Ms Hliddal and Mr Bornand, both Swiss nationals, reside in Switzerland with their respective families and work as airline captains for an airline in Luxembourg. The CNPF refused to grant either of them a parental leave allowance on the ground that they did not satisfy the conditions in Luxembourg legislation, pursuant to which a person claiming parental leave must have an official address and reside continuously in Luxembourg or be covered by the Community regulations.

Having taken this case to the Luxembourg Supreme Court, it decided to stay proceedings and ask the ECJ whether Articles 1(u)(i) and 4(1)(h) of Regulation 1408/71 should be interpreted as meaning that a parental leave allowance, such as the allowance provided for under Luxembourg legislation, constitutes a ‘family benefit’ within the meaning of that regulation.

It must first be determined whether a parental leave allowance falls to be regarded as ‘pay’ within the meaning of Article 157 TFEU or as a ‘social security benefit’ within the meaning of Regulation 1408/71. Under Article 157(2) TFEU, ‘pay’ means ‘the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment, from his employer’. It is settled case-law that that concept covers any consideration, whether immediate or future, provided that the worker receives it, albeit indirectly, in respect of his employment, from his employer, and irrespective of whether it is received under a contract of employment, by virtue of legislative provisions or on a voluntary basis.

Next to that, as such leave is characterised by the suspension of the employment contract and as it is not apparent that the allowance at issue in the main proceedings is paid, even indirectly, by the employer, it follows that the parental leave allowance does not constitute ‘pay’ within the meaning of Article 157 TFEU.

Secondly, it must be determined whether a parental leave allowance meets the criteria enabling a benefit to be classified as a ‘social security benefit’ within the meaning of Regulation 1408/71.

It should be stressed at the outset that the fact that the Luxembourg Government has not made a declaration under Article 5 of Regulation 1408/71 specifying the parental leave allowance as being a scheme as referred to in Article 4(1) and (2) of Regulation 1408/71 is not proof in itself that the allowance does not fall within the scope of that regulation. Furthermore, the way in which a benefit is classified under domestic law is not decisive for the purposes of determining whether or not that benefit falls within the material scope of Regulation 1408/71. According to settled case-law, a benefit may be regarded as a social security benefit in so far as it is granted to the recipients, without any individual and discretionary assessment of personal needs, on the basis of a legally defined position and relates to one of the risks expressly listed in Article 4(1) of Regulation 1408/71.

Although the CNPF claims that the legal situation giving rise to the right to the parental leave allowance ultimately stems from the employer’s decision to grant – or not to grant – parental leave, the fact remains that the allowance itself is granted on the basis of a legally defined position, without any individual and discretionary assessment of personal needs.

A benefit such as the parental leave allowance does not constitute an unemployment benefit. An unemployment benefit covers the risk associated with the loss of revenue suffered by a worker following the loss of his employment although he is still able to work. A benefit granted if that risk, namely loss of employment, materialises and which is no longer payable if that situation ceases to exist as a result of the claimant’s engaging in paid employment must be regarded as constituting an unemployment benefit. However, that is not the position in the case of a person receiving a parental leave allowance such as the allowance at issue. That person has not lost his employment, but has merely decided to suspend the employment relationship.

It should also be borne in mind that, under Article 1(u)(i) of Regulation 1408/71, ‘the term family benefits means all benefits in kind or in cash intended to meet family expenses’. The Court has held that the purpose underlying a parenting allowance which is designed to enable one of the parents to devote himself or herself to the raising of a young child and which is intended, specifically, as remuneration for bringing up that child, and to meet other costs involved in caring for and raising a child and, as the case may be, to mitigate the financial disadvantages entailed in giving up income from full-time employment is ‘to meet family expenses’ within the meaning of Article 1(u)(i) of Regulation 1408/71. Specifically, in relation to a career break allowance granted, subject to certain conditions, to a worker taking a break from his or her career using parental leave, the Court has held that that type of benefit, which is similar to the parental leave allowance at issue in the main proceedings, must be treated as a family benefit.

It follows from all the foregoing that the parental leave allowance at issue in the main proceedings may not be classified as ‘pay’ within the meaning of Article 157 TFEU and that it constitutes a social security benefit with the characteristics of a ‘family benefit’ within the meaning of Regulation 1408/71.