C-125/97

2 — See Joined Cases C-94/95 and C-95/95 Bonifaci and Others * Original language: Greek. [1997] ECR I-3969, paragraph 3, and Case C-373/95 Maso 1 — OJ 1980 L 283, p. 23. and Others [1997] ECR I-4051, paragraphs 50 and 56.

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OPINION OF MR COSMAS — CASE C-125/97

5. Article 2(1) explains when an employer is — or that of the notice of dismissal issued to to be deemed to be in a state of insolvency the employee concerned on account of and Article 2(2) goes on to state: the employer's insolvency;

— or a combination of dates.

'This Directive is without prejudice to national law as regards the definition of the terms "employee", "employer", "pay", 7. However, under Article 4, Member States "right conferring immediate entitlement" are to have the option to limit the above- and "right conferring prospective entitle- mentioned liability of guarantee institutions ment".' to payment solely of the claims relating to a certain period (the reference period) which is determined in accordance with the date cho- sen under Article 3.

9. Nevertheless, Article 9 states:

12. As is clear from the order for reference and the observations of the parties, the sys­ 'This Directive shall not affect the option of tem under the Netherlands law is as follows: Member States to apply or introduce laws, regulations or administrative provisions which are more favourable to employees.'

13. Under Article 61(1), an employee is entitled to payment from the competent 10. Lastly, pursuant to Article 11, Member guarantee institution where he has claims States are required to take the steps neces­ against an insolvent employer relating to pay sary to transpose the directive into national or holiday pay. law within 36 months of its notification; that period expired on 23 October 1983. 3

14. Under Article 67(a), 'pay' means such III — National law sum as is due in law from the employer to the employee in connection with the employment relationship (with the exception of holiday pay).

11. In the Netherlands, the question of insolvent employers' outstanding debts to

15. The right to payment covers, under 3 — Case 22/87 Commission ν Italy [1989] ECR 143, paragraph 3. Article 64,

O n 14 June 1991 his employer terminated the contract of employment, with effect from 1 August 1991.

17. Furthermore, as the parties also correctly observe, the extension of the guarantee to 4 — As I shall explain at the appropriate juncture (see point 51 cover the claims of workers in respect of the below), the guarantee under the directive includes all pay to period of notice of termination of the which the employee was entitled for work performed durine the reference period, including statutory supplements and employment contract (Article 64(b) of the allowances. Consequently, holiday pay corresponding to the reference period (three months or 13 weeks) is taken into Netherlands Law), in other words going consideration by law for the calculation of the guarantee, beyond the reference period, constitutes the whilst holiday pay for the additional time (up to one year) constitutes a more favourable measure (Article 9 of the application of a more favourable measure Directive).

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REGELING ν BESTUUR VAN DE BEDRIJFSVERENIGING VOOR DE METAALNIJVERHEID

Subsequently, on 21 April 1992, his over the same period exceeded the total employer was declared bankrupt, but the amount of his wage claims for that period. procedure was discontinued on the ground of lack of assets.

21. Following the declaration of bankruptcy, Mr Regeling applied to the Netherlands guarantee institution for payment of the guarantee provided for in the directive. The claims which had to be taken into account over the period in question, from 15 March 24. The national court observes that that to 25 July 1991 (that is to say, the reference question is not expressly governed by the period of 13 weeks or three months, and the national provisions at issue and, moreover, six-week period in respect of termination of the case-law of the Netherlands courts is the employment contract), relating to pay, divided on that point. Thus the civil courts overtime and holiday pay, amounted, accord­ have taken the view put forward by Mr ing to his calculations, to H F L 21 892. Con­ Regeling, whilst the administrative courts are sequently, in Mr Regeling's view, his in agreement with the guarantee institu­ employer still owed him H F L 3 756 in wage tions's view. arrears and related claims.

