Volker Graf v. Filzmoser Maschinenbau GmbH (Case C-190/98)

Before the Court of Justice of the European

Communities

ECJ (Presiding, RodrÍguez Iglesias, P.; Moitinho de Almeida,

Sevón, Schintgen ( Rapporteur), PP.C.; Kapteyn, Gulmann, Puissochet,

Hirsch, Jann, Ragnemalm and Wathelet, JJ.) Mr Nial Fennelly, Advocate General.

27 January 2000

Reference from the Oberlandesgericht, Linz (Austria), under Article 177 of

the E.C. Treaty (now Article 234 E.C.). Free movement of workers--employment law--whether Article 48 of the E.C. Treaty (now, after amendment, Article 39 E.C.) precluded national legislation providing for compensation in the event of the termination of an employment contract by the employer and not when occurring on the employee's initiative. Austrian law (paragraph 23(7) of the Angestelltengesetz--the AngG, the Law on Employees) provides for compensation to be paid to a worker with over three years' continuous service upon termination of his contract of employment, on condition that the worker neither terminates nor bears responsibility for the termination of the contract. Mr Graf terminated his contract of employment with Filzmoser in Austria after three and a half years to take up new employment in Germany. Filzmoser refused to pay compensation upon termination of his employment in accordance with paragraph 23(7) AngG since the employment had been terminated by Mr Graf. Mr Graf commenced proceedings in the Regional Court, contending that paragraph 23(7) was contrary to Article 48 of the E.C. Treaty (now, after amendment, Article 39 E.C.). The court held that paragraph 23(7) was not contrary to Article 39 E.C. as it did not restrict workers' movement between Member States to a greater extent than it may have restricted movement within Austria. Furthermore, the loss of a compensation payment amounting to two months' salary did not result in a perceptible restriction on the freedom of movement for workers, as stated in Bosman. On appeal, Mr Graf reinforced his original argument with the submission that it could

not be inferred from Bosman that the restriction must be "perceptible" in order to be contrary to Article 39 E.C. The following question was thus referred to the European Court of Justice for a preliminary ruling concerning the compatibility of Austrian law with Article 39 E.C.: *742 Does Article 48 of the E.C. Treaty preclude national provisions under which an employee who is a national of a Member State is not entitled to compensation on termination of his employment relationship simply because he himself gave notice terminating that relationship in order to take up employment in another Member State? Held: Article 39 E.C. prohibits national measures not based on nationality restricting access to the labour market (a) Article 39 E.C., providing for free movement for workers, prohibited not only overt discrimination regarding the equal treatment of workers based on nationality, but also covert practices resulting in discrimination. The exclusion of compensation under the legislation at issue for workers terminating their employment contract applied irrespective of the nationality of the worker. [14]-[17] Clean Car Autoservice GmbH v. Landeshauptmann Von Wien (C-350/96): [1998] E.C.R. I-2521; [1998] 2 C.M.L.R. 637, followed. (b) Article 39 E.C. prohibited not only direct and indirect discrimination based on nationality but also any national measures restricting the application of Community rules on the free movement of workers. These rules purported to ensure that Member State nationals could take up professional activities within the Community without being placed at a disadvantage. They entailed the right to move to other Member States, which implied the right to leave one's Member State of origin. A national rule preventing a national from leaving his Member State could therefore constitute an obstacle to the free movement of workers if it affected access to the labour market. The national rule at issue did not prevent a worker from leaving employment to take up new employment with another employer. It was activated solely upon termination by the employer of the worker's contract, a future and hypothetical event which was too uncertain and indirect to result in the national rule in question being an impediment to the free movement of workers. [18]-[25] Union Royale Belge des Societes de Football Association Asbl and Others v. Bosman and Others (C-415/93): [1995] E.C.R. I-4921; [1996] 1 C.M.L.R. 645 and Terhoeve v. Inspecteur Van de Belastingdienst Particulieren/Ondernemingen Buitenland (C-18/95): [1999] E.C.R. I-345, followed. H. Krantz GmbH & Co v. Ontvanger der Directe Belastingen (C-69/88): [1990] E.C.R. I-583; [1991] 2 C.M.L.R. 677 and BASF AG v. Präsident des Deutschen Patentamts (C-44/98): Not yet reported, referred to. Representation

K. Mayr, Secretary of the Kammer für Arbeiter und Angestellte für Oberösterreich, for Volker Graf. *743 S. Köck and T. Eilmansberger, Rechtsanwälte, Vienna, for Filzmoser Maschinenbau GmbH. F. Cede, Ambassador in the Federal Ministry of Foreign Affairs, acting as Agent, for the Austrian Government. E. Röder, Ministerialrat in the Federal Ministry of the Economy, and C.-D. Quassowski, Regierungsdirektor in the same Ministry, acting as Agents, for the German Government. J. Molde, Legal Adviser, Head of Division in the Ministry of Foreign Affairs, acting as Agent, for the Danish Government. U. Leanza, Head of the Legal Department in the Ministry of Foreign Affairs, acting as Agent, and I. M. Braguglia, Avvocato dello Stato, for the Italian Government. S. Ridley, of the Treasury Solicitor's Department, acting as Agent, and S. Masters, Barrister, for the U.K. Government. P. J. Kuijper, Legal Adviser, acting as Agent, and I. Brinker and R. Karpenstein, of the Brussels Bar, for the E.C. Commission. Cases referred to in the judgment: 1. Union Royale Belge des Societes de Football Association Asbl and Others v. Bosman and Others (C-415/93), 15 December 1995: [1995] E.C.R. I-4921; [1996] 1 C.M.L.R. 645. 2. Masgio v. Bundesknappschaft (C-10/90), 7 March 1991: [1991] E.C.R. I-1119; [1992] 3 C.M.L.R. 757. 3. Kraus v. Land Baden-Württemberg (C-19/92), 31 March 1993: [1993] E.C.R. I-1663. 4. Clean Car Autoservice GmbH v. Landeshauptmann Von Wien (C-350/96), 7 May 1998: [1998] E.C.R. I-2521; [1998] 2 C.M.L.R. 637. 5. Terhoeve v. Inspecteur Van de Belastingdienst Particulieren/Ondernemingen Buitenland (C-18/95), 26 January 1999: [1999] E.C.R. I-345. 6. H. Krantz GmbH & Co. v. Ontvanger der Directe Belastingen (C-69/88), 7 March 1990: [1990] E.C.R. I-583; [1991] 2 C.M.L.R. 677. 7. BASF AG v. Präsident des Deutschen Patentamts (C-44/98), 21 September 1999: Not yet reported. Further cases referred to by the Advocate General: 8. Criminal Proceedings against Keck and Mithouard (C 267 & 268/91), 24 November 1993: [1993] E.C.R. I-6097; [1995] 1 C.M.L.R. 101. 9. Gruber v. Silhouette International Schmied GmbH & Co. KG (C-249/97), 14 September 1999: Not yet reported. 10. Hünermund and Others v. Landesapothekerkammer Baden-Württemberg (C-292/92), 15 December 1993: [1993] E.C.R. I-6787. 11. Ordre des Avocats Au Barreau de Paris v. Klopp (107/83), 12 July 1984: [1984] E.C.R. 2971; [1985] 1 C.M.L.R. 99.

