C-250/97

LAUGE AND OTHERS v LØNMODTAGERNES GARANTIFOND

OPINION OF ADVOCATE GENERAL COSMAS delivered on 24 September 1998

I — Introduction Dansk Metalarbejderforbund, 3 acting on behalf of John Lauge and Others (hereinafter 'the plaintiffs), and Lønmodtagernes Garan­ tifond (Employees' Guarantee Fund, herein­ after 'the defendant').

1. This reference for a preliminary ruling from the Civilret Hillerød (Denmark), sub­ mitted by order of 4 July 1997, seeks an inter­ pretation of the second subparagraph of II — Legal background Article 3(1) and Article 4(4) of Council Direc­ tive 75/129/EEC of 17 February 1975 on the approximation of the laws of the Member States relating to collective redundancies, 1 as amended by Council Directive 92/56/EEC of 2 24 June 1992 ('Directive 92/56'). A — The Community provisions

2. Specifically, the case concerns the interpre­ tation of the phrase 'collective redundancies 4. Directive 75/129 concerns the approxima­ arising from termination of the establish­ tion of the laws of the Member States relating ment's activities as a/where this is the result to collective redundancies. Many of its provi­ of a judicial decision' contained in the above sions were amended by Directive 92/56. provisions.

5. Section I of Directive 75/129 is entitled 3. The question referred to the Court for a 'Definitions and Scope'; Article 1 gives defi­ preliminary ruling arose in a dispute between nitions of the terms 'collective redundancies' and 'workers' representatives' (paragraph 1)

7. Among the provisions applicable in cases of collective redundancies arising from termi­ nation of the establishment's activities as a result of a judicial decision is, consequently, 'However, Member States may provide that Article 2 of Section II of Directive 75/129, as in the case of planned collective redundancies 5 replaced by Directive 92/56, concerning the arising from termination of the establish­ consultation procedure. According to that ment's activities as a result of a judicial deci­ article, where an employer is contemplating sion, the employer shall be obliged to notify collective redundancies, he is to begin con­ the competent public authority in writing sultations with the workers' representatives only if the latter so requests.' in good time with a view to reaching an agreement, he must supply them with all rel­ evant information and notify them in writing 6 of a number of facts, and forward to the

4 — Article1(1)(b). 10. Article 4(1) of Directive 75/129 provides 5 — Article 1(2). that projected collective redundancies noti­ 6 — According to Article 2(3), the employer is to notify the workers' representatives inter alia of the reasons for the pro­ fied to the competent public authority are to jected redundancies, the numbers [and] categories of workers take effect not earlier than 30 days after noti­ to be made redundant, the period over which the projected redundances are to be effected, and so forth. fication.

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LAUGE AND OTHERS y LØNMODTAGERNES GARANTIFOND

11. Article 4(4), which was added by Direc­ B •— The national legislation tive 92/56, lays down that:

12. From the above provisions of Directive 75/129, as amended, with regard to consulta­ tions with the workers' representatives, infor­ mation to be supplied to the workers and more generally the procedure to be followed in the event of collective redundancies, it fol­ lows that in principle they apply in the case of termination of the establishment's activi­ 15. Paragraph 1(6) and (7) of Law No 414 ties as a result of a judicial decision. From provides that the procedure governing collec­ this provision it is also clear, moreover, that tive redundancies, including the condition that the Member States are entitled to lay down these should take effect not earlier than 30 that certain provisions concerning the proce­ days after the competent public authority has dure for collective redundancies, that is to been notified, does not apply in the event of say, provisions concerning notification to the 'redundancies of employees affected by the competent public authority and deferment for termination of an establishment's activities as at least thirty days of the commencement of a result of a judicial decision'. the effects of the collective redundancies, do not apply in the event of termination of activities as a result of a judicial decision. 7 — Lovtidende 1994, p. 1963.

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III — Facts order to meet certain obligations by com­ pleting a number of orders.

18. At the hearing the Commission clarified, without any challenge to its assertions in this respect, on the one hand, that prior to the collective redundancies there had been no consultations with the employees' representa­ tives either before or after the winding-up petition had been filed. On the other hand it 21. The ten hourly-paid employees who are pointed out that, according to the Skifteret, the plaintiffs considered that, under Council even though the establishment was not oper­ Directive 75/129, as amended by Directive ating normally during the period in question 92/56, and Law No 414/1994 transposing and had already dismissed the hourly-paid those directives into the domestic law of Den­ employees, nevertheless certain administrative mark, Ideal-Line A/S was obliged to give employees had not been dismissed and the advance notice of the redundancies in ques­ Skifteret permitted the provisional adminis­ tion as laid down therein. They sought 30 trators of its assets to exercise discretion in days' pay as compensation for the failure to relation to the establishment's activities in give advance notice.

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LAUGE AND OTHERS v LØNMODTAGERNES GARANTIFOND

8 1 22. The plaintiffs requested the defendant received. 1According to the defendant fur­ to meet that claim against the employer. thermore, the fact that the formal winding-up order was not issued on 2 November 1994, the date on which the Skifteret received the winding-up petition, but only six days later, is attributable solely to the purely practical fact that, as a result of the organisation of their work, the Bankruptcy and Probate Courts often do not have the time to deal with winding-up petitions on the same day as 12 they receive them.

