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Elimination of unemployment assistance as of 1 January 2005 is constitutional
Press Release No. 120/2010 of 29 December 2010
Order of 7 December 2010
1 BvR 2628/07
Unemployment assistance was a replacement for income provided by the state and financed through tax revenues upon unemployment which was paid by the Federal Employment Agency (Bundesagentur für Arbeit) on behalf of the Federation. Among others, a prerequisite for the grant of unemployment assistance was the need of the complainant. Its amount was not oriented toward the need of the recipient, but rather, toward his last salary earned; it was a certain percentage of a net standardised salary. Unemployment assistance was granted for periods of time. Prior to each renewed grant, all eligibility prerequisites for the claim were to be re-examined. Pursuant to § 428.1 sentence 1 and § 198 sentence 2 no. 3 of the Third Book of the Code of Social Law (Drittes Buch Sozialgesetzbuch - SGB III) there was also a possibility for claiming unemployment assistance with relaxed prerequisites: those employees who were above the age of 58 and did not fulfil the legal prerequisites of the claim because they were not ready to work and did not use or did not want to use all means to end their unemployment situation also had a claim for unemployment assistance. This was the practice when an unemployed person made a corresponding declaration to the Federal Employment Agency.
The rules regarding unemployment assistance were amended by the Fourth Act for Modern Services on the Labour Market (Viertes Gesetz für moderne Dienstleistungen am Arbeitsmarkt) of 24 December 2003 so that it could only be granted until 31 December 2004. The amendment became effective on 1 January 2004. In addition, unemployment assistance was completely deleted from the catalogue of employment promotion from 1 January 2005. Unemployment benefit II (Arbeitslosengeld II) paid according to the provisions of the Second Book of the Code of Social Law (Zweites Buch Sozialgesetzbuch - SGB II) - Basic Provision for Job-seekers - was put in its place, the calculation of which no longer related to the previous income of the persons in need of assistance, but rather, in general to their need.
The complainant, who was born in 1946, received unemployment assistance. In June 2004 he submitted a declaration within the meaning of § 428.1 sentence 1 SGB III and thereupon received unemployment assistance until the end of the year. His application for a grant of unemployment benefit II from January 2005 onward was rejected by the benefits provider on the grounds that the monthly income to be set off against the complainant's and his wife's total calculated need exceeded that need. The complainant's lawsuit for continued payment of unemployment assistance was unsuccessful before the social courts. The complainant argues that the challenged decisions and the elimination of unemployment assistance violate his fundamental right to property; furthermore, he complains of an infringement of the constitutional principle of the protection of legitimate expectations.
The First Senate of the Federal Constitutional Court rejected the constitutional complaint of the complainant, to the extent it was admissible, as unfounded. The elimination of unemployment assistance is compatible with the Basic Law.
In essence, the decision is based on the following considerations:
1. The elimination of unemployment assistance does not violate the complainant's fundamental right to property (Article 14.1 of the Basic Law) because the statutory claim for unemployment assistance is not property within the meaning of this fundamental right. This also applies to the grant of unemployment assistance under the relaxed prerequisites of § 428.1 sentence 1 SGB III. Social law claims only enjoy the fundamental right of protection of property when the matter involves legal assets that serve to secure subsistence and relate to not insignificant personal contributions of the owner.
The latter point does not relate to the statutory claim for unemployment assistance. There was no direct financial connection between the contributions to unemployment insurance and the expenses for unemployment assistance. The contributions income only served to finance unemployment benefits, but not unemployment assistance, which was always paid out of tax revenues on behalf of the Federation. Unemployment assistance from a financial legal point of view also was not conceived of as a unit financed by both contributions and taxes. The fundamental differences between unemployment benefits and unemployment assistance also exclude the assumption that both types of aid were combined into one uniform claim. While the unemployment benefits were a time-limited insurance payment, this was not the case for unemployment assistance, which was basically unlimited in duration, and which, unlike unemployment benefits, was only paid upon need, taking into account the recipient's assets. Unemployment assistance was aid motivated by socio-political concerns that was paid without relation to the provision of contributions by the insured person and was not paid as a modified continuation of unemployment benefits.
2. The elimination of unemployment assistance does not violate the principle of legitimate expectations because it did not develop any retroactive effect. The complainant also was not protected from a change in the legal situation based on any other reasons.
Genuine retroactive effect (echte Rückwirkung), where a statute subsequently changes situations in the past that have already been concluded or that establishes its temporal application at a point in time prior to the promulgation of the statute, does not exist here. This is because both the deadline for new or renewed grants of unemployment assistance until 31 December 2004 as well as its elimination from 1 January 2005 onward only affected future grants.
Similarly, false retroactive effect (unechte Rückwirkung), which exists when a statute affects current, not yet concluded circumstances and legal relationships in the future and, thus, at the same time subsequently devalues the affected legal position, does not exist here. Unemployment assistance was only granted for a certain period of time and only upon a renewed examination of the prerequisites to a claim. A right that could have been protected by the principle of legitimate expectations against its subsequent devaluation, thus, arose at the earliest upon each period of new or renewed grant of unemployment assistance, and it only related to the time until the expiration of each grant period.
The general reliance of a citizen on the continuation of a legal situation and, therefore, his expected future entitlement to benefits is not a legal position subject to constitutional law protection. Similarly, the submission of a declaration pursuant to § 428.1 sentence 1 SGB III does not rise to the level of a disposition for the unemployed person that could form the basis of an expectation of continuation of a claim that is worthy of protection. Moreover, from the outset there was no basis for a legitimate expectation worthy of protection on the part of the complainant that unemployment assistance would be granted beyond 31 December 2004 because the limitation of unemployment assistance until 31 December and its elimination from 1 January 2005 had already been written into law before he made his declaration according to § 428.1 sentence 1 SGB III.