Volker Steen v. Deutsche Bundespost (German Federal Post Office) (Case C-332/90) Before the Court of Justice of the European Communities (2nd Chamber)

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1 Volker Steen v. Deutsche Bundespost (German Federal Post Office) (Case C-332/90) Before the Court of Justice of the European Communities (2nd Chamber) ECJ (2nd Chamber) (Presiding, Schockweiler P.C.; Mancini and Murray JJ.) M. Marco Darmon, Advocate General. 28 January 1992 [FN1] Reference from Germany by the Arbeitsgericht (Labour Tribunal) Elmshorn, under Article 177 EEC. Provisions considered: EEC 7, 48 Discrimination. Reverse discrimination. Nationality. Employment. Civil service. The EEC Treaty rules on free movement of workers do not apply to jobs of which all the aspects are confined to a single member-state. Whether that is so is a matter for the national courts. [9] FN1 The judgment and the Advocate General's Opinion in this case have been translated by us. The English wording of the questions put by the national court and of the European Court's ruling is, however, taken from the English text published in the Official Journal.--Ed. The Court interpreted Articles 7 and 48EEC in the context of a German employee of the German Post Office who was not allowed to continue in a certain occupation under a contract of employment but was required to become an established civil servant (at a lower pay for that job), whereas a non-german would have been able to continue as an employee since he would have been ineligible to become a civil servant, that constituting reverse discrimination, to the effect that if, as here, there was no non-german element Community rules on *407 discrimination did not apply, and therefore that the employment rules and practices in issue were not subject to Community law on discrimination.

2 Representation At the oral hearing: Reinhard Mendel, of the Hamburg Bar, for the plaintiff. Ernst Röder and Joachim Karl, Regierungsdirektor and Oberregierungsrat at the Ministry of Finance, for the German Government as amicus curiae. Götz zur Hausen, Legal Adviser to the Commission, for the E.C. Commission as amicus curiae. In the written proceedings only: Werner Schulte, Rüdiger Paulsenand Brigitte Zwolski, president, Secretary and Assessorin, respectively, of union of postal workers for Schleswig Holstein, for the plaintiff. Franz Dolleschel, chief administrative officer at the general headquarters of the Kiel Post Office, for the defendant. The following case was referred to in the judgment: 1. Höfner v. Mactron Gesellschaft (41/90), 23 April 1991: not yet reported. Gaz:41/90 The following further cases were referred to by the Advocate General: 2. Morson v. Netherlands (35-36/82), 27 October 1982: [1982] E.C.R. 3723, [1983] 2 C.M.L.R Gaz:35/82 3. Regina v. Saunders (175/78), 28 March 1979: [1979] E.C.R. 1129, [1979] 2 C.M.L.R Gaz:175/78 4. Moser v. Land Baden-Württemburg (180/83), 28 June 1984: [1984] E.C.R. 2539, [1984] 3 C.M.L.R Gaz:180/83 5. Iorio v. Azienda Autonoma delle Ferrovie dello Stato (298/84), 23 January 1986: [1986] E.C.R. 247, [1986] 3 C.M.L.R Gaz: 298/84 6. Zaoui v. Caisse Regionale d'assurance Maladie de l'ile de France (147/87), 17 December 1987: [1987] E.C.R. 5511, [1989] 2 C.M.L.R Gaz:147/87 7. Knoors v. Secretary of State for Economic Affairs (115/78), 7 February 1979: [1979] E.C.R. 399, [1979] 2 C.M.L.R Gaz:115/78 8. Auer v. Ministere Public (No.2) (271/82), 22 September 1983: [1983] E.C.R. 2727, [1985] 1 C.M.L.R Gaz:271/82 9 Gullung v. Conseil de l'ordre des Avocats du Barreau de Colmar (292/86), 19 January 1988: [1988] E.C.R. 111, [1988] 2 C.M.L.R. 57. Gaz:292/ Van de Bijl v. Staatssecretaris Van Economische Zaken (130/88), 27 September 1989: [1989] E.C.R Gaz:130/ Re Ownership of Landed Property: E.C. Commission v. Greece (305/87), 30 May 1989: [1989] E.C.R. 1461, [1991] 1 C.M.L.R Gaz:305/87 * Masgio v. Bundesknappschaft (C-10/90), 7 March 1991: not yet reported. Gaz:10/90 TABULAR OR GRAPHIC MATERIAL SET FORTH AT THIS POINT IS NOT

