‘Subject to the legislation of the Member State’ – important request for a preliminary ruling to the CJEU

The Court of Justice of the European Union has recently published in its resources the content of the request for a preliminary ruling from the Administrativen sad Veliko Tarnovo (Administrative Court in Veliko Tarnovo) in Bulgaria, concerning the concept of being ‘subject to legislation of the Member State’ within the scope of social security coordination in the EU.

Important legal issue often interpreted erroneously

The questions asked in case C-451/17 Walltopia at hand concern a concept of being ‘subject to the legislation of the Member State’ contained in Art. 14(1) of Regulation 987/2009 and Art. 12(1) of Regulation 883/2004. They focus on a widespread, yet improper interpretation of that concept, which equates the concept of ‘being subject to the legislation of the Member State’ with ‘being subject’ to the social security legislation. Such practice results in impeding employment of e.g. students, economically inactive persons and persons who for various reasons have not been registered for the purposes of social or health insurance, in particular those within the ‘grey economy’, in situations when the employer intends to temporarily post them abroad within one month from employing them. Alternatively, it may give rise to the Social Security Institution’s erroneous determination of a foreign social security system for such persons. This is contrary to the principles of EU coordination of social security systems and contrary to the case law of the Court itself, including the holding in C-308/14 Commission v UK, in which the CJEU emphasized the protective nature of Article 11 para. 3 lit. (e) of Regulation No 883/2004 for such situations (citing inter alia the views previously expressed in C-140/12 Brey, C-619/11 Dumont de Chassart and C-275/96 Kuusijärvi). However, national organs usually fail to make use of that provision in such situations.

Questions referred to the Court of Justice

The Bulgarian Court referred to the CJEU four questions, arranged in a cascade-like manner. By those questions, the Administrative Court essentially seeks to find out whether it is correct to understand the concept of ‘being subject to the legislation of a Member State’ as being governed simply by the legislation of the Member State of residence of a given person to be posted abroad and not only by social security legislation. Such interpretation finds an appropriate basis in the wording of Article 11(3)(e) of Regulation (EC) No 883/2004 and in the doctrine of the EU law.

A potentially far-reaching judgment

We have learned that the Court decided not to appoint an Advocate General and that it will rule on the basis of Article 20(5) of the Statute of the Court of Justice of the EU, without the submission from the Advocate General.
The CJEU’s reply to the above-mentioned questions will undoubtedly be fundamental for the future of internal market for services and for both posting entrepreneurs and workers to be posted alike. A judgment of the Court referring to the said Article 11(3)(e) of Regulation 883/2004 could also go a long way towards fostering an inclusive and protective nature of the Union’s social security coordination.

MK