CELEX: 61992CC0382
Language: en
Date: 1994-03-02 00:00:00
Title: Joined opinion of Mr Advocate General Van Gerven delivered on 2 March 1994. # Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland. # Safeguarding of employees rights in the event of transfers of undertakings. # Case C-382/92. # Commission of the European Communities v United Kingdom of Great Britain and Northern Ireland. # Collective redundancies. # Case C-383/92.

Important legal notice

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61992C0382

JOINED OPINIONS OF MR ADVOCATE GENERAL VAN GERVEN DELIVERED ON 2 MARCH 1994.  -  COMMISSION OF THE EUROPEAN COMMUNITIES V UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND.  -  CASES C-382/92 AND C-383/92.  -  SAFEGUARDING OF EMPLOYEES'RIGHTS IN THE EVENT OF TRANSFERS OF UNDERTAKINGS - COLLECTIVE REDUNDANCIES.  

European Court reports 1994 Page I-02435 Swedish special edition Page I-00169 Finnish special edition Page I-00205

Opinion of the Advocate-General

++++Mr President,  Members of the Court,  1. This opinion relates to two sets of proceedings brought before the Court by the Commission against the United Kingdom under Article 169 of the EC Treaty. The Commission argues in each case that that Member State has failed to fulfil its obligations under Article 5 of the EC Treaty and under a Council directive. The first case, Case C-382/92, concerns the defective implementation of Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses, (1) while the second case, Case C-383/92, concerns the defective implementation of Council Directive 75/129/EEC of 17 February 1975 on the approximation of the laws of the Member States relating to collective redundancies. (2) I would first like to recapitulate the relevant provisions in each directive.  2. Article 1(1) of Directive 77/187 provides that that directive is to apply to the "transfer of an undertaking, business or part of a business to another employer as a result of a legal transfer or merger".  Articles 3 to 5 of that directive contain provisions designed to safeguard employees' rights in the event of transfer. More specifically, they concern the rights under individual contracts of employment and collective agreements, dismissal by reason of a transfer and protection of the status and function of the representatives of employees. In addition, Article 6 of the directive imposes conditions regarding information and consultation of employees affected and is worded as follows:  "1. The transferor and the transferee shall be required to inform the representatives of their respective employees affected by a transfer within the meaning of Article 1(1) of the following:  - the reasons for the transfer,  - the legal, economic and social implications of the transfer for the employees,  - measures envisaged in relation to the employees.  The transferor must give such information to the representatives of his employees in good time before the transfer is carried out.  The transferee must give such information to the representatives of his employees in good time, and in any event before his employees are directly affected by the transfer as regards their conditions of work and employment.  2. If the transferor or the transferee envisages measures in relation to his employees, he shall consult his representatives of the employees in good time on such measures with a view to seeking agreement.  3. ...  4. Member States may limit the obligations laid down in paragraphs 1, 2 and 3 to undertakings or businesses which, in respect of the number of employees, fulfil the conditions for the election or designation of a collegiate body representing the employees.  5. Member States may provide that where there are no representatives of the employees in an undertaking or business, the employees concerned must be informed in advance when a transfer within the meaning of Article 1(1) is about to take place."  According to Article 2(c) of Directive 77/187, the phrase "representatives of the employees" is to be understood in the directive as meaning the "representatives of the employees provided for by the laws or practice of the Member States, with the exception of members of administrative, governing or supervisory bodies of companies who represent employees on such bodies in certain Member States".  It should also be noted that, according to Article 7, the directive "shall not affect the right of Member States to apply or introduce laws, regulations or administrative provisions which are more favourable to employees".  3. Directive 75/129 contains common rules governing situations of collective redundancies. Article 1 contains a definition of "collective redundancies" and defines the scope of the directive. Under the heading "consultation procedure", Article 2 provides as follows:  "1. Where an employer is contemplating collective redundancies, he shall begin consultations with the workers' representatives with a view to reaching an agreement.  2. These consultations shall, at least, cover ways and means of avoiding collective redundancies or reducing the number of workers affected, and mitigating the consequences.  3. To enable the workers' representatives to make constructive proposals the employer shall supply them with all relevant information and shall in any event give in writing the reasons for the redundancies, the number of workers to be made redundant, the number of workers normally employed and the period over which the redundancies are to be effected.  ..."  Articles 3 and 4 set out the procedure to be followed in the case of collective redundancies. Article 3 is worded as follows:  "1. Employers shall notify the competent public authority in writing of all projected collective redundancies.  ...  2. Employers shall forward to the workers' representatives a copy of the notification provided for in paragraph 1.  The workers' representatives may send any comments they may have to the competent public authority."  Article 4 provides that:  "1. Projected collective redundancies notified to the competent public authority shall take effect not earlier than 30 days after the notification referred to in Article 3(1), without prejudice to any provisions governing individual rights with regard to notice of dismissal.  ...  2. The period provided for in paragraph 1 shall be used by the competent public authority to seek solutions in the problems raised by the projected collective redundancies.  3. ...".  