12. E.C. Commission v. France (96/85), 30 April 1986: [1986] E.C.R. 1475; [1986] 3 C.M.L.R. 57. *744 13. Stanton and Another v. Institut National d'Assurances Sociales pour Travailleurs Independants (INASTI) (143/87), 7 July 1988: [1988] E.C.R. 3877; [1989] 3 C.M.L.R. 761. 14. Institut National d'Assurances Sociales pour Travailleurs Independants (INASTI) v. Kemmler (C-53/95), 15 February 1996: [1996] E.C.R. I-703. 15. Criminal Proceedings against Guiot and Climatec SA (C-272/94), 28 March 1996: [1996] E.C.R. I-1905. 16. Union Nationale des Entraineurs et Cadres Techniques Professionnels du Football (UNECTEF) v. Heylens and Others (222/86), 15 October 1987: [1987] E.C.R. 4096; [1989] 1 C.M.L.R. 901. 17. Vlassopoulou v. Ministerium für Justiz, Bundes- und Europaangelegenheiten Baden-Württemberg (C-340/89), 7 May 1991: [1991] E.C.R. I-2357; [1993] 2 C.M.L.R. 221. 18. Criminal Proceedings against Choquet (16/78), 28 November 1978: [1978] E.C.R. 2293; [1979] 1 C.M.L.R. 535. 19. Gebhard v. Consiglio Dell'Ordine degli Avvocati E Procuratori di Milano (C-55/94), 30 November 1995: [1995] E.C.R. I-4165; [1996] 1 C.M.L.R. 603. 20. Procureur du Roi v. Dassonville (8/74), 11 July 1974: [1974] E.C.R. 837; [1974] 2 C.M.L.R. 436. 21. Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein (120/78), 20 February 1979: [1979] E.C.R. 649; [1979] 3 C.M.L.R. 494. 22. Cinetheque SA and Others v. Federation Nationale des Cinemas Francais (60 & 61/84), 11 July 1985: [1985] E.C.R. 2605; [1986] 1 C.M.L.R. 365. 23. Parfums Christian Dior SA v. Evora BV (C-337/95), 4 November 1997: [1997] E.C.R. I-6013; [1998] 1 C.M.L.R. 737. 24. Konsumentombudsmannen v. de Agostini (Svenska) Förlag AB and Another (C 34-36/95), 9 July 1997: [1997] E.C.R. I-3843; [1998] 1 C.M.L.R. 32. 25. Societe d'Importation Edouard Leclerc-Siplec v. TF1 Publicite SA and Another (C-412/93), 9 February 1995: [1995] E.C.R. I-179; [1995] 3 C.M.L.R. 422. 26. Alpine Investments BV v. Minister Van Financien (C-384/93), 10 May 1995: [1995] E.C.R. I-1141; [1995] 2 C.M.L.R. 209. 27. Bachmann v. Belgium (C-204/90), 28 January 1992: [1992] E.C.R. I-249; [1993] 1 C.M.L.R. 785. 28. Ingetraut Scholz v. Opera Universitaria di Cagliari and Cinzia Porcedda (C-419/92), 23 February 1994: [1994] E.C.R. I-505; [1994] 1 C.M.L.R. 873. 29. Schöning-Kougebetopoulou v. Freie und Hansestadt Hamburg (C-15/96), 15 January 1998: [1998] E.C.R. I-47; [1998] 1 C.M.L.R. 931. *745 30. Ramrath v. Ministre de la Justice and Another (C-106/91), 20 May 1992: [1992] E.C.R. I-3351; [1995] 2 C.M.L.R. 187. 31. Institut National d'Assurances Sociales pour Travailleurs Independants (INASTI) v. Wolf and Others (154 & 155/87), 7 July 1988: [1988] E.C.R. 3897. 32. R. v. H.M. Treasury and Commissioners of Inland Revenue, Ex parte Daily Mail and Another (81/87), 27 September 1988: [1988] E.C.R. 5483; [1988] 3

C.M.L.R. 713. 33. Imperial Chemical Industries Plc (ICI) v. Colmer (C-264/96), 16 July 1998: [1998] E.C.R. I-4695; [1998] 3 C.M.L.R. 293. 34. Hartmann Trioani v. Landesversicherungsanstalt Rheinprovinz (368/87), 18 May 1989: [1989] E.C.R. 1333; [1991] 1 C.M.L.R. 697. 35. E.C. Commission v. Luxembourg (C-351/90), 16 June 1992; [1992] E.C.R. I-3945; [1992] 3 C.M.L.R. 124. 36. Thieffry v. Conseil de l'Ordre des Avocats A la Cour de Paris (71/76), 28 April 1977: [1977] E.C.R. 765; [1977] 2 C.M.L.R. 373. 37. Groener v. Minister for Education and Another (C-379/87), 28 November 1989: [1989] E.C.R. 3967. 38. De Bobadilla v. Museo Nacional del Prado and Others (C-234/97), 8 July 1999: [1999] 3 C.M.L.R. 151. 39. Deliege v. Ligue Francophone de Judo et Disciplines Associees Asbl and Others (C 51 & 191/97), Advocate General's Opinion of 18 May 1999: Awaiting judgment. 40. Lehtonen and Another v. Federation Royale Belge des Societes de Basketball and Another (C-176/96) Advocate General's Opinion of 22 June 1999: Awaiting judgment. 41. Verein gegen Unwesen In Handel und Gewerbe Köln eV v. Mars GmbH (C-470/93), 6 July 1995: [1995] E.C.R. I-1923; [1995] 3 C.M.L.R. 1. 42. Criminal Proceedings against Peralta (C-379/92), 14 July 1994: [1994] E.C.R. I-3453. 43. CMC Motorradcenter GmbH v. Baskiciogullari (C-93/92), 13 October 1993: [1993] E.C.R. I-5009. 44. Criminal Proceedings against Bluhme (C-67/97), 3 December 1998: [1998] E.C.R. I-8033; [1999] 1 C.M.L.R. 612. 45. ED Srl v. Italo Fenocchio (C-412/97), 22 June 1999: Not yet reported.

Opinion of Mr Advocate General Fennelly

Introduction 1. The present case gives the Court an opportunity to define further the scope of its ruling in Case C-415/93, Union Royale Belge des Societes de Football Association Asbl and Others v. Bosman and Others *746 (hereinafter "Bosman") [FN1] on the application of Article 48 of the E.C. Treaty (now, after amendment, Article 39 E.C.) to restrictions on the freedom of movement of workers which are not discriminatory on grounds of nationality. It raises the question whether a worker's loss, upon voluntary resignation in order to take up employment in another Member State, of a contingent statutory right to compensation by his employer payable upon forced resignation, dismissal or retirement is capable of constituting such a restriction, where the amount of any such compensation is related to the length of the worker's period of continuous service with his former employer. In addressing that question, a number of basic issues must be resolved, in particular: the definition of a prohibited non-discriminatory restriction

on the freedom of movement of workers: whether its restrictive effects must be in some way conditional on the exercise of freedom of movement; whether it must affect access to an economic activity or can also arise from regulation of its exercise; whether its effect must be to prevent workers exercising their rights or simply to deter or hamper them in so doing; whether its restrictive effects must be of a certain level of gravity or intensity; whether its preventive or dissuasive effects must be direct or may be indirect; and whether these burdensome effects must be certain or may be merely contingent. In seeking to resolve these issues, particular regard must be had to the broader question whether the Court's more developed case law on the free movement of goods, including the judgment in Joined Cases C 267 & 268/91, Criminal Proceedings against Keck and Mithouard (hereinafter "Keck" [FN2]) limiting the application of some of its earlier pronouncements, can furnish useful guidance. FN1 [1995] E.C.R. I-4921; [1996] 1 C.M.L.R. 645. FN2 [1993] E.C.R. I-6097; [1995] 1 C.M.L.R. 101.

Factual and legal context

The national law 2. The relevant compensation provisions of paragraph 23 of the Angestelltengesetz (Austrian Law on Employees; hereinafter "the AngG") state as follows: (1) If the employment relationship has continued uninterruptedly for three years, the employee shall be entitled to a compensation payment on termination of that relationship. That payment shall amount to twice the salary due to the employee for the last month's employment and after five years' service shall increase to three times, after 10 years' service to four times, after 15 years' service to six times, after 20 years' service to nine times and after 25 years' service to 12 times the monthly salary. (...) (7) There shall ... be no entitlement to compensation if the employee gives notice, leaves prematurely for no important reason or bears responsibility for his premature dismissal. (...) 3. Paragraph 23a of the AngG provides that a right to compensation shall also exist in the case of a continuous employment relationship of *747 at least 10 years' duration which ceases upon termination by the employee of the contract of employment because the employee has reached retirement age (65 years in the case of a man, 60 in that of a woman), because of early retirement, or due to incapacity or reduced capacity for work. It appears that compensation payments under paragraphs 23 and 23a of the AngG are subject to favourable tax treatment, so that the sums actually received by beneficiaries considerably exceed the normal net salary for the number of months on the basis of which compensation is calculated. 4. Article 26 of the AngG sets out the circumstances in which the premature termination of the employment relationship by an employee does not deprive him

of the right to compensation on the terms outlined immediately above. As the Court points out in its judgment in Case C-249/97, Gruber v. Silhouette International Schmied GmbH & Co. KG (hereinafter "Gruber"), delivered during the week of 13-19 September 1999, all of these important reasons for termination relate either to working conditions in the employing undertaking or to behaviour on the part of the employer by virtue of which continued work there is impossible. [FN3] FN3 Not yet reported, para. [32].

