C-22/87

OPINION OF MR LENZ — CASE 22/87

OPINION OF MR ADVOCATE GENERAL LENZ delivered on 15 November 1988 *

Mr President, (Article 3). Those guarantee institutions Members of the Court, must comply with certain principles set out in Article 5 of the directive.

A — Facts

COMMISSION v ITALY

offering the employee protection equivalent dated 25 April 1986 enclosing a memo­ to that resulting from the directive. The randum from the Italian Ministry of Labour relevant categories in the case of Italy are which contained an account of the relevant listed in section IIC of the Annex as Italian provisions. follows: '1 . Employees covered by benefits laid down by law guaranteeing that their wages will continue to be paid in the event that the undertaking is hit by an economic 10. At the end of the memorandum it was crisis.' stated that certain obligations of Community law relating to the protection of all employees had not yet been fulfilled and appropriate solutions would have to be 6. Article 11 provides that the Member found. Similarly the accompanying letter States had to take the measures necessary to from the Permanent Representative stated comply with the directive within 36 months that there were still problems outstanding of its notification (that is by 23 October regarding the adaptation of national law in 1983) and had to communicate to the order that the obligations under the Commission the texts of the provisions directive might be completely fulfilled and which they had adopted in the field mentioned that an inter-ministerial governed by the directive. committee had been requested to draft proposals to remedy the remaining defi­ ciencies.

7. Since it had received no such communi­ cation from Italy, the Commission on 3 November 1983 asked the Italian 11. Since the Commission heard nothing Government what the position was. In further of the work of that committee or of March 1984 apparently the Commission was any transposition of its proposals into law it given a list of certain Italian laws which brought these proceedings against Italy on were relevant to the directive. 23 January 1987.

(iii) the Italian Republic has not adopted tioned provision in section IIC 1 of the the measures required under Article 8 Annex to the directive — that the Cassa of the directive. integrazione guadagni — gestione straor­ dinaria, which is also a fund set up within the National Institution for Social Welfare, serves to ensure that employees may receive B — Analysis 80% of their salary without limitation of time if the undertaking which employs them is facing a crisis. However, that does not suffice, in the Commission's opinion, to satisfy the obligations of the directive The following observations may be made because, first of all, only certain under­ regarding those specific complaints. takings are covered (basically large and medium-sized industrial undertakings and large commercial undertakings but not agri­ cultural undertakings, service industries or 1. The measures required under Articles 3 and small traders), secondly the provision does 5 of the directive not apply to all kinds of employees (namely managers, apprentices and out-workers) and, thirdly, the Inter-ministerial Committee for Industrial Policy (CIPI) has a discretion 13. (a) The first Italian measure to consider in implementing the rules and since the in this context is Law No 297 of 29 May criterion is the social significance of a crisis, 1982. It set up a special fund within the that is it depends on the size of the under­ Istituto nazionale della previdenza soziale taking and the employment position in the (National Institution for Social Welfare) area, small and medium-sized undertakings which guarantees payment of the compen­ and their employees rarely enjoy the benefit sation for termination of contract provided of the rules. for in Article 2120 of the Italian civil code. The Commission accepts that the fund meets the requirements of Article 5 of the directive, but objects that it is concerned 15. (b) It is soon apparent that the only with compensation for termination of arguments relied on by the Italian contractual relationships and not with the Government in its defence are not employees' unsatisfied claims for payment convincing in so far as concerns the special of wages for the period referred to in fund referred to first for guaranteeing Article 3 of the directive, and for that compensation on the termination of a reason considers that it does not suffice to contract. comply with the directive. Moreover, where the employment relationship was of short duration the compensation, one month's salary for every year of employment, is not equal to the minimum amount (three 16. It will be recalled that the primary months' salary) provided for in Article 4 of argument was that in general more effective the directive. protection was thereby ensured than the directive provides for (because compen­ sation is as a rule greater than the minimum protection provided for in the directive of three months' salary). It was secondly 14. The fact is also relevant here — and this observed that Italian undertakings already is the point referred to by the aforemen­ bore the considerable burden of the said

17. One counter-argument (I shall not now 20. (aa) The ineluctable conclusion is that discuss further the fact that the contested the rules do not apply to all undertakings but compensation is in principle payable only on only to those specified on pp. 6 and 7 of the termination of the contractual relationship) memorandum of the Italian Ministry of is that the method of determining the Labour, and thus they do not apply, in compensation payable by the compensation particular, to small and certain fund does not lead to the level of compen­ medium-sized undertakings. sation laid down in the directive always being attained or even exceeded. That level is obviously not reached where the employment relationship has been of short duration which may be the case with young employees or may also be due to the 21. It is also clear that the Italian mobility of employees, which can scarcely Government cannot argue that according to be described as being of just subsidiary Article 2 of the directive the finding of importance in Italy. insolvency depends on the initiation of formal proceedings, and such (bankruptcy) proceedings cannot be brought, pursuant to Royal Decree No 297 of 16 March 1942 in conjunction with Article 2083 of the civil 18. It is also significant that the directive code, against small undertakings such as provides for only a certain minimum farmers, manual workers, small traders and protection, but does not require that the family undertakings. Even if that is true and measures it envisages should be adopted in accordingly to that extent protective addition to measures already existing. If, measures are not necessarily prescribed by however, national law is adapted to the the directive, the fact remains that the requirements of the directive (which is all undertakings excluded by the Italian rules that the latter requires) so that there are no are not only those which have just been longer any lacunae in the protection of mentioned but also other small and employees, that can certainly not be said to medium-sized undertakings for which represent an excessive and unjustified proceedings for a declaration of insolvency burden for Italian producers. The defendant are quite possible and which accordingly fall has itself admitted that in view of the high under the directive. level of protection already achieved such cases would be of only marginal importance; it would not, therefore, lead to an excessive extra burden. On the contrary it would merely produce the greatest possible degree of uniformity for the whole 22. (bb) It is further clear that the rules in Community. respect of the Cassa integrazione

