Case C-435/10

J.C. van Ardennen

v

Raad van bestuur van het Uitvoeringsinstituut werknemersverzekeringen

(Reference for a preliminary ruling from the Centrale Raad van Beroep)

(Directive 80/987/EEC – Protection of employees in the event of the insolvency of their employer – Insolvency benefit – Payment subject to registration as a job‑seeker)

Summary of the Judgment

Social policy – Approximation of laws – Protection of employees in the event of the insolvency of their employer – Directive 80/987 – Limitation of liability of the guarantee institutions

(Council Directive 80/987, as amended by European Parliament and Council Directive 2002/74, Arts 3 and 4)

Articles 3 and 4 of Directive 80/987 relating to the protection of employees in the event of the insolvency of their employer, as amended by Directive 2002/74, must be interpreted as precluding a national rule which obliges employees to register as job-seekers in the event of the insolvency of their employer, in order fully to assert their right to payment of wage claims outstanding, uncontested and recognised by the national legislation.

It is purely by way of exception that Member States have the option, under Article 4 of Directive 80/987, to limit the payment obligation referred to in Article 3 of that directive. Article 4 of Directive 80/987 must be interpreted strictly and in conformity with its social objective, which is to guarantee a minimum of protection to all employees. To this effect, the cases in which it is permitted to limit the payment obligation of the guarantee institutions are listed exhaustively by Directive 80/987 and the provisions concerned must be interpreted strictly, having regard to their being derogations and to the social objective of that directive. In this respect, it would be contrary to the objective of Directive 80/987 to interpret it, and in particular Articles 3 and 4 thereof, in such a way that an employee is subject – owing to not fulfilling the obligation to register as a job-seeker within a given period – to an automatic and flat-rate reduction of the reimbursement of his salary claims, uncontested and recognised by the national legislation, and is not, therefore, entitled to the guarantee in respect of the salary which he has actually lost during the reference period.

(see paras 30-31, 34-35, 39, operative part)

JUDGMENT OF THE COURT (Fourth Chamber)

17 November 2011 ( )

(Directive 80/987/EEC – Protection of employees in the event of the insolvency of their employer – Insolvency benefit – Payment subject to registration as a job-seeker)

In Case C‑435/10,

REFERENCE for a preliminary ruling under Article 267 TFEU from the Centrale Raad van Beroep (Netherlands), made by decision of 8 September 2010, received at the Court on 13 September 2010, in the proceedings

J. C. van Ardennen

v

Raad van bestuur van het Uitvoeringsinstituut werknemersverzekeringen,

THE COURT (Fourth Chamber),

composed of J.-C. Bonichot, President of the Chamber, A. Prechal, K. Schiemann (Rapporteur), L. Bay Larsen and E. Jarašiūnas, Judges,

Advocate General: Y. Bot,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 8 September 2011,

after considering the observations submitted on behalf of:

– the Raad van bestuur van het Uitvoeringsinstituut werknemersverzekeringen, by M. Mollee, acting as Agent,

– the Netherlands Government, by C. Wissels and M. Noort, acting as Agents,

– the European Commission, by J. Enegren and F. Wilman, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Articles 4, 5 and 10 of Council Directive 80/987/EEC of 20 October 1980 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) (‘Directive 80/987’).

2 The reference has been made in proceedings between Mr van Ardennen, the applicant in the main proceedings, and the Raad van Bestuur van het Uitvoeringsinstituut Werknemersverzekeringen (Management Board of the body entrusted with implementation of employee insurance contributions, ‘the UWV’) concerning the refusal by the latter to pay him the entire amount of the insolvency benefit on the ground that he did not register as a job-seeker with the Centrale organisatie voor Werk en Inkomen (Central Organisation for Work and Income, ‘the CWI’) within the prescribed time limit.

Legal context

European Union legislation

3 Article 3 of Directive 80/987 states:

‘Member States shall take the measures necessary to ensure that guarantee institutions guarantee, subject to Article 4, payment of employees’ outstanding claims resulting from contracts of employment or employment relationships, including, where provided for by national law, severance pay on termination of employment relationships.

The claims taken over by the guarantee institution shall be the outstanding pay claims relating to a period prior to and/or, as applicable, after a given date determined by the Member States.’

4 Article 4 of the directive provides:

‘(1) Member States shall have the option to limit the liability of the guarantee institutions referred to in Article 3.

(2) When Member States exercise the option referred to in paragraph 1, they shall specify the length of the period for which outstanding claims are to be met by the guarantee institution. However, this may not be shorter than a period covering the remuneration of the last three months of the employment relationship prior to and/or after the date referred to in Article 3. Member States may include this minimum period of three months in a reference period with a duration of not less than six months.

