(Request for a preliminary ruling from the Tribunal Superior de Justicia de Madrid (Spain))
(Directive 98/59/EC Collective redundancies Meaning Termination of an employment contract following the death, retirement or incapacity of the employer)
- By order of 14 July 2008, the Tribunal Superior de Justicia de Madrid (Spain) referred to the Court for a preliminary ruling under Article 234 EC three questions: two on the interpretation of Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies (2) ('the directive' or 'Directive 98/59') and one on the interpretation of Article 30 of the Charter of Fundamental Rights of the European Union and of the 1989 Community Charter of the Fundamental Social Rights of Workers.
- Those questions were raised in proceedings for unlawful dismissal brought by the employees of an undertaking against the heirs of the employer.
- In essence, the Court is called on to clarify, first, whether termination of an employment contract following the death of an employer falls within the concept of collective redundancy as used in the directive; and, second, whether the provisions of the directive, of the Charter of Fundamental Rights of the European Union and of the Community Charter of Fundamental Social Rights preclude legislation of a Member State under which the rules laid down for collective redundancies in particular with regard to determination of the compensation payable to workers who have been made redundant do not apply where the employment contract has been brought to an end following the death of an employer, whilst those rules are applicable to cases where the contract has come to an end as a result of the winding up of a corporate employer.
I Legislative context
A Community law
- Adopted on the basis of Article 100 of the EC Treaty (now Article 94 EC), Directive 98/59, which codified Council Directive 75/129/EEC of 17 February 1975 on the approximation of the laws of the Member States relating to collective redundancies, (3) seeks to enhance the protection of workers by promoting convergence of national provisions 'concerning the practical arrangements and procedures for such redundancies and the measures designed to alleviate the consequences of redundancy for workers'. (4) The aim pursued by Directive 98/59 made clearly apparent in its preamble, in particular in recitals 1, 4, 6 and 7 is to reduce the impact of the differences between the laws of the Member States on the functioning of the internal market and to promote balanced economic and social development in the Community in accordance with the principles laid down by the Community Charter of the Fundamental Social Rights of Workers and by Article 117 of the EC Treaty (now Article 136 EC), according to which:
'The Community and the Member States, having in mind Fundamental Social Rights such as those set out in the European Social Charter signed at Turin on 18 October 1961 and in the 1989 Community Charter of the Fundamental Social Rights of Workers, shall have as their objectives the promotion of employment, improved living and working conditions, so as to make possible their harmonisation while the improvement is being maintained, proper social protection, dialogue between management and labour, the development of human resources with a view to lasting high employment and the combating of exclusion.
To this end, the Community and the Member States shall implement measures which take account of the diverse forms of national practices, in particular in the field of contractual relations, and the need to maintain the competitiveness of the Community economy.
They believe that such a development will ensue not only from the functioning of the common market, which will favour the harmonisation of social systems, but also from the procedures provided for in this Treaty and from the approximation of provisions laid down by law, regulation or administrative action'.
- The scope of the directive is defined in Article 1(1)(a), which states:
'1. For the purposes of this Directive:
(a) 'collective redundancies' means dismissals effected by an employer for one or more reasons not related to the individual workers concerned where, according to the choice of the Member States, the number of redundancies is:
(i) either, over a period of 30 days:
at least 10 in establishments normally employing more than 20 and less than 100 workers,
at least 10 % of the number of workers in establishments normally employing at least 100 but less than 300 workers,
at least 30 in establishments normally employing 300 workers or more,
(ii) or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question.'
- Article 1(1), second subparagraph, provides that '[f]or the purpose of calculating the number of redundancies provided for in the first subparagraph of point (a), terminations of an employment contract which occur on the employer's initiative for one or more reasons not related to the individual workers concerned shall be assimilated to redundancies, provided that there are at least five redundancies'.
- Finally, Article 1(2) lists the cases to which the directive does not apply.(5)
- The second section of the directive, comprising Article 2, gives details of the obligations of information and consultation attaching to an employer intending to effect collective redundancies. The third section, comprising Articles 3 and 4, defines the procedure for collective redundancies. In particular, Article 3 clarifies the duties of employers within the procedure, whilst Article 4 contains provisions concerning the timing of the effects of projected collective redundancies and the role of the competent public authorities in the procedure.
- Mention must also be made of Articles 5 and 6, in the fourth and last section of the directive.
- By virtue of Article 5, the directive 'shall not affect the right of Member States to apply or to introduce laws, regulations or administrative provisions which are more favourable to workers or to promote or to allow the application of collective agreements more favourable to workers.'
- Article 6 goes on to provide that 'Member States shall ensure that judicial and/or administrative procedures for the enforcement of obligations under this directive are available to the workers' representatives and/or workers.'
- Article 30 of the Charter of Fundamental Rights of the European Union provides that '[e]very worker has the right to protection against unjustified dismissal, in accordance with Community law and national laws and practices'.
- Finally, paragraphs 7, 17 and 18 of the Community Charter of Fundamental Social Rights of Workers provide:
'7. The completion of the internal market must lead to an improvement in the living and working conditions of workers in the European Community. This process must result from an approximation of these conditions while the improvement is being maintained, as regards in particular the duration and organisation of working time and forms of employment other than open-ended contracts, such as fixed-term contracts, part-time working, temporary work and seasonal work.
The improvement must cover, where necessary, the development of certain aspects of employment regulations such as procedures for collective redundancies and those regarding bankruptcies.'
'17. Information, consultation and participation for workers must be developed along appropriate lines, taking account of the practices in force in the various Member States.
This shall apply especially in companies or groups of companies having establishments or companies in several Member States of the European Community.
18. Such information, consultation and participation must be implemented in due time, particularly in the following cases:
when technological changes which, from the point of view of working conditions and work organisation, have major implications for the work force are introduced into undertakings;
in connection with restructuring operations in undertakings or in cases of mergers having an impact on the employment of workers;
in cases of collective redundancy procedures;
when trans-frontier workers in particular are affected by employment policies pursued by the undertaking where they are employed'.