guadagni — gestione straordinaria do not regarded as employees under Italian law, as apply to all employees, that is they do not the Commission has shown by reference to apply to managers, apprentices and Article 2134 of the civil code, Law No 25 of out-workers, whose exclusion is likewise 19 January 1955 and the relevant case-law, plainly unjustified. and that accordingly the directive does in principle also apply to them. In that connection the reference to the duration of such employment relationships is certainly immaterial. It was rightly pointed out in reply to the Italian Government that there is in reality no question of such employment 23. As far as managers are concerned, it relationships being generally short in view can scarcely be said that the directive of the maximum limit of five years under (Article 2 of which states that the directive Article 7 of Law No 25. In addition it is is without prejudice to national law as clear that under the directive (Article 4 of regards the definition of inter alia the term which provides for minimum protection of 'employee') does not apply to managers. only three months) that factor is irrelevant. The Commission has convincingly shown Equally immaterial in this connection is the that according to Article 2095 of the civil reference to the said Article 1(2) (according code (as amended by Law No 190 of 13 to which Member States may exclude claims May 1985) the rules applicable to employees by certain categories of employees from the (apart from specific exceptions) also apply scope of the directive) and the statement to managers and there is no doubt in that that should apprentices in fact fall within respect according to Italian legal commen­ the scope of the directive the Italian tators and case-law. It has also rightly Government would apply to have the annex pointed out that if special rules had been to the directive supplemented accordingly. intended for this important group, they For the present proceedings all that matters would have been expressly taken into is that the current legal position is that account in the annex to the directive. apprentices are not excluded from the scope of the directive. Moreover, it must be quite doubtful whether such an amendment of the annex, which cannot be undertaken unilat­ erally by a Member State, but must be decided by the Council, is even conceivable, 24. In so far however as the Italian for there is evidently no other equivalent Government further alleged that appropriate protection of apprentices within the protection was given to managers by other meaning of Article 1 (2) of the directive and rules (in particular often by collective it can scarcely be said that this is a special agreements) it must concede that (pursuant group of employees who do not need to be to Article 11 of the directive) it was under protected. an obligation to give details and to produce evidence, of which there was no question in these proceedings.

principle within the scope of the directive. It Inter-ministerial Committee for the Coordi may be noted that in the case of Ireland it nation of Industrial Policy of 12 June 1984 was considered necessary expressly to is to no avail. Apart from the fact that exclude them in the annex. Further greater authority is to be attributed to the significant factors are, as the Commission law on which the decision was based has shown, the Italian law on the subject, (which, as stated, is concerned mainly with namely Articles 2094 and 2128 of the civil the social significance of the undertakings code, Law No 817 of 18 November 1973 affected), it is clear from the decision as a with its definition of out-worker, and the whole that there can be no question of any case-law and the relevant criteria developed automatic obligation to pay in all cases (I in it (although admittedly in particular cases refer in particular to the fifth recital which there may be problems of definition and mentions the 'eccezionale rilevanza della consequently frequent disputes). situazione occupazionale' (exceptional importance of the employment situation) and to the operative paa which refers to the 'eccezionale rilevanza dei provvedimenti, da desumersi in rapporto all'organico aziendale, alla localizzazione d'impresa e al

30. It is no use contending that Article 1 of the directive allows categories of employees to be excluded from the scope of the directive and accordingly the annex refers in relation to Italy to the abstract category of 28. (cc) Finally the Commission has rightly employees to which the Cassa system objected to the rules governing the Cassa applies. As the Commission contended, the that even within the scope of those rules the exception has to be seen in the context of Cassa is not invariably bound to pay the whole system, that is, it presupposes that benefits for it enjoys a discretion. Since the the directive is basically complied with and Cassa is mainly concerned with the social that there is comprehensive protection for significance of an undertaking which is employees which is of general application suffering a crisis, small and medium-size subject to certain exceptions. Above all it is undertakings may fail to qualify for the also clear from the sense of the rule in

OPINION OF MR LENZ — CASE 22/87

33. That also applies to the reference to the collective agreements said to exist in 35. (a) It is no defence for the Italian commerce and in the tourist industry, for Government to refer to Article 6 of the example. No details were given and above directive which provides that Member States all it was not demonstrated that all the may stipulate that Articles 3 to 5 shall not aforementioned deficiencies are adequately apply to contributions due under national and comprehensively covered. statutory social security schemes.