The national proceedings 5. The plaintiff in the main proceedings, Mr Graf (hereinafter "the plaintiff"), is a German national. He was employed in Austria by the defendant, Filzmoser Maschinenbau GmbH (hereinafter "the defendant"), from 3 August 1992. He gave notice of termination of the employment relationship on 29 February 1996, with effect from 30 April 1996, and on 1 May 1996 he commenced employment with an undertaking in Germany. The plaintiff sought payment of two months' salary under the terms of paragraph 23(1) of the AngG, which was refused by the defendant, in reliance on paragraph 23(7). The plaintiff brought proceedings seeking the disputed payment before the Landesgericht Wels (Regional Court, Wels), which declined to grant the order sought, whereupon he appealed to the Oberlandesgericht Linz (Higher Regional Court, Linz, hereinafter "the national court"). 6. The plaintiff argued before the Landesgericht Wels that the limitation on the right to compensation in paragraph 23(7) of the AngG principally affected migrant workers who voluntarily gave up existing employment in order to move to another Member State, thereby giving rise to indirect discrimination, and that it constituted, in any event, a disproportionate financial penalty amounting to a restriction on the mobility of workers which was not objectively justified. The defendant submitted that paragraph 23(7) of the AngG was not discriminatory in effect, because most of those affected were and remained national residents. Furthermore, it was not designed to regulate access to the labour market, did not amount to a prohibition *748 and did not prevent or deter persons from taking up employment in other Member States. It had, instead, the twin social aims of protecting workers from dismissal and of promoting employee loyalty. 7. The Landesgericht Wels found that paragraph 23(7) of the AngG did not either discriminate on grounds of nationality or impose any impediment on the movement of persons across borders which was more severe than a restriction on comparable internal mobility. The loss of compensation in the present case did not result in a perceptible non-discriminatory restriction on mobility--it was not comparable to the transfer fee at issue in Bosman, which was fixed at so high a level that no employer would pay it, but was merely one factor to be included, in the same way as any other loss of social security benefits, in the overall assessment of the balance of financial advantage undertaken by a worker when deciding whether to change employment. Furthermore, any restrictive effect was objectively justified by the social aims of providing transition payments for

employees who unexpectedly lose their jobs and of protecting older workers through the higher cost of dismissing them. 8. On appeal, the plaintiff submitted that the Court had not required in Bosman that restrictions of freedom of movement be perceptible. The national court stated that national residents were chiefly affected by the rule, so that there was no indirect discrimination against workers willing to migrate to work in other Member States. It doubted whether denial of compensation in cases of voluntary termination of employment by the employee was necessary to the achievement of the social-policy objectives mentioned by the Landesgericht, and observed that, on the one hand, employees were often neither faultless nor taken by surprise when dismissed by their employer and, on the other, workers might often have perfectly legitimate reasons voluntarily to change employment. It was also unsure of the test to be applied in identifying non-discriminatory restrictions on worker mobility which came within the scope of the Treaty--the Court stated in Bosman that a worker should not be "preclude[ed] or deter [red]" from exercising his fundamental right, but also referred to its judgment in Case C-19/92, Kraus v. Land Baden-Württemberg (hereinafter "Kraus"), [FN4] where it defined as restrictions any national rule which is simply "liable to hamper or to render less attractive" the exercise of such freedom of movement. FN4 [1993] E.C.R. I-1663. 9. As a result of its doubts in this regard, the national court suspended the proceedings before it and referred the following question to the Court for a preliminary ruling pursuant to Article 177 of the E.C. Treaty (now Article 234 E.C.): Does Article 48 of the E.C. Treaty preclude national provisions under which an employee who is a national of a Member State is not entitled to compensation on termination of his employment relationship simply *749 because he himself gave notice terminating that relationship in order to take up employment in another Member State?

Observations submitted to the Court 10. Written and oral observations were submitted by the plaintiff, the defendant, Italy and the Commission. Written observations were also submitted by Denmark, Germany, Austria and the United Kingdom.

Arguments and analysis

Discrimination on grounds of nationality 11. The plaintiff reiterated his argument that paragraph 23(7) of the AngG constituted indirect discrimination on grounds of nationality. The defendant, the Commission and the Member States which submitted observations all take a contrary view. They deny that paragraph 23(7) of the AngG has any discriminatory effects, in that it is indistinctly applicable and principally affects

employees who voluntarily terminate their contracts of employment without leaving Austria. Furthermore, several of them argued that the national court had expressly stated in its order for reference that it was not indirectly discriminatory. 12. It is self-evident that paragraph 23(7) of the AngG does not contain any direct discrimination on grounds of nationality. The national court did not, in fact, comment on the question of indirect discrimination on grounds of nationality, observing only that the AngG did not particularly penalise persons migrating to work in other countries. [FN5] However, there is no evidence to suggest that it principally affects in practice persons of non-Austrian nationality. Therefore, I shall now turn to question whether paragraph 23(7) nonetheless constitutes a non-discriminatory restriction on the free movement of workers. FN5 See, further, para. 22 below.

Non-discriminatory restrictions--arguments 13. In the alternative, the plaintiff submitted that the case was comparable to Bosman, as it was immaterial whether a worker suffered a financial loss by virtue of changing employers or, as in that case, the new employer was obliged to make a payment in order to engage the worker. Thus, paragraph 23(7) of the AngG also constituted a non-discriminatory restriction on freedom of movement. He also questioned whether the avowed objectives of the AngG-- promoting employee fidelity and easing the transition from one post to another upon dismissal--justified such a restriction. 14. Regarding whether paragraph 23(7) of the AngG constitutes a non-discriminatory restriction on the freedom of movement of *750 workers, the other observations submitted may be divided into two groups. The defendant states the objective of Article 39 E.C. to be the removal of obstacles to movement arising from internal frontiers rather than deregulation [FN6] and the encouragement of mobility for its own sake. Thus, only measures which render impossible or excessively difficult, in law or in fact, the taking up of employment in another Member State are prohibited by Article 39 E.C. [FN7] Examples include measures which impose greater disadvantages upon taking up economic activity in another Member State than in the State of application, [FN8] as well as indistinctly applicable requirements for access to a profession or other economic activity which are more burdensome for non-domestic workers if account is not taken of their existing qualifications and skills. [FN9] On the other hand, national measures whose restrictive effect on a trans-frontier change of employment is entirely neutral, having regard to their identical effects on changes of employment within the Member State in question, cannot be classified as restrictions prohibited by Article 39 E.C. Otherwise, the scope of application of that provision would be impossibly broad and would extend to national rules on workplace incentives, pension schemes and employee protection as well as to any measure which made employment in a given Member State more attractive by ensuring a high level of remuneration or of job security. FN6 See the Opinion of Advocate General Tesauro in Case C-292/92,

Hünermund and Others v. Landesapothekerkammer Baden-Württemberg: [1993] E.C.R. I-6787 (hereinafter "Hünermund") regarding the objective of Article 30 of the E.C. Treaty (now, after amendment, Article 28 E.C.). FN7 Bosman, cited above, para. [96]. In the sphere of establishment, see Case 107/83, Ordre des Avocats Au Barreau de Paris v. Klopp: [1984] E.C.R. 2971: [1985] 1 C.M.L.R. 99 (hereinafter "Klopp") and Case 96/85, E.C. Commission v. France: [1986] E.C.R. 1475; [1986] 3 C.M.L.R. 57. FN8 Case C-10/90, Masgio v. Bundesknappschaft: [1991] E.C.R. I-1119; [1992] 3 C.M.L.R. 757, Case 143/87, Stanton and Another v. Institut National d'Assurances Sociales pour Travailleurs Independants (INASTI): [1988] E.C.R. 3877; [1989] 3 C.M.L.R. 761, Case C-53/95, Institut National d'Assurances Sociales pour Travailleurs Independants (INASTI) v. Kemmler: [1996] E.C.R. I-703 and Case C-272/94, Criminal Proceedings against Guiot and Climatec SA: [1996] E.C.R. I-1905. FN9 Case 222/86, Union Nationale des Entraineurs et Cadres Techniques Professionnels du Football (UNECTEF) v. Heylens and Others: [1987] E.C.R. 4096; [1989] 1 C.M.L.R. 901, Case C-340/89, Vlassopoulou v. Ministerium für Justiz, Bundes- und Europaangelegenheiten Baden-Württemberg: [1991] E.C.R. I-2357: [1993] 2 C.M.L.R. 221 and Case 16/78, Criminal Proceedings against Choquet: [1978] E.C.R. 2293: [1979] 1 C.M.L.R. 535. 15. On the other hand, the Commission (expressly or implicitly supported by the Member States which submitted observations) accepts that the judgments in Kraus and Bosman, as well as that, in the related field of establishment, in Case C-55/94, Gebhard v. Consiglio Dell'Ordine degli Avvocati E Procuratori di Milano (hereinafter "Gebhard"), [FN10] make clear that the prohibition on non-discriminatory obstacles to free movement of workers or of self-employed persons *751 extends beyond measures with specific burdensome effects on trans-frontier mobility. However, despite the broad language used in those judgments to describe such restrictions, [FN11] it counsels against extending the Treaty prohibition to all national provisions which might dissuade a worker from exercising his rights of free movement. In contrast, Bosman involves rules which expressly prevented a worker taking up employment as a footballer in another Member State. The Commission, Denmark, Italy and the United Kingdom all urge the Court, in various terms, to follow the advice of Advocate General Lenz in Bosman by expressly adopting a distinction, borrowed from Keck, between national rules regulating access to the labour market and those which merely govern the exercise of a particular activity, such as employee protection, pay scales, working conditions and so on. FN10 [1995] E.C.R. I-4165; [1996] 1 C.M.L.R. 603. FN11 See, for example, Bosman, para. [96] and Gebhard, cited above.