11 — More precisely, as is explained in the order for reference, that date determines, inter alia, which rules apply to set-off 8 — The defendant, Lonmodtagernes Garantifond, is the body in regard to assets, which transactions can be set aside, and responsible for guaranteeing outstanding claims against insol­ which pay claims can be treated as preferential claims against vent employers in Denmark pursuant to Council Directive liquidation assets. Furthermore, in the order for reference it 80/987/EEC of 20 October 1980 on the approximation of the is stated that under the provisions in Paragraph 17 of the laws of the Member States relating to the protection of Danish Law on Bankruptcy and Winding-up, a debtor's employees in the event of the insolvency of their employer business must be wound up if the debtor so requests and he (OJ 1980 L 283, p. 23). Directive 80/927 was transposed into is insolvent. That Law states that a debtor is insolvent if he Danish law by the Lov om Lonmodtagernes Garantifond is unable to meet his liabilities as they fall due, unless that (Law on the Employees' Guarantee Fund), which was pub­ inability to pay can be regarded as merely temporary. lished in codified form on 12 February 1988 under No 77 (Lovtidende 1988, p. 256), as amended by Law No 380 of 6 12 ·— According to the defendant, it was for that reason, among June 1991 (Lovtidende 1991, p. 1499). others, that Danish legislation on bankruptcy and winding-up introduced the system of taking as the operative date that on 9 — Specifically, the second subparagraph of Article 3(1) and which the winding-up petition is received, in order to ensure Article 4(4) of Directive 75/129, as amended by Directive that assets could not be disturbed during the period between 92/56. the submission of the winding-up petition and the winding-up 10 — Paragraph 1(6) and (7) of Law No 414/1994). order.

tion of the establishment's activities as a result of a judicial decision' covers the case of col­ lective redundancies which occur in the con­ ditions described in the order for reference. If 13 — The defendant, relying on an advisory statement by Sø-og Handelsretten (Maritime and Commercial Court), Copen­ the answer is in the affirmative, that would hagen, made in reply to a request by the Legislation Depart­ ment of the Danish Ministry of Justice, in the course of the mean that in such situations the Member preparatory work for the transposition of Directive 92/56 States may exclude application of the provi­ into Danish law, considers that the dismissal of the estab­ lishment's employees which took place immediately prior to sions of Directive 75/129, in the version in the judicial winding-up order constitutes part of the winding-up process. In its view, it was necessary to limit the force after Directive 92/56, relating to the losses of the insolvent undertaking, in other words to limit collective redundancy procedure (Section III, further damage to the debtor at the expense of the creditors, since otherwise the cost of the hourly-paid workers for six Articles 3 and 4). days would be a further burden on the assets.

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32. First of all, on a literal construction, it 35. Moreover, I consider that there is nothing follows from the second subparagraph of in the letter of the provisions here interpreted Article 3(1) and Article 4(4) of Directive which would enable us to consider that the 75/129, as amended by Directive 92/56, that derogations also apply to a case such as that both those provisions arc applicable to "col­ before the national court. In the latter case lective redundancies arising from termination the activities of the establishment were termi­ of the establishment's activities as a/where nated not as a result of a judicial decision but this is the result of a judicial decision" (empha­ on the initiative of the employer itself, on the sis added). In other words, those provisions same day as that on which it filed the are expressly applicable to cases in which the winding-up petition, in other words before

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the winding-up order was issued, regardless tion to workers in the event of collective whether that in fact took place a few days redundancies. That aim was clearly rein­ later, as happened in this case. forced by the amendment brought about by Directive 92/56, the third recital in the pre­ amble to which states that Directive 75/129/EEC should in principle apply also to collective redundancies resulting where the establishment's activities are terminated as a result of a judicial decision.

14 — See the Opinion of Advocate General Lenz in Case 284/83 Dansk Metalarbejderforbund y Nielsen & Søn [1985] ECR. 553, at p. 556; judgment in the case was delivered on 12 Feb­ ruary 1985. 38. According to its preamble, the aim of 15 — Section II (Article 2) of Directive 75/129, as substituted by Directive 75/129 is to afford greater protec­ Directive 92/56.

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41. In addition, the provisions concerning the preted narrowly, so that those provisions 1& procedure for collective redundancies and, apply to cases where the activities of an estab­ in particular, notification to the competent lishment are terminated only after a judicial public authority and the period by which the decision. commencement of the effects of the collective redundancies must be deferred, in other words when they take effect, also apply to cases where the activities of an establishment are terminated as a result of a judicial decision, unless the Member States have availed them­ selves of the right to provide for derogations conferred on them by the second subpara­ 43. In order to corroborate the above con­ graph of Article 3(1) and Article 4(4) of Direc­ clusions based on a literal and telcological tive 75/129, as amended by Directive 92/56, construction we may, I think, draw arguments as the Kingdom of Denmark did in this case. from a systematic construction as well. In In fact, since what is involved is a derogation other words, we can interpret the provisions from a general provision, the derogations laid of the second subparagraph of Article 3(1) down must be interpreted narrowly and with and Article 4(4) of Directive 75/129, as the aim of not jeopardising the fulfilment of amended by Directive 92/56, in the context the basic aim of the Directive, which is to of the whole body of rules laid down in those provide a minimum level of protection for directives, in relation to the various stages of employees in the case of collective redundan­ 17 procedure to be followed by an employer cies decided upon by their employer. who wishes to effect collective redundancies.