COMMISSION v ITALY

39. As far as concerns the practical effects of the rules in issue and their alleged 37. (b) I am not convinced by the Italian marginal significance, it may be noted that Government's contention that the disad­ pursuant to the directive comprehensive and vantage in the Italian system pointed out by watertight protection must be provided in the Commission can be avoided by means of the context of Article 7. Since in the checking mechanisms in the social proceedings under Article 169 of the EEC security system (whereby the social security Treaty the principle de minimis non curat authorities send employees annual praetor does not apply, the complaint that statements to enable them to check that the there has not been a correct transposition is compulsory contributions have been paid justified even if the national law is such that and accordingly claims cannot become time- the aim of the directive is not achieved in barred if the employer is reported for not only a few cases. Accordingly there is no fulfilling his obligations). The observation need to go further into the question whether that the system to which the Commission the cases cited by the Commission are in objects is of only marginal practical signif­ fact all relevant. It suffices that it was icance is in my view immaterial. clearly shown that at least in a number of

OPINION OF MR LENZ —CASE 22/87

cases there were actions for damages under 3. The measures required under Article 8 of Article 2116(2) for non-payment of contri­ the directive butions by the employer and because the 10-year period of limitation had expired.

44. In the Commission's view that does not 41. It is unnecessary to comment on the satisfy the requirements of the directive; last-mentioned case (payment by the measures are necessary for the case where employee) where the adverse effects within the employer fails to set up such a fund with the meaning of Article 7 are self-evident. the necessary means. On the other hand, the possibility of subsequent payment by the employer naturally presupposes that he is solvent (which is precisely not the case in the situ­ ations envisaged by the directive). Moreover 45. (a) The Italian Government defended it is significant, as the case-law cited by the its position in that regard in the written Commission makes clear, that there is no procedure only by citing the aforementioned obligation on the employer and in conse­ Article 6 of the directive and alleging that quence if he does not take the appropriate there are few such systems in Italy (for action to remedy matters the only course example, for managers and bank open to the employee is an action for employees); only in recent years have there damages, which must be regarded as unsat­ been any significant developments in this isfactory. area.

42. (d) It is thus in fact clear that the 46. It is clear that that argument is to no Commission has rightly included Article 7 purpose. It has already been shown that the of the directive in the list of provisions in Italian Government is proceeding on a respect of which the Italian legal system misconception of Article 6 of the directive does not satisfy the requirements of the which in reality envisages only the possi­ directive. bility of excluding contributions from

employers under supplementary company or 48. That argument can hardly be accepted inter-company pension schemes from the either. Of primary importance in my view is provisions on guarantee institutions in that Article 8 clearly requires measures to Articles 3 and 5. But there is no doubt that protect vested rights or rights in the process it is not only when a considerable category of being acquired under supplementary of the working population is affected that pension schemes. Since in general such there is a failure to implement the directive. rights depend on the length of employment Accordingly in the present connection the in the undertaking, protection which is Italian Government's admission that confined to the inviolability of funds supplementary social security schemes of the actually set up and is not concerned with kind referred to in Article 8 of the directive the adequacy of payments into such funds is exist in Italy is enough and there is no need obviously insufficient. to consider the question whether in fact the Commission's observation is correct that there are already 200 such supplementary pension schemes in Italy for more than 1 million employees or whether the Italian Government is right in claiming that that 49. I am not convinced by counter­ statement, which is taken from a newspaper arguments based on comparison of Article 8 report about a congress of insurance under­ with Article 7, like the Italian Government's takings, relates to funds of a quite different reference in particular to the fact that, in kind which has nothing to do with the contrast to Article 8, Article 7 expressly schemes within the meaning of Article 8 of mentions non-payment of contributions. On the directive. the one hand, the failure to mention the payment of contributions may be due to the fact that supplementary pension schemes may be funded not only in that way but for example by internal transfers to reserves. It is above all borne out by reference to Article 6 in which contributions to supplementary pension schemes are in fact mentioned. It may be said that the fact that provision is expressly made for the possibility of dispensing with the guarantee institutions 47. (b) The Italian Government surprisingly envisaged under Articles 3 to 5 (and only changed its defence completely at the thereunder) is evidence that the authors of hearing (surprisingly, especially, because in the directive plainly also intended to cover the written procedure it had said, as regards the problem of funding in connection with Article 8, that a law would be drafted to Article 8 as well. ensure the solvency of such supplementary funds, for example by setting up a central guarantee fund). Now, as we have heard, the Italian Government's position is that the provisions of Article 2117 of the civil code are sufficient to comply with Article 8 of the 50. Finally, in my view, support for the directive; it alleges that Article 8 does not Commission's interpretation comes from the require the further measures of whose introductory wording of Article 8 adopted absence the Commission complains and by the Council, which departed from the there can therefore be no question of insuf­ Commission's proposal: 'Member States ficient compliance on the part of Italy. shall ensure. .. ' (instead of: 'Member