Furthermore, the Commission argues that, before any distinction between access to and exercise of economic activity as an employed person even needs to be addressed, it should be established that there is a direct connection between the allegedly restrictive national rule and the decision to exercise the right of free movement in order to take up employment in another Member State. Germany submitted observations in a similar vein. 17. On a somewhat different note, both Austria and the United Kingdom posit tests based on the gravity or intensity of an alleged restriction. The amount of money at issue in the present case bears no comparison to the transfer fee demanded in Bosman. It can be treated, not as an effective prohibition on changing jobs, but as just one of many factors to be weighed in the balance by a worker considering such a step.

The significance of Keck 18. I would like to state at the outset, in response to the last question posed in paragraph 1 above, that, in my view, the Court's case law in the field of free movement of goods, including Keck, furnishes useful guidance on the application of Article 48 of the E.C. Treaty (now, after amendment, Article 39 E.C.). I will make a few preliminary observations about the development of the Keck case law before examining the more immediate issues raised by the present case regarding the mobility of workers. I should add, however, that analogies between the two fields are rarely perfect and that, in particular, the reasoning in Keck can only be extended to the field of freedom of movement of workers if it is reduced to its essential elements, shorn of the more rigid and formalist distinctions--between product rules and certain selling arrangements--which are specific to the process of production and distribution of goods. Persons are not products and the process of migration for the purposes of employment *752 or establishment abroad, including preparation therefor, cannot be so neatly divided into (mass) production and marketing stages. Furthermore, the dichotomy between product and selling rules is not exhaustive of the range of possible restrictions even in the field of trade in goods. 19. The formal distinction between product rules and selling arrangements is less important than the motivation which led to its adoption, which was to identify the circumstances in which different types of rules have the same undesired effect, that is, to affect access to the market. Thus, the Court singled out national provisions regarding certain selling arrangements, such as the rules against below-cost sales at issue in that case, because if such rules were indistinctly applicable and affected the marketing of all products in the same manner, in law and in fact, they were not, in the Court's view, of a nature either to prevent the access of imported products to the market or to impede their access any more than they did that of domestic products. [FN12] Thus, they did not fall within the scope of the test set out in Case 8/74, Procureur du Roi v. Dassonville (hereinafter "Dassonville") [FN13] whereby Article 30 of the E.C. Treaty (now, after amendment, Article 28 E.C.) applied to all national rules liable to hinder trade between Member States either directly or indirectly, actually or potentially.

For present purposes, Keck is most significant because it represents a reappraisal by the Court of its previous attempts to apply a test of great generality--that in Dassonville--in a uniform fashion to the definition of barriers to trade in goods. This had resulted in national rules which were neither discriminatory nor particularly restrictive of trade, such as those on shop opening hours, being subjected to the same prohibition and analysis of possible justification as national rules, such as product rules, which by the very fact of disparities in national regulation imposed serious impediments on the free movement of goods. [FN14] It was reasonable for the Court to respond by developing presumptions, in the light of experience and of its knowledge of market behaviour, regarding the likely effects of different types of regulation on the achievement of the ultimate objective of Article 28 E.C.: the establishment of an internal market to which products from the different Member States have both equal and, subject to qualifications in the public interest, free access. Such presumptions should not, however, be conclusive. It is legitimate for the Court to develop presumptions about the market effects of different broadly defined categories of rules, provided that, in concrete cases, the validity of the presumption may be tested against the underlying criterion of market *753 access, rather than automatically being taken as being sufficient in itself to dispose of the case. Such an approach would temper and refine the application of a broad uniform definition of restrictions such as that in Dassonville through a concrete assessment of the market effects of what are perceived to be more marginal types of regulation, while providing guidance both to national regulators and to economic actors as to the likely judicial response to such regulations. FN12 Keck, cited above, paras [16] & [17]. FN13 [1974] E.C.R. 837; [1974] 2 C.M.L.R. 436, para. [5]. FN14 Case 120/78, Rewe-Zentral AG v. Bundesmonopolverwaltung für Branntwein ("Cassis de Dijon"): [1979] E.C.R. 649; [1979] 3 C.M.L.R. 494. See further, for example, Joined Cases 60 & 61/84, Cinetheque SA and Others v. Federation Nationale des Cinemas Francais: [1985] E.C.R. 2605; [1986] 1 C.M.L.R. 365, paras [21] & [22]. 20. It is not necessary, for the purposes of the present case, to examine the reliability of the Court's presumption in Keck that national provisions regarding selling arrangements will not affect importers' access to the market in the absence of direct or covert discrimination. As it happens, the Court has more recently applied the formal criteria in Keck with a relatively light touch in cases where it considers market access to be materially threatened. In Case C-337/95, Parfums Christian Dior SA v. Evora BV (hereinafter "Dior"), [FN15] the Court held that national rules which permitted the holders of trade marks or copyright to prevent parallel importers from advertising the reselling of goods came within the scope of Article 28 E.C. because access to the market would consequently be "appreciably more difficult". The national rules could equally have been used, it

seems, to prevent the advertising of goods which had escaped the domestic selective distribution system and the Court made no reference to differences in treatment of domestic and imported goods. (It may, however, have taken the view that such rules have a greater effect in fact on imports.) In another instance where the Court accepted that an advertising rule applicable to all traders--the total ban on television advertising directed at children in Joined Cases C 34-36/95, Konsumentombudsmannen v. de Agostini (Svenska) Förlag AB and Another (hereinafter "De Agostini") [FN16] might have a greater impact on products from other Member States, it did so because the importer involved in the case stated that such advertising was the only available form of promotion enabling it to penetrate the market in question, without even referring to the position of domestic producers. Thus, it would appear that national rules can be deemed to have unequal effects in fact on the marketing of imported and domestic products and, thus, on their access to the market simply by virtue of the fact that new (imported) products have greater need of promotional opportunities than (domestic) products which are well established in the market--a result similar to that which would arise from the direct application of the test of substantial impact on market access suggested by Advocate General Jacobs in Case C-412/93, Societe d'Importation Edouard Leclerc-Siplec v. TF1 Publicite SA and Another (hereinafter "Leclerc-Siplec"). [FN17] Furthermore, in *754 Case C-384/93, Alpine Investments BV v. Minister Van Financien, [FN18] the Court held that Keck could not be applied by analogy to a nondiscriminatory national regulation which deprived operators of a rapid and direct technique (but not necessarily the only technique) for marketing and contacting potential clients in other Member States-- cold calling--because it directly affected access to the market in services. FN15 [1997] E.C.R. I-6013; [1998] 1 C.M.L.R. 737, para. [51]. Advertising rules are deemed to be rules concerning selling arrangements: see Hünermund, cited above. FN16 [1997] E.C.R. I-3843; [1998] 1 C.M.L.R. 32, paras [42]-[44]. FN17 [1995] E.C.R. I-179; [1995] 3 C.M.L.R. 422, paras [50]-[54]. FN18 [1995] E.C.R. I-1141; [1995] 2 C.M.L.R. 209, paras [28] & [33]-[38]. Moreover, it is apparent from the judgment that the fact that the restriction was imposed by the State of origin of the service-provider was not deemed to be relevant to this question; see paras [29]-[31].

