ECJ 4 October 2012, case C-115/11 (Format - v - ZUS), Free movement, Social insurance

Facts

Mr Kita, a Polish national living in Poland, was employed by the Polish subcontractor “Format”. Format’s business consisted of subcontracting work on construction projects in other EU countries and of recruiting and employing staff in Poland to work on those sites.
Mr Kita worked for Format twice in France (for over four months in 2006  and  just  under  eight  months  in  2007)  and  once  in  Finland  (for four months in 2008). Each time, upon termination of his contract, he returned  to  Poland.  Each  time  that  Format  sent  Mr  Kita  to  work  on its project in France (2x) and Finland, it entered into an employment contract  that  defined  the  place  of  employment  as  being  “operations and building sites in Poland and within the territory of the European Union  (i.e.  Ireland,  France,  Great  Britain,  Germany  and  Finland),  as instructed  by  the  employer”.  Thus,  under  the  terms  of  the  contract, Format could, at will, instruct Mr Kita to move from a building site in one Member State to a site in another Member State.
In  the  course  of  2008,  Format  applied  to  the  Polish  Social  Security Institution  “ZUS”  for  E101  certificates  covering  the  years  2008  and 2009. An E101 certificate under the former Regulation 1408/71 [Editor: now an A1 certificate under Directive 883/2004] is a certificate, issued to an employer in respect of an employee, stating that the latter remains covered  by  the  social  security  legislation  of  his  home  country  and, therefore,  not  by  the  legislation  of  the  country  where  he  is  to  work temporarily. 
In  other  words,  what  Format  wanted,  is  permission  to  apply  the (cheaper) Polish social insurance legislation to Mr Kita rather than the (more expensive) legislation of the Member State where Mr Kita was to perform his work. The relevant provisions of Regulation 1408/71 are Articles 13 and 14. Article 13 basically provides that an employee shall be  governed  by  the  social  insurance  legislation  of  a  single  Member State only and, if he works in one Member State, he is subject to the legislation of that State. Article 14(1) provides that, subject to certain conditions, “a person employed in the territory of a Member State by an undertaking to which he is normally attached, who is posted by that undertaking to the territory of another Member State to perform work there for that undertaking shall continue to be subject to the legislation of  the  first  Member  State”.  Article  14(2)  gives  different  rules  for  “a person  normally  employed  in  the  territory  of  two  or  more  Member States”.

National proceedings

The ZUS refused to issue E101 certificates on the ground that Mr Kita was not “a person normally employed in the territory of two or more Member States” within the meaning of Article 14(2) of the Regulation. Format appealed to the local Social Security Court. It ruled in favour of the ZUS. Both Format and Mr Kita appealed. The Court of Appeal referred questions to the ECJ.
The referring court started from the premise, which was not contested before the ECJ, that Article 14(1) of Regulation 1408/71 did not apply to Mr Kita’s situation, on the ground that Format did not usually carry out significant activities in Poland, as required by Article 14(1) according to the ECJ’s case law. Therefore, the issue narrowed down to a choice between Article 13 (place of work) or Article 14(2) (normally employed in two or more Member States).

ECJ’s findings

1.   The referring court essentially wished to know whether the concept of  “a  person  normally  employed  in  the  territory  of  two  or  more Member States” within the meaning of Article 14(2) refers not only to  employees  who  work  concurrently  in  more  than  one  Member State,  but  also  to  those  who,  at  least  under  the  terms  of  their employment contract, are required to perform their work in several Member  States,  without  that  work  having  to  be  carried  out  in several Member States at the same time or almost simultaneously (§ 35).
2.   To fall within Article 14(2), a person must “normally” be employed in two or more Member States. It follows that, if employment in a single Member State constitutes the normal arrangement for the person concerned, such employment cannot fall within the scope of Article 14(2). In a situation such as that of Mr Kita, it is necessary to take account of the existence of a divergence between the terms of the contract (work to be performed anywhere within the EU) and the way in which the obligations were performed in practice (in one country at a time) (§ 39-41).
3.   E101  certificates  tend  to  be  issued  before  or  at  the  start  of  the period  they  cover.  The  assessment  of  the  facts  must  be  carried out  at  that  time.  That  is  why  the  description  of  the  work  to  be performed abroad as evidenced by the contractual document is of particular importance - provided, of course, that the terms of those documents are consistent with the foreseeable activities (§ 42-43).
4.   When  assessing  the  facts  with  a  view  to  determining  the  social security legislation applicable for the purpose of issuing an E101 certificate, the institution concerned may, where appropriate, take account not only of the wording of the contractual documents, but also  of  factors  such  as  the  way  in  which  employment  contracts between the employer and the worker concerned had previously been  implemented  in  practice,  the  circumstances  surrounding the  conclusion  of  those  contracts  and,  more  generally,  the characteristics  and  conditions  of  the  work  performed  by  the company concerned, insofar as those factors may throw light on the nature of the work in question (§ 45).
5.   Given that Mr Kita performed work continuously for several months in one Member State at a time, returning to Poland when the work was  finished,  it  cannot  validly  be  maintained  that  an  employed person in a situation such as Mr Kita’s can fall within the concept of  “a  person  normally  employed  in  the  territory  of  two  or  more Member States” within the meaning of Article 14(2) of Regulation 1408/71 (§ 46-49).

Ruling

Article 14(2)(b) of Regulation (EEC) No. 1408/71 […] must be interpreted as meaning that, in circumstances such as those at issue in the main proceedings, a person who, under successive employment contracts stating the place of employment to be the territory of several Member States, in fact works during the term of each of those contracts only on the territory of one of those States at a time, cannot fall within the concept of “a person normally employed in the territory of two or more Member States”, within the meaning of that provision.