Member States having a reference period of not less than 18 months may limit the period for which outstanding claims are met by the guarantee institution to eight weeks. In this case, those periods which are most favourable to the employee are used for the calculation of the minimum period.

(3) Furthermore, Member States may set ceilings on the payments made by the guarantee institution. These ceilings must not fall below a level which is socially compatible with the social objective of this Directive.

When Member States exercise this option, they shall inform the Commission of the methods used to set the ceiling.’

5 As provided in Article 5 of that directive:

‘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.’

6 Article 10 of Directive 80/987 states:

‘This Directive shall not affect the option of Member States:

(a) to take the measures necessary to avoid abuses;

(b) to refuse or reduce the liability referred to in the first paragraph of Article 3 or the guarantee obligation referred to in Article 7 if it appears that fulfilment of the obligation is unjustifiable because of the existence of special links between the employee and the employer and of common interests resulting in collusion between them;

(c) to refuse or reduce the liability referred to in the first paragraph of Article 3 or the guarantee obligation referred to in Article 7 in cases where the employee, on his or her own or together with his or her close relatives, was the owner of an essential part of the employer’s undertaking or business and had a considerable influence on its activities.’

National legislation

7 Chapter IV of the Law on unemployment (Werkloosheidswet, ‘the WW’) concerns the assumption of the obligations arising from the employment relationship in the event of the employer’s inability to pay. Pursuant to Article 61 of the WW, which is part of Chapter IV, an employee has a right to payment of benefit if he has to claim wages, holiday pay or holiday allowance from an employer adjudged insolvent.

8 Article 64 provides:

‘1. The right to benefit under this chapter covers:

(a) a maximum of thirteen weeks’ pay in respect of the period immediately preceding:

1. the date on which the employment relationship is rescinded;

2. the date on which the employment relationship ends through mutual agreement;

3. the date on which the employment relationship is automatically terminated; or

4. the date on which the employment relationship is repudiated;

(b) pay in respect of, at most, the appropriate period of notice for the employee …

(c) the holiday pay, the holiday allowance and the amounts associated with the employment relationship with the employee which the employer owes to third parties …

9 As provided in Article 65 of the WW:

‘(1) The following shall be deducted in full from the benefit referred to in Article 64:

(a) income derived from work as an employee and from activities for the purposes of which he is not regarded as an employee, performed during the period referred to in Article 64(1)(a) and (b);

...’

10 It is apparent from Article 2(1) of the CWI Registration Decree (Besluit registratie CWI, Nederlandse Staatscourant 2002, n° 229) that an employee who is entitled to a benefit under Chapter IV of the WW is obliged to register with the CWI as a job-seeker at the latest on the first working day following the day after the start of the notice period referred to in Article 64(1)(b) of the WW.

11 Article 40(1) of the Law on insolvency (Faillissementswet) provides:

‘(1) Employees in the service of the insolvent party may give notice to terminate the employment contract and in turn, the Liquidator may give notice to terminate their employment contract, with due account being taken of the contractual or statutory notice periods, on the understanding, however, that the employment contract may in any case be terminated with a notice period of six weeks …’

12 Article 3 of the Decree laying down the measures that the UWV may apply (Maatregelenbesluit UWV, Nederlandse Staatscourant 2004, n° 163, ‘UWV Measures Decree’) states:

‘In the event of an obligation contained in the first category of the … WW … not being fulfilled or not being properly fulfilled and if a warning is not sufficient, the amount and the duration are:

...

c. 20% of the period of delay with a maximum of 52 weeks if the time limit set is exceeded by more than … calendar days.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

13 From 1 August 1985 Mr van Ardennen was employed by Fruit Sellers International BV, an undertaking which was declared insolvent on 28 November 2006. Mr van Ardennen’s wages were paid in full and, accordingly, there were no wage arrears.

14 Having attempted, without success, to set up his own business, Mr van Ardennen registered with the CWI on 15 May 2007 and submitted an application for unemployment allowance on 20 May 2007. It was only on the 29 May 2007 that Mr van Ardennen registered as a job-seeker.

15 On 7 June 2007, Mr van Ardennen submitted an application for insolvency benefit to the UWV.

16 By decision of 11 September 2007, the UWV awarded Mr van Ardennen an insolvency benefit for outstanding claims for the period from 29 November 2006 to 12 February 2007. According to the UWV, that period corresponded to the notice period referred to in Article 64(1)(b) of the WW. That benefit included the following amounts: a gross payment of EUR 26 505.15 representing the salary, the cost of travel by car, holiday pay and holiday allowance and a net payment of EUR 1 200 in respect of expenses.

