3.

As I have noted, the Staff Regulations provide that in orde to be entitled to the payment of the allowance, employees who are nationals of a Member State other than that in which they are employed must fulfil two conditions for an unbroken period of five years (in this case, from 17 November 1976 to 17 November 1981): (a) they must not habe habitually resided within the territory of the State where they are employed; (b) they must not have carried on their main occupation in that State. I should point out that those conditions are concurrent, and not alternative as the applicant argues. Before considering whether those conditions were met in this case, I think it useful to outline the way in which the administrative authority applied Article 4 of Annex VII. The Parliament's representative did not in fact provide the Court with sufficiently clear information on that point. From what we are given to understand, in July 1974 the heads of administration of the major Community institutions decided to give the provision of the Staff Regulations referred to a generous interpretation; they therefore decided to grant the allowance to employees who could show that their residence or employment in the Member State in which they were required to work had been interrupted for a period of six consecutive months, provided that that interruption did not take place at the beginning or at the end of the five-year period. That practice was altered by a decision of the same heads of administration on 18 March 1977. That is, they decided that the condition of six months' absence should no longer be regarded as a mandatory condition for the grant of the allowance but only as a fact which the administration would take into account in determining the habitual residence of the employee. The heads of administration were induced to make that change by the judgment of the Court of 17 February 1976 in Case 42/75, Delvaux v Commission, [1976] ECR 167. That case too concerned entitlement to the expatriation allowance ás provided for by Article 4 (1) (b) of Annex VII to the Staff Regulations. The Court was required to assess, for the purpose of the reference period (10 years in that case), certain periods during which an employee had lived abroad; it held that the employee was not entitled to the allowance and rejected the application since he had “lived outside the State in which he is employed for a period of less than 10 years ending on his entry into the service of the Communities” (paragraph 11). Since the employee had shown that he had lived abroad for more than eight years, it is obvious that the period laid down in the Staff Regulations cannot be derogated from or reduced, and the heads of administration of the Community institutions took note of that fact. It is worth mentioning a further change in the administrative practice regarding the expatriation allowance, which took place in Spring 1981. Until that time it appears that for the purposes of the allowance in question the various Community institutions did not differentiate between employees and their children and spouses. In practice, for the period during which they were resident in the Member State where their parent or spouse was employed (but in the case of children only until they reached 18 years of age), they were deemed not to reside in that State. The Court of Auditors considered that interpretation improper (Special Report on Expatriation and Foreign Residence Allowances, March 1981) and the heads of administration complied with its views. The Court will shortly be called upon to conside the lawfulness of that alteration in Case 246/83, De Angelis v Commission.