Proposal for a Directive of the European Parliament and of the Council on the protection of employees in the event of the insolvency of their employer (Codified version)
Date: 2006-11-06
Institutions: European Commission
Subjects: approximation of laws, codification of EU law, employer, financial solvency, occupational safety, pay, social security

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 6.11.2006 
COM(2006) 657 final 

2006/0220 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the protection of employees in the event of the insolvency of their employer 

(Codified version) 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

In  the  context  of  a  people’s  Europe,  the  Commission  attaches  great  importance  to 
simplifying  and  clarifying  Community  law  so  as  to  make  it  clearer  and  more 
accessible to the ordinary citizen, thus giving him new opportunities and the chance 
to make use of the specific rights it gives him. 

This aim cannot be achieved so long as numerous provisions that have been amended 
several times, often quite substantially, remain scattered, so that they must be sought 
partly  in  the  original  instrument  and  partly  in  later  amending  ones.  Considerable 
research work, comparing many different instruments, is thus needed to identify the 
current rules. 

For  this  reason  a  codification  of  rules  that  have  frequently  been  amended  is  also 
essential if Community law is to be clear and transparent. 

On  1  April  1987  the  Commission  therefore  decided1  to  instruct  its  staff  that  all 
legislative acts should be codified after no more than ten amendments, stressing that 
this  is  a  minimum  requirement  and  that  departments  should  endeavour  to  codify  at 
even  shorter  intervals  the  texts  for  which  they  are  responsible,  to  ensure  that  the 
Community rules are clear and readily understandable. 

The  Conclusions  of 
the  Edinburgh  European  Council 
(December 1992) confirmed this2, stressing the importance of codification as it offers 
certainty as to the law applicable to a given matter at a given time. 

the  Presidency  of 

Codification  must  be  undertaken  in  full  compliance  with  the  normal  Community 
legislative procedure. 

Given  that  no  changes  of  substance  may  be  made  to  the  instruments  affected  by 
codification, the European Parliament, the Council and the Commission have agreed, 
by  an  interinstitutional  agreement  dated  20  December  1994,  that  an  accelerated 
procedure may be used for the fast-track adoption of codification instruments. 

is 

this  proposal 

to  undertake  a  codification  of  Council 
The  purpose  of 
Directive 80/987/EEC  of  20  October  1980  on  the  protection  of  employees  in  the 
event  of  the  insolvency  of  their  employer3.  The  new  Directive  will  supersede  the 
various acts incorporated in it4; this proposal fully preserves the content of the acts 
being  codified  and  hence  does  no  more  than  bring  them  together  with  only  such 
formal amendments as are required by the codification exercise itself. 

COM(87) 868 PV. 
See Annex 3 to Part A of the Conclusions. 
Carried out pursuant to the Communication from the Commission to the European Parliament and the 
Council – Codification of the Acquis communautaire, COM(2001) 645 final. 
See Annex I, Parts A and B, to this proposal. 

1. 

2. 

3. 

4. 

1 
2 
3 

4 

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5. 

The codification proposal was drawn up on the basis of a preliminary consolidation, 
in all official languages, of Directive 80/987/EEC and the instruments amending it, 
carried out by the Office for Official Publications of the European Communities, by 
means  of  a  data-processing  system.  Where  the  Articles  have  been  given  new 
numbers,  the  correlation  between  the  old and  the  new  numbers  is  shown  in  a  table 
contained in Annex II to the codified Directive. 

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(cid:208) 80/987/EEC 

2006/0220 (COD) 

Proposal for a 

DIRECTIVE …/…/EC OF THE EUROPEAN PARLIAMENT AND OF THE 
COUNCIL 

of […] 

(cid:208) 2002/74/EC Art. 1 pt. 1 

on the protection of employees in the event of the insolvency of their employer 

(Text with EEA relevance) 

(cid:208) 80/987/EEC (adapted) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article ⌦ 137(2) ⌫ thereof, 

Having regard to the proposal from the Commission, 

Having regard to the opinion of the European Economic and Social Committee1, 

⌦ Having regard to the opinion of the Committee of the Regions2, ⌫ 

Acting in accordance with the procedure laid down in Article 251 of the Treaty3, 

Whereas: 

(1) 

Council Directive 80/987/EEC of 20 October 1980 on the protection of employees in 
the event of the insolvency of their employer4 has been substantially amended several 
times5. In the interests of clarity and rationality the said Directive should be codified. 