Discrimination on grounds of migration 21. I now turn to address directly the interpretation of the prohibition in Article 39 E.C. of obstacles to the free movement of workers and its possible application to paragraph 23(7) of the AngG. Article 39(2) E.C. expressly provides for the prohibition of discrimination against workers on grounds of nationality, without having to determine the precise effects of any such discrimination on their access

to the labour market. However, as this case relates to an alleged barrier to exit from a Member State in order to migrate to work elsewhere in the Community, it is necessary to advert not only to the Court's well-established case law regarding the prohibition of overt or covert discrimination on grounds of nationality, [FN19] but also to what might be called its case law in respect of discrimination on grounds of migration. [FN20] This case law demonstrates that the guarantee of freedom of movement for workers within the Community in Article 39 E.C. also entails the prohibition of national measures which distinguish, not according to nationality, but according to whether a person engages in uninterrupted economic activity in his country of origin, on the one hand, or, on the other, either moves to another country to work in an employed or self-employed capacity or works in more than one country at a time, to the prejudice of those who thereby exercise their right of free movement. Examples of direct discrimination of this type include the national rules at issue in Case 96/85, E.C. Commission v. France, [FN21] Stanton, [FN22] Joined Cases 154 & 155/87, Institut National d'Assurances Sociales pour Travailleurs Independants (INASTI) v. Wolf and Others *755 (hereinafter "Wolf"), [FN23] Masgio, [FN24] Case 81/87, R. v. H.M. Treasury and Commissioners of Inland Revenue, Ex parte Daily Mail and Another (hereinafter "Daily Mail"), [FN25] Ramrath, [FN26] Case C-264/96, Imperial Chemical Industries Plc (ICI) v. Colmer (hereinafter "ICI"), [FN27] and Case 18/95, Terhoeve v. Inspecteur Van de Belastingdienst Particulieren/Ondernemingen Buitenland (hereinafter "Terhoeve"). [FN28] This category will normally merge with that of covert discrimination on grounds of nationality in the case of measures applied to migrant workers by a receiving State, because of the presumption that foreign workers are principally affected thereby. [FN29] In the case of differentiated treatment by the State of origin of migrant workers, no such presumption applies, so the two categories are more readily distinguishable. FN19 See, for example, Case C-204/90, Bachmann v. Belgium: [1992] E.C.R. I-249; [1993] 1 C.M.L.R. 785, Case C-419/92, Ingetraut Scholz v. Opera Universitaria di Cagliari and Cinzia Porcedda: [1994] E.C.R. I-505; [1994] 1 C.M.L.R. 873, Case C-15/96, Schöning-Kougebetopoulou v. Freie und Hansestadt Hamburg: [1998] E.C.R. I-47: [1998] 1 C.M.L.R. 931 and Case C- 350/96, Clean Car Autoservice GmbH v. Landeshauptmann Von Wien: [1998] E.C.R. I-2521; [1998] 2 C.M.L.R. 637. FN20 In the discussion of case law, I follow the now general practice of treating cases regarding Articles 48 and 52 of the E.C. Treaty as being, for most purposes, of equivalent scope and effect; see, for example, Case C-106/91, Ramrath v. Ministre de la Justice and Another: [1992] E.C.R. I-3351: [1995] 2 C.M.L.R. 187, para. [17], Kraus, cited above and Bosman, cited above, para. [97]; see also the Opinion of Advocate General Lenz in Bosman, para. 165. FN21 Cited above, para. [12].

FN22 Cited above. FN23 [1988] E.C.R. 3897. FN24 Cited above. FN25 [1988] E.C.R. 5483; [1988] 3 C.M.L.R. 713, Especially Para. [16]. The case related to the requirement of the consent of the U.K. tax authorities for a company resident there for tax purposes to cease to be so resident, by moving its central management and control to another Member State, in circumstances where it nonetheless sought to maintain its legal personality and status as a U.K. company. The Court found that the national rules at issue did not constitute a restriction on the freedom of establishment because the relationship between the place of incorporation of a company and its centre of management and control was still a matter governed by national law (paras [23] & [24]). FN26 Cited above. FN27 [1998] E.C.R. I-4695; [1998] 3 C.M.L.R. 293. FN28 [1999] E.C.R. I-345. For an example of an unremedied problem of this nature, see, however, Case 368/87, Hartmann Trioani v. Landesversicherungsanstalt Rheinprovinz: [1989] E.C.R. 1333; [1991] 1 C.M.L.R. 697. FN29 The two categories could be distinguished only if it were shown that the majority of migrant workers in a country were in fact returned emigrants of that Member State's nationality, as may, for example, be the case in Ireland at the moment. 22. Paragraph 23(7) of the AngG cannot be placed in this category of rule. Its application does not depend, in any way, on the exercise of Community law freedom of movement or on any other transfrontier element: the payment of compensation is denied irrespective of the intended destination of the worker who voluntarily terminates his contract without serious grounds and it is guaranteed irrespective of the subsequent movements of a worker dismissed by his employer. Furthermore, there is no evidence to suggest that the national court erred in stating that mostly national residents are affected by the rule, so that its application does not give rise even to covert discrimination on grounds of subsequent migration, i.e. as between workers who emigrate and those who prefer to remain in Austria upon termination, voluntary or otherwise, of their employment contracts. 23. It is, nonetheless, useful to note for the purposes of the discussion which follows that, as in the case of discrimination on grounds of nationality, the Court has also declined to formulate any test based on the material consequences for freedom of movement of differentiated treatment of migrant workers and of

natural and legal persons *756 exercising the right of establishment relative to those who remain in their Member State of origin. In the case of a prohibition, as was alleged in Daily Mail, the consequences are fairly clear, but in other cases, the Court has refrained from assessing the likely effect, if any, of the disadvantage in question on the prospective migrant's calculations: the difference in treatment was enough to establish a presumption that the national rule was one which could in fact "preclude or deter" [FN30] or "hinder" [FN31] a national of a Member State from exercising his Community law rights. FN30 Masgio, cited above, para. [18] and Terhoeve, cited above, paras [39] & [40]. FN31 Daily Mail, cited above, para. [16] and ICI, cited above, para. [21].

Other types of non-discriminatory restriction 24. Three other broad types of restriction on the freedom of movement of workers or of self-employed persons can be identified in the Court's case law, which I refer to as neutral restrictions because the rules in question have been indistinctly applicable, have not expressly created distinctions on the basis of the exercise of freedom of movement and have been treated by the Court as being neutral in their effects as regards the nationality of the persons affected. These are: (1) national rules which limit an economic operator--typically a member of a liberal profession--to a single place of establishment, [FN32] (2) national rules regarding qualifications for posts or professional activities, [FN33] as well as those concerning recognition of qualifications which are not formally required for a specific economic activity, [FN34] and (3) national rules which create a barrier to workers taking up new employment by requiring that the prospective employer pay a fee equivalent to several years' salary to the worker's former employer, even after the expiry of the worker's contract of employment with the latter. [FN35] *757 FN32 Klopp, cited above, Case 96/85, E.C. Commission v. France, cited above, paras [13] & [14] and Case C-351/90, E.C. Commission v. Luxembourg: [1992] E.C.R. I-3945; [1992] 3 C.M.L.R. 124, paras [19] et seq. FN33 Case 71/76, Thieffry v. Conseil de l'Ordre des Avocats A la Cour de Paris: [1977] E.C.R. 765; [1977] 2 C.M.L.R. 373 (hereinafter "Thieffry"), Heylens, cited above, Case C-379/87, Groener v. Minister for Education and Another: [1989] E.C.R. 3967 (hereinafter "Groener"), Vlassopoulou, cited above, Gebhard, cited above and Case C-234/97, De Bobadilla v. Museo Nacional del Prado and Others: [1999] 3 C.M.L.R. 151. FN34 Kraus, cited above and Choquet, cited above. One could also add cases regarding non-recognition of work experience in other Member States for promotion or other purposes, such as Scholz, cited above, and Schöning-

Kougebetopoulou, cited above, but the Court has analysed these as cases of covert discrimination on grounds of nationality. FN35 Bosman, cited above. See also the Opinion of Advocate General Cosmas of 18 May 1999 in Joined Cases C 51 & 191/97, Deliege v. Ligue Francophone de Judo et Disciplines Associees Asbl and Others: Advocate General's Opinion, awaiting judgment; regarding a different formal non-discriminatory obstacle to changing employment, see the Opinion of Advocate General Alber of 22 June 1999 in Case C-176/96, Lehtonen and Another v. Federation Royale Belge des Societes de Basketball and Another: Advocate General's Opinion, awaiting judgment. 25. With regard to the first type of restriction, the Court has approached such rules in the field of establishment on the presumption that they are not discriminatory on grounds of nationality [FN36] and has held that they nonetheless restrict the freedom of establishment because that freedom is not confined to the right to create a single establishment within the Community, but extends expressly to the setting up of agencies, branches or subsidiaries in another Member State. [FN37] The national rules could, therefore, be condemned as a direct denial of freedom of movement through a formal prohibition of one possible manner of exercising that freedom. In these circumstances, the fact that freedom of establishment within the Member State in question was similarly restricted was not, apparently, viewed as being relevant. [FN38] FN36 Klopp, cited above, para. [14]. FN37 Klopp, cited above, para. [19]. FN38 Although Article 39 E.C. is not as explicit in this respect as Article 43 E.C., I presume that a national rule confining workers to a single post, without the possibility of additional part-time work either in that State or elsewhere, would come within the scope of that Article. 26. It would be possible to approach the second type of restrictive national rule, regarding qualifications, as a type of disguised discrimination on grounds of nationality or migration, in so far as migrants are much less likely than domestic economic actors to possess qualifications which conform exactly, without the need for further verification, to the criteria laid down. This would also be consistent with the case law regarding the taking into account of prior work experience. However, the Court has indicated that such rules constitute restrictions on freedom of establishment and the free movement of workers even in the absence of discrimination on grounds of nationality. [FN39] An analogy may be drawn with the application in the field of goods of indistinctly applicable national product rules or of duplicated checks on compliance with common product standards regarding health and safety, which in both cases subject the

