CELEX: 62009CJ0477
Preliminary ruling
Directives 80/987/EEC and 2002/74/EC
Insolvency of the employer
Protection of employees
Payment of outstanding workers’ claims
Determination of the competent guarantee institution
More favourable guarantee under national law
Possibility of relying on that law

The reference for a preliminary ruling concerns the interpretation of Articles 8a and 9 of Council Directive 80/987/EEC of
20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event
of the insolvency of their employer (OJ 1980 L 283, p. 23), as amended by Directive 2002/74/EC of the European Parliament
and of the Council of 23 September 2002 (OJ 2002 L 270, p. 10).
That reference was made in the context of proceedings between Mr Defossez and Mr Wiart, in his capacity as liquidator of Sotimon
Sarl (‘Sotimon’) which employed Mr Defossez before his unlawful dismissal, and the Fonds de fermeture d’entreprises de l’Office
national de l’emploi (Closure of Undertakings Fund of the National Employment Office) (‘the Belgian FFE’) and the Centre de
gestion et d’études de l’Association pour la gestion du régime de garantie des créances des salariés de Lille (Management
and Study Centre of the Association for the management of the employee payment guarantee scheme, Lille) (‘the Lille CGEA’),
concerning the remuneration still owing to Mr Defossez when his employer became insolvent.

Legal context
Article 1(1) of Directive 80/987 states that that directive is to ‘apply to employees’ claims arising from contracts of employment
or employment relationships and existing against employers who are in a state of insolvency within the meaning of Article
2(1)’.
Article 2(1) of that directive provides:
‘For the purposes of this Directive, an employer shall be deemed to be in a state of insolvency:
(a)      where a request has been made for the opening of proceedings involving the employer’s assets, as provided for under the laws,
regulations and administrative provisions of the Member State concerned, to satisfy collectively the claims of creditors and
which make it possible to take into consideration the claims referred to in Article 1(1),
and
(b)      where the authority which is competent pursuant to the said laws, regulations and administrative provisions has:
–        either decided to open the proceedings,
–        or established that the employer’s undertaking or business has been definitively closed down and that the available assets
are insufficient to warrant the opening of the proceedings.’
Article 3 of Directive 80/987 requires Member States to take the measures necessary to ensure that guarantee institutions
guarantee payment of employees’ outstanding claims resulting from contracts of employment or employment relationships and
relating to pay for the period prior to a given date.
Article 5 of that directive is worded as follows:
‘Member States shall lay down detailed rules for the organisation, financing and operation of the guarantee institutions,
complying with the following principles in particular:
(a)      the assets of the institutions shall be independent of the employers’ operating capital and be inaccessible to proceedings
for insolvency;
(b)      employers shall contribute to financing, unless it is fully covered by the public authorities;
(c)      the institutions’ liabilities shall not depend on whether or not obligations to contribute to financing have been fulfilled.’
Under Article 9 of Directive 80/987, that directive is not to affect the option of Member States to apply or introduce laws,
regulations or administrative provisions which are more favourable to employees.
Recital 7 in the preamble to Directive 2002/74 states that, in order to ensure legal certainty for employees in the event
of insolvency of undertakings pursuing their activities in a number of Member States, and to strengthen workers’ rights in
line with the established case-law of the Court of Justice, provisions should be introduced which expressly state which institution
is responsible for meeting employees’ outstanding pay claims in these cases and establishes as the aim of cooperation between
the competent administrative authorities of the Member States the early settlement of employees’ outstanding claims. Furthermore
it is necessary to ensure that the relevant arrangements are properly implemented by making provision for collaboration between
the competent administrative authorities in the Member States.
Article 1(4) of Directive 2002/74 introduced provisions concerning transnational situations, including Article 8a of Directive
80/987. Under Article 8a(1), when an undertaking with activities in the territories of at least two Member States is in a
state of insolvency, the competent institution for meeting employees’ outstanding claims shall be that in the Member State
in whose territory they work or habitually work.
Article 2(1) of Directive 2002/74 provides that Member States are to bring into force the laws, regulations and administrative
provisions necessary to comply with this Directive before 8 October 2005 and that they are to apply those provisions to any
state of insolvency of an employer occurring after the date of entry into force of those provisions.