47. The effectiveness of the Directive's provi­ sions would not, however, be safeguarded 45. The possible subsequent stage under the were we to consider that the derogating pro­ provisions of the Directive (Articles 3 and 4), visions in the second subparagraph of Article where, that is to say, the employer decides on 3(1) and Article 4(4) of Directive 75/129, as collective redundancies, consists in the noti­ amended by Directive 92/56, meant that the fication of the projected collective redundan­ employer's obligation to notify the compe­ cies to the competent public authority, which tent public authority of any projected collec­ then has at least thirty days to seek solutions tive redundancies came to an end when a to the problems raised by the projected redun­ petition was filed seeking a judicial decision dancies. Collective redundancies which have winding up the activity of the establishment, already been put into effect before the end of as the Commission moreover rightly con­ that period are not valid unless the period of cludes. That interpretation contra legem could, thirty days has expired. therefore, operate as a Trojan horse in the sense that in that situation the procedure pro­ vided for in Directive 75/129, as amended, which must be followed in the event of col­ lective redundancies, would not have to be complied with after a petition had been filed for a judicial decision, rather than after a judi­ cial decision winding up the activities of the 20 46. In order to achieve the aim of the Direc­ establishment had been delivered. tive, which consists, in the protection of workers, the rules which it lays down must fully maintain their effectiveness with regard 19 — I would point out that at the hearing the Commission to the successive stages of the procedure for emphasised that in this dispute the management of the estab­ lishment which was subsequently wound up never at any collective redundancies for which the Direc­ point, that is to say either before or after the filing of the tive provides (consultations between the winding-up petition, began the consultation procedure with the employees' representatives. employer and the workers' representatives 20 — At the hearing the Commission stated that, according to the where the former is contemplating collective Skifteret, even though the establishment was not operating properly at the time when the hourly-paid workers had redundancies, all essential information to be already been made redundant, nevertheless certain adminis­ trative employees had not been dismissed and the Skifteret supplied to them and a copy of all the written had allowed the provisional administrators of its assets to communications to be forwarded to the com­ exercise their discretion and continue the activities of the undertaking in order to meet certain of its obligations by petent public authority, notification to that completing certain orders.

50. In summary, I consider that the second 49. Moreover, it is precisely at the stage at subparagraph of Article 3(1) and Article 4(4) which a decision is awaited as to whether the of Directive 75/129, as amended by Directive activities of the establishment are to be con­ 92/56, apply solely to the case of collective 22 tinued, restructured or finally terminated redundancies due to the termination of the activities of an establishment subsequent to the date on which a judicial decision is given, 21 — I would point out that in its judgment in Joined Cases which is the necessary consequence of that C-58/95, C-75/96, C-112/95, C-119/95, C-123/95, C-135/95, decision. C-140/95, C-141/95, C-154/95 and C-157/95 Gallotti and Others [1996] ECR 1-4345, paragraph 14, the Court empha­ sised that the Member States are required, within the bounds of the freedom left to them by the third paragraph of Article 189 of the EC Treaty, to choose the most appropriate forms and methods to ensure the effectiveness of directives (see 23 — As the Commission noted, moreover, at the hearing, after also Case 48/75 Royer [1976] ECR 497, paragraph 75), whilst the petition has been lodged it is possible that there will be Article 5 of the Treaty requires the Member States, in the a settlement between the debtor and creditors and that pros­ abovementioned conditions, to take all measures necessary pect might result in the postponement of the judicial deci­ to guarantee the application and effectiveness of Community sion. Also it should not escape notice that a winding-up law (see Cases C-382/92 Commission v United Kingdom petition will frequently be lodged by a creditor and that [1994] ECR I-2435, paragraph 55, and C-383/92 Commis- means that the court dealing with the matter will have to sion v United Kingdom [1994] ECR 1-2479, paragraph 40). decide whether the petition is well founded which will cer­ tainly have an effect on the length of the procedure. 22 — The Commission underlines the fact that there may be a judicial decision within the meaning of the Directive not 24 — As the Commission states(both at paragraph 40 of its written only in the context of the winding-up procedure but also in observations and at the hearing), without being contradicted, any procedure which, under national law, is aimed at the the sole fact that the management of the undertaking docs overall satisfaction of debts (paiement global) in respect of not appear to have carried out the necessary consultations the employer's creditors. As stated, it is possible for a judi­ with the workers' representatives, despite the fact that it was cial decision to be adopted, for example concerning the contemplating collective redundancies, is sufficient to bring maintenance of work-place safety requirements, environ­ about the consequences of Article 11 of Law No 414 of 1994 mental protection or compliance with special manufacturing on compensation of workers and Article 12 providing for a conditions for the protection of public health. penalty in the form of a fine.