17 However, the UWV decreased that sum by 20%, in accordance with Chapter IV of the WW, thus penalising the fact that Mr van Ardennen did not register as a job-seeker within the prescribed time limit.

18 The objection by Mr van Ardennen was rejected by the UWV by decision of 18 December 2007, again on the ground that the WW required him to register as a job-seeker with the CWI and to have that registration extended.

19 Since the action brought against that decision by Mr van Ardennen before the Rechtbank was, on the same ground, also held to be unfounded, Mr van Ardennen appealed to the Centrale Raad van Beroep.

20 According to the UWV, under Article 65 of the WW, the income from the work carried out during the reference period is entirely deductible from the benefit referred to in Article 64 of that law. The UWV claims that the obligation to register as a job-seeker aims to increase the chances of the worker in question obtaining employment during that period and, consequently, to minimise the cost to the guarantee institutions.

21 The referring court submits that such underlying rationale to the obligation to register raises the question whether income earned from work during the period in which the right to insolvency benefit exists may be deducted from the insolvency benefit. It refers to the judgment in Case C-373/95 Maso and Others [1997] ECR I‑4051, in which the Court held that a Member State may not prohibit the aggregation of amounts guaranteed by Directive 80/987 with an allowance such as the allowance in question in the case giving rise to that judgment, because that allowance does not result from a contract or an employment relationship as it is paid to the worker only after his redundancy and therefore does not aim to remunerate activities carried out in the context of an employment relationship.

22 According to the referring court, it can be inferred from that judgment that such an aggregation may be prohibited if it related to the remuneration of activities carried out during the reference period.

23 That same court takes the view that Article 4(3) of Directive 80/987 does not prohibit the adoption of a rule whose purpose is to prohibit such an aggregation. In the light of the aim of this directive, it seems justified to deduct from the sum of the insolvency benefit the income that the worker actually earned during the notice period for the work carried out because such a deduction does not affect the minimal protection guaranteed by that directive.

24 The referring court takes the view that Articles 4, 5 and 10 of Directive 80/987 permit Member States not only to fix the rules for the organisation, the financing and the functioning of the guarantee institutions, but, in certain circumstances, also to limit the protection which that directive aims to guarantee to workers (see, in the context of the application for certain limitation periods, Case C‑125/01 Pflücke [2003] ECR I‑9375 and Case C-69/08 Visciano [2009] ECR I‑6741). The referring court adds that it is not able to determine clearly whether the obligation to register as a job-seeker is a provision that a Member State could adopt in general on the basis of those provisions of Directive 80/987.

25 Thus, having doubts as to whether the obligation to register as a job‑seeker in order to benefit from the insolvency benefit and the reduction of that sum in the case of late registration are compatible with the provisions of Directive 80/987, the Centrale Raad van Beroep decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘1. Must Directive 80/987, in particular Articles 4, 5 and 10 thereof, be interpreted in such a way as to render generally incompatible with it a national rule which obliges employees, in the event of the insolvency of their employer, in order to (fully) validate their right to have their outstanding wage claims met, to register as job-seekers at the latest on the first working day after the day on which the employment relationship ended or should reasonably have ended?

If not:

2. Must Directive 80/987, in particular Articles 4, 5 and 10 thereof, be interpreted in such a way as to render incompatible with it a national rule which also imposes that registration obligation on employees who engaged in activities in their own business or profession during the notice period?

3. Must Directive 80/987, in particular Articles 4, 5 and 10 thereof, be interpreted in such a way as to render incompatible with it a national rule on the basis of which failure to comply (timeously) with that registration obligation can result in the partial non‑payment of the insolvency benefit, where the level and the duration of the partial non payment measure taken are partly determined by the date of compliance with that obligation?’

Consideration of the questions referred

The first question

26 By its first question, the referring court asks, in essence, whether the provisions of Directive 80/987 must be interpreted as precluding a national rule which obliges employees in the event of the insolvency of their employer to register as job-seekers, in order to fully assert their right to payment of outstanding wage claims, such as those in issue in the main proceedings.

27 In that regard, it should first be recalled that it follows from the Court’s case-law that the social objective of Directive 80/987 is to guarantee employees a minimum of protection at European Union level in the event of the employer’s insolvency through payment of outstanding claims resulting from contracts of employment or employment relationships and relating to pay for a specific period (see Case C‑19/01, C‑50/01 and C‑84/01 Barsotti and Others [2004] ECR I‑2005, paragraph 35, and Visciano, paragraph 27).