Facts in the main proceedings and the question referred for a preliminary ruling
Mr Defossez worked in Belgium, first, as a foreman and, then, as team leader, employed initially, from March 1997, by EBM
SA and subsequently, from September 2000, by Sotimon; both companies are established in France.
In December 2003, Mr Defossez was dismissed. On 15 January 2004, Mr Defossez brought an action before the Conseil de prud’hommes
(Employment Tribunal), Dunkirk.
By judgment of the Tribunal de commerce (Commercial Court), Dunkirk, of 1 June 2004, Sotimon was wound up by order of the
court. To obtain payment of his outstanding claims, Mr Defossez sought the intervention of the Lille CGEA and, in the alternative,
of the Belgian FFE.
By judgment of 30 June 2006, the Conseil de prud’hommes, Dunkirk, found there to be no ‘real and serious’ ground for the dismissal
and accordingly fixed the amount of Mr Defossez’s outstanding claims; the judgment was declared enforceable against the Lille
CGEA.
By judgment of 31 January 2008, the Cour d’appel (Court of Appeal), Douai, entered Mr Defossez’s outstanding claims in the
liabilities of Sotimon in the context of that company’s winding-up and declared the judgment enforceable against the Belgian
FFE, ruling out any liability on the part of the Lille CGEA.
Mr Defossez appealed against that judgment before the Cour de cassation , claiming that the cour d’appel de Douai, acting
on the basis of Article 8a of Directive 80/987, as amended, incorrectly dismissed his claim in guarantee against the Lille
CGEA and held the Belgian FFE liable for the claim.
In those circumstances, the Cour de cassation decided to stay the proceedings and to refer the following question to the Court
for a preliminary ruling:
‘Is Article 8a of Council Directive [80/987], as amended by Directive [2002/74], which provides, in paragraph 1 thereof, that
when an undertaking with activities in the territories of at least two Member States is in a state of insolvency, the institution
responsible for meeting employees’ outstanding claims is that in the Member State in whose territory they work or habitually
work and, in paragraph 2 thereof, that the extent of employees’ rights is to be determined by the law governing the competent
guarantee institution, to be interpreted as designating the competent institution to the exclusion of any other, or, having
regard to the purpose of the directive, which is to strengthen the rights of workers exercising their right to freedom of
movement, and to the first paragraph of Article 9 of the directive, under which the directive is not to affect the option
of Member States to apply or introduce laws, regulations or administrative provisions which are more favourable to employees,
is it to be interpreted as not depriving the employee of the right to take advantage, in the place of that institution’s guarantee,
of a more favourable guarantee from the institution with which his employer is insured and to which it has made contributions
under national law?’