market access of imported goods to a dual regulatory *758 regime [FN40] and whose place within the scope of application of Article 28 E.C. remains, accordingly, assured after the decision in Keck. [FN41] FN39 See most clearly Vlassopoulou, cited above, para. [15]; this also emerges from an a contrario reading of Groener, cited above, para. [19], requiring that such rules be proportionate and non-discriminatory. See, to similar effect, Kraus, cited above, para. [32] and Gebhard, cited above, para. [37]. Cf. the views of Advocate General Mayras in Thieffry, cited above, and of Advocate General Van Gerven in Kraus. The covert discrimination argument is obviously more enticing in cases where the actual origin of the qualifications directly determined the question of their recognition, as in Thieffrey, Choquet, cited above, and Kraus. FN40 This is the accepted reason for the application of Article 28 E.C. to such rules, rather than the argument that imported products are covertly discriminated against by any national product rules because they are inherently less likely to comply with them. See, for example, Case C-470/93, Verein gegen Unwesen In Handel und Gewerbe Köln eV v. Mars GmbH: [1995] E.C.R. I-1923; [1995] 3 C.M.L.R. 1, para. [13] (hereinafter "Mars"). FN41 The Court referred in Choquet, cited above, para. [8], to the need to avoid duplication of tests already taken; this has been a continuing theme of the qualifications case law since Heylens, cited above; see most recently De Bobadilla, cited above, paras [32]-[34]. 27. The third, Bosman-type class of restriction may be compared with that in Klopp in that it directly affects a step in the exercise of free movement, that is, the change or taking up of employment. Furthermore, this is, in the case of free movement of workers, an essential step and not, as in Klopp, merely one possible manner of exercising the Treaty rights in question. 28. These three classes of non-discriminatory restrictions on freedom of movement share the attribute of being formal restrictions on access to economic activity in a Member State. Conditions are prescribed by law or regulation non- compliance with which constitutes an absolute bar to taking up the activity in question. [FN42] In this regard, only Choquet and Kraus are exceptional, in that they relate to rules which, depending on the circumstances, could constitute handicaps rather than absolute bars to access to certain economic activities. In Kraus, the German degree-recognition rules at issue did not themselves make access to any activity contingent on securing such recognition, but the Court pointed out that possession of a postgraduate academic title could be a prerequisite for access to certain professions [FN43] and could facilitate access to a profession or economic activity in other contexts. [FN44] In Choquet, the Court observed that rules regarding recognition of driving licences exerted an influence, both direct and indirect, on the exercise of rights relating to free movement and, in particular, that possession of a driving licence duly recognised by the host State could affect the actual pursuit of a large number of occupations

for employed or self-employed persons. [FN45] FN42 See Bosman, cited above, paras [94]-[103], discussed further below. On the usefulness of a distinction between restrictions on access to an economic activity and restrictions on its exercise, as proposed by Advocate General Lenz in Bosman, see further below, Klopp-type rules are also barriers to exit, that is, to establishment elsewhere, by a person already established in a Member State applying such rules. FN43 Cited above, para. [20]. FN44 ibid., para. [23]; see also paras [18], [19], [21] & [22]. FN45 Cited above, para. [4].

A general test? 29. In a number of the more recent cases, the Court has defined non-discriminatory restrictions in terms reminiscent of those used in *759 respect of rules which either discriminate on grounds of nationality or result in different treatment on the basis of the exercise of freedom of movement. In Kraus, the Court stated that [FN46]: Articles 48 and 52 preclude any national measure governing the conditions under which an academic title obtained in another Member State may be used, where that measure, even though it is applicable without discrimination on grounds of nationality, is liable to hamper or to render less attractive the exercise by Community nationals ... of fundamental freedoms guaranteed by the Treaty. FN46 Cited above, para. [32], emphasis added. In Gebhard, the Court subjected the application of "national measures liable to hinder or make less attractive the exercise of fundamental freedoms guaranteed by the Treaty" to conditions of non-discrimination and of proportionate pursuit of general-interest requirements. [FN47] Finally, in Bosman, the Court set out the following test: Provisions which preclude or deter a national of a Member State from leaving his country of origin in order to exercise his right to freedom of movement therefore constitute an obstacle to that freedom even if they apply without regard to the nationality of the workers concerned. [FN48] FN47 Cited above, para. [37], emphasis added. FN48 Cited above, para. [96], emphasis added. The Court cited Masgio, cited above, paras [18] & [19], a case involving national rules which did in fact distinguish between those who had exercised their freedom of movement and those who had not.

The Court added that Article 39 E.C. also limits the application of national rules which impede the freedom of movement of nationals of that State wishing to engage in gainful employment in another. [FN49] FN49 Bosman, para. [97]. The Court cited Daily Mail, para. [16]. 30. The present case essentially concerns the scope of these broadly drawn definitions of neutral restrictions on freedom of movement. As I stated above, national provisions which discriminate overtly or covertly on grounds of nationality or which differentiate between persons according to whether they have exercised such rights give rise automatically to the conclusion that the enjoyment of those rights is prejudiced as a result, even if the likely prejudice is small in a given case relative to the remaining advantages of migration. Similarly, in my view, in cases where access to the employment market is barred by neutral formal requirements which are contrary to the express guarantees of the Treaty regarding the manner of exercise of freedom of movement (as in Klopp) or which effectively subject migrants to duplicate requirements or to overburdensome recognition procedures (as in the qualifications cases) or which require payment of a fee in order to exercise a Treaty right (as in Bosman), the resulting prejudice to the exercise of Treaty rights is evidence. One can state that such rules impede, deter, preclude or render less attractive the exercise of freedom of movement. This language should not, however, be mistaken for a test of general application. The imposition of conditions *760 regarding entry to the market or the taking up of economic activity is itself sufficient to establish the existence of a restriction, even if the condition can be relatively easily satisfied (this being an element in determining whether or not the restriction is justified). The same, broadly speaking, can probably also be said of formal conditions imposed regarding matters which are intimately connected with successful access to the market, such as those governing recognition of a qualification which is necessary or beneficial to the exercise of many professional activities. [FN50] FN50 See Choquet and Kraus. See also the analysis above of Dior and De Agostini.

The limits of a general test 31. It would be possible to construe the broadly worded tests quoted above from Kraus, Gebhard and Bosman as relating solely to the sorts of formal conditions of access to the employment market which were at issue in those and the other cases discussed at paragraphs 24 to 28 above. On the other hand, the Court did not advert expressly to any such limitation of the scope of application of the criteria it laid down in those cases. If, however, it were proposed to treat as restrictions on the exercise of freedom of movement neutral national rules which allegedly preclude, deter, impede, hinder or render less attractive such exercise simply by raising material barriers, for example, by establishing commercial and regulatory conditions in the market in question which are less enticing than in other Member States, or by offering benefits which would be lost in the event that

a worker changed employment, those criteria could not be applied in the same way as in the case of a formal condition. Prejudice to the exercise of the freedom of movement of workers or self-employed persons cannot be automatically presumed in all cases where an apparently burdensome national regulation of economic activity, or the loss of a benefit in the case of a change in economic activity, is at issue. Such an approach would be equivalent to applying the Dassonville test, in its most far-reaching construction, to freedom of movement of persons. Where an alleged obstacle to freedom of movement does not result from a formal condition of market participation but is instead alleged to arise from some neutral material barrier or disincentive deriving from national regulations, the prejudice to the exercise of Community law rights must be established. 32. In my view, if the possibility of treating such national rules as restrictions on freedom of movement were admitted, the appropriate criterion would be that which has already been employed by the Court in Bosman and in Alpine Investments in order to reject the application by analogy to certain national rules in the field of the free movement of persons of the approach adopted in Keck to national provisions governing selling arrangements for goods: that, proposed by the *761 Commission in this case, of a direct effect on access to the market in question of the worker or self-employed person concerned. [FN51] Although the Court did not have occasion in either case to state whether fulfilment of this criterion was essential in all cases to establish the existence of a prohibited neutral obstacle to free movement, this appears to me to be necessary if the Treaty is not to be exploited as a means of challenging any national rules whose effect is simply to limit commercial freedom. [FN52] Thus, neutral national rules could only be deemed to constitute material barriers to market access, if it were established that they had actual effects on market actors akin to exclusion from the market. As in the case of rules regarding selling arrangements in the case of goods, there can be no presumption that neutral national commercial regulations, or those governing pay scales, social protection and other matters of concern to workers, have this effect. In the normal case, the migrant worker must take the national employment market as he finds it. The same holds true for neutral national rules which are alleged to affect the worker's decision as to whether or not to leave a Member State in order to take up an economic activity in another. This is especially important as regards such possible exit restrictions because the number of formal restrictions on leaving a post is likely to be extremely limited relative to those applicable to taking up employment. If the Court established, in principle, that such material disincentives could, in certain cases, constitute restrictions on freedom of movement, aggrieved persons should be required to reverse that presumption by demonstrating that a particular rule has, in all the circumstances, such a burdensome and deterrent effect on market access as to constitute a direct denial of such access. It is, of course, implicit in such an approach that the existence of the alleged material denial of market access must be ascertained by reference to the circumstances of the particular complainant. FN51 See Bosman, para. [103] and Alpine Investments, para. [38].