B National law
- Pursuant to Article 49(1)(g) of the Estatuto de los Trabajadores (Workers' Statute), an employment contract comes to an end in the following cases:
'By reason of the death, retirement in the cases provided for in the applicable Social Security provisions, or incapacity of the employer, without prejudice to Article 44, or by reason of the extinguishment of the legal personality of the contractor'.
- That provision also states that '[i]n cases of the death, retirement or incapacity of the employer, workers shall be entitled to payment of a sum equivalent to one month's remuneration. In cases of the extinguishment of the legal personality of the contractor, the procedures laid down in Article 51 of this Law must be followed.'
- Article 51 of the Estatuto de los Trabajadores is worded as follows:
'1. For the purposes of this Law, collective redundancy shall mean the termination of employment contracts based on economic, technical, organisational or production grounds, where, over a period of 90 days, the termination affects at least:
(a) 10 workers, in undertakings employing fewer than 100 workers.
(b) 10% of the number of workers in the undertaking in undertakings employing between 100 and 300 workers.
(c) 30 workers in undertakings employing 300 or more workers.
The grounds referred to in this Article shall be deemed to satisfied when the adoption of the proposed measures contributes to overcoming the negative economic situation of the undertaking, where the grounds relied on are economic, or to ensuring the future viability of the undertaking and of employment in that undertaking by means of a more appropriate organisation of resources, where the grounds relied on are technical, organisational or production-related.
Collective redundancy shall also mean a termination of employment contracts affecting the entire workforce of an undertaking, provided that the number of workers affected is greater than five, where the termination occurs as a result of the total cessation of the business activity of the undertaking on the grounds referred to above.
In order to calculate the number of terminations of contracts for the purposes of paragraph 1 of this article, account shall also be taken of any other terminations which occurred within the reference period on the initiative of the employer, for other reasons not related to the individual workers concerned and different from the grounds provided for in Article 49(1)(c) of this Law, provided that the number of terminations is at least five. Where, over successive periods of 90 days and for the purposes of avoiding the requirements of this article, an undertaking terminates, under Article 52(c) of this Law, contracts the number of which is lower than the thresholds indicated, in the absence of any new grounds justifying such action, those new terminations shall be deemed to be effected in circumvention of the law and shall be declared null and void.
2. An employer who intends to effect a collective redundancy must seek authorisation for the termination of employment contracts in accordance with the employment regulation procedure provided for in this Law and in its implementing provisions. The procedure shall be commenced by a request made to the competent employment authority and the simultaneous initiation of a period of consultation with the workers' legal representatives.
...
8. Workers whose contracts are terminated under this article shall be entitled to compensation of 20 days' remuneration for each year of service, periods shorter than a year being calculated pro rata on a monthly basis up to 12 monthly payments.
...'.
- According to Article 55(1) of the Estatuto de los Trabajadores:
'Notice of the redundancy must be given to the worker in writing, with details of the circumstances giving rise to it and the date from which it is to take effect. Collective contracts may lay down other formal requirements concerning redundancy'.
- Article 122 of the Ley de Procedimiento Laboral (Law on employment procedure) provides as follows:
'1. The decision to terminate shall be declared fair where the employer has complied with the applicable procedural requirements and provides proof of the existence of the legal ground stated in the written notice. If the employer fails to provide proof, the decision shall be classified as unfair.
2. The decision to terminate shall be void where:
(a) the legal formalities pertaining to the written notice, including a statement of the ground of dismissal, have not been satisfied;
(b) the compensation due has not been made available to the worker, except in cases where that condition is not required by law;
(c) the decision is discriminatory or contrary to the fundamental rights and public freedoms of the worker;
(d) the decision was taken in circumvention of the law, without regard to the provisions laid down for collective redundancies, in the cases referred to in the final subparagraph of Article 51(1) of the recast version of the Law on the Estatuto de los Trabajadores.'
- Under Article 123 of that Law:
'1. If the judgment holds that the employer's decision is fair, the employment contract shall be ruled to be terminated and, where applicable, the employer shall be ordered to pay to the employee any shortfall which may exist between the compensation the employee might already have received and the compensation to which he is legally entitled, together with any shortfall relating to remuneration for the notice period in cases where that period was not fulfilled.
2. If the judgment holds that the decision to terminate is unfair or void, an order shall be made against the employer in the terms provided for in cases of disciplinary dismissal ...'.
- Article 56(1) of the Estatuto de los Trabajadores, concerning disciplinary dismissal , provides that:
'1. Where the dismissal is held to be unfair, the employer, within five days of notification of the judgment, may choose either to reinstate the worker and pay 'salarios de tramitación'(wages for the period between dismissal and the disposal of proceedings challenging that dismissal), as provided for in point (b) of the present subparagraph, or to pay the following sums, which must be determined by the judgment:
(a) compensation equivalent to 45 days' remuneration for each year of service, periods shorter than a year being calculated pro rata on a monthly basis up to 42 monthly payments;
(b) an amount equivalent to the remuneration payable with effect from the date of dismissal up to the date of notification of the judgment holding the dismissal to be unfair or up to the date on which the worker finds another job, if he is recruited before the delivery of the judgment and if the employer provides evidence of the sums paid so that they can be deducted from the 'salarios de tramitación''.
II Facts, the main proceedings and the questions referred to the Court of Justice
- Mr Rodríguez Mayor and six other persons, the appellants in the main proceedings ('the appellants'), were employees of the undertaking Rafael de las Heras Dávila.
- In the period from 30 April to 5 May 2004, when they arrived at work the appellants found that the premises where they were employed had been closed. Considering that they had been constructively dismissed, they brought proceedings against their employer, Mr Rafael de las Heras Dávila, who had died intestate on 1 May 2004. Since all the legal heirs of the deceased had declined to inherit the estate, the proceedings continued against the estate in abeyance and the Fondo de Garantía Salarial (Wages Guarantee Fund), which was joined as a party.
- It is common ground that, following the death of Rafael de las Heras Dávila, the undertaking ceased business entirely.