The question referred for a preliminary ruling
It should be observed as a preliminary point that, under Article 2(1) of Directive 2002/74, Member States are to bring into
force the laws, regulations and administrative provisions necessary to comply with this Directive before 8 October 2005 and
are to apply those national provisions to any state of insolvency of an employer occurring after the date of entry into force
of those provisions.
In that regard, the Court has held that Directive 2002/74 has direct effect in the event of non-transposition only in respect
of insolvencies arising after 8 October 2005 (Case C-246/06
Velasco Navarro
[2008] ECR I-105, paragraphs 27 to 29).
The Court has also held that, by failing to adopt, within the prescribed time-limit, the measures intended to ensure the transposition
of Directive 2002/74 in French law, the French Republic failed to fulfil its obligations under that directive (Case C-9/07
Commission
v
France
[2007] ECR I-121, paragraph 12).
Accordingly, since Sotimon was wound up by order of the Tribunal de commerce, Dunkirk, on 1 June 2004, the insolvency at issue
in the main proceedings does not fall within the scope of the provisions of Directive 2002/74.
The precise determination of the provisions to be applied in circumstances such as those of the main proceedings is all the
more important in the light of the Court’s finding, in paragraphs 20 and 25 to 28 of its judgment in Case C‑310/07
Holmqvist
[2008] ECR I-7871, to the effect that Article 8a, inserted into Directive 80/987 by Directive 2002/74, establishes a new
criterion for identifying the competent guarantee institution. That article therefore introduces a substantive change to the
provisions of Directive 80/987. It follows that the legal appraisal of a situation such as that in the main proceedings does
not necessarily lead to the same result when it is carried out in accordance with the provisions of Directive 80/987 in its
initial version or those of that same directive as amended by Directive 2002/74.
It is therefore appropriate, for the purpose of resolving the dispute in the main proceedings, to respond to the referring
court’s question by interpreting the provisions of Directive 80/987 in the version thereof that existed before the amendments
effected by Directive 2002/74.
The Court has held previously in that regard that, although Directive 80/987 does not contain any provisions which expressly
refer to the claims of employees having been employed in a Member State other than that in which their employer is established,
it is nevertheless applicable to such claims and it is therefore necessary to determine the guarantee institution responsible
for paying those claims in accordance with the provisions of that directive (see, to that effect, Case C-117/96
Mosbæk
[1997] ECR I-5017, paragraphs 16 and 19).
The Court has held in respect of such a situation that, under Article 3 of Directive 80/987, the competent guarantee institution
is that of the Member State in which, in accordance with Article 2(1) of the directive, either it is decided to open the proceedings
for the collective satisfaction of creditors’ claims, or it has been established that the employer’s undertaking has been
definitively closed down (see
Mosbæk
, paragraphs 20 and 27).
The Court has also held that it accords with the scheme of Directive 80/987 that the competent guarantee institution, except
where it is fully financed by the public authorities, is the one which levied, or at all events should have levied, the insolvent
employer’s contributions (see, to that effect,
Mosbæk
, paragraphs 24 and 25).
Moreover, in Case C-198/98
Everson and Barrass
[1999] ECR I-8903, to which the referring court refers in its order for reference, where, unlike the situation in
Mosbæk
, the insolvent employer had a business in the form of a branch in the Member State where the employees were employed, the
Court held that the institution responsible for paying the outstanding claims is that of the Member State where that branch
is established (
Everson and Barrass
, paragraph 23). In addition, that competent guarantee institution was that of the Member State where the social security
contributions from both the employer and the employees were paid.
In respect of those aspects, the referring court states, first, that the undertaking which employed Mr Defossez was established
in France. Second, it is apparent from the case-file that the contributions for covering potential salary claims were paid
in that same Member State and that the employer did not have any stable business establishment in Belgium.
In those circumstances, it must be observed that the relevant elements of the present case do not resemble those which gave
rise to the judgment in
Everson and Barrass
. There are greater similarities between the relevant elements of the present case and those which gave rise to the judgment
in
Mosbæk
.
It follows that, where the undertaking which employed the worker does not have any establishment in the Member State where
that employee is employed and the undertaking pays the social security contributions in its capacity as employer in the Member
State where it is established, the competent guarantee institution, under Article 3 of Directive 80/987, for the payment of
claims of employees resulting from the insolvency of their employer, is the institution of the Member State where the winding-up
of the employer has been ordered.
Furthermore, although Directive 80/987 does not afford employees the option of choosing between different guarantee institutions,
it does not prevent employees, where that would prove favourable to them and where national law so provides, from availing
themselves of the guarantee provided by an institution other than the institution identified on the basis of the application
thereof.
Directive 80/987 is intended to guarantee employees a minimum level of protection under European Union law in the event of
the insolvency of their employer (see, inter alia, Joined Cases C‑6/90 and C‑9/90
Francovich and Others
[1991] ECR I‑5357, paragraph 3, and Case C-69/08
Visciano
[2009] ECR I‑6741, paragraph 27), without prejudice, in accordance with its Article 9, to more favourable provisions which
the Member States may apply or introduce (see, to that effect, Case C‑160/01
Mau
[2003] ECR I‑4791, paragraph 32, and Case C‑278/05
Robins and Others
[2007] ECR I‑1053, paragraph 40).
Thus, Directive 80/987 does not preclude a Member State’s legislation from providing that employees may avail themselves of
the salary guarantee from that Member State’s institution in accordance with its law, either in addition to or instead of
the guarantee offered by the institution designated as competent under that directive, provided however that that guarantee
results in a greater level of worker protection.
In the light of the foregoing, the answer to the question referred is that:
–        Article 3 of Directive 80/987, in the version thereof as it existed before it was amended by Directive 2002/74, is to be interpreted
as meaning that, for the payment of the outstanding claims of workers having been habitually employed in a Member State other
than that where their employer is established, where the employer was declared insolvent before 8 October 2005 and that employer
is not established in that other Member State and fulfils its obligation to contribute to the financing of the guarantee institution
in the Member State where it is established, it is that institution which is liable for the obligations defined by that article.
–        Directive 80/987 does not preclude a Member State’s legislation from providing that employees may avail themselves of the
salary guarantee from that Member State’s institution in accordance with its law, either in addition to or instead of the
guarantee offered by the institution designated as competent under that directive, provided however that that guarantee results
in a greater level of worker protection.

Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court,
the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs
of those parties, are not recoverable.
On those grounds, the Court (Third Chamber) hereby rules:
Article 3 of Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating
to the protection of employees in the event of the insolvency of their employer, in the version thereof as it existed before
it was amended by Directive 2002/74, is to be interpreted as meaning that, for the payment of the outstanding claims of workers
having been habitually employed in a Member State other than that where their employer is established, where the employer
was declared insolvent before 8 October 2005 and that employer is not established in that other Member State and fulfils its
obligation to contribute to the financing of the guarantee institution in the Member State where it is established, it is
that institution which is liable for the obligations defined by that article.
Directive 80/987 does not preclude a Member State’s legislation from providing that employees may avail themselves of the
salary guarantee from that Member State’s institution in accordance with its law, either in addition to or instead of the
guarantee offered by the institution designated as competent under that directive, provided however that that guarantee results
in a greater level of worker protection.
[Signatures]
*
Language of the case: French.