FN52 See Keck, para. [14]. Advocate General Cosmas takes the same view on the need for a test of market access in his Opinion in Deliege, paras 65 & 66. 33. My analysis is, I think, similar to that of Advocate General Lenz in Bosman, where he sought to establish a distinction between national rules regarding access to the market and those merely governing the exercise of an economic activity. [FN53] Advocate General Alber has expressed a different view to Advocate General Lenz in Lehtonen, [FN54] arguing, by reference to Keck, that rules regarding the exercise of a profession are closer to product rules than to those regarding selling arrangements, in that they directly affect citizens, who may thus have to take into account different rules and to acquire new skills every time they migrate from one Member State to another. However, I think that the apparent disagreement arises in part from a different *762 understanding of what is meant by rules governing the exercise of an economic activity. According to the scheme I have outlined above on the basis of the case law, in particular that governing qualifications, national provisions which require certain skills of economic actors and thus tend to subject migrant workers to a dual regulatory regime are more readily classifiable as formally affecting access or, at the very least, as in Kraus and Choquet, as being sufficiently closely bound up with market access as to be subjected to a similar regime. FN53 Cited above, paras 205, 206 & 210 of his Opinion. FN54 Cited above, para. 48 of his Opinion.

The present case 34. However, it is not necessary, in my view, for the Court to take a stance in the present case on the question whether such neutral material deterrents or impediments to workers' exercise of free movement constitute, in principle, restrictions on such movement prohibited (subject to possible justification) by Article 39 E.C. It seems clear to me that paragraph 23(7) of the AngG does not satisfy the necessary conditions, outlined immediately above, for the potential application of any such prohibition, that is, its effects on the decision to terminate an employment contract, however direct, are not such as to restrict access to, or, in this case, exit from, a national labour market. This conclusion is not affected by the small size of the amounts of money involved relative to those in a case like Bosman. In different circumstances, a rule denying a worker the equivalent of almost three months' net salary could be taken to have a powerful effect on his calculations. I reach this conclusion because it cannot be said that the AngG in any real sense denies this sum to the plaintiff. It provides for a compensation payment when a certain contingency--unprovoked dismissal by the employer--materialises. The potential benefit of compensation for actual or constructive dismissal linked to his years of service is denied to the plaintiff upon voluntary termination of his contract in order to work in another Member State in the same way as he is denied the benefit of the Austrian system of compensation for damage arising from industrial accidents because he leaves employment there

before such an accident occurs. The fact that the amount of potential compensation in the former case is linked to his salary and period of service, thereby rewarding those who remain with a single firm, does not take away from the fact that, at the time of his resignation from the firm, no such right to compensation has crystallised. The effect of the loss of a merely potential and uncertain right is, in my view, far too tenuous, remote and uncertain to constitute a restriction on free movement. [FN55] FN55 See, for example, Case C-379/92, Criminal Proceedings against Peralta: [1994] E.C.R. I-3453, para. [24], Case C-69/88, H. Krantz GmbH & Co. v. Ontvanger der Directe Belastingen: [1990] E.C.R. I-583; [1991] 2 C.M.L.R. 677, para. [11], Case C-93/92, CMC Motorradcenter GmbH v. Baskiciogullari: [1993] E.C.R. I-5009, para. [12], Case C-67/97, Criminal Proceedings against Bluhme: [1998] E.C.R. I-8033; [1999] 1 C.M.L.R. 612, para. [22] and Case C-412/97, ED Srl v. Italo Fenocchio: Not yet reported, para. [11]; see also the comments of Advocate General Jacobs at paras 57 & 58 of his Opinion in Alpine Investments and my comments at para. 19 of my Opinion in Bluhme. 35. The fact that a worker can benefit, upon retirement after 10 *763 years' employment with a single employer, from a compensation payment based on his salary and years of service does not alter my conclusion. Such a right was very far from vesting in the plaintiff in the present case, who had worked with the defendant for less than four years. Even the potential enjoyment of that contingent right was subject to another, different contingency, namely, that the plaintiff would remain with the same Austrian employer for a further period of over six years. It is not necessary, in the circumstances of the present case, to comment on how the application of Article 23a of the AngG might affect the calculations of a worker who satisfied its conditions. 36. I conclude, therefore, that the denial to the plaintiff by paragraph 23(7) of the AngG of a right to compensation upon his voluntary termination of his employment contract does not constitute a restriction on his exercise of the freedom of movement of workers. As a result, it is not necessary to examine the arguments regarding whether any such restriction might be justified in the present case by reference to social or employment policy or to the public interest in employee loyalty.

Conclusion 37. In the light of the foregoing analysis, I recommend that the Court respond to the question referred by the Oberlandesgericht, Linz, as follows: A national rule which deprives a worker, who voluntarily terminates his employment relationship, of a benefit which he would have received if he had been dismissed or if he had terminated his employment for grave reasons does not constitute a restriction on the freedom of movement of workers prohibited by Article 48 of the E.C. Treaty (now, after amendment, Article 39 E.C.), where the application of the national rule in question is in no way dependent on the worker actually exercising such freedom of movement in order to take up employment in

another Member State. JUDGMENT [1] By order of 15 April 1998, received at the Court on 19 May 1998, the Oberlandesgericht Linz (Higher Regional Court, Linz) referred to the Court for a preliminary ruling under Article 177 of the E.C. Treaty (now Article 234 E.C.) a question on the interpretation of Article 48 of the E.C. Treaty (now, after amendment, Article 39 E.C.). *764 [2] That question was raised in proceedings between Mr Graf, a German national, and Filzmoser Maschinenbau GmbH ("Filzmoser"), whose registered office is in Wels, Austria, concerning the latter's refusal to pay Mr Graf the compensation on termination of employment to which he claimed entitlement under paragraph 23 of the Angestelltengesetz (Law on Employees; "the AngG") when he terminated his contract of employment with Filzmoser in order to go and work in Germany. National legislation [3] Paragraph 23 of the AngG provides: (1) If the employment relationship has continued uninterruptedly for three years, the employee shall be entitled to a compensation payment on termination of that relationship. That payment shall amount to twice the salary due to the employee for the last month's employment and after five years' service shall increase to three times, after 10 years' service to four times, after 15 years' service to six times, after 20 years' service to nine times and after 25 years' service to 12 times the monthly salary. ... ... (7) Without prejudice to paragraph 23a, there shall be no entitlement to compensation if the employee gives notice, leaves prematurely for no important reason or bears responsibility for his premature dismissal. ... [4] Paragraph 23a of the AngG has no bearing on the main proceedings. The main proceedings [5] By letter of 29 February 1996, Mr Graf terminated the contract of employment which he had had with Filzmoser since 3 August 1992, in order to move to Germany and take up new employment in that country from 1 May 1996 with G. Siempelkamp GmbH & Co., whose registered office is in Düsseldorf. [6] Filzmoser refused, on the basis of paragraph 23(7) of the AngG, to pay Mr Graf the compensation on termination of employment equal to two months' salary which he was claiming from it under paragraph 23(1). Mr Graf thereupon brought proceedings against his former employer before the Landesgericht Wels (Regional Court, Wels) for payment of that compensation, contending in particular that paragraph 23(7) of the AngG was contrary to Article 48 of the E.C.