- On 22 June 2007, the trial court rejected the applicants' claims after finding that there had been no dismissal and that the employment relationship had come to an end as a result of the employer's death, as envisaged in Article 49(1)(g) of the Estatuto de los Trabajadores.
- The applicants appealed against that decision to the Tribunal Superior de Justicia de Madrid ('the Tribunal Superior de Justicia'). They contended that the heirs of Mr de las Heras Dávila had failed, in breach of Article 55(1) of the Estatuto de los Trabajadores, to notify the dismissal decision to them. They also complained that they had received no communication regarding their employer's death and the intention of his heirs not to continue the business of the company.
- The appellants' main claim before the Tribunal Superior de Justicia was for a finding of unlawful dismissal and an order that the respondents pay them compensation equivalent to 45 days' wages for each year of service, arrears of wages from the date of dismissal until notification of the forthcoming appellate judgment holding the dismissal to be unfair or until such time as they were reinstated. In the alternative, they requested a finding that the employment contract had been brought to an end by the death of the employer within the meaning of Article 49 of the Estatuto de los Trabajadores and that compensation should be awarded in accordance with that provision.
- By decision of 17 May 2008, the Tribunal Superior de Justicia requested that the parties and the Public Prosecutor's Office submit observations concerning the possibility that Article 49(1)(g) of the Estatuto de los Trabajadores might be contrary to Community law.
- After the appellants and the Public Prosecutor's Office had submitted their observations, the Tribunal Superior de Justicia made an order on 16 July 2008 ('the order for reference') expressing the view that it was necessary, in order to enable it to give judgment, to seek a preliminary ruling from the Court of Justice.
- In the order for reference, the Tribunal Superior de Justicia observed that, under Spanish law, where employment contracts of workers in an undertaking come to an end as a result of the death, retirement or incapacity of an employer, the compensation received by each employee amounts to one month's wages, regardless of length of service, whereas in the case of the cessation of business of an undertaking run by a legal person, the compensation is commensurate with the worker's period of employment in the undertaking and may be as much as 45 days' wages for each year of service.
- The referring court considered that difference of treatment unjustified and queried whether it was compatible with Community law.
- In the first place, it observed that, on the basis of the case-law of the Court of Justice, the termination of the employment contracts of the entire workforce of undertaking as a result of the employer's death amounts to a case of collective redundancy within the meaning of the directive; (6) and by limiting the concept of collective redundancy to dismissal on economic, technical, organisational or production grounds and by not extending it to all dismissals for reasons not relating to the worker personally, the Spanish legislation infringed the directive.
- The national court went on to state that the directive does not make any distinction based on the legal nature of the employer and does not make it possible to treat differently two situations which involve the same consequences for the worker; in its view, it would not therefore be compatible with the obligation imposed on the Member States by Article 6 of the directive to exempt the employer or his heirs, in a case such as the present one, from the obligation to fulfil the formalities laid down for cases of collective redundancy and relieve him or them of the obligation to pay compensation for the harm suffered by the worker through loss of employment.
- Second, the Tribunal Superior de Justicia considered that a provision whereby, in cases of termination of employment contracts as a result of the employer's death, compensation was limited to one month's wages regardless of the employee's length of service, did not, under domestic law, afford workers protection consistent with that provided for by Article 30 of the Charter of Fundamental Rights of the European Union and the provisions of the Community Charter of the Fundamental Social Rights of Workers.
- Faced with those issues of Community law, the national court considered it necessary to stay its proceedings and seek a preliminary ruling from the Court of Justice under Article 234 EC on the following questions:
'1. By restricting the definition of collective redundancies to dismissals on economic, technical, organisational or production grounds and by failing to extend the definition to dismissals for any reason not related to the individual workers concerned, does Article 51 of the Spanish Estatuto de los Trabajadores fail to fulfil the obligations imposed in Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies?
2. Is the legal rule in Article 49(1)(g) of the Estatuto de los Trabajadores, which establishes for workers who lose their jobs as a result of the death, retirement or incapacity of the employer compensation limited to one month's remuneration, excluding them from the scope of Article 51 of the Statute and failing to comply with Articles 1, 2, 3, 4 and 6 of the Directive, also contrary to Council Directive 98/59/EC?
3. Does the Spanish legislation on collective redundancies, and specifically Articles 49(1)(g) and 51 of the Estatuto de los Trabajadores, infringe Article 30 of the Charter of Fundamental Rights of the European Union and the Community Charter of the Fundamental Social Rights of Workers adopted at the European Council meeting held in Strasbourg on 9 December 1989?'
- Written submissions were submitted, in accordance with Article 23 of the Statute of the Court of Justice, by the Spanish, Hungarian and United Kingdom Governments and by the Commission.
III Arguments of the parties
- The Spanish Government and the Commission raise a preliminary objection as to the admissibility of the reference for a preliminary ruling, observing that the numerical thresholds laid down for applicability of the concept of collective redundancy within the meaning of the directive were not reached in the present case. The Commission also observes that the Spanish legislation, by means of a provision which is more favourable to workers, assimilated to collective redundancy 'redundancies' (sic) (7) which also affect a smaller number of workers but considers that, in so far as a Member State has voluntarily decided to apply the national rules transposing the directive to cases not falling within the scope of the directive, it cannot be criticised for not having included in such cases the death of the employer. Finally, according to the Spanish Government, a ruling by the Court of Justice is not necessary to enable the national court to give judgment in the main proceedings, in which the dispute concerns not the fact or otherwise of collective redundancy but rather the illegality of the dismissal of the appellants or, in the alternative, the termination of the appellants' contracts as a result of the employer's death, and the award of severance pay provided for in those two cases.