(cid:208)  

1 
2 
3 
4 

5 

OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ C […], […], p. […]. 
OJ  L  283,  28.10.1980,  p.  23.  Directive  as  last  amended  by  Directive  2002/74/EC  of  the  European 
Parliament and of the Council (OJ L 270, 8.10.2002, p. 10). 
See Annex I, Parts A and B. 

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(2) 

(3) 

(4) 

(5) 

(cid:208) 2002/74/EC Recital 1 

The  Community  Charter  of  Fundamental  Social  Rights  for  Workers  adopted  on 
9 December  1989  states,  in  point  7,  that  the  completion  of  the  internal  market  must 
lead  to  an  improvement  in  the  living  and  working  conditions  of  workers  in  the 
Community and that this improvement must cover, where necessary, the development 
of  certain  aspects  of  employment  regulations  such  as  procedures  for  collective 
redundancies and those regarding bankruptcies. 

(cid:208) 80/987/EEC Recital 1 and 
2002/74/EC Recital 2, second part 
(adapted) 

It  is  necessary  to  provide  for  the  protection  of  employees  in  the  event  of  the 
insolvency  of  their  employer,  in  particular  in  order  to  guarantee  payment  of  their 
outstanding  claims,  ⌦ and  to  ensure  a  minimum  degree  of  protection, ⌫  while 
taking  account  of  the  need  for  balanced  economic  and  social  development  in  the 
Community.  ⌦ To  this  end,  the  Member  States  must  establish  a  body  which 
guarantees payment of the outstanding claims of the employees concerned. ⌫ 

(cid:208) 2002/74/EC Recital 5 (adapted) 

In  order  to  ensure  equitable  protection  for  the  employees  concerned,  the  state  of 
insolvency  should  be  ⌦ defined  in  the  light  of  the ⌫  legislative  trends  in  the 
Member States and that concept should also include insolvency proceedings other than 
liquidation. In this context, Member States should, in order to determine the liability of 
the guarantee institution, be able to lay down that where an insolvency situation results 
in several insolvency proceedings, the situation is to be treated as a single insolvency 
procedure. 

(cid:208) 2002/74/EC Recital 6 

It should be ensured that the employees referred to in Council Directive 97/81/EC of 
15  December  1997  concerning  the  Framework  Agreement  on  part-time  work 
concluded  by  UNICE,  CEEP  and  the  ETUC6,  Council  Directive  1999/70/EC  of 
28 June 1999 concerning the framework agreement on fixed-term work concluded by 
the  ETUC,  UNICE  and  CEEP7  and  Council  Directive  91/383/EEC  of  25  June  1991 
supplementing  the  measures  to  encourage  improvements  in  the  safety  and  health  at 
work  of  workers  with  a  fixed-duration  employment  relationship  or  a  temporary 
employment relationship8 are not excluded from the scope of this Directive. 

6 
7 
8 

OJ L 14, 20.1.1998, p. 9. Directive as amended by Directive 98/23/EC (OJ L 131, 5.5.1998, p. 10). 
OJ L 175, 10.7.1999, p. 43. 
OJ L 206, 29.7.1991, p. 19. 

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(cid:208) 2002/74/EC Recital 7 (adapted) 

(6) 

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 
⌦ employees’ ⌫ rights in line with the established case law of the Court of Justice 
of the European Communities, provisions should be ⌦ laid down ⌫ which expressly 
state  which  institution  is  responsible  for  meeting  pay  claims  in  these  cases  and 
establish  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. 

(7)  Member States may set limitations on the responsibility of the guarantee institutions. 
Those  limitations  must  be  compatible  with  the  social  objective  of  the  Directive  and 
may take into account the different levels of claims. 

