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"
Date: 2001-05-30
Institutions: European Economic and Social Committee
Subjects: approximation of laws, employer, financial solvency, job security, wage earner

C 221/110

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Official Journal of the European Communities

7.8.2001

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

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

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 deliber-
ations 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 insti-

tution in cases with a cross-border dimension;

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.

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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.

As regards the obligation to notify national insolvency pro-
ceedings, 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. E m p l o y e e s c o v e r e d b y t h e p r o p o s a l f o r

a D i r e c t i v e

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.

The Committee welcomes the fact that the scope
3.1.2.1.
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).

As regards the legal basis for the Directive,

2.5.
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.

In the interests of providing maximum transparency,
2.6.
the Committee also recommends the publication of a consoli-
dated 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. T h e t e r m ‘ i n s o l v e n c y ’

the development of

As mentioned above, the proposal for a Directive takes account
insolvency law and the practical
of
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.

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, nonethe-
less, 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.

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.

(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).

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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.

The Commission does, however,

3.1.2.3.
to make
provision for excluding persons who exercise a controlling
influence on the management of an enterprise. The Com-
mission 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.

fail

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 prin-
ciple. It shares the Commission’s view concerning the need to

Brussels, 30 May 2001.

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.

The President

of the Economic and Social Committee

Göke FRERICHS