- As regards the substance, the Spanish Government observes, with regard to the first question submitted that there is an ontological distinction between the general concept of termination of an employment contract and the more specific concept of redundancy: redundancy is brought about by the will of the employer and not by circumstances outside his control, as occurs in other cases of termination of the employment contract. The fact that a redundancy occurs irrespective of the wishes of the worker does not necessarily imply that it reflects the wishes of the employer: for that reason, it cannot be concluded that what occurs when an employer dies without resumption of his business activity amounts to a redundancy. The case-law of the Court of Justice, which includes within the concept of redundancy cases of termination of an employment contract brought about by circumstances outside the control of the employer, does not extend to all cases of termination of employment contracts not sought by the employer. Furthermore, that case-law, formulated in the context of Treaty-infringement proceedings against Portugal, is not applicable to the preliminary question submitted by the Tribunal Superior de Justicia, which concerns the interpretation of Article 51 of the Estatuto de los Trabajadores, a provision which, in contrast to the Portuguese legislation, does not limit cases of redundancy to economic circumstances but extends them to other cases, such as force majeure and all causes unconnected with the worker personally.
- According to the Spanish Government, since the thresholds for applicability of the directive have not been reached in the present case, the only circumstances which might possibly be relevant would be those provided for in the last subparagraph of Article 1(1) of the directive, which treats as collective redundancy termination of the contracts of all workers in an undertaking, provided that there are at least five and provided that such termination takes place 'on the employer's initiative' and 'for one or more reasons not related to the individual workers concerned'. The case of termination of the employment contract as a result of the employer's death cannot come within the scope of that provision, because, whilst it is true that there are no grounds here which do not concern the workers personally, there is nevertheless no initiative on the part of the employer; accordingly, this case is not one of collective redundancy.
- The difference between collective redundancy and termination of an employment contract as a result of the employer' death which is reflected by different legal treatment for the two cases also derives, in the Spanish Government's opinion, from a teleological interpretation of the directive: in reality, the fulfilment of procedural requirements, and of the obligations of consultation of and information for workers provided for therein, presupposes the adoption, by the employer, of a decision to effect collective redundancies. In the event of the employer' death, without any resumption of business activity and thus in the absence of someone who can take charge of it the formalities laid down by the directive for the protection of dismissed workers cannot be materially fulfilled.
- With regard to the second question submitted, the Spanish Government accepts that the national legislation provides for rules, concerning severance allowances, which differ according to whether the termination of employment contracts follows on from cessation of the business activity of a natural or of a legal person, by reason of the fact that in the latter case there is nevertheless a decision to cease business, which makes it possible to bring about termination of employment contracts, whereas no such decision exists in the case of the death of an employer, where business activity is not resumed. In both cases, however, the protection of workers is sufficiently guaranteed in domestic law by the obligation to pay compensation, albeit of differing amounts.
- With regard to the third question submitted, the Spanish Government considers that the national rules on collective redundancy are not inconsistent with the Charter of Fundamental Rights of the European Union or with the Community Charter of the Fundamental Social Rights of Workers: the principles enunciated in those instruments are in fact protected within the Spanish legal order, including at constitutional level.
- With regard to the first question submitted, the Hungarian Government, whilst taking the view that the case-law of the Court of Justice has extended the concept of collective redundancy within the meaning of the directive to cases where an employer dies and his business is not continued, adds that it is nevertheless necessary to verify whether the national legal order imposes, in the event of the employer's heirs declining to accept the estate, an obligation on the heirs or on a public authority to carry on the business. Only in such a case, in fact, would it be possible to identify the subject responsible for fulfilling the procedural requirements and the obligations of consultation and information provided for by the directive, so as to bring the case of an employer's death within the scope of the directive. In fact, the directive provides, for there to be a case of collective redundancy, not only that the redundancy is attributable to 'one or more reasons not related to the individual workers concerned' but also that the redundancy is 'effected' by the employer: that concept calls for active and forceful conduct on the part of the employer.
- So far as concerns the second and third questions submitted, the Hungarian Government considers that it is incumbent on the Member States to regulate severance allowances in the event of termination of an employment contract and that national legislation which, with justification, provides for different treatment for workers depending on whether they are employed by a natural person or by a legal person cannot be regarded as contrary to the Charter of Fundamental Rights of the European Union or the Community Charter of the Fundamental Social Rights of Workers.
- The United Kingdom Government focuses its observations on the third question submitted, observing, first, that the Nice Charter is not a blinding legal instrument and cannot therefore be 'infringed'. Second, regardless of the legal effects of the Charter, in cannot in any event be the source of Community law on collective redundancies, but rather merely confirms certain fundamental rights regarding the protection of workers already provided for in national legislation and the acquis communautaire, including directives concerning employment.
- The Commission considers that the first preliminary question can be answered in the light of the case-law of the Court of Justice, which interprets the concept of redundancy within the meaning of the directive as extending to all terminations of employment contracts not desired by the worker, without its being necessary for the reasons for redundancy to reflect the wishes of the employer, including, specifically, the case of an employer's death without resumption of his business.
- As regards the second question, the Commission emphasises that the directive does not effect complete harmonisation of the conditions for collective redundancies, but merely imposes on employers the obligation to consult workers and inform the competent public authority before effecting a collective redundancy, and does not impose any obligation to compensate workers, still less determine the amount of compensation. The Commission recognises that, to the extent to which a difference of treatment between workers regarding severance allowances is not objectively justified and is therefore to be regarded as discriminatory, a provision of national law may conflict with fundamental rights which the Court of Justice upholds as principles of Community law, which include the principles of equal treatment and non-discrimination. Since, however, determination of severance allowances is a matter reserved exclusively to the Member States, the Court of Justice has no jurisdiction to rule as to any breach of those principles resulting from a difference of treatment noted by the national court. Consequently, it is not necessary to give a ruling on the third question: not only are the statements recorded in the Charter of Fundamental Rights of the European Union and the Community Charter of the Fundamental Rights of Workers not legally binding, serving rather to confirm the existence and clarify the scope of general principles of Community law, but in addition those principles cannot in any case be considered applicable to the present case since the question of compensation payable to workers under Spanish legislation in cases of collective redundancy does not fall within the scope of Community law.