(cid:208) 2002/74/EC Recital 8 

(8) 

In order to make it easier to identify insolvency proceedings, in particular in situations 
with  a  cross-border  dimension,  provision  should  be  made  for  the  Member  States  to 
notify  the  Commission  and  the  other  Member  States  about  the  types  of  insolvency 
proceedings which give rise to intervention by the guarantee institution. 

(cid:208) 2002/74/EC Recital 9 

(cid:208) 2002/74/EC Recital 11 
(adapted) 

(9) 

Since  the  objectives  of  the  action ⌦ to  be  taken ⌫  cannot  be  sufficiently  achieved 
by  the  Member  States  and  can  therefore  be  better  achieved  at  Community  level,  the 
Community  may  adopt  measures,  in  accordance  with  the  principle  of  subsidiarity  as 
set out in Article 5 of the Treaty. In accordance with the principle of proportionality, 
as set out in that Article, this Directive does not go beyond what is necessary in order 
to achieve that objective. 

(10)  The Commission should submit to the European Parliament and the Council a report 
on  the  implementation  and  application  of  this  Directive  in  particular  as  regards  the 
new forms of employment emerging in the Member States. 

(cid:208) 2002/74/EC Recital 12 

(11)  This  Directive  should  be  without  prejudice  to  the  obligations  of  the  Member  States 
relating  to  the  time-limits  for  transposition  into  national  law  and  application  of  the 
Directives set out in Annex I, Part C, 

(cid:208)  

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HAVE ADOPTED THIS DIRECTIVE: 

(cid:208) 80/987/EEC 

(cid:208) 2002/74/EC Art. 1 pt. 2 
(adapted) 

CHAPTER I 

Scope and definitions 

Article 1 

1.  This  Directive  shall  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). 

2.  Member  States  may,  by  way  of  exception,  exclude  claims  by  certain  categories  of 
employee  from  the  scope  of  this  Directive,  by  virtue  of  the  existence  of  other  forms  of 
guarantee  if  it  is  established  that  these  offer  the  persons  concerned  a  degree  of  protection 
equivalent to that resulting from this Directive. 

3.  Where  such  provision  already  applies  in  their  national  legislation,  Member  States  may 
continue to exclude from the scope of this Directive: 

(a) 

(b) 

domestic servants employed by a natural person; 

share-fishermen. 

Article 2 

1.  For  the  purposes  of  this  Directive,  an  employer  shall  be  deemed  to  be  in  a  state  of 
insolvency where a request has been made for the opening of collective proceedings based on 
insolvency  of  the  employer,  as  provided  for  under  the  laws,  regulations  and  administrative 
provisions of a Member State, and involving the partial or total divestment of the employer's 
assets  and  the  appointment  of  a  liquidator  or  a  person  performing  a  similar  task,  and  the 
authority which is competent pursuant to the said provisions has: 

(a) 

(b) 

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. 

2.  This  Directive  is  without  prejudice  to  national  law  as  regards  the  definition  of  the  terms 
‘employee’, ‘employer’, ‘pay’, ‘right conferring immediate entitlement’ and ‘right conferring 
prospective entitlement’. 

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However, the Member States may not exclude from the scope of this Directive: 

(a) 

part-time employees within the meaning of Directive 97/81/EC; 

(b)  ⌦ employees ⌫  with 

a 

fixed-term 

contract  within 

the  meaning  of 

Directive 1999/70/EC; 

(c)  ⌦ employees ⌫ with a temporary employment relationship within the meaning of 

Article 1(2) of Directive 91/383/EEC. 

3.  Member  States  may  not  set  a  minimum  duration  for  the  contract  of  employment  or  the 
employment  relationship  in  order  for  ⌦ employees ⌫  to  qualify  for  claims  under  this 
Directive. 

4.  This  Directive  does  not  prevent  Member  States  from  extending  employee  protection  to 
other situations of insolvency, for example where payments have been de facto stopped on a 
permanent basis, established by proceedings different from those mentioned in paragraph 1 as 
provided for under national law. 

Such  procedures  shall  not  however  create  a  guarantee  obligation  for  the  institutions  of  the 
other Member States in the cases referred to in Chapter ⌦ IV ⌫ . 