25. In particular, according to the case-law 22. Mr Regeling's request was rejected by of the Hoge Raad, claims such as Mr the institution, on the ground that the total Regeling's are governed by Articles 1432 and of the part payments made by the employer 1435 of the Burgerlijk Wetboek (Civil Code)

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26. O n the other hand, the administrative courts, in particular the Centrale Raad van Beroep, consider that every payment of V — Question referred for a preliminary wages made within the period referred to in ruling the above Article 64(a) and (b) of the Law on Unemployment must be applied first and foremost against the employee's claims which arose during that same period, with no account being taken of the priority rules under civil law. The Centrale Raad considers in that connection that the provisions on payment of the guarantee by the competent institution fall under public law and have a 'Are the requirements of Directive 80/987 special character in relation to the provisions fully satisfied by rules of national law which of civil law. Assimilation of a claim for pay- may result in a claim relating to pay being ment of the guarantee to a claim under pri- met, as required by that directive, only if and vate law would mean that rights which arose in so far as that claim amounts, over the before the period in question would deter- period referred to in the directive, to a sum mine the liability of the guarantee institution greater than the amount of pay which the relating to that period. That, however, employee received during that period but according to the Centrale Raad, is contrary which is attributed, under national civil law, to the whole scheme of the rules whereby to a claim relating to pay which arose prior the guarantee institution takes over the to that period?'

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REGELING ν BESTUUR VAN DE BEDRIJFSVERENIGING VOOR DE METAALNIJVERHEID

Similarly, the United Kingdom Government maintains that in view of the limited objec­ 30. In that connection Mr Regeling main­ tives of the directive it is for national law to tains that the directive is designed to ensure determine how debts arising from an that employees are paid all their outstanding employment contract are to be treated. claims in respect of the reference period and Moreover, the directive makes it mandatory that an interpretation of the national provi­ to satisfy only the claims of employees sions in question according to the construc­ which arose during the reference period, not

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OPINION OF MR COSMAS — CASE C-125/97

claims that arose earlier as well. Accordingly, the aim of achieving the result sought by the it is for national law to determine how to directive. treat employees' earlier claims and payments made by the employer during the reference period, that is to say whether those pay­ ments should be treated as covering the employee's claims which arose during that period or earlier claims. Consequently, according to the U K Government, it is not 33. In interpreting the national provisions, contrary to the directive to attribute pay­ the pńnciple of an interpretation in confor­ ments made by the employer to claims aris­ mity with Community law must be applied. ing solely in the reference period rather than That principle entails, according to the to earlier outstanding claims of the Court's setded case-law, that employee.

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REGELING ν BESTUUR VAN DE BEDRIJFSVERENIGING V O O R D E METAALNIJVERHEID

34. From that principle flow two particular interpretation, preference should be given to requirements, in my opinion. Under the first the interpretation which renders the provi­ requirement, where the provisions by which sion consistent with the directive rather than a directive is transposed into national law fall the interpretation which leads to its being to be interpreted, they should be interpreted incompatible with the Treaty. as far as possible in a manner to ensure their conformity with the provisions of the direc­ tive.

Nevertheless, for the reasons set out above, that principle should be regarded as applying Since, however, the provisions of the direc­ to the interpretation of national provisions tive rank higher than the provisions of transposing the directive into national law. 8 national law transposing the directive into national law, the above requirement applies, for exactly the same reason, in the present 7 — Case 252/83 Commission ν Denmark [1986] ECR 3713, case also. paragraph 15. 8 — In fact the incorporation of the Community legal order into the national legal systems involves the reordering and grad­ ing of the rules of law within the Community in the form of a pyramid, the basis of which is formed by the national rules, the middle by the rules of secondary Community law, and the summit by the Treaty rules and the general principles of Community law. According to that hierarchy, the rules at each level must be in conformity with the rules not only at 35. Under the second requirement, when the next level but at all the higher levels so as to ensure the coherence and effectiveness of the system. In that context, national provisions transposing a directive the principle of the primacy of Community law in relation into national law are open to more than one to national law is only a particular expression of the general principle of the primacy of higher-ranking rules over lowcr- evel rules, which is inherent in the very concept of a system of rules of law. For that reason, the relationship between national rules transposing a directive and the rules of the directive is symmetrical with the relationship between the 6 — Case C-90/92 Dr Treuer ν Hauptzollamt Stuttgart-Ost rules of the directive and the rules of the Treaty, and what [1993] ECR I-3569, paragraph 11. applies to the latter applies also to the former.

