THIRD SECTION

DECISION

Application no. 42923/10 Ivars Å ULCS against Latvia and 22 other cases (see list appended)

The European Court of Human Rights ( Third Section ), sitting on 6 December 2011 as a Chamber composed of:

Josep Casadevall , President, Corneliu Bîrsan , Egbert Myjer , Ján Šikuta , Ineta Ziemele , Nona Tsotsoria , Kristina Pardalos , judges, and Marialena Tsirli , Deputy Section Registrar ,

Having regard to the above application s lodged on various dates specified in the appended list;

Having deliberated, decides as follows:

THE FACTS

1 . The applicants are Latvian nationals, except the applicant Aleksandrs Ä» ebedevs (application n o . 52525/10 ) who is a non-citizen of the Republic of Latvia . Their names, dates of birth, places of residence and the dates of introduction of applications are listed in the appendix to this decision.

A. The circumstances of the cases

2 . According to the amendments to the Law on Maternity and Sickness Insurance ( “ Par maternitātes un slimības apdrošināšanu ”) , from 1 January 2008 the parental benefit ( vec āku pabalsts ) was allocated to socially insured persons (to one of the parents or a guardian) who either did not gain income because s/he was on parental leave or, on the contrary, did not use the parental leave and continued working. The benefit was paid until the child reached the age of one.

3 . The applicants ’ children were born in the period between December 2008 and June 2009, except three applicants whose children were born shor tly afterwards (see the appended list ).

4 . By virtue of a decision of the State Social Insurance Agency (“VSAA” ) the applicants , whose children were born before June 2009, were entitled to a parental benefit in the amount of 70% of the average salary calculated for the purposes of social insurance deductions. Until June 2009 the applicants received the parental benefit in full amount and continued working.

5 . On 16 June 2009 the Parliament of Latvia introduced changes to the Law on Maternity and Sickness Insurance which came into force on 1 July 2009 and deleted, inter alia , the provision according to which the parental benefit could be allocated to a parent or a guardian who was not on a parental leave but continued working. Section 5 of the Law on Payment of State Pensions and Benefits during the Period from 2009 to 2012 (thereinafter – Law on Payments) ( Par valsts pensiju un valsts pab alstu izmaksu laika periodā no. 2009. gada līdz 2012. gadam ) , which was adopted on the same day, provided for a transitional period of the aforementioned amendments. In particular, it provided that starting from 1 July 2009 to 2 May 2010 the parents (guardians) who gained income during the maternity period should receive 50% of the parental benefit allocated to them.

Constitutional complaint

6 . Each applicant submitted a constitutional complaint seeking the Constitutional Court to find that provision 5 of the Law on Payments run contrary to Articles 1, 91 and 110 of the Constitution. They argued that by virtue of the decision of the VSAA they were entitled to a parental benefit, and that, therefore, the legislative changes infringed their legitimate expectations to receive the parental benefit in full amount until the child reached the age of one. The applicants whose children were born after June 2009 argued that they had the same legitimate expectations arising from the law in force at the time when they planned their family.

7 . The Constitutional Court on 15 March 2010 found that the contested provision was constitutional. Firstly, it concluded that the employed and unemployed parents were not in a comparable situation, therefore differentiated benefit rates did not lead to unequal treatment. Secondly, the Constitutional Court recognised that even if the parents had had legitimate expectation to receive the parental benefit in full amount, the contested measure in the particular economic situation in Latvia had a legitimate aim and it did strike a fair balance between the general interests and the applicants ’ rights:

“ 9.7 ... [The amendments to the social insurance benefits in force as from 1 January 2008] caused a situation that families could choose to attribute parental benefit to the parent who received higher remuneration before the birth of a child . For instance, in a family where one of the parents was unemployed before the birth of a child , whilst the other parent was employed, the benefit was allocated to the one who wa s employed and received a wage ... rather than the one who was not employed and was on a parental leave. However, in cases when both parents were employed before the birth of the child , the family asked to allocate the parental benefit to th e one who received a higher salary, even thought de fact it was the other parent who was on the parental leave.... .