28 It is for those reasons that Article 3 of that directive requires Member States to take the measures necessary to ensure that guarantee institutions guarantee, subject to Article 4 of that directive, payment of employees’ outstanding claims.

29 As regards the main proceedings, it is apparent from the file that Mr van Ardennen was refused the full payment of his salary relating to the notice period, provided for in Article 64(1)(b) of the WW, because he was late in registering as a job-seeker.

30 It is apparent from the file submitted to the Court that the action of Mr van Ardennen against the guarantee institution is in fact based on the existence of a non-contested claim that is recognised by the Dutch national legislation, namely Article 64(1)(b) of the WW. The payment of such a claim, actually owed by the employer who has been declared insolvent, falls within the scope of Article 3 of Directive 80/987 and is guaranteed by that directive.

31 In that respect, it should be recalled that it is purely by way of exception that Member States have the option, under Article 4 of Directive 90/987, to limit the payment obligation referred to in Article 3 of that directive. Such a limitation is possible both in respect of the duration of the period giving rise to the payment, in accordance with Article 4(2) of that directive, and the ceiling of such a payment, in accordance with Article 4(3) of the same directive.

32 Directive 80/987 requires, again in Article 4(3), that when a Member State exercises the option to set such a ceiling, it must inform the Commission.

33 It is apparent from the file that the legislation in issue in the main proceedings does not provide for a ceiling for reimbursement and therefore does not fall within the scope of the option provided for in Article 4(3) of Directive 80/987.

34 Furthermore, it should be noted that Article 4 of Directive 80/987 must be interpreted strictly and in conformity with its social objective, which is to guarantee a minimum of protection to all employees (see Case C‑125/97 Regeling [1998] ECR I-4493, paragraph 20). To this effect, the cases in which it is permitted to limit the payment obligation of the guarantee institutions are listed exhaustively and the provisions concerned must be interpreted strictly, having regard to their being derogations and to the social objective of the Directive.

35 In this respect, it must be noted that it would be contrary to the objective of Directive 80/987 to interpret it, and in particular Articles 3 and 4, in such a way that an employee, in the position of the applicant in the main proceedings, is subject ­– owing to the non-respect of the obligation to register as a job-seeker within a given period prescribed by the national law in question in the main proceedings – to an automatic and flat-rate reduction of the reimbursement of his salary claims and is not, therefore, entitled to the guarantee in respect of the salary which he has in fact lost during the reference period.

36 Furthermore, with regard to the case-law put forward by the referring court and cited at paragraph 24 of this judgment, it should be noted, as correctly observed by the Commission, that an obligation to register as a job-seeker within a fixed period such as that in issue in the main proceedings, the non-respect of which results in the reduction of the insolvency benefit paid, is not by its nature comparable with a time limit for the submission of an application for an insolvency benefit.

37 It should also be noted that it is not a question, in the main proceedings, of the payment of sums going beyond the social objective of Directive 80/987, payment which Article 4 of that directive authorises the Member States to limit (see, to that effect, Barsotti and Others, paragraph 34). Therefore, irrespective of whether Directive 80/987 precludes a rule that the income actually earned by the interested party during the notice period is deducted from the amount of the benefit, a national rule which, like that in issue in the main proceedings, reduces the amount of the reimbursement of salary claims automatically and at a flat-rate directly prejudices the minimum level of protection pursued by Directive 80/987 in the event of the employer’s insolvency.

38 Furthermore, although Article 10 of Directive 80/987 enables the Member States to take the measures necessary to avoid abuses, the order for reference does not contain anything which might establish the existence of an abuse which the obligation to register in question is intended to prevent. Moreover, during the hearing, the UWV expressly confirmed that the justification for that obligation is not based on Article 10.

39 In view of the foregoing, the answer to the first question is that Articles 3 and 4 of Directive 80/987 must be interpreted as precluding a national rule which obliges employees to register as job-seekers in the event of the insolvency of their employer, in order to fully assert their right to payment of outstanding wage claims, such as those in issue in the main proceedings.

The second and third questions

40 Since the first question has been answered in the affirmative, it is unnecessary to answer the second and third questions.

Costs

41 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 (Fourth Chamber) hereby rules:

Articles 3 and 4 of Council Directive 80/987/EEC of 20 October 1980 relating to the protection of employees in the event of the insolvency of their employer, as amended by Directive 2002/74/EC of the European Parliament and of the Council of 23 September 2002 must be interpreted as precluding a national rule which obliges employees to register as job-seekers in the event of the insolvency of their employer, in order to fully assert their right to payment of outstanding wage claims, such as those in issue in the main proceedings.

[Signatures]