3 DISPLAYABLE Facts Article 7(1) EEC is worded as follows: Within the scope of application of this Treaty, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited. Pursuant to Article 48(2) EEC, freedom of movement for workers entails the abolition of any discrimination based on nationality between workers of the member-states as regards employment, remuneration and other conditions of work and employment. Article 48(4) as in the following terms: The provisions of this Article shall not apply to employment in the public services. Under the German legislation on the career progress of federal civil servants (Bundeslaufbahnverordnung of 15 November 1978, published in [1978] I BGB , 'BLV'), which is applicable to the Deutsche Bundespost ('the Bundespost' ), applicants for employment in the public service must prove their aptitude by passing an examination and taking a two-year training course. Pursuant to the Order of the Federal Minister for Posts and Telecommunications of 14 May 1985, admission to the training course for taking up a career as a middle technical manager is limited to applicants who declare that they agree to be employed as trainee civil servants immediately after the end of training, in accordance with the conditions laid down concerning the career and pay of civil servants. Furthermore, applicants must satisfy the general conditions required for subsequent establishment in their posts. During the training course the applicant has a contract of employment. The declaration of agreement is annexed thereto and forms an integral part thereof. This annex also states that the applicant's assignment to tasks within the competence of a middle technical manager shall end if he refuses to become established in spite of his declaration of agreement. Mr. Volker Steen, a German national domiciled in the Federal Republic of Germany, has been employed by the Bundespost since 1973 as a technical employee in the category of maintenance personnel and graded A5. His employment relationship is governed by the *409 collective agreement for workers of the Federal Administration for Posts. In July 1985 Mr. Steen, then graded A7, applied for a post the tasks of which are described as maintenance tasks within the competence of a middle technical manger, supervision and stores administration tasks. On 15 August 1985 he began the two-year training course for post Dp A7 Pt/M entitled 'maintenance, supervision, stores administration' with remuneration index I(a). In July 1985 he had lodged a declaration whereby he agreed to establishment as a trainee civil servant immediately after the training period. After passing the aptitude examination in October 1987, Mr. Steen informed the Bundespost that he wished to remain employed on the basis of a contract of employment and revoked his declaration of consent of July In November 1987 the Bundespost transferred him to a post as a manual worker with remuneration index II(a) while