36. Naturally the principles set out above do 38. Lastly, there is no question of seeking not mean that the national court need only the solution 'most favourable' to the choose one of the two solutions offered by employee in reliance purely and simply on national law, primarily because, as stated, the aim of the directive as set out above there is no such dilemma because of the (point 3). The directive is indeed intended to nature of the dispute as one of Community provide employees with guarantees, but pay- law. ment of the guarantee is subject to certain conditions, and does not require the guaran- tee to be paid at all cost in every case. Solu- tions cannot be derived from the purpose of the directive if they are incompatible with its wording, 9 because even a teleologicai inter- pretation is an interpretation intra legem 37. N o r is it a question of applying directly, rather than extra legem or contra legem. or by analogy, the solution which appears Consequently in every case it is the interpre- 'most favourable' for the employee in any tation of the applicable Community provi- particular situation (in this case the civil law sions that prevails and only if some leeway solution). First of all, the fact that the civil remains for a favourable interpretation may law solution leads to such a result in this case the protective purpose of the directive then is fortuitous. As we have seen, the Nether- be invoked. lands Civil Code regulates in detail the ques- tion of the order in which claims are satis- fied, attributing priority to those so determined by the employer, then to the more onerous claims and so forth. Those pri- orities are not, however, consistent with the directive. As will be explained in more detail below (point 45), the employer cannot be 39. Following that clarification, let us exam- allowed to determine which claims should be ine the merits, that is to say, the question of satisfied by part payment and which should which claims may be regarded as 'outstand- remain outstanding, because in that way he ing' under the directive, so that they may be would determine the existence and the extent taken into account in calculating the guaran- of a Community right (that is to say, of the tee. guarantee). Similarly alien to the spirit of the directive is the criterion of whether or not the claim is onerous.

arising prior to a given date and linked to the former case. The only difference is that, employer's insolvency. when a reference period is laid down under Article 4, the guarantee does not include all the outstanding claims but only those falling within the reference period. Where the employer has made sporadic part payments of the wages owed, 'outstanding'claims fall­ ing within the reference period are, again, those remaining when all payments, whether 41. Moreover, as the term is currently made during the reference period or before it understood and in the absence of any indica­ (for example advances on pay) or even after tion to the contrary in the directive, all the reference period (for example late pay­ claims in respect of which there has been no ment of wages due) are deducted from all payment on the part of the employer on claims. In fact it would not be logical, and account of his insolvency must be regarded would go beyond the purpose of the direc­ as 'outstanding'. Where there has been part tive, were payments in advance or late pay­ payment by the latter, the claims remaining ment of wages not taken into account when when all payments made by the employer the employee's ' o u t s t a n d i n g 'claims falling are deducted from all the employee's claims within the reference period were deter­ are 'outstanding'. In that case it is irrelevant mined. 1 0 when the part payments took place, that is to say, whether they were made at the begin­ ning, the middle or the end of the period prior to the date laid down in Article 3(2) of the directive.

manipulation on his part. Thus it would be 47. It is true that in Francovich II, n the sufficient for the employer, either fortu- Court stated that the aim pursued by the itously or intentionally, to make payments of directive is the partial harmonisation of the wages during the reference period corre- legislation of the Member States as regards sponding essentially to employees' older protection of employees in the event of the claims, in order to reduce or nullify the guar- insolvency of their employer (paragraph 20). antee to which they are entitled. That, how- However, in that judgment the Court was ever, would be contrary to the protective aim resolving a different issue. More specifically, pursued by the directive. it clarified the meaning of 'insolvency of the employer' for the purposes of Article 2(1), which is determinant as regards the extent of the scope of application of the directive. It held that, in view of the absence of a com- monly accepted meaning of insolvency, only employees whose employers are subject to proceedings for satisfying collectively the claims of creditors fall under the directive. That question bears no relation to the present case, in which there is no doubt that Mr Regeling and his employer are covered 45. Moreover to accept that view would by the directive. mean that the already limited guarantee resulting from application of Article 4(2) could be yet further limited by the intention of the employer, for reasons other than those provided for in the directive. That cannot, however, be accepted, because the cases in which limitation of the guarantee institu- tions' liability is allowed are defined limita- tively in the directive, and the relevant provi- sions must be construed narrowly in view both of their nature as an exception and the Moreover partial harmonisation appears not purpose of the directive. to have been the solution deliberately sought by the Community legislature but rather that imposed by circumstances, that is to say, by reason of the significant differences apparent in the legislation of the Member States on the matter and the practical difficulties of finding common rules which could be applied uniformly in all the Member States. 12 In view of the fact that such diffi- culties do not arise in defining outstanding claims, there are no grounds for using the above legislative choice as an argument. 46. N o r has the contrary view any basis in the limited harmonisation sought by the directive or the discretion afforded by 11 — Cited above in footnote 9. Article 2(2) thereof. 12 — Ibid., paragraph 28.

