Joined Cases C‑216/12 and C‑217/12, Hliddal and Bornand

Court further defines concept of ‚pay’ in the sense of Article 157(2) TFEU
>> Ms Hliddal and Mr Bornand, both Swiss nationals, reside in Switzerland with their respective families and work as airline captains for an airline in Luxembourg.
They were refused a parental leave allowance on the ground that they did not satisfy the conditions laid down in the Luxembourg Code du Travail, pursuant to which a person claiming parental leave must have an official address and reside continuously in Luxembourg or be covered by the Community regulations.
The Court first of all assesses the applicability of the EC-Swiss Agreement to the cases before the referring court, and hence, the question whether it had jurisdiction to answer the question referred.
The Court held that by expressly referring to Regulation No 1408/71, the EC-Swiss Agreement extended the personal scope of that regulation to cover Swiss nationals. By its question regarding the interpretation of Regulation No 1408/71, the national court sought to ascertain whether a parental leave allowance, such as the allowance at issue in the case before it, fell within the material scope of Regulation No 1408/71, which would mean that the allowance was covered by the reference to that regulation in the EC-Swiss Agreement and could be claimed by a Swiss national. In that regard, moreover, it was of no relevance to the disputes before the referring court that the EC-Swiss Agreement did not refer to Directive 96/34, the directive which, according to the CNPF, the Law of 12 February 1999 introducing parental leave and leave for family reasons was intended to transpose into Luxembourg law. The Court held that in those circumstances, it had jurisdiction to answer the question referred.
The Court furthermore determined whether a parental leave allowance fell to be regarded as ‘pay’ within the meaning of Article 157 TFEU or as a ‘social security benefit’ within the meaning of Regulation No 1408/71.
The Court held that under Article 157(2) TFEU, ‘pay’ means ‘the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker received directly or indirectly, in respect of his employment, from his employer’. 
It is settled case-law that that concept covers any consideration, whether immediate or future, provided that the worker receives it, albeit indirectly, in respect of his employment, from his employer, and irrespective of whether it is received under a contract of employment, by virtue of legislative provisions or on a voluntary basis (see Case C‑262/88 Barber [1990]; Case C‑66/96 Høj Pedersen and Others [1998]; Case C‑236/98 JämO [2000]; and Case C‑147/02 Alabaster [2004]). The Court has held that a worker who exercises a statutory right to parenting leave which carries with it a parenting allowance paid by the State is in a specific situation which cannot be assimilated to that of a man or woman who works, since such leave is characterised by the suspension of the employment contract and, accordingly, of the respective obligations of the employer and the worker (see Case C‑333/97 Lewen [1999], and Case C‑537/07 Gómez-Limón Sánchez‑Camacho [2009]).
It is also settled case-law that a benefit may be regarded as a social security benefit in so far as it is granted to the recipients, without any individual and discretionary assessment of personal needs, on the basis of a legally defined position and relates to one of the risks expressly listed in Article 4(1) of Regulation No 1408/71 (see, inter alia, Case C‑286/03 Hosse [2006]; Joined Cases C‑396/05, C‑419/05 and C‑450/05 Habelt and Others [2007]; and Case C‑228/07 Petersen [2008]).
The Court held that a benefit such as the parental leave allowance at issue in the main proceedings did not constitute an unemployment benefit. The Court reiterated that in order to distinguish between the various categories of social security benefit, ‘the risk covered’ by each benefit must be taken into consideration. Thus, an unemployment benefit covered the risk associated with the loss of revenue suffered by a worker following the loss of his employment although he was still able to work. A benefit granted if that risk, namely loss of employment, materialized and which was no longer payable if that situation ceased to exist as a result of the claimant’s engaging in paid employment must be regarded as constituting an unemployment benefit (see Case C‑406/04 De Cuyper [2006]).
However, as pointed out by the Court, that was not the position in the case of a person receiving a parental leave allowance such as the allowance at issue in the main proceedings. That person had not lost his employment, but had merely decided to suspend the employment relationship.
The Court also pointed out that, under Article 1(u)(i) of Regulation No 1408/71, ‘the term family benefits meant all benefits in kind or in cash intended to meet family expenses’. The Court reiterated that family benefits were intended to provide social assistance for workers with dependent families in the form of a contribution by society towards their expenses (see Case 104/84 Kromhout [1985]).
The Court held that the phrase ‘to meet family expenses’ which was used in that provision was to be interpreted as referring, in particular, to a public contribution to a family’s budget to alleviate the financial burdens involved in the maintenance of children (Case C‑333/00 Maaheimo [2002]).
The Court held that the purpose underlying a parenting allowance which was designed to enable one of the parents to devote himself or herself to the raising of a young child and which was intended, specifically, as remuneration for bringing up that child, and to meet other costs involved in caring for and raising a child and, as the case may be, to mitigate the financial disadvantages entailed in giving up income from full-time employment was ‘to meet family expenses’ within the meaning of Article 1(u)(i) of Regulation No 1408/71. The Court held that such a benefit must be treated as a ‘family benefit’ within the meaning of Articles 1(u)(i) and 4(1)(h) of Regulation No 1408/71 (see Case C‑275/96 Kuusijärvi [1998]).
Specifically, in relation to a career break allowance granted, subject to certain conditions, to a worker taking a break from his or her career using parental leave, the Court reiterated that that type of benefit, which was similar to the parental leave allowance at issue in the main proceedings, must be treated as a family benefit (see Case C‑469/02 Commission v Belgium).
It followed that the parental leave allowance at issue in the main proceedings might not be classified as ‘pay’ within the meaning of Article 157 TFEU and that it constituted a social security benefit with the characteristics of a ‘family benefit’ within the meaning of Regulation No 1408/71.
Accordingly, the answer to the question referred was that Articles 1(u)(i) and 4(1)(h) of Regulation No 1408/71 must be interpreted as meaning that a parental leave allowance, such as the allowance provided for under Luxembourg legislation, constituted a ‘family benefit’ within the meaning of that regulation.