Such application of the parental benefit was in conflict with the conclusions made in the judgment n o . 2006-07-01 by the Constitutional Court regarding the effective social insurance system of the State because in the result of this a group of persons was formed who were not socially insured during the childcare period. For instance, if parental benefit was allocated to an employed parent who had a higher wage, social insurance payments were made from the wage of this particular person. However, the other parent who was on childcare leave and did not receive parental benefit, was not socially insured since he or she received neither benefit, nor wage. Therefore persons could not receive any other social insurance services because they have not made social insurance payments for almost a year.

Moreover, the newly established type of insurance, i.e. parental insurance did not provide for an additional social insurance payment rate, therefore it deteriorated the situation in the State social insurance budget. One of the reasons of such a huge deficit in the social insurance budget was inconsiderate definition of parenting benefit as a type of social insurance. In 2008, approximately 66.7 million lats were spent for the disbursement of this benefit (when introducing this benefit, it was planned to use about 26 million lats), and already 43 million lats were used for this purpose in the first half o f 2009 before the contested provision was adopte d.

(...)

20. The contested provision was adopted during economic recession in Latvia ... . In the second quarter of 2009, Latvia underwent the most rapid reduction of economic activities in the entire European Union. ... During this period, the financial deficit of the s tate consolidated budget reached 449.9 million lats or approximately 3.5 percent from the Gross Domestic Product, and it was estimated that the deficit may reach 1.3 milliard lats or approximately 9.5 percent from the Gross Domestic Product by the end of 2009. As a result, both the functioning of the State and economic growth in the for eseeable future would be en danger ed...

(...)

24. If amendment of legal regulatory framework serves for the benefit of the society, then restriction of the legal trus t of persons is permitted. The contested n orm has been adopted with the purpose to balance revenues and expenses of the State special budget of social insurance. Economic recession denied the possibility for the State to guarantee such amount of social security that was established during the period of economic growth of the State. If no measures were taken to solve the situation, this would have influenced the possibility of the State to ensure the right of persons to social security and to guarantee sustainability of social security system. This would not comply with the principle of a socially responsible State.

Consequently, restriction of the right of employed parents to receive parental benefit at full extent during the transitional period has been established with a view to ensure substantial interests of the societ y. In the result of this, a fair balance between restriction of legal security of a person and the right of the society to a sustainable State social insurance system and balanced State budget was ensured ”.

8 . Finally, the court recognised that the reduced amount of the benefit to employed parents in the transitional period was a proportional measure in that the employed parents still continued to receive both the salary and 50% of the reduced parental benefit. Consequently, their family income increased in comparison to the unemployed parents who received only the benefit.

9 . The dissenting opinion to the aforementioned judgment of the Constitutional Court stated:

“ It has been concluded in the Judgment that a transitional period of 306 days has been observed, which guarantees protection of legitimate expectations, whilst the amount of benefit to be disbursed has only been reduced ( see: Para 19 – 23 of the Judgment). I do not share this point of view. Even based on the strictest criteria for assessing legitimate expectations, the above mentioned transitional period could only be applied to those persons who have not been calculated and allocated the benefit before coming into force of the Contested Norm. It would be more appropriate for a socially responsible State not to change the amount of the benefit regarding all children who were incepted before coming into force of the Contested Norm.

However, the amount of benefit for persons, to whom it has already been granted, was reduced in half wit hin the term of two weeks (the contested n orm was adopted on 16 June 2009 and came into force on 1 July of the same year). In that short time, no one could change their life. For instance, those person who decided to take a child care leave because of the amendments to the legal regulatory framework, could not implement their intention because, pursuant to Section 156 (2) of the Labour Law, an employee has a duty to notify the employer in writing one month in advance of the beginning and the length of the p arental leave or parts thereof”.

B. Relevant domestic law

1. Relevant constitutional provisions

10 . Pursuant to Article 91 of the Constitution ( Satversme ) , a ll human beings in Latvia shall be equal before the law and the courts. Human rights shall be realised without discrimination of any kind.

11 . Article 110 provides that the State shall protect and support marriage – a union between a man and a woman, the family, the rights of parents and rights of the child. The State shall provide special support to disabled children, children left without parental care or who have suffered from violence.

2. Law on State Social Benefits ( Valsts sociālo pabalstu likums ) ; in force as from 31 October 2002

12 . The law defines the state social benefit as a State monetary support, such as, for instance, child-care benefit, to individuals belonging to certain categories in situations when they bear additional expenditures or when those individuals do not gain income, and the compensation is not provided from State social insurance scheme. It is paid from the State budget.