According to Article 1(1)(b) of Directive 75/129, the term "workers' representatives" is to be understood as meaning "the workers' representatives provided for by the laws or practices of the Member States". It also appears from Article 1(1)(a) that, for the directive to apply, at least 20 workers must be employed in the undertaking or establishment affected by the collective redundancies.  In contrast to the rules contained in Article 6(4) and (5) of Directive 77/187, Directive 75/129 does not provide any similar opportunities for Member States to depart from the provisions laid down. Article 5, in the same way as Article 7 of Directive 77/187, simply provides that the directive does not affect the right of Member States to apply or introduce laws, regulations or administrative provisions which are more favourable to workers.  4. Directive 77/187 was implemented in the United Kingdom by way of the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("the 1981 Regulations"). (3) The provisions which implemented Directive 75/129 are to be found in the Employment Protection Act 1975 ("the Employment Protection Act"). (4) According to the Commission, the implementation of each directive is defective in a number of different respects. In accordance with Article 169 of the EC Treaty, the Commission instituted proceedings against the United Kingdom for failure to fulfil its obligations, beginning with a letter of notice dated 27 November 1989. While the administrative procedure initially related to both directives together, it subsequently followed separate but parallel courses: in each case the Commission delivered a reasoned opinion on 26 March 1991 and ultimately brought two separate sets of proceedings before the Court on 14 October 1992. In each case, however, the first head of complaint is the same, relating as it does to the designation of workers' representatives, while there are four other heads of complaint in Case C-382/92 and three others in Case C-383/92. In what follows, I shall examine the one head of complaint common to both cases before going on to examine the remaining heads of complaint in Case C-382/92 and in Case C-383/92.  The head of complaint common to both cases: the duty to designate workers' representatives  5. This head of complaint relates to Article 6 of Directive 77/187 (so far as Case C-382/92 is concerned) and Articles 2 and 3 of Directive 75/129 (so far as Case C-383/92 is concerned). Those provisions, the text of which I have already set out, require workers' representatives to be informed and consulted. According to the Commission, the United Kingdom has failed to implement those provisions correctly inasmuch as it has not provided rules for the designation of workers' representatives where this does not take place on a voluntary basis.  6. There is no dispute between the parties as to the present position under United Kingdom law. Regulation 10 of the 1981 Regulations, which implements Article 6 of Directive 77/187, and sections 99 and 100(1) of the Employment Protection Act, which implement Articles 2 and 3 of Directive 75/129, limit the obligations to inform and consult to representatives of trade unions recognized by employers. Thus, only representatives of trade unions which have been voluntarily recognized can be treated as workers' representatives for the purposes of the directives. At the hearing, counsel for the United Kingdom confirmed that the United Kingdom legislation did not impose any alternative obligation on an employer, in the absence of voluntary recognition, to meet the requirements under the directives as to information or consultation, not even if there is within the undertaking an agreement under which there are de facto workers' representatives or a works council.  It should be noted that at the time of the negotiation and adoption of Directives 75/129 and 77/187 different legislation applied in the United Kingdom, namely the Industrial Relations Act 1971 and, following the repeal of that statute in 1974, the Employment Protection Act 1975. Those statutes provided a mechanism for the appointment of workers' representatives in the event that an employer might refuse to recognize such representatives. The application of the rules in question appears to have given rise to a number of legal problems. After a new government took office in 1979, the rules in question were repealed by the Employment Protection Act 1980.  7. The Commission takes the view that the present rules largely deprive Article 6 of Directive 77/187 and Articles 2 and 3 of Directive 75/129 of their effectiveness. By making recognition of representatives dependent on the will of employers, the obligations set out in those articles are undermined. The Commission accepts that each directive leaves it up to the Member States to define the term "workers' representatives" (5) in accordance with their laws or practices (see points 2 and 3 above). There is, however, a huge difference between leaving Member States free to provide for workers' representatives in accordance with their own legal systems and leaving them free not to provide for any such representatives at all. According to the Commission, each directive was adopted by the Council on the premiss that there was or would be (6) a mechanism in every Member State for the designation of workers' representatives in cases where employers were not prepared to recognize such representatives on a voluntary basis.  In the case of Directive 77/187, the Commission accepts that, as is evident from Article 6(5) of that directive, there need not necessarily be workers' representatives in every undertaking or business. That provision, however, relates to special situations or to small undertakings and may not be interpreted in such a way that the principal obligations set out in Article 6(1) and (2) (see point 2 above) are thereby undermined.  