Treaty. [7] By judgment of 4 February 1998 the Landesgericht Wels dismissed Mr Graf's action, holding, in particular, that paragraph 23(7) of the AngG was not discriminatory and did not constitute an obstacle prohibited by Article 48 of the E.C. Treaty since, first, it did not restrict cross-border mobility to a greater extent than mobility within Austria and, secondly, the loss of compensation on termination of employment equal to two months' salary was not such as to result in a perceptible *765 restriction on freedom of movement for workers, as stated by the Court in Case C-415/93, Union Royale Belge des Societes de Football Association Asbl and Others v. Bosman and Others. [FN56] FN56 [1995] E.C.R. I-4921; [1996] 1 C.M.L.R. 645. [8] The Landesgericht also found that the provision at issue in the main proceedings served in particular to provide maintenance and temporary assistance and thus pursued legitimate social-policy objectives, so that it was in any event justified by overriding reasons in the public interest. In this connection, it observed in particular that, where an employer terminated a contract of employment, the employee found himself, through no fault of his own and very often to his complete surprise, in a situation where temporary assistance was needed, whereas an employee who voluntarily gave up his job by giving notice himself could plan for the resulting consequences. [9] Mr Graf appealed against the judgment of the Landesgericht Wels to the Oberlandesgericht Linz, before which he amplified the arguments already rejected at first instance with the submission that it could not be inferred from the judgment in Bosman, [FN57] that a restriction on freedom of movement had to be "perceptible" in order to be prohibited by Article 48 of the E.C. Treaty. He also disputed the validity of the social-policy grounds adopted by the Landesgericht to justify payment of compensation on loss of employment, at any rate so far as concerns the loss of compensation entitlement by virtue of paragraph 23(7) of the AngG. FN57 Cited above. [10] The Oberlandesgericht Linz found first of all that there was no case law of the Court of Justice relating to a comparable set of facts, that while the arguments of the parties were irreconcilable they all appeared cogent at first sight, that the Landesgericht reached its decision only after careful and detailed assessment, and that in the most recent legal literature published in Austria the view had almost unanimously been taken that the loss of compensation on termination of employment when the employee himself gave notice was irreconcilable, or at least difficult to reconcile, with the principle of freedom of movement. [11] It then expressed doubts that social-policy objectives, however legitimate they might be, or overriding reasons in the public interest could, in view of the case law of the Court of Justice on the principle of proportionality, justify an

exclusion from entitlement to compensation on termination of employment as broad and general as that laid down in paragraph 23(7) of the AngG. It held that the line of argument of the court at first instance was founded in that regard on incomplete and incorrect premisses. It was not evident that every termination of a contract by an employer took the employee by surprise and occurred through no fault of his own. Conversely, all sorts of circumstances relating to the undertaking, whether or not the employer was *766 responsible for them, could equally prompt an employee who was long-serving and therefore entitled to a large amount of compensation on termination of employment to change jobs without him necessarily being at fault. Finally, there were terminations which were not decisively influenced by either the employee or the employer but were brought about by outside factors affecting one or other of the parties to the contract of employment. [12] The Oberlandesgericht Linz considered, finally, that the import of Bosman for labour law in general was no longer clear either, given in particular that in that case the Court had, on the one hand, accepted broad grounds of justification for restrictions, including non-economic grounds, but had, on the other, referred to the very general formulations used in Case C-10/90, Masgio v. Bundesknappschaft [FN58] and Case C-19/92, Kraus v. Land Baden-Württemberg. [FN59] It therefore decided to stay proceedings and refer the following question to the Court for a preliminary ruling: Does Article 48 of the E.C. Treaty preclude national provisions under which an employee who is a national of a Member State is not entitled to compensation on termination of his employment relationship simply because he himself gave notice terminating that relationship in order to take up employment in another Member State? FN58 [1991] E.C.R. I-1119; [1992] 3 C.M.L.R. 757. FN59 [1993] E.C.R. I-1663. Consideration of the question submitted [13] By its question, the national court essentially asks whether Article 48 of the E.C. Treaty precludes national provisions which deny a worker entitlement to compensation on termination of employment if he terminates his contract of employment himself in order to take up employment in another Member State, when those provisions grant him entitlement to such compensation if the contract ends without the termination being at his own initiative or attributable to him. [14] First, it must be borne in mind that Article 48(2) of the E.C. Treaty expressly provides that freedom of movement for workers is to entail 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. In addition, according to the Court's case law, the rule of equal treatment, laid down in Article 48, prohibits not only overt discrimination based on nationality but also all covert forms of discrimination which, by applying other

distinguishing criteria, achieve in practice the same result. [FN60] FN60 See, in particular, Case C-350/96, Clean Car Autoservice GmbH v. Landeshauptmann Von Wien: [1998] E.C.R. I-2521; [1998] 2 C.M.L.R. 637, para. [27]. [15] Legislation such as that at issue in the main proceedings applies irrespective of the nationality of the worker concerned. [16] Moreover, legislation of that kind denies compensation on termination of employment to all workers who end their contract of *767 employment themselves in order to take up employment with a new employer, regardless of whether the latter is established in the same Member State as the previous employer or in another Member State. In those circumstances, it cannot be maintained that such legislation affects migrant workers to a greater extent than national workers and that it might therefore place at a disadvantage the former in particular. [17] Furthermore, as the national court expressly stated in its order for reference, there is nothing on the file to indicate that such legislation operates to the disadvantage of a particular group of workers wishing to take up new employment in another Member State. [18] Secondly, it is clear from the Court's case law, in particular from the judgment in Bosman, that Article 48 of the E.C. Treaty prohibits not only all discrimination, direct or indirect, based on nationality but also national rules which are applicable irrespective of the nationality of the workers concerned but impede their freedom of movement. [19] According to Mr Graf, the loss of compensation on termination of employment where the worker himself terminates the contract constitutes such an obstacle to freedom of movement for workers, comparable to the obstacle which was at issue in Bosman. In his submission, it is largely immaterial in this connection whether the worker suffers a financial loss because he changes employer or the new employer is required to make a payment in order to take him on. [20] By contrast, the other parties who have submitted observations to the Court maintain that national legislation applicable irrespective of the nationality of the workers concerned which is liable to dissuade the latter from deciding to exercise their right to freedom of movement does not necessarily constitute an obstacle to freedom of movement for workers. [21] In that regard, the Court has held on numerous occasions that the Treaty provisions relating to freedom of movement for persons are intended to facilitate the pursuit by Community nationals of occupational activities of all kinds throughout the Community, and preclude measures which might place Community nationals at a disadvantage when they wish to pursue an economic activity in the territory of another Member State. [FN61] FN61 See, in particular, Bosman, cited above, para. [94] and Case C-18/95, Terhoeve v. Inspecteur Van de Belastingdienst Particulieren/Ondernemingen

Buitenland: [1999] E.C.R. I-345, para. [37]. [22] Nationals of Member States have in particular the right, which they derive directly from the Treaty, to leave their country of origin to enter the territory of another Member State and reside there in order to pursue an economic activity. [FN62] FN62 See, in particular, Bosman, para. [95] and Terhoeve, para. [38]. [23] Provisions which, even if they are applicable without distinction, preclude or deter a national of a Member State from leaving his country of origin in order to exercise his right to freedom of movement therefore constitute an obstacle to that freedom. However, in order to *768 be capable of constituting such an obstacle, they must affect access of workers to the labour market. [24] Legislation of the kind at issue in the main proceedings is not such as to preclude or deter a worker from ending his contract of employment in order to take a job with another employer, because the entitlement to compensation on termination of employment is not dependent on the worker's choosing whether or not to stay with his current employer but on a future and hypothetical event, namely the subsequent termination of his contract without such termination being at his own initiative or attributable to him. [25] Such an event is too uncertain and indirect a possibility for legislation to be capable of being regarded as liable to hinder freedom of movement for workers where it does not attach to termination of a contract of employment by the worker himself the same consequence as it attaches to termination which was not at his initiative or is not attributable to him. [FN63] FN63 See, to that effect, with regard to the free movement of goods, in particular Case C-69/88, H. Krantz GmbH & Co. v. Ontvanger der Directe Belastingen: [1990] E.C.R. I-583; [1991] 2 C.M.L.R. 677, para. [11] and Case C-44/98, BASF AG v. Präsident des Deutschen Patentamts: Not yet reported, paras [16] & [21]. [26] In view of all the foregoing considerations, the answer to the question submitted must be that Article 48 of the E.C. Treaty does not preclude national provisions which deny a worker entitlement to compensation on termination of employment if he terminates his contract of employment himself in order to take up employment in another Member State, when those provisions grant him entitlement to such compensation if the contract ends without the termination being at his own initiative or attributable to him. Costs [27] The costs incurred by the Austrian, Danish, German, Italian and United Kingdom Governments and by the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, 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, in answer to the question referred to it by the Oberlandesgericht Linz by order of 15 April 1998, HEREBY RULES: Article 48 of the E.C. Treaty (now, after amendment, Article 39 E.C.) does not preclude national provisions which deny a worker entitlement to compensation on termination of employment if he *769 terminates his contract of employment himself in order to take up employment in another Member State, when those provisions grant him entitlement to such compensation if the contract ends without the termination being at his own initiative or attributable to him.

(c) Sweet & Maxwell Limited [2000] 1 C.M.L.R. 741 END OF DOCUMENT