IV Legal analysis
A The first and second questions, considered together
1. Admissibility
- The first preliminary question, as framed by the referring Court, cannot be regarded as admissible since, in these proceedings, the Court of Justice cannot be called on to give a ruling on the compatibility of State legislation with the directive, but only on the interpretation of the latter; the question may be regarded as admissible only if it is construed as seeking interpretation of the term 'redundancy' used in Article 1 of Directive 98/59 and, in particular, clarification as to whether that concept includes cases of termination of an employment contract resulting from the death of an employer where, in the event of the legal heirs to the estate declining to accept it, such death gives rise to complete cessation of the undertaking's business.
- The same must be said with regard to the second question, by which, essentially, the referring court asks the Court of Justice to verify the compatibility with the directive of a provision of the Estatuto de los Trabajadores which, in the case of the death of an employer, provides for severance allowances for employees which are lower than those received in the event of a collective redundancy.
- In that connection, however, I would observe that Directive 98/59 does not completely harmonise the laws of the Member States on collective redundancies. Although connected with the objectives pursued by the Community and the Member States of promoting employment and better living and working conditions, as referred to in the EC Treaty in what is now Article 136 on the basis of the 1989 Community Charter of the Fundamental Social Rights of Workers, it confines itself to pursuing those objectives by requiring the Member States to oblige undertakings, in cases of collective redundancies, to follow procedures regarding information, consultation, notification and participation, in such a way as to protect employees by reducing as far as possible the risk of their losing their jobs.
- The directive adds to this only a requirement on the Member States to ensure that workers' representatives and/or the workers themselves have access to administrative and/or judicial procedures to enforce compliance with the obligations referred to in the foregoing paragraph. However, it leaves the Member States to determine the consequences of non-fulfilment of the obligations which it requires those States to impose on undertakings and, more generally, the compensation which must be paid to a worker affected by collective redundancy or by termination of an employment contract that may be equated to redundancy.
- If the first question is considered alongside the second one, it is clear that the first relates strictly to the solution of the problems outlined in the second one and that the request from the national court in essence seeks clarification of the legality of the State legislation to which it refers. But, in the light of the remarks made in the foregoing paragraph, the Court of Justice cannot do so.
- In the spirit of cooperation with national courts provided for in Article 234 EC, the Court of Justice may consider the request for a preliminary ruling to be admissible and therefore give a ruling only if it takes the view that clarification of the concept of redundancy, referred to in point 47 above, is sought from it on the basis (the correctness of which is not a matter for the Court of Justice to ascertain) that the Spanish legislature, in adopting the provisions of the Estatuto de los Trabajadores that provide for compensation for workers affected by collective redundancy, intended to rely on the same concept of collective redundancy and therefore, as far as the payment of such compensation is concerned, protect the same workers as those referred to in Directive 98/59.
- Now, that makes sense because, if Directive 98/59 is construed as not applying to the termination of an employment contract in the event of the death of an employer whose heirs do not accept his estate, that clarification may enable referring courts to interpret Spanish law provided that they have framed their question on the basis indicated and that they are correct to do so and could, at the same time, contribute to the uniform interpretation of Community law.
2. Substance
- From the account of the facts of the case in the order for reference, it might appear that termination of the appellants' employment contract is not attributable to the redundancies and terminations of employment contracts that can be assimilated thereto, falling within the scope of the directive; given, in fact, that the directive, in Article 1(1)(a)(ii), provides that ''collective redundancies' means dismissals effected by an employer for one or more reasons not related to the individual workers concerned where ... the number of redundancies' is at least 20, whatever the number of workers normally employed in the establishments in question, it may in fact be concluded that the employment contracts entered into with the undertaking of Mr de las Heras Dávila do not fall within its scope because the employer had only seven people working for him.
- We must, however, ask whether, with reference to the characteristics of the case with which the main proceedings are concerned, the interpretative problem that must be tackled in order to give an answer to the referring court relates only to the first subparagraph of that Article 1(1) since (1) it is closely linked to the second subparagraph of that provision, according to which, '[f]or the purpose of calculating the number of redundancies provided for in the first subparagraph of point (a), terminations of an employment contract which occur on the employer's initiative for one or more reasons not related to the individual workers concerned shall be assimilated to redundancies, provided that there are at least five redundancies', and (2) the case-law of the Court of Justice dealing with the concept of collective redundancy used in the directive has attributed to that concept an interpretation which leads to a wider application of that second subparagraph than is apparent from its wording.
- The concept of collective redundancy has so far been interpreted in two pronouncements of the Court of Justice: one is the abovementioned judgment in Case C-55/02 relating to the directive at issue in the present case (98/59), and the other is the judgment in Case C-187/05, (8) relating to Directive 75/129/EEC.
- The first case involved Treaty-infringement proceedings in which the Commission complained, among other things, of non-implementation by Portugal of the first subparagraph of Article 1(1) of Directive 98/59 and did not mention the number of persons dismissed; in the second case, a preliminary ruling was requested by a Greek court concerning the interpretation of Article 1(1)(a) of Directive 75/129 and more specifically the possibility of construing that provision as excluding from the scope of that directive dismissals resulting from decisions definitively bringing an undertaking's business to an end which are within the control of the employer alone and which the Greek case-law regards as representing an expression of economic and financial freedom guaranteed by the constitution. (9)
- Both Directive 98/59, in Article 1(1) (a), and Directive 75/129, in Article 1(1)(a), for the purpose of defining collective redundancies in order to determine their scope, make it clear that what is involved must be 'dismissals effected by an employer for one or more reasons not related to the individual workers concerned'. They differ, however, by virtue of the fact that in the first case and not in the second, Article 1(1) is accompanied by a second subparagraph in which it is stated that '[f]or the purpose of calculating the number of redundancies provided for in the first subparagraph of point (a), terminations of an employment contract which occur on the employer's initiative for one or more reasons not related to the individual workers concerned shall be assimilated to redundancies, provided that there are at least five redundancies'.
- In its judgment in case C-187/05, the Court, called on to rule only with reference to Directive 75/29, was able to confine itself to considering the expression 'dismissals effected by an employer' solely in the context of Article 1(1)(a) of that directive.