(cid:208) 80/987/EEC 

CHAPTER II 

Provisions concerning guarantee institutions 

(cid:208) 2002/74/EC Art. 1 pt. 3 

Article 3 

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. 

Article 4 

1.  Member  States  shall  have  the  option  to  limit  the  liability  of  the  guarantee  institutions 
referred to in the first paragraph of Article 3. 

2.  If  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. 

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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 the second 
paragraph of 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 shall be used for the calculation of 
the minimum period. 

(cid:208) 2002/74/EC Art. 1 pt 3 
(adapted) 

3. 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. 

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

(cid:208) 80/987/EEC (adapted) 

Article 5 

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) 

(b) 

(c) 

the assets of the institutions must be independent of the employers’ operating capital 
and be inaccessible to proceedings for insolvency; 

employers  must  contribute  to  financing,  unless  it  is  fully  covered  by  the  public 
authorities; 

the  institutions'  liabilities  must  not  depend  on  whether  or  not  obligations  to 
contribute to financing have been fulfilled. 

CHAPTER III 

Provisions concerning social security 

Article 6 

Member  States  may  stipulate  that  Articles  3,  4  and  5  shall  not  apply  to  contributions  due 
under national statutory social security schemes or under supplementary ⌦ occupational or 
inter-occupational ⌫ pension schemes outside the national statutory social security schemes. 

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Article 7 

Member States shall take the measures necessary to ensure that non-payment of compulsory 
contributions  due  from  the  employer,  before  the  onset  of  his  insolvency,  to  their  insurance 
institutions  under  national  statutory  social  security  schemes  does  not  adversely  affect 
employees'  benefit  entitlement  in  respect  of  these  insurance  institutions  in  so  far  as  the 
employees' contributions have been deducted at source from the remuneration paid. 

Article 8 

Member States shall ensure that the necessary measures are taken to protect the interests of 
employees  and  of  persons  having  already  left  the  employer's  undertaking  or  business  at  the 
date  of  the  onset  of  the  employer's  insolvency  in  respect  of  rights  conferring  on  them 
immediate or prospective entitlement to old-age benefits, including survivors' benefits, under 
supplementary  ⌦ occupational  or  inter-occupational ⌫  pension  schemes  outside  the 
national statutory social security schemes. 

(cid:208) 2002/74/EC Art. 1 pt. 4 
(adapted) 

CHAPTER IV  

Provisions concerning transnational situations 

Article 9 

1. If an undertaking with activities in the territories of at least two Member States is in a state 
of  insolvency  within  the  meaning  of  Article  2(l),  the  institution  responsible  for  meeting 
employees' outstanding claims shall be that in the Member State in whose territory they work 
or habitually work. 

2.  The  extent  of  employees'  rights  shall  be  determined  by  the  law  governing  the  competent 
guarantee institution. 

3. Member States shall take the measures necessary to ensure that, in the cases referred to in 
paragraph  1,  decisions  taken  in  the  context  of  insolvency  proceedings  referred  to  in 
Article 2(1),  which  have  been  requested  in  another  Member  State,  are  taken  into  account 
when determining the employer's state of insolvency within the meaning of this Directive. 

Article 10 

1.  For  the  purposes  of  implementing  Article  9, Member  States  shall  make  provision  for  the 
sharing of relevant information between their competent administrative authorities and/or the 
guarantee  institutions  mentioned  in  the  first  paragraph  of  Article  3,  making  it  possible  in 
particular  to  inform  the  guarantee  institution  responsible  for  meeting  the  employees' 
outstanding claims. 

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2.  Member  States  shall  notify  the  Commission  and  the  other  Member  States  of  the  contact 
details  of  their  competent  administrative  authorities  and/or  guarantee  institutions.  The 
Commission shall make ⌦ that information ⌫ publicly accessible. 

(cid:208) 80/987/EEC (adapted) 

CHAPTER V  

General and final provisions 

Article 11 

This  Directive  shall  not  affect  the  option  of  Member  States  to  apply  or  introduce  laws, 
regulations or administrative provisions which are more favourable to employees. 