4 continuing to employ him provisionally in the previous post Dp A7 Pt/M with remuneration index I(a) plus 10 per cent. Mr. Steen's tasks as supervisor of the machinery department in post Dp A7 Pt/M consisted in distributing different tasks among technical employees, supervising them and familiarising young employees with their work. The function of the machinery department was to ensure that equipment was in working order and to service and maintain the sorting equipment and plant of a post office, such as heating installations and letter boxes. In the framework of his duties as stores administrator, Mr. Steen was responsible for ordering and distributing the necessary materials. In May 1988 Mr. Steen's remuneration was higher, in gross and net terms, than what he would have received had he possessed the status of a civil servant engaged in the same tasks of post Dp A7 Pt/M. Mr. Steen brought an action against the decision not to retain him in post Dp A7 Pt/M to which he was assigned. In support of his action he contends that the post he holds is not employment in the public service, which may be retained for nationals only, within the meaning of Article 48(4) EEC. Therefore it should be possible for the post in question to be occupied by nationals of other member- States on the basis of a contract of employment which is more favourable. Consequently German workers, who are constrained to accept the post only with the status of a civil servant, would be placed at a disadvantage by reason of nationality. Finding that the case raised problems of the interpretation of Community law, the Arbeitsgericht (Labour Court), Elmshorn, decided by order of 28 September 1990 to stay judgment and to seek a preliminary ruling from the Court of Justice pursuant to Article 177 EEC on the following questions: 1. Is the employment at the Deutsche Bundespost (German Federal Post Office) in a post entitled 'maintenance, *410 supervision, stores administration'employment in the public service within the meaning of Article 48(4) EEC? 2. If question 1 is answered in the negative: (a) Is a German national to whom the abovementioned post is offered only as a post for a civil servant (Beamte) entitled to argue that Article 7 and Article 48(2) EEC have been infringed on the ground that that post would have to be offered to a national of another member-state on the basis of a contract of employment, where employment as a civil servant results inter alia in the payment of a lower monthly remuneration than employment under a contract of employment and in the loss of the right to strike? (b) Is a German national to whom the abovementioned post is offered only as a post for a civil servant entitled to argue that Article 48 EEC has been infringed on the ground that, in order to take up an equivalent post under a contract of employment, he would be obliged to leave the Federal Republic of Germany and go to another member-state (negative restriction on free movement)? It appears from the order making the reference that, so far as the court is concerned, the tasks of the disputed post should not be regarded as employment in the public service within the meaning of Article 48(4) EEC in spite of the fact

5 that the opposite was held to be the case by the Landesarbeitsgericht (Regional Labour Court), Frankfurt, by a judgment of 6 December The court making the reference points out that a national of another member-state who held the contested post on the basis of a contract of employment, and not as a civil servant, would be privileged because he would receive higher remuneration and would have the right to strike which is denied to German civil servants. This difference is said to attach to nationality. Finally the Arbeitsgericht, Elmshorn, adds that if the plaintiff wished to pursue the disputed occupation on the basis of a contract of employment and not with the status of a civil servant, he would be compelled to leave the Federal Republic of Germany and to pursue that occupation in another member-state. Opinion of the Advocate General (M. Marco Darmon) The questions referred to the Court by the Arbeitsgericht, Elmshorn, for a preliminary ruling originate from a situation which prima facie should not give rise to the application of Community law. The facts may be summarised as follows. Mr. Volker Steen has been employed as a 'technical employee'by the Deutsche Bundespost since 15 March On 12 July 1985 he applied for a post entitled 'maintenance, supervision, stores administration' as a middle technical manager. Pursuant to an Order of the Federal Minister for Posts and Telecommunications of 14 May 1985, employment as a *411 middle manager is subject to a training course during which the trainee is employed on a contractual basis. However, the applicant must undertake to become an established civil servant on completion of the training period. Mr. Steen gave this undertaking in July 1985 and the following month he began two years' training for post A7 Pt/M with remuneration index Ia. On 13 October 1987 he passed the examination for middle technical managers. By letter of 29 October, however, he stated that he wished to retain his status based on his contract of employment and withdrew his previous undertaking. It appears that employment under a contract of employment was financially more advantageous to Mr. Steen than the position of a civil servant. On 1 May 1988 the plaintiff's index remuneration totalled 2, DM net whereas, if he possessed the status of a civil servant on that date, his net salary at Grade A5 would have been 2, DM. It also seems that, according to the prevailing opinion of German academic lawyers, civil servants in the Deutsche Bundespost do not have the right to strike, whereas employees with a contract of employment do. When Mr. Steen was appointed by the Deutsche Bundespost to a post with remuneration index IIa on 12 November 1987, he challenged this decision before the court making the reference. In so far as employment as a civil servant is not open to nationals of other member-states and therefore German nationals alone have to be employed for a limited period under a contract of employment, he took the view that he was the victim of discrimination contrary to Articles 7 and 48(2) EEC. The court hearing the action has consequently referred to you three questions concerning the interpretation of Articles 7 and 48(2)EEC.