The Commission also argues that no inference can be drawn from either Article 2(c) of Directive 77/187 or Article 1(1)(b) of Directive 75/129 to the effect that worker representation can depend on the consent of employers. While Member States may leave the implementation of the social-policy objectives of both directives to management and labour, that does not discharge them from their fundamental obligation to ensure that all workers are afforded the full protection provided for in the directives in the event that that objective cannot be attained by means of consensus, that is to say, between management and labour. In that connection, the Commission cites two earlier decisions of the Court, namely the judgment in Case 61/81 (7) and that in Case 235/84 (see points 12 and 13 below). (8)  8. In contrast to the Commission, the United Kingdom takes the view that Directives 77/187 and 75/129 in no way affect national laws and practices regarding the recognition of trade unions or workers' representatives. It argues that the directives are limited to a partial harmonization in respect of the transfer of undertakings and collective redundancies respectively. They are not intended to amend the existing rules and practices with regard to worker representation.  The United Kingdom draws a parallel in this connection with the Court' s decision in the Danmols case. One of the issues in that case happened to be the interpretation of the term "employee" in Directive 77/187. The Court took the view that it was clear from the provisions of the directive that it was "intended to achieve only partial harmonization ... It is not however intended to establish a uniform level of protection throughout the Community on the basis of common criteria." The Court held that the term "employee" within the meaning of the directive had to be interpreted as covering "any person who, in the Member State concerned, is protected as an employee under national employment law". (9) According to the United Kingdom, the term "workers' representatives" can, by analogy, refer only to those representatives who have a role in the employment relationship under national laws or practices. This, it argues, is all the more the case in view of the fact that the two directives expressly define the term "workers' representatives" by reference to the laws or practices of the Member States (Article 1(1)(b) of Directive 75/129 and Article 2(c) of Directive 77/187).  9. We are thus faced with two conflicting interpretations of the content and scope of Article 6 of Directive 77/187 and Articles 2 and 3 of Directive 75/129. In the view of the Commission, those provisions impose on employers in every instance an obligation to inform and consult. If representatives are not designated on a voluntary basis, the Member State in question must then provide appropriate rules under which they can be designated. According to the United Kingdom, on the other hand, those provisions impose an obligation to inform and consult workers' representatives only if national law and practice provide for representatives.  With the appropriate qualifications (see point 14 below), I would go along with the view taken by the Commission. Naturally, it is necessary to accept the United Kingdom' s argument that neither of the two directives was intended to achieve even partial harmonization of national rules regarding the designation of workers' representatives within undertakings. Bearing in mind the politically sensitive nature of the problem, (10) the unavoidable conclusion is that, had that been the intention, it would have been stated in express terms. However, I share the view taken by the Commission that to make the activity of workers' representatives totally dependent on voluntary recognition by employers is incompatible with the protection of workers as apparent from the directives in the light of their objective, structure and wording.  10. In my opinion, this is most apparent with regard to Directive 75/129, for which reason we shall first consider its objective and structure. The essential objective of Directive 75/129 is to guarantee to workers within the Community, by way of Community rules establishing ordered procedures for consultation and redundancies, that their representatives should have the right to put their views in a situation, that of collective redundancies, which can undoubtedly be regarded as a crisis situation so far as the workers are concerned. With regard to such a situation, Article 2, which is the sole article in Section II of the directive, requires an employer to begin consultations with workers' representatives with a view to reaching an agreement and to supply them with all information necessary to enable them to make constructive proposals. Section III of the directive sets out a procedure for collective redundancies which is designed to involve the authorities in the search for a solution acceptable to the workers.  The objective and structure of the directive thus make clear the fundamental importance which it attaches to information and consultation of workers in what is for them the difficult situation of collective redundancy. (11) The wording of the directive also makes that clear. Apart from the provision in Article 1(1)(a) restricting the scope of the directive to establishments employing at least 20 workers, the directive contains no exceptions under which Member States might be entitled to circumvent the obligation to inform and consult workers' representatives. In the Court' s own words, the provisions of Directive 75/129 are thus "intended to serve to establish a common body of rules applicable in all the Member States, whilst leaving to the Member States power to apply or introduce provisions which are more favourable to workers". (12)  11. Although there are obvious differences between Directive 75/129 and Directive 77/187 with regard to objectives, structure and wording, it is clear that Directive 77/187 also attaches particular importance to information and consultation of workers' representatives in the event of the transfer of the undertaking or business in which they are employed. In such a situation, which indeed often leads to individual or collective redundancies, workers also deserve particular protection. Other than in cases of collective redundancy, however, in which they would not be appropriate, Directive 77/187 provides in the first place for provisions of substantive law, laid down in Articles 3, 4 and 5 and set out in Section II of the directive. Those provisions specify that workers are to retain their rights, that their employment should not be imperilled and that the position of existing workers' representatives should not be affected. Provisions of procedural law are however to be found in Section III of the directive, consisting of the abovementioned Article 6, which lay great emphasis on prior information and consultation to enable the transfer of the undertaking or business to take place in conditions acceptable to the workers employed.  