'It follows that the directive on the insol­ vency of employers is intended to apply to all categories of employee defined as such by the national law of a Member State, with the exception of those listed in the Annex to the 49. Irrespective of the above, the provision directive' (paragraph 12). in question does not have the meaning attributed to it by the defendant institution and the United Kingdom Government. In fact that provision by no means allows the Member States to determine arbitrarily the meanings of 'employee', 'employer', 'pay', etc. when transposing the directive into The Court concluded that where, under national law. O n the contrary, the meaning national law, higher management staff were of the provision is that, subject to the adop­ classified under national law as employees, tion of more favourable provisions (Article 9 measures transposing the directive, inasmuch of the directive), the above terms are to have as they did not cover that category, were the same meaning when the directive is defective, with the result that the employees transposed as they already have in national in question, since they were excluded from law. the guarantee, were entitled to compensation against the State (paragraphs 14, 22 and operative part).

50. In that connection, in the above-cited 51. For identical reasons the same must be Wagner Miret judgment 13 the Court, having accepted as regards all the terms mentioned pointed out that: in the above provision. Thus 'pay' for the purpose of calculating the guarantee means that to which each particular employee was 13 — Sec footnote 5. entitled, under national law, to receive from

52. O n the question of what must be regarded as 'pay' for the purposes of apply­ 53. From that point of view, the fact that, pursuant to Article 4(3), the Member States may yet further limit the guarantee institu­ 14 — See Case 22/87 Commission ν Italy [1989] ECR 143, para­ tions' liability under Article 4(2) is irrelevant. graph 11. Generally 'pay' is given a broad meaning in Com­ munity social law. On that point see the definition of 'pay' In fact that latter provision allows a ceiling in the second paragraph of Article 119 of the Treaty and the Court's interpretation (see, for example, Case 69/80 Wor- to be set on the amount of the guarantee ringham and Humphreys [1981] ECR 767, paragraph 14 et which would follow from the application of seq.; Case C-262/88 Barber [1990] ECR I-1889, paragraphs 11 and 12; Case C-278/93 Freers and Speckmann [1996] the other two provisions and does not relate ECR I-1165, paragraphs 17 to 20, and so forth). See also Article 68(1) of Regulation 1408/71 (Case C-201/91 Gris- to determination of the guarantee itself. At vard and Kreitz [1992] ECR I-5009, paragraph 14 et seq.) etc. all events, recourse to that derogating provi­ 15 — It should be noted that, in this case, the dispute between the sion (which is not, moreover, at issue in this plaintiff and the guarantee institution is perhaps also due, at case) is justified only 'in order to avoid the least in part, to the fact that the same items do not appear to have been taken into account for the purposes of calculating payment of sums going beyond the social the guarantee. That means that there may be a divergence of 1 views as far as the meaning of 'pay' is concerned, which is objective of [the] directive', 6which is not taken as the basis for determining the guarantee. For the situation in this case. example, from the order for reference it appears that the plaintiff considers, rightly in my view, that he is entitled to pay for overtime as well as to legal increments to his pay, whilst it is not obvious that the guarantee institution is tak­ ing those items into account. However, in view of the fact that the facts relating to that question are not established 16 — In my opinion the Court is entitled and obliged to examine and, moreover, neither the national court nor any other whether those conditions are satisfied in the context of party has expressly raised such a point, I consider it unnec­ either an action brought by the Commission or a reference essary for the Court to examine it in any detail. for a preliminary ruling.