- In its judgment in case C-55/02, however, it was faced with the problem of construing the expression in question in the light of the meaning to be attributed to it by comparison with the expression contained in the second subparagraph of Article 1(1) of Directive 98/59. The Court of Justice might therefore have asked itself whether the Community legislature gave to the expression 'dismissals effected by an employer' the same meaning as, in the second subparagraph, it gave to the expression 'terminations of an employment contract which occur on the employer's initiative '.
- In its judgment in Case C-55/02, the Court did not in fact ask that question. It may rightly be concluded that it did not do so because the charge made by the Commission against Portugal, as indicated earlier, made no reference to the number of persons dismissed and therefore the clarification contained in that second subparagraph might prove, in view of its specific nature, to be a special provision having no bearing on the finding that the Court was to make.
- That question must however be asked in the case now before the Court, in which the number of persons whose employment was terminated is fewer than 20 (that is to say, the number of dismissals set for the directive to be applicable by virtue of Article 1(1)(a)(ii)) but more than 5 (that is to say, the number of dismissals which, by virtue of the first subparagraph of Article 1(1), may, by way of derogation from subparagraph (a), trigger the application of the directive).
- In its judgment in case C-55/02, the Court, giving judgment regarding the infringement attributed by the Commission to Portugal, construed the expression 'dismissals effected by an employer for one or more reasons not related to the individual workers concerned' as 'any termination of contract of employment not sought by the worker, and therefore without his consent'. (10) It thus omitted to consider whether the dismissed was effected by the employer, depriving the latter's conduct of any relevance.
- We cannot fail to ask whether the Court's exclusion of the relevance of the conduct or the wishes of the employer in its judgment in case C-55/02, given that it was based on grounds linked to Article 117 of the EC Treaty (now Article 136 EC), must be regarded as intended to have an effect also on the interpretation to be attributed to the second subparagraph of Article 1(1) of Directive 98/59.
- The answer to this question depends of course on an assessment of the extent to which the statement by the Court in the Treaty-infringement proceedings (Case C-55/02 Commission v Portugal) (11) can be endorsed and whether it is applicable in the case now being considered by the Court.
- In the case now before the Court of Justice, the central issue reformulated in the terms indicated in point 47 above is that of determining the interpretation to be attributed to the term 'redundancy' in Article 1 of the directive and, in particular, of clarifying whether that concept also embraces cases of termination of employment contracts by reason of the employer's death. In order to do so, as indicated in the foregoing point, it is necessary to take as the starting point an analysis of the judgment of the Court of Justice of 12 October 2004 in Case 55/02 Commission v Portugal and to consider whether or not the dicta of the Court may be used for the purposes of the answer to be given to the Spanish court.
- As indicated earlier, that case concerned Treaty-infringement proceedings in which the Commission alleged that the concept of collective redundancy in Portuguese law did not include all the types of collective redundancy envisaged by the directive, with the result that Portuguese law did not protect workers in cases where the termination of an employment contract resulted from bankruptcy, winding up and similar procedures in other words, following a judicial decision or in cases of expropriation, fire or other cases of force majeure, or cases where an undertaking ceased trading following the death of the owner. For its part, the Portuguese Government defended itself by contending in particular that certain terminations of employment contracts not attributable to the will of the employer do not constitute collective redundancy. (12)
- Dealing with that difference of views, in his Opinion of 11 March 2004 in that case, Advocate General Tizzano first of all suggested that the Court take account of the fact that (1) the concept in question must be interpreted autonomously and uniformly, (2) it must be construed in accordance with the directive's aim of enhancing the protection of workers and (3) any limitation on the scope of the protection provided for by the directive must clearly derive from the text, and that criterion must be applied to any interpretation which purports to deprive workers of protection under the directive in cases where cessation of the employment relationship is imposed by circumstances outside the control of the employer.
- However, Advocate General Tizzano then made the important point to the Court that the ninth recital to Directive 98/59 and Article 3(1), second subparagraph, thereof show that 'the termination of an employment relationship arising from a judicial decision is covered by the definition of collective redundancy in' that directive. On that basis, he went on to indicate to the Court that 'one cannot talk of redundancy as being 'voluntary'' and that 'redundancy within the meaning of the directive does not necessarily require a voluntary termination'. (13) Consequently, he went on to conclude that ''redundancy' within the meaning of the Directive includes any termination of the employment relationship not desired by the worker', (14) including terminations of the employment contract about whose omission from Portuguese legislation the Commission complained, namely those following a declaration of bankruptcy, winding up and similar procedures, expropriation, fire and other cases of force majeure, and also an undertaking's cessation of trading following the owner's death. (15)
- The Court of Justice specifically adopted the approach taken by the Advocate General and, in support of his reasoning, it added that the directive, as initially worded, that is to say Directive 75/129, provided in Article 1(2)(d) that it did not apply to workers affected by cessation of the undertaking's business following a judicial decision. That article allowed a derogation from the rule in Article 1(1)(a) of that directive, in which it was stated, in terms identical to those of the same provision in Directive 98/59, that, for the application of the directive, 'collective redundancies' means dismissals effected by an employer for one or more reasons not related to the individual workers concerned. That exception would not have been needed had the concept of 'redundancy' taken the form of a 'willed act of the employer'. (16)
- As is clear from the ninth recital to Directive 98/59, the derogation provided for in Article 1(2)(d) of Directive 75/129 has been removed. It was that negative aspect, represented by that removal, and the positive aspect represented by the ninth recital to Directive 98/59, which the Advocate General highlighted, that prompted the Court to hold that particular conduct on the part of an employer is not an essential precondition for there to be collective redundancy within the meaning of the directive.
- But the repeal of the provisions contained in Article 1(2)(d) of Directive 75/29, according to which termination of a contract of employment following a judicial decision did not constitute collective redundancy within the meaning of the relevant Community rules, amounts to a manifestation only of the fact that such a termination of an employment contract can no longer be regarded as being excluded from the scope of the Community rules and not the manifestation of a wish to say that, for the purpose of establishing a case of redundancy required for application of the directive, no importance can be attached to a circumstance which in broad terms falls within the same classification as conduct of the employer.
