Opinion of the Economic and Social Committee on the "Proposal for a Directive of the European Parliament and of the Council amending Council Directive 80/987/EEC 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"

(2001/C 221/19)

On 14 February 2001, the Council decided to consult the Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Employment, Social Affairs and Citizenship, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 2 May 2001 by a unanimous vote. The rapporteur was Mr Zöhrer.

At its 382nd plenary session (meeting of 30 May 2001), the Economic and Social Committee adopted the following opinion by 118 votes to two with three abstentions.

1. Gist of the Commission proposal

Twenty years have elapsed since Directive 80/987/EEC was adopted by the Council, and the Commission believes that the time has come to take stock of the discussions and deliberations on the problems in enforcing some of the provisions, and to present the Council with a proposal for amendments to the Directive.

The Commission takes the view that the basic structure of the Directive should be retained: its aim of offering protection, the mechanism introduced and the results achieved are beyond dispute. It appears, however, that over the years new conditions on the job market as well as restructuring and reorganisation within firms mean that the Directive should be revised in relation to specific points on which it has got out of step.

The main developments which have shown up gaps or shortcomings concern changes to insolvency law in the Member States, the dynamism of the internal market, the need for consistency with other Community directives on labour law adopted in the meantime, and the recent case law of the Court of Justice.

The following amendments are proposed:

- precise indication of the scope in Articles 1 and 2, with the current Annex being removed;

- new concept of insolvency in Article 2: definition based on that used in the Council Regulation on insolvency procedures;

- simplification of Articles 3 and 4;

- new Article 8a specifying the competent guarantee institution in cases with a cross-border dimension;

- new Article 8b providing for administrative collaboration between the Member States with a view to facilitating the implementation of Article 8a.

2. General comments

2.1. The Committee generally welcomes the Commission's initiative. The Directive was adopted 20 years ago and it now has to be adapted to cater for labour market changes, the dynamism of the internal market, and the restructuring and reorganisation of enterprises.

The simplification and alignment of legal provisions and the use of uniform terms and definitions in Community law generally enhance transparency and legal certainty.

2.2. The Committee underlines the view expressed by the Commission in its proposal that the aim is to continue to afford the protection provided by the original Directive. The purpose of the Directive is, after all, to ensure that employees receive at least a part of their remuneration in the event of the insolvency of their employer.

In the light of the development of insolvency law and the introduction of new forms of employment contracts to take account of greater labour-market flexibility, the Directive, in its current form, appears to be no longer suited to providing employees with full protection.

Above all, particular flexible forms of employment contracts, which have grown in importance in recent times, must not be excluded from the scope of the Directive.

2.3. Since the adoption of the Directive, extensive changes have been made to insolvency law in the Member States. The purpose of these changes is increasingly to avoid the total liquidation of enterprises which have difficulty meeting their financial obligations and to enable such enterprises to continue to operate.

However, if the Directive is interpreted strictly - as the European Court of Justice has done in its rulings - these cases are the very ones to fall outside the scope of the Directive. The Committee therefore supports an updating of the term "insolvency". This would not only help the Directive to continue to afford protection to employees but could also make it possible for employees to keep their jobs and to take part in the rebuilding of the enterprise.

2.4. Corporate structures are also taking on an increasingly European character as the internal market continues to develop. This produces more and more cases of employees in other countries being potentially affected by the insolvency of their employer.

Even though the European Court of Justice has already delivered rulings on such cases, the Committee takes the view that, in the interests of clarity and legal certainty, the Directive should also set out provisions governing this matter.

2.5. As regards the legal basis for the Directive, the Committee shares the Commission's view that the entry into force of the Treaty of Amsterdam has created a clear basis for the Directive in the Treaty and that Article 137(2) therefore provides the appropriate legal basis.

2.6. In the interests of providing maximum transparency, the Committee also recommends the publication of a consolidated version of the Directive. For the same reason, the Committee further recommends that Member States should produce a consolidated version of their national legislation when implementing this Directive.

3. Specific comments

3.1. Scope and definitions

3.1.1. The term "insolvency"

As mentioned above, the proposal for a Directive takes account of the development of insolvency law and the practical application of the Directive in the Member States. The Committee endorses the proposal for a Directive as it also helps to ensure that the Directive continues to meet the goal of affording protection to employees.

