Summary
The plaintiff in this case is a man whose unemployment benefits were reduced first by 30% and then by 60% when he declined a proposed employer and later failed to accept a training and trial placement in another role. The man objected to the reductions unsuccessfully, and filed suit in the Social Court. Before rendering a decision, the Social Court stayed the proceedings in order to obtain judicial review from the Federal Constitutional Court (FCC) as to whether or not the sanctions scheme in question is in compliance with the Basic Law. For violating the obligation to cooperate in overcoming or preventing the need for benefits, the sanctions mandated a reduction of benefits by 30% for a first violation, 60% for a second violation within a year, and complete suspension of benefits for any subsequent violations. All of the sanctions are mandatory and last for three months. Specifically at issue was whether the provisions violate Articles 1(1) and 20(1) of the Basic Law which, taken together, are fundamental rights that guarantee a minimum standard of living in line with human dignity.
The FCC first considered the cooperation obligation itself. The court found that the legislature is entitled, under the principle of subsidiarity, to impose a requirement that beneficiaries make reasonable efforts to prevent or eliminate their own need through gainful employment. However, given that the benefits support necessary costs and implicate the fundamental right to human dignity, the legislature’s discretion in reducing the benefits is circumscribed and must be suitable, necessary, and reasonable for achieving the aim of cooperation.
The FCC struck down several parts of the provision as violations of the Basic Law. The first was the mandatory nature of the sanction, which left no discretion for waivers in cases of extreme hardship. The other was the inability to shorten the three-month period, even if the sanctioned individual complied or made a credible declaration of intent to comply (where compliance was impossible). These provisions were both struck down as disproportionate when weighed against the fundamental right of human dignity.
The FCC found that the 30% reduction did not per se violate the Basic Law, but that the 60% reduction and total cut off were, in fact, contrary to it. The Court considered the 30% reduction to be a relatively low burden, finding that the legislature is entitled to assume that a reduction in benefits will induce the legitimate goal of compliance and that less invasive measures would likely not be as effective. Regarding the 60% and total reductions, the FCC emphasized that the legislature’s leeway is circumscribed when fundamental rights are implicated, and found that there was little or no compelling evidence to suggest that these substantial cuts to benefits would be effective or that there were not less invasive methods that would be equally or more effective. Given the size of the larger reductions, and that the benefits in question provide for basic necessities that are crucial to human dignity, the legislature was not permitted to rely on assumptions to justify these provisions.