6 However, in the present instance I do not think it is necessary for you to give the national court guidance on the interpretation of Community law in order to decide the case before it. According to your settled law case.... the Treaty provisions on freedom of movement for workers and the rules adopted to implement them cannot be applied to cases which have no factor linking them with any of the situations governed by Community law. Such is undoubtedly the case with workers who have never exercised the right to freedom of movement within the Community. [FN2] FN2 Joined Cases 35-36/82, Morson & Jhanjan v. Netherlands: [1982]: E.C.R. 3723, [1983] 2 C.M.L.R. 221, paras. [16] to [17]; cf. Case 175/78, Saunders : [1979] E.C.R. 1129, [1979] 2 C.M.L.R. 216, para. [11]; Case 180/83, Moser : [1984] E.C.R. 2539, [1984] 3 C.M.L.R. 720, para. [15]; Case 298/84, Iorio : [1986] E.C.R. 247, [1986] 3 C.M.L.R. 665, para. [14]; Case 147/87, Zaoui : [1987] E.C.R. 5511, [1989] 2 C.M.L.R. 646, para. [15]. Although there is nothing to prevent Mr. Steen, a German national, from pleading Articles 7 and 48 EEC against his own State, [FN3] the fact *412 remains that he has never exercised his right to freedom of movement and, for example, has never worked, acquired training or obtained a qualification in another member- State of the Community. The rules of the Treaty relating to the freedom of movement of workers cannot be applied to a purely internal situation. By reference to the principles of Community law, therefore, cognisance cannot be taken of what academic lawyers call 'reverse discrimination'. FN3 Case 115/78, Knoors: [1979] E.C.R. 399, [1979] 2 C.M.L.R. 357, para. [24]; Case 271/82, Auer: [1983] E.C.R. 2727, [1985] 1 C.M.L.R. 123; Case 292/86, Gullung : [1988] E.C.R. 111, [1988] 2 C.M.L.R. 57, paras. [10] to [13]; Case 130/88, Van de Bijl: [1989] E.C.R Consequently Article 7 EEC cannot be applied either because it prohibits all discrimination by reason of nationality only 'within the scope of application of this Treaty' itself. It should also be observed that, according to the Court's case law, Article 7 applies independently only to situations governed by Community law in regard to which the Treaty lays down no specific prohibition of discrimination. [FN4] FN4 Case 305/87, E.C. Commission v. Greece: [1989] E.C.R. 1461, [1991] 1 C.M.L.R. 611, para. [13]; Case C-10/90, Masgio: not yet reported. However, Article 48(2) provides specifically for the same principle of nondiscrimination on the basis of nationality with regard to the freedom of movement for workers. [FN5] FN5 For a similar situation regarding the freedom to supply services, cf. Case C-