3. Law o n Maternity and Sickness Insurance ( Par maternitātes un slimības apdrošināšanu ) ; wording in force on 1 January 2008

13 . Section 10 provided that parental benefits were allocated to socially insured persons (to one of the parent or a guardian) who either did not gain income because s/he was on parental leave or, did not use the parental leave and continued working. The benefit was paid until the child reached the age of one.

4 . Law on State Social Insurance ( Par valsts sociālo apdrošināšanu )

14 . The travaux préparatoires to the Law on State Social Insurance, which introduced the aforementioned amendments of 1 January 2008 (see paragraph 12, above) highlighted certain threats to the sustainability of the proposed model (as cited by the Constitutional Court in the judgment of 15 March 2010):

“ .... [With the amendment] it was planned to disburse parental benefit to employed persons without restrictions and at full extent, these persons also receiving labour incomes; however this does not comply with the essence of social insurance. Second, introduction of parental benefit would be ensured in the frameworks of the present social insurance payment rate; therefore this would negatively influence social insurance special budget in the long term. Consequently, according to the prognosis of the social insurance budget model, the reserve accumulated in the social insurance special budget would be used 10 years earlier, i.e. already in 2032 after introduction of parental benefit and disbursing it from the state social insurance budget in the frameworks of the actual social insurance payment rate”.

5. The Law on Payment of State Pensions and Benefits during the Period from 2009 to 2012 ( Par valsts pensiju un valsts pab alstu izmaksu laika periodā no 2009. gada līdz 2012. gadam ) ; wording in force at the material tine

15 . Paragraph 1 of section 5 provides that an employed or a self-employed person who was granted a parental benefit with respect to a child born until 2 May 2010 shall receive the parental benefit in the amount of 50% of th e amount of the benefit granted.

16 . The travaux préparatoires to the aforementioned law provided that it shall ensure functioning of the fundamental principle of state social insurance . N amely, the S tate social insurance substitutes certain income in a situation when a person loses earning from labour . If a person takes care for a child aged up to one year and at the same time continue s working, s/he do es not lose the income from labour . More over, persons who receive both a wage and a parental benef it enjoy better circumstances when compared to those parents who are on a childcare leave an d receive parental benefit only .

C. Relevant international law

17 . The ILO Maternity Protection Convention (revised) of 15 June 2000 (ratified by Latvia on 14 April 2006 and came into force on 9 February 2009) with respect to maternity benefits provides:

Article 6

1. Cash benefits shall be provided, in accordance with national laws and regulations, or in any other manner consistent with national practice, to women who are absent from work on leave referred to in Articles 4 or 5.

2. Cash benefits shall be at a level which ensures that the woman can maintain herself and her child in proper conditions of health and with a suitable standard of living.

3. Where, under national law or practice, cash benefits paid with respect to leave referred to in Article 4 are based on previous earnings, the amount of such benefits shall not be less than two-thirds of the woman ’ s previous earnings or of such of those earnings as are taken into account for the purpose of computing benefits.

4. Where, under national law or practice, other methods are used to determine the cash benefits paid with respect to leave referred to in Article 4, the amount of such benefits shall be comparable to the amount resulting on average from the application of the preceding paragraph.

5. Each Member shall ensure that the conditions to qualify for cash benefits can be satisfied by a large majority of the women to whom this Convention applies.

6. Where a woman does not meet the conditions to qualify for cash benefits under national laws and regulations or in any other manner consistent with national practice, she shall be entitled to adequate benefits out of social assistance funds, subject to the means test required for such assistance.

7. Medical benefits shall be provided for the woman and her child in accordance with national laws and regulations or in any other manner consistent with national practice. Medical benefits shall include prenatal, childbirth and postnatal care, as well as hospitalization care when necessary.

8. In order to protect the situation of women in the labour market, benefits in respect of the leave referred to in Articles 4 and 5 shall be provided through compulsory social insurance or public funds, or in a manner determine d by national law and practice...

