In its judgment of 19 September 2019 the Court of Justice ruled that Dutch legislation excluding cross-border workers, who live in the Netherlands but work in Germany as mini-jobbers, from the Dutch social security system is compatible with EU law. If the Supreme Court follows the approach of the ECJ, the status quo will remain. This would mean that these cross-border workers would remain uninsured in both Germany and the Netherlands. This is precisely why such a situation should be discouraged. For a further analysis of the ECJ judgment and its background, please refer to the ITEM Cross-border Portal.
The case concerned three Dutch residents who have or have had mini-jobs in Germany. A mini-job is a special form of employment in Germany, where a person is allowed to work a limited number of hours per month for a maximum allowance of €450 per month. Today, there are various forms of mini-jobs. Because of this limited income, German legislation excludes these mini-jobbers from the German social security system. At the same time, Dutch legislation excludes them because European social security coordination rules designate the Member State of employment as the competent Member State. It is in the context of a situation where Dutch residents are or were not insured in Germany and the Netherlands that the Supreme Court has requested a preliminary ruling from the ECJ.
The judgment of the ECJ
Firstly, the ECJ considered whether the Dutch legislation, which excludes frontier workers residing in the Netherlands who work exclusively in Germany as minigolf workers in Germany, is compatible with EU law. The fact that the Member State of residence may grant social security benefits to a frontier worker who is covered by the social security system of the Member State of employment does not entitle that frontier worker to claim those social security benefits in the Member State of residence. This applies even if that frontier worker is not entitled to the same social security benefits in the Member State of employment. Dutch legislation excluding these frontier workers from the Dutch social security system is therefore not contrary to EU law. If the ECJ ruled otherwise, this would shift the burden from the Member State of employment to the Member State with the highest social security benefits, disrupting the European social security coordination system, as ITEM previously concluded based on the Conclusion of the Advocate General of the ECJ.
Second, the ECJ considered whether Dutch legislation may make the right to an old-age pension conditional on compulsory insurance in the Netherlands and the corresponding obligation to pay contributions. National legislation cannot make the right to social security benefits conditional on the obligation to be socially insured in the Member State of residence if the frontier worker is not insured there. However, frontier workers can be socially insured for the social security system of their Member State of residence if national legislation provides for such a possibility without requiring them to be insured there and pay the corresponding contributions. Thus, the ECJ ruled that Dutch legislation that makes the right to an old-age pension conditional on compulsory insurance and the obligation to pay contributions in the Netherlands is incompatible with EU law. This relates only to the situation in the Netherlands before 1989.
Maintaining the status quo
The first part of the ruling is particularly problematic from the perspective of the Dutch mini-jobber. The ECJ follows the position of the Social Insurance Bank and upholds the Dutch legislation excluding these cross-border workers from the Dutch social security system. The Dutch mini-jobbers will therefore remain uninsured in both Member States and will not be entitled to social benefits in either Member State. This ruling leaves these mini-jobbers in the same deplorable situation as before, with only very limited options available to them.
Either they remain uninsured, or they take out voluntary insurance that would significantly burden their limited income, removing the incentive to work in a mini-job. Alternatively, the Dutch and German competent authorities could be asked to conclude an agreement under Article 16 of Regulation 883/2004. In such an Article 16 agreement, the competent authorities could deviate from European social security coordination rules and designate the Netherlands as the responsible Member State. This would result in coverage by the Dutch social security system, but would still have some drawbacks. Both the Dutch employee and the German employer would have to pay contributions in the Netherlands, which the German employer would be reluctant to do, and the competent authorities would have to conclude such an agreement first.
The above considerations apply only to those who worked as mini-jobbers during the period at issue in this judgment, and apply only to a certain extent to contemporary mini-jobbers. Nowadays, the position of a mini-jobber in Germany has improved. Mini-jobbers now in principle build up an old-age pension in Germany, but they can also choose to waive it. However, that old-age pension will be lower than the AOW, because the German old-age pension depends on the level of income, and let that be exactly low in the case of mini-jobs. In addition, mini-jobbers are entitled to German Kindergeld if they work at least 8 hours a week. If they work less, whether there is an entitlement to Kindergeld is assessed on a case-by-case basis. Nevertheless, they remain uninsured for health insurance.
Thus, mini-jobbers living in the Netherlands will have to make a choice. They can choose not to take out supplementary insurance, which means their income will remain the same. However, if they choose to take out voluntary or Section 16 insurance, they will have to start paying expensive premiums. Of course, the Supreme Court has yet to apply the ECJ’s ruling to the facts of the pending cases, but it is to be expected that the Supreme Court will follow the ECJ’s directions. This would result in the status quo being maintained. Dutch residents considering working as mini-jobbers in Germany should therefore be well informed about the negative consequences that might be overlooked initially. In light of these negative consequences, mini-jobbing should be discouraged in most situations, as previously advised by GrensInfoPunt and ITEM.