Care must, however, also be taken to avoid abuse in the case of the "rebuilding" of enterprises. It is not part of the protective role of the Directive to facilitate the financial rehabilitation of enterprises at the expense of the guarantee institutions. The Committee proposes that attention be drawn to this possibility in Article 10 of the Directive and that the Member States be given the responsibility for taking measures to prevent such abuse, also in individual cases.

As regards the obligation to notify national insolvency proceedings, incumbent on Member States, the Committee would point out that a list of the proceedings falling under Article 1 of Regulation (EC) 1346/2000 is already set out in Annex A to this Regulation. This raises the question of to what extent it would not suffice merely to refer to this annex. The obligation incumbent on Member States to notify proceedings could therefore be limited to amendments, supplementary provisions or additional proceedings relating to the implementation of the Directive.

3.1.2. Employees covered by the proposal for a Directive

3.1.2.1. The Committee welcomes the fact that the scope of the Directive has been made more precise and is now to include part-time employees, workers with fixed-term contracts, workers with a temporary employment relationship and homeworkers(1).

Consideration should be given to the extent to which persons having a similar status to employees may also come within the scope of the Directive. Such persons work for an employer on the basis of a contract which, whilst it does not in itself establish an employer-employee relationship, does, nonetheless, contain similar features or, to an extensive degree, equivalent features to an employment contract.

As this issue is directly linked to the respective national labour law provisions, the Committee calls upon the Member States to take account of this group of persons when defining the various terms.

3.1.2.2. The Committee also takes the view that inclusion in the Directive of clear provisions spelling out which employees may be excluded from the scope of the Directive, and under what conditions, represents an improvement on the previous provisions, which involved considerable differences between the Member States.

Provision is made for two grounds for exclusion from the Directive. Under Article 1(2) it is possible to exclude employees who receive equivalent protection by virtue of the existence of other forms of guarantee. The Committee endorses this provision.

Article 1(3) authorises Member States to exclude domestic servants employed by a natural person and share-fishermen.

The Committee believes that this constitutes an example of discrimination which is out of step with the Community's social policy objectives. Under the provisions set out in the previous Annex to the Directive, only two Member States were authorised to exclude domestic servants and two Member States also received authorisation to exclude share-fishermen paid in the form of a share of the catch. These employees should therefore be deleted from the list of persons who may be excluded from the scope of the Directive.

3.1.2.3. The Commission does, however, fail to make provision for excluding persons who exercise a controlling influence on the management of an enterprise. The Commission refers in this context to Article 10 of the Directive but this does not, in the Committee's view, fully take account of this issue.

The Committee therefore recommends that the following criteria be included in Article 3(1) as grounds which may be invoked by the Member States for exclusion from the scope of the Directive:

- members of the executive organ of a legal entity who are authorised to act as its legal representative;

- partners who are authorised to exercise a controlling influence on a company, even in the case of trust companies.

3.2. Time-limit on the guarantee

The Committee endorses the proposed simplification in principle. It shares the Commission's view concerning the need to apply the principle of subsidiarity, whilst at the same time stipulating a minimum level of protection. The proposed measures must not, however, result in a lowering of the guarantees currently enjoyed by employees.

Furthermore, the question should also be raised as to whether account should not also be taken of longer standing pay claims by employees where the liability of the employer was recognised by the courts but which were not met because of the onset of insolvency.

The Committee has reservations about allowing Member States to set a ceiling on payments to be made by the guarantee institution (Article 4(3)) as the new wording imposes no restrictions. The following qualification should be added: "in so doing they shall ensure that the purpose of the Directive, namely to provide protection, is safeguarded".

3.3. Transnational cases

On this point the Commission follows the case law of the European Court of Justice. The Committee endorses the principle that pay claims arise in the Member State in which the employee works; this principle is also in line with the Directive's aim of affording protection. A key prerequisite here is that the insolvency of the enterprise is recognised in the other Member State concerned.

Brussels, 30 May 2001.

The President

of the Economic and Social Committee

Göke Frerichs

(1) Council Directive 97/81/EC of 15 December 1997 concerning the framework agreement on part-time work concluded by UNICE, CEEP and the ETUC (OJ L 14, 20.1.1998, p. 9). Council Directive 199/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP (OJ L 175, 10.7.1999, p. 43). Council Directive 91/383/EEC of 25 June 1991 supplementing the measures to encourage improvements in the safety and health at work of workers (OJ L 206, 29.7.1991, p. 19).