COMPLAINT S

18 . The applicants complained in substance under Article 1 of Pro tocol N o . 1 to the Convention about the reduction of the parental benefit which was allocated to them or was going to be allocated in full amount but has been afterwards reduced by 50% as a result of the austerity measures introduced in Latvia in 2009 aiming to deal with the economic recession. The applicants alleged that the legislator failed to provide a sufficient transition period for the amendments of the amount of parental benefit.

19 . They further complained under Articles 6, 8 and 14 of the Convention.

THE LAW

A. Joinder of the applications

20 . Pursuant to Rule 42 § 1 of the Rules of Court, the Court joins the applications given their common factual and legal background.

B . Complaint under Article 1 of Protocol N o . 1

21 . The applicant s complained that the reduction of the already allocated parental benefit run against the legitimate expectations in breach of Article 1 of Protocol N o . 1 to the Convention. The relevant part s of that provision read as follows:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest ...”

22 . The Court notes that since the birth of their children the applicants were entitled to receive a parental benefit until their children reached the age of one. The amount of the benefit was calculated by the VSAA based on the applicants ’ contributions to the State social insurance scheme. The Court, therefore, concludes that the proprietary interest in form of a social insurance benefit deriving from the national legislation constitutes a possession in the meaning of Article 1 of Protocol No. 1 (see, Andrejeva v. Latvia [GC], no. 55707/00, § 77 , 18 February 2009 ). In the particular circumstances of this case the Court shall assume that the same applies also to those applicants whose children were born shortly after June 2009.

23 . The Court considers that the issue raised by the applicants shall be considered under the first sentence of the first paragraph of Article 1. The Court shall examine whether the contested measure, i.e. the reduction of the social insurance benefit, complied with the principles enshrined by it (see, mutatis mutandis, Klein v. Austria , no. 57028/00 , § 49 , 3 March 2011 ). In course of the assessment the Court shall analyse whether the contested measure was adopted “in accordance with the law”, pursued a legitimate aim and could be regarded as “necessar y in a democratic society” (see Broniowski v. Poland [GC], no. 31443/96, § § 147 - 151 , ECHR 2004 ‑ V ).

24 . The contested decision to reduce the paternity benefit was adopted in accordance with legislative amendments (see Domestic law part, above), thus fulfilling the requirement of lawfulness.

25 . The Court refers to the reasoning of the Constitutional Court which described the situation in the State budget of the Republic of Latvia in early 2009 which required speedy and radical decrease of public spending (see paragraph 7, above). Subsequently, the aim pursued by the contested measure to re-establish the balance in the State social budget is to be considered as legitimate.

26 . It shall next assess whether the contested measure struck a fair balance between the general public interests and rights of the applicants. The Court notes that States enjoy a wide margin of appreciation in balancing the rights at stake in relation to economic policies in situation of complex transitional processes. However, even duri ng the most complex reforms States cannot adopt measures which entail consequences at variance with the Convention standards (see Broniowski , cited above, paragraph 182 ) .

27 . The Court reiterates that the applicants complain about the reduction of the amount of the parental benefit which was introduced in 2008 as a new type of social insurance benefit . The same amount was t o be paid to both employed or unemployed parents (see paragraph 1 3 , above), whereas the social insurance contribution rate remained unchanged ( see paragraph 14 , above).

28 . The Court observes that the purpose of the aforementioned benefit was to provide for a substitute of loss of earnings caused by the birth of a child. However, it also notes that since 2008 the legal framework in Latvia provided for a more favourable parental benefit system as, for example, enshrined by the ILO Maternity Protect ion Convention (see paragraph 17 , above). A s referred to by the Constitutional Court, (see paragraph 7 , above) the new benefit scheme not only compensated the loss of earnings during the period when one of the parents took care of a child younger than one year old, but in fact gave to parents the possibility to increase their earnings in that i t allowed to one or both of them to continue working and at the same time receive a parental benefit based on the income of the parent whose wage was higher (ibid).

29 . That being so , as it wa s already stated in paragraph 25 , above, the overall financial situation in the respondent State had an adverse effect to the parental benefit scheme which, if it had remained unchanged, it would have endanger ed the sustainability of the overall social budget.