Implementation of this Directive shall not under any circumstances be sufficient grounds for a 
regression  in  relation  to  the  current  situation  in  the  Member  States  and  in  relation  to  the 
general level of protection of ⌦ employees ⌫ in the area covered by it. 

(cid:208) 2002/74/EC Art. 1 pt. 5 
(adapted) 

(cid:208) 80/987/EEC (adapted) 

This Directive shall not affect the option of Member States: 

Article 12 

(a) 

(b) 

(c) 

to take the measures necessary to avoid abuses; 

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; 

(cid:208) 2002/74/EC Art. 1 pt. 6 

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. 

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(cid:208) 2002/74/EC Art. 1 pt. 7 
(adapted) 

Article 13 

Member  States  shall  notify  the  Commission  and  the  other  Member  States  of  the  types  of 
national  insolvency  proceedings  falling  within  the  scope  of  this  Directive,  and  of  any 
amendments relating thereto.  

The Commission shall publish these communications in the Official Journal of the European 
⌦ Union ⌫ . 

(cid:208) 80/987/EEC Art 11 (adapted) 

Article 14 

Member States shall communicate to the Commission the text of the ⌦ main ⌫ provisions 
⌦ of national law ⌫ which they adopt in the field ⌦ covered ⌫ by this Directive. 

(cid:208) 2002/74/EC Art. 2(2) (adapted) 

(cid:208) 2002/74/EC Art. 4 (adapted) 

⌦ Article 15 ⌫ 

⌦ By 8 October 2010 at the latest, the Commission shall submit to the European Parliament 
and  to  the  Council  a  report  on  the  implementation and  application  in  the  Member  States  of 
Articles  1  to  4,  Articles  9  and  10,  Article  11,  second  paragraph,  Article  12,  point  (c),  and 
Articles 13 and 14. ⌫ 

(cid:208)  

Article 16 

Directive  80/987/EEC,  as  amended  by  the  acts  listed  in  Annex  I,  is  repealed,  without 
prejudice to the obligations of the Member States relating to the time-limits for transposition 
into national law and application of the Directives set out in Annex I, Part C. 

References  to  the  repealed  Directive  shall  be  construed  as  references  to  this  Directive  and 
shall be read in accordance with the correlation table in Annex II. 

This Directive shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

Article 17 

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(cid:208) 80/987/EEC 

Article 18 

This Directive is addressed to the Member States. 

Done at Brussels, […] 

For the European Parliament 
The President 
[…] 

For the Council 
The President 
[…] 

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(cid:207) 

ANNEX I 

Part A 

Repealed Directive with its successive amendments 
(referred to in Article 16) 

Council Directive 80/987/EEC 

(OJ L 283, 28.10.1980, p. 23) 

Council Directive 87/164/EEC 

(OJ L 66, 11.3.1987, p. 11) 

Directive 2002/74/EC of the European Parliament 
and of the Council 

(OJ L 270, 8.10.2002, p. 10) 

1994 Act of Accession 

Part B 

Non-repealed amending act 
(referred to in Article 16) 

Part C 

List of time-limits for transposition into national law and application 
(referred to in Article 16) 

Directive 

Time-limit for transposition 

Date of application 

80/987/EEC 

87/164/EEC 

2002/74/EC 

28 October 1983 

8 October 2005 

_____________ 

1 January 1986 

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ANNEX II 

CORRELATION TABLE 

Directive 80/987/EEC 

This Directive 

Article 1 

Article 2 

Article 3 

Article 4 

Article 5 

Article 6 

Article 7 

Article 8 

Article 8a 

Article 8b 

Article 9 

Article 10 

Article 10a 

Article 11(1) 

Article 11(2) 

Article 12 

________ 

________ 

________ 

Article 13 

________ 

________ 

Article 1 

Article 2 

Article 3 

Article 4 

Article 5 

Article 6 

Article 7 

Article 8 

Article 9 

Article 10 

Article 11 

Article 12 

Article 13 

_______ 

Article 14 

_______ 

Article 15 

Article 16 

Article 17 

Article 18 

Annex I 

Annex II 

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