- The general conclusion drawn, first by the Advocate General and then by the Court, from the new development represented by the removal of the provisions of Article 2(1)(d) of Directive 75/159, as indicated above, was strongly supported by a teleological interpretation of the new directive to the effect that it seeks to improve the protection of workers and enhance their living and working conditions. But to allow such an interpretation of the directive to be inferred, which involves extending its scope, (17) the view must be taken that the teleological interpretation can prevail over, and deprive of significance, the fact that Article 1(1)(a) of Directive 98/59 provides that collective redundancy within the meaning of the directive means any dismissal effected by an employer.
- Both the Advocate General and the Court of Justice considered themselves entitled to do so because they clearly took the view that the new approach, embodied in the relevant rules by the insertion in the EC Treaty of Article 117 (now Article 136 EC), was so incisive as to deprive that fact of any significance. (18)
- But the case now before the Court of Justice cannot fail to alert it to the fact that the delimitation of the scope of Directive 98/59 derives not only from Article 1(1)(a) thereof but also from the last subparagraph of Article 1(1) in which unequivocal importance is attached to the conduct of the employer so as to extend the scope of the directive.
- We cannot fail to question how, by interpreting one of two subparagraphs of a single provision of the directive the provision represented by Article 1(1) of Directive 98/59 that subparagraph can be perceived as obscuring the reference made in it to the need for there to be certain conduct by a person in this case, the employer in order for the provisions of that same subparagraph to be able to be operative, when conduct by the same person is envisaged in order for the second subparagraph to come into operation.
- Only one possibility can prevail: either the conduct of the person in question is to be ignored for the interpretation of both subparagraphs or else a degree of importance, not necessarily the same, must be attached to it in both cases.
- It is clear that, if the first course were to be followed, the question submitted by the national court, as reformulated in point 48, would have to be answered to the effect that the directive is the expression of a high standard of treatment to be applied to employees of the kind in relation to whom the national court is called on to give a decision: a standard, in other words, of which that court could take account, in the sense indicated in point 53, when interpreting its own domestic legislation.
- But that course cannot be followed because, however much importance is attributed to the impact which the insertion of Article 136 EC in the EC treaty may have had on the interpretation to be given to Article 1(1) of Directive 98/59, both subparagraphs thereof being taken into account, it is not possible to arrive at that result because that would deprive of any useful effect the entire difference of treatment which, on the basis of an assessment which, as I shall indicate below, (19) cannot be regarded as other than secondary, it makes between two types of employer.
- Following the other course, however, does not necessarily mean that the employer's conduct must be seen as having the same importance for the purposes of the interpretation of Article 1(1)(a) and the second subparagraph of Article 1(1).
- As regards the meanings to be attributed to the expression 'dismissals effected' and to the expression 'terminations of an employment contract which occur on the employer's initiative', whilst it is true that there is a common factor in that both events must arise from a course of conduct or, in any event, from a circumstance attributable to the employer, it is also true that the second expression implies a direct, rather than a qualified, manifestation of his will, because it is characterised by a particularly active role on his part in taking the initiative.
- Moreover, the fact that the Community legislature so specifically referred to the conduct of the employer, as provided in the second paragraph, cannot be indicative of anything other than a wish to regard both as species of a single genus.
- As a result, it is understandable that in its judgment in Commission v Portugal, the Court of Justice considered Portugal to be in default because, in contrast to the requirement of the ninth recital to Directive 98/59, it implemented the directive without ensuring compliance with the procedural obligations laid down therein, at least so far as concerns terminations of employment contracts following a judicial decision: where there are redundancies or terminations of employment contracts arising from a judicial decision, they occur as a result of substitution of a judge for the employer and therefore may, in a wide sense, be attributable to the same sphere as the conduct of the employer (and it may also be thought that it was for that reason that the Community legislature, when repealing the exclusion from the concept of collective redundancies subject to Community rules of those deriving from a judicial decision provided for by Directive 75/29, did not feel the need to remove from the text of Article 1(1)(a) of what is today Directive 98/59 the expression 'effected by an employer'). Logically, however, the same thing cannot be said in relation to the death of an employer and in particular in relation to a death in circumstances like those in relation to which the Court is now called on to give a decision, where although not expressly indicated in the questions submitted by the national court but clearly apparent from the case file there are no successors to the estate of the deceased employer since his potential heirs have declined to accept it and he is not replaced, by virtue of the legal order of a Member State, by a public authority.
- If close attention is paid to the nuances which must be borne in mind in establishing the attributability of the redundancy to the employer, together with the fact that the second subparagraph of Article 1(1) was inserted in Directive 98/59 at the same time as the exclusion from the relevant rules on terminations of employment contracts following a judicial decision was repealed, we cannot fail to regard those two facts as being indicative of a will on the part of the Community legislature to provide for enhanced protection of workers, while at the same time applying criteria which vary according to the characteristics of the undertakings in which they are employed.
- There is then room to conclude that the Community legislature, in determining the procedures for the dismissal of workers, did not adopt an undifferentiated standard for their treatment, which could be taken into account by the national legislature in interpreting the rules which remain within its exclusive purview in determining the compensation due to dismissed workers, but indicated an orientation according to which their protection must, or at least may, be differentiated having regard to the characteristics and/or the conduct of the employer and in any event having regard to the fact that an event causing termination of the contract, such as that mentioned by the referring court, is not in any way attributable to the employer's area of responsibility.
B Partial conclusions on the first and second questions, taken together
- The request from the Tribunal Superior de Justicia for a preliminary ruling may be regarded as admissible only in so far as it is construed as seeking clarification of the concept of 'redundancy' used in Article 1 of the directive on the assumption (the correctness of which is not a matter to be decided by the Court of Justice) that the Estatuto de los Trabajadores, governing severance allowances, intended to reproduce it.