7 41/90, Höfner & Elser: not yet reported, paras. [35] to [40]. I propose therefore that the Court should find that Articles 7 and 48 EEC and the measures adopted to implement them do not apply to situations which are purely internal to a member-state, such as that of a national of such a State who has never resided, worked or obtained training or qualifications in another member-state. JUDGMENT [1] By order of 28 September 1990, received by the Court on 26 October following, the Arbeitsgericht, Elmshorn, referred to the Court for a preliminary ruling under Article 177 EEC two questions relating to the interpretation of Articles 7 and 48(4) EEC. [2] The questions have arisen in the context of an action brought by Mr. Volker Steen, a German national, against the Deutsche Bundespost ('the Bundespost') concerning a post designated by the code Dp A7 Pt/M, that of a middle technical manager with the tasks of 'maintenance, supervision and stores administration'. [3] From 1973 Mr. Steen was a technical employee of the Bundespost. In July 1985 he applied for the abovementioned post. Pursuant to the Order of the Federal Minister for Posts and Telecommunications of 14 May 1985, employment as a middle technical manager is subject to a training course of two years during which the trainee is employed on the basis of a contract of employment *413 and is also subject to an undertaking by the trainee to become an established civil servant on completion of the training period, provided that he passes an examination. [4] After giving this undertaking in July 1985, Mr. Steen began his period of training for post Dp A7 Pt/M on the basis of a contract of employment. When he passed the examination for middle technical managers in October 1987, he withdrew his undertaking of July 1985 and expressed a wish to continue in the abovementioned post on the basis of a contract of employment. At the relevant time his remuneration in post Dp A7 Pt/M was higher than what he would have received in the same post if he had been assigned to it as a civil servant. [5] Following Mr. Steen's refusal to become an established civil servant, on 12 November 1987 the Bundespost transferred him to a post as a manual worker in a pay category lower than the grade for post Dp A7 Pt/M. Mr. Steen brought an action challenging the decision to transfer him. He contended that, in so far as employment as a civil servant is open only to German nationals, only they are unable to occupy a post such as that in question for an indefinite period as employees with a contract of employment, and therefore they suffer discrimination, within the meaning of Articles 7 and 48 EEC, in relation to nationals of other member-states. [6] Under these circumstances the national court has referred the following questions to the Court for a preliminary ruling: 1. Is the employment at the Deutsche Bundespost (German Federal Post Office) in the post entitled 'maintenance, supervision, stores administration' employment

8 in the public service within the meaning of Article 48(4) EEC? 2. If question 1 is answered in the negative: (a) Is a German national to whom the abovementioned post is offered only as a post for a civil servant (Beamte) entitled to argue that Article 7 and Article 48(2) EEC have been infringed on the ground that that post would have to be offered to a national of another member-state on the basis of a contract of employment, where employment as a civil servant results inter alia in the payment of a lower monthly remuneration than employment under a contract of employment and in the loss of the right to strike? (b) Is a German national to whom the abovementioned post is offered only as a post for a civil servant entitled to argue that Article 48 EEC has been infringed on the ground that, in order to take up an equivalent post under a contract of employment, he would be obliged to leave the Federal Republic of Germany and go to another member-state (negative restriction on free movement)? [7] Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the course of the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court. *414 [8] First of all it should be observed that Article 48(2) EEC is the application to the freedom of movement of workers of the general principle of nondiscrimination on grounds of nationality laid down by Article 7 EEC. Consequently any measures which are incompatible with Article 48 are also incompatible with Article 7. [9] However, a problem of non-discrimination within the meaning of Article 48 arises only in relation to the attitude of a member-state towards workers of other member-states who wish to pursue their occupation in the first State. According to settled case law (see most recently, Case 41/90, Höfner & Elser, [FN6]para. [37], the provisions of the Treaty concerning freedom of movement cannot be applied to occupations all the elements of which are confined within a single member-state, and the question of whether this is so is a factual matter upon which the national court must make a finding. FN6 Not yet reported. [10] However, it appears from the facts, as established by the national court in the order making the reference, that the main action concerns a dispute between the German Bundespost and a German national, who has never exercised his freedom of movement in the Community, relating to recruitment for a post situated in the Federal Republic of Germany. [11] A situation of this kind has no connecting factor with any of the situations contemplated by Community law with regard to the freedom of movement of workers. [12] Therefore the reply to the national court's questions must be that a national of a member-state who has never exercised the right to freedom of movement in the Community cannot rely on Articles 7 and 48 in relation to a purely internal situation.

9 Costs [13] The costs incurred by the German Government and the E.C. Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court. Order On those grounds, THE COURT (Second Chamber), in answer to the questions referred to it by the Arbeitsgericht, Elmshorn, by order of 26 October 1990, HEREBY RULES: A national of a member-state who has never exercised the right of freedom of movement within the Community cannot rely on Articles 7 and 48 EEC in circumstances wholly within the domestic sphere of a member-state. (c) Sweet & Maxwell Limited [1992] 2 C.M.L.R. 406 END OF DOCUMENT