 Seymour-Smith and Perez [1999] ECR I-623, paragraph 23.

19 – Garland, cited in footnote 18, paragraph 5. See also Case C-281/97 Krüger [1999] ECR I-5127, paragraph 15.

22 – It would thus also be open to the trade union (the ÖGB), if it wishes to ensure an enhanced level of protection for part-time workers, to negotiate that child allowance should be a flat-rate payment to all qualifying employees, regardless of hours worked, as part of its overall negotiations with the employers’ representative body (the VÖBB). It would likewise be open to the social partners to decide (for example) whether the dependent child allowance should be linked to the level of salary and, if so, precisely in what way. An attractive argument can indubitably be made for not reducing some aspects of employment related benefits pro rata where that would bolster substantive equality between the sexes (see my Opinion in Gómez-Limón Sánchez-Camacho, cited in footnote 10 above, points 54 to 56); but that reading does not follow as an obligation from the Court’s case-law thus far.

23 – It may also be that in such circumstances the payment would fall outside the definition of ‘pay’ in Article 157 TFEU: see Impact, cited in footnote 5 above, paragraph 131.

24 – In this respect, see the striking example of not applying the principle of pro rata temporis in Matthew 20:1-16. Those first hired worked full-time (all day) and got the agreed wage; those who worked only part of the day (those hired at midday, for a half-day; and those hired last, only for one hour) nevertheless got the same wage because the householder hiring them chose to be generous (literally, ‘ότι ἐγώ ἀγαθόs εἰμι’ – ‘because I am good’ (v. 15)). Whether this was also because the householder recognised that their needs (to earn money to feed their families) were the same the text does not say.

25 – Case C-427/11 Kenny and Others [2013] ECR, paragraph 37 and case-law cited, and Case 170/84 Bilka-Kaufhaus [1986] ECR 1607, paragraph 36.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Österreichischer Gewerkschaftsbund v Verband Österreichischer Banken und Bankiers (Advocate Generals opinion) [2014] EUECJ C-476/12 (13 February 2014) URL: http://www.bailii.org/eu/cases/EUECJ/2014/C47612_O.html Cite as: [2015] IRLR 67, EU:C:2014:89, [2014] EUECJ C-476/12, ECLI:EU:C:2014:89

Court of Justice of the European Communities (including Court of First Instance Decisions)