ECJ ruling- social security legislation applicable to cross-border temporary agency workers

The ECJ delivered the judgment in Raad van bestuur van de Sociale verzekeringsbank v X and Y (13 October 2022, C-713/20, EU:C:2022:782).

The request for a preliminary ruling submitted by the Social Security and Civil Service Court of Appeal (the Netherlands), is concerned with the social security legislation applicable to temporary agency workers residing in a Member State and pursuing an employment activity in another Member State.

The question referred to the ECJ for preliminary ruling relates to periods between temporary work assignments (when no temporary agency work is performed, and the employment relationship with the temporary work agency is terminated).

The referring court is essentially asking whether the legislation of the Member State in which the worker pursues the activity as an employed person is applicable [Art 11.3(a) Regulation 883/2004], or the legislation of the Member State of residence [Art 11.3(e) of the said regulation].

The ECJ recalled that:

  • Article 11(3)(a) of Regulation 883/2004 establishes the principle of lex loci laboris (i.e., the applicable legislation is the legislation of the Member State in which territory the employment or self-employment activity is carried out)
  • the only situation in which the existence of an employment relationship in a Member State becomes irrelevant, is the one referred to in Article 11(2) of Regulation 883/2004 (persons receiving cash benefits because or as a consequence of their activity as an employed or self-employed person are considered to be pursuing that activity)

The case at hand does not fall under the scope of Article 11(2) of Regulation 883/2004.

The question is whether it falls under the scope of Article 11(3)(a) of Regulation 883/2004.

Pursuant to Article 1(a) of Regulation 883/2004 an ‘activity as an employed person’ is an activity or equivalent situation, which is treated as such for the purposes of the social security legislation of the Member State in which that activity is pursued or the equivalent situation exists.

Or, in the case at hand, during periods between temporary work assignments, no temporary agency work (or other activity can be qualified as an employment activity under the Netherland law) is performed, and the employment relationship with the temporary work agency is terminated.

It follows that for the purpose of the Netherland social security legislation, during periods between temporary work assignments, the persons concerned were not pursuing activity as employed persons and were not in an equivalent situation.

The case at hand does not fall under the scope of Article 11(3)(a) of Regulation 883/2004, and consequently, the legislation of the Member State of residence is applicable [Art 11.3(e) of Regulation 883/2004].

The ECJ underlines that the legislation of the Member State of residence “applies both to persons who have definitively ceased their occupational activity and to those who have merely temporarily ceased their occupational activity”.

That is the interpretation must be given to the ECJ ruling in Franzen and Others (C‑382/13, EU:C:2015:261).

To invoke the applicability of Art 11.3(a) Regulation 883/2004, “the existence of an employment contract and the type of employment, whether partial or casual, or even the number of hours worked by the employee, are irrelevant” (C‑382/13, paragraph 50), however, “the continued existence of an employment relationship is always necessary” (paragraph 49 C-713/20, read in conjunction with paragraph 51 C‑382/13).

The takeaway

Where the conclusion of an employment contract is mandatory, that contract must cover periods between temporary work assignments- “permanent contract” (unless another activity can be qualified as an employment activity is carried out).

The application of the “agency clause” (CLA for Temporary Agency Workers-the Netherlands), undermines the possibility to invoke Art 11.3(a) of Regulation 883/2004 for periods between temporary work assignments (during the first 52 weeks worked for the same private employment agency, the agency clause applies unless the agency work employment contract provides for its non-applicability).

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