- Directive 98/59 does not preclude the provisions contained in Article 51 of the Estatuto de los Trabajadores in so far as it merely provides for approximation of the laws of the Member States on collective redundancies as regards the procedure to be followed in that matter, leaving rules governing the compensation to be paid to workers as a matter exclusively for the Member States.
- In interpreting Directive 98/59, the fact cannot be ignored that it is intended to lay down procedures to be applied to redundancies which are in a broad sense attributable to an employer, such as those deriving from an order of a judge acting in the stead of the employer; it cannot be inferred that it imposes the redundancy procedure that it establishes in relation to cases in which termination of the employment contract follows the death of an employer whose estate remains in abeyance because his heirs decline to accept it and no provision of the legal order of a Member State appoints a public authority to act in his place.
- Directive 98/59, by providing that the Member States are to require application of the procedures for which it provides in relation to redundancies attributable to undertakings which employ a specified number of workers and limiting that number only where the redundancy takes place specifically on the initiative of the employer, excludes the application of those procedures and therefore takes a less rigid approach in situations such as those in which termination of an employment contract occurs following the death of an employer whose heirs do not accept the estate and the deceased is not replaced by a public authority by virtue of a provision of the legal order of a Member State.
C The third question
- By its third question, read in the light of the order for reference as a whole, the referring court seeks a ruling from the Court of Justice as to the compatibility of the Spanish rules on collective redundancies with Article 30 of the Charter of Fundamental Rights of the European Union (20) and with the Community Charter of the Fundamental Social Rights of Workers, adopted by the European Council in Strasbourg on 19 December 1989, in so far as those rules give rise to a difference of treatment between workers regarding severance allowances.
- In line with what I have said regarding the first and second questions referred to the Court, this third question, as framed, cannot be examined since its subject-matter, as indicated in points 49 and 50 above, is not governed by the directives relevant to this case and, moreover, as observed by the Commission, since determination of severance allowances accruing to dismissed workers remains within the exclusive competence of the Member States, the principles of equal treatment and non-discrimination cannot be applied here. The request for a ruling can only be considered if it is treated as a request for clarification of the importance to be attached to Article 30 of the Charter of Fundamental Rights of the European Union and to the Community Charter of the Fundamental Social Rights of Workers in order to clarify what kind of favourable treatment of workers is imposed by Community law on employers in relation to the procedures to be followed in cases of collective redundancies.
- But those instruments, although potentially important for the interpretation of Community law, are not relevant to the ruling sought by the national court, not only because of the considerations set out in point 85 above but also because they contain no provisions relating to those procedures.
V Conclusion
- In the light of the foregoing considerations, I suggest that the Court give the following answer to the questions on which the Tribunal Superior de Justicia seeks a preliminary ruling:
(1) The concept of 'redundancy' used in Article 1 of Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies does not cover cases of termination of employment contracts brought about by the death of the owner of the undertaking, whose lawful heirs decline to accept his estate, where such death gives rise to complete cessation of business activity and no provision of the legal order of a Member State appoints a public authority to replace the employer and fulfil his obligations under the directive.
2) Directive 98/59 merely provides for approximation of the laws of the Member States regarding collective redundancies in relation to the procedure to be followed in that regard, leaving rules on the compensation to be paid to workers as a matter exclusively for the Member States. The directive does not therefore preclude a provision of national law which, in the event of termination of an employment contract following the employer's death, prescribes payment of a severance allowance which is lower than that which the worker would receive in the case of collective redundancy.
3) Article 30 of the Charter of Fundamental Rights of the European Union and the Community Charter of the Fundamental Social Rights of Workers, given the general nature of the principles which they expound, cannot contribute to clarification of the scope of the redundancy procedures provided for by Directive 98/59, since those instruments contain no provisions relating to such procedures.
1 Original language: Italian.
2 OJ 1998 L 225, p. 16.
3 OJ 1975 L 48, p. 29. That directive was amended by Council Directive 92/56/EEC of 24 June 1992 (OJ 1992 L 254, p. 3).
4 See recitals 2 and 3.
5 They are (a) collective redundancies effected under contracts of employment concluded for limited periods of time or for specific tasks, except where such redundancies take place prior to the date of expiry or the completion of such contracts; (b) workers employed by public administrative bodies or by establishments governed by public law, and (c) the crews of seagoing vessels.
6 Judgment of 12 October 2004 in Case C-55/02 Commission v Portugal [2004] ECR I-9387).
7 In fact, Article 51(1), third subparagraph, of the Estatuto de los Trabajadores refers to 'terminations of employment contracts' and not to 'redundancies'.
8 Joined Cases C-187/05 to C-190/05 Georgios Agorastoudis and Others v. Goodyear Hellas ABEE [2006] ECR I-7775.
9 On this point, see the judgment in Case C-187/05, cited in footnote 8, paragraph 24, and also Coursier, P., 'Une fermeture spontanée d'établissement constitue un cas de licenciement pour motif économique', La Semaine Juridique Édition Sociale, No 47, 21 November 2006, pp. 23-24, and Lafuma, E., 'L'actualité de la jurisprudence communautaire et internationale', in Revue de Jurisprudence sociale, 2007, pp. 17-19.
10 See paragraph 50 of the judgment.
11 - Cited in footnote 6.
12 See paragraphs 32 to 37 of the judgment.
13 See point 34 of the Opinion.
14 See point 33 of the Opinion.
15 See point 36 of the Opinion.
16 See paragraph 55 of the judgment.
17 See Dorssement F., 'Case C-55/02 Commission of the European Communities v Portuguese Republic, judgment of the Second Chamber of the Court of Justice of 12 October 2004', in Common Market Law Review, 2006, pp. 225 and 231.
18 For an interpretation of the Court of Justice's approach as 'reminiscent of the legislature's implicit intention to prevent social dumping, interweaving the two ideas of strengthening the protection of workers and of harmonising the social costs which such preventive rules entail', see Dorssemont F., cited in footnote 16, p. 231.
19 See paragraph 85 above.
20 Proclaimed at Nice on 7 December 2000 (OJ 2000 C 364, p. 1).