30 . In this respect the Court observes that the legislator, although in a speedy manner , adopted amendments which resulted in reduction of the amount of the parental benefit which had already been allocated to certain number of socially insured persons, such as the applicants. In addition to recalling that Article 1 of Protocol No. 1 can not be interpreted as guaranteeing a right to a benefit of certain amount (see Kjartan Ásmundsson v. Iceland , no. 60669/00, § 39 , ECHR 2004 ‑ IX ), the Court further observes that the impugned measure provided for the following options to the applicants. Firstly, they could use the parental leave and receive a parental benefit eq ual to their monthly wage . Alternatively, they could continue working and receive a parental benefit which was equal to about a half of their monthly wage.

31 . It appears that the majority of the applicants opted for the second option. Thus, they were not deprived of their right to receive a substitute for the loss of earnings, which, as stated above, was the very essence of the right at issue. Besides, none of them claimed that they had had any obstacles to choose the option which was in their case the most favourable to them. In these circumstances the Court can not see in what manner the applicants were deprived in the very essence of their right to a parental benefit.

32 . In the light of the aforementioned and observing the overall public interests at stake in the respondent State at the material time, the Court finds that the impugned measure was proportional.

33 . It follows that this part of the application s is manifestly ill-founded within the meaning of Article 35 § 3 of the Convention and must be rejected as inadmissible pursuant to Article 35 § 4.

C . Other complaints

34 . The applicant s also alleged violations under A rticles 6, 8 and 14 of the Convention.

35 . In the light of all the material in its possession, and in so far as the matters complained of are within its competence, the Court considers that the remainder of the complaints does not disclose any appearance of a violation of any of the above Articles of the Convention. It follows that these complaints are inadmissible under Article 35 § 3 as manifestly ill-founded and must be rejected pursuant to Article 35 § 4 of the Convention

For these reasons, the Court unanimously

Decide s to join the applications;

Declares the application s inadmissible.

Marialena Tsirli Josep Casadevall              Deputy Registrar              President

Applicant ’ s list

No.

Case no.

Lodged on

Applicant name

date of birth

P lace of residence

The date since the applicants were eligible to a

parental benefit

42923/10

22/07/2010

Ivars Å ULCS

31/05/1980

Riga

March 2009

51500/10

06/09/2010

Janis GRAUDULIS

06/12/1976

Jelgava

April 2009

51831/10

08/09/2010

Rolands VACERS

22/04/1979

Jelgava

April 2009

51844/10

07/09/2010

Armands NOVICKIS

28/07/1962

Riga

February 2009

51848/10

07/09/2010

Arnis MACULEVICS

22/02/1965

Marupes Novads

August 2009

52043/10

06/09/2010

Nauris GRIÅ CENKO

23/02/1971

Ikskile

Marc 2009

52112/10

09/09/2010

Valerijs Å ABANOVS

06/05/1979

Riga

May 2009

52485/10

07/09/2010

Martinš OZERS

15/01/1976

Riga

January 2009

52509/10

06/09/2010

Ingus SLOKA

04/06/1973

Ozolnieki

January 2009

52517/10

06/09/2010

Andris AMATNIEKS

27/02/1976

Ogre

February 2009

52519/10

07/09/2010

Martinš SOLOVJOVS

27/06/1967

Riga

April 2009

52524/10

06/09/2010

Kaspars LAMANIS-JEGERSONS

04/12/1981

Marupe

April 2009

52525/10

06/09/2010

Aleksandrs LEBEDEVS

28/08/1978

Riga

March 2009

52591/10

06/09/2010

Sandris MUKANS

10/03/1977

Riga

December 2008

52598/10

06/09/2010

Ingars ZARINÅ

16/07/1975

Riga

December 2008

52601/10

08/09/2010

Daniils AZARIJEVS

30/12/1980

Riga

April 2009

52610/10

06/09/2010

Agris NEILANDS

30/09/1975

Jurmala

April 2009

52904/10

10/09/2010

Dmitrijs JANSONS

Katlakalns

August 2009

53176/10

08/09/2010

Viktors RAUTMANIS

19/03/1980

Brankas

July 2009

53177/10

08/09/2010

Vairis LEJINÅ

28/08/1972

Riga

May 2009

55265/10

14/09/2010

Diana KAIRIÅ A

12/03/1978

Riga

January 2009

55286/10

14/09/2010

Olga BUMANE

26/06/1980

Jelgava

May 2009

55531/10

14/09/2010

Edgars GROTANS

14/11/1975

Riga

April 2009