The importance which Directive 77/187 attaches to prior information and consultation with workers' representatives is also evident from the wording of the directive. Admittedly the directive, in contrast to Directive 75/129, allows the Member States in specific areas to depart from the obligation of information and consultation. Thus, the Member States may, under Article 6(4) of Directive 77/187, exclude information and consultation in undertakings or businesses in which the workers are not represented by a collegiate body, essentially a works council. At the same time, they are empowered under Article 6(5), in undertakings or businesses where there are no workers' representatives at all, to require that the workers themselves be informed. The fact that these possibilities of derogation do not feature in the directive on collective redundancies does not, however, point to a major difference regarding the legal protection available to workers. The first possibility of derogation is comparable to the restriction in Article 1 of Directive 75/129 on that directive' s scope in favour of small undertakings ("in respect of the number of employees"). (13) The second possibility of derogation seems to me to be no more than a special application of the possibility which each directive offers to Member States to confer wider protection on workers than that provided under the directive in question. (14)  12. On the basis of the foregoing, I cannot accept the United Kingdom' s argument that national rules may be regarded as compatible with the fundamental objectives of the two directives in question if they render the provision of information to, and consultation of, workers' representatives in matters of such import to workers as collective redundancies and transfers of undertakings entirely dependent on the free choice of individual employers. As the Commission has pointed out, support for this view may be found in the two decisions which it has cited. The first of those decisions, in Case 61/81, concerned the failure of the United Kingdom to comply with Directive 75/117/EEC, (15) which is designed to give effect to the principle set out in Article 119 of the EC Treaty that men and women should receive equal pay for equal work. That directive requires Member States to eliminate all discrimination on grounds of sex with regard to the same work or work to which equal value is attached. The only way in the United Kingdom in which it was possible to determine whether two work functions were of equal value was by means of a job classification system which could be introduced only with the employer' s consent. Workers in the United Kingdom were for that reason unable to claim that their work was of equal value to comparable work if their employer refused to introduce a classification system. The Court took the view that such a situation was contrary to Directive 75/117. On the basis of the objective and system of the directive, it held that a worker who thought that his work had the same value as other work had to be entitled to assert his rights "before an appropriate authority" if the employer refused to introduce a job classification system, as the absence of such entitlement would "prevent the aims of the directive from being achieved". (16)  The Court rejected the argument that practical difficulties would arise if the system of employer approval in the United Kingdom were to be abandoned and the criterion of work of equal value were to be applied by national courts:  "The Court cannot endorse that view. The implementation of the directive implies that the assessment of the 'equal value' to be 'attributed' to particular work may be effected notwithstanding the employer' s wishes, if necessary in the context of adversary proceedings. The Member States must endow an authority with the requisite jurisdiction to decide whether work has the same value as other work, after obtaining such information as may be required." (17)  It cannot be denied that there are, as the United Kingdom has pointed out, important differences between Directive 75/117 and the directives here in issue with regard to objectives, scheme and wording, and that the requirement of judicial supervision is central to that judgment. That judgment is none the less based on the third paragraph of Article 189 of the Treaty, which, while leaving Member States to choose the ways and means, obliges them to adopt "in their national legal systems, all the measures necessary to ensure that the directive is fully effective, in accordance with the objective which it pursues". (18) In the present case, also, the Member States are required to bring about in full the result prescribed in the directives - the provision of information regarded as essential and the consultation of workers' representatives - without its being permissible to make that result entirely dependent on the will of employers.  13. Support for this position is also to be found in the Court' s judgment in Case 235/84, cited by the Commission, in which the Court held that:  "it is true that the Member States may leave the implementation of the social policy objectives pursued by a directive in this area in the first instance to management and labour. That possibility does not, however, discharge them from the obligation of ensuring that all workers in the Community are afforded the full protection provided for in the directive. The State guarantee must cover all cases where effective protection is not ensured by other means." (19)  That judgment is of all the more relevance to the present cases in view of the fact that it involved the provisions of Article 6 of Directive 77/187 here under discussion. Although the nature of the failure to fulfil obligations which was attributed to a Member State (Italy) in that case differed from that in the present cases, (20) the principle referred to by the Court is based on the same rule as that in the judgment in Case 91/81 cited above: while a Member State is free to choose the form and methods for the implementation of a directive - and can therefore in the first instance leave it to management and labour - it must always guarantee the result to be achieved.  14. That leads me to the following conclusion. By failing to provide laws, regulations and administrative provisions designed to bring about the result stipulated in Directives 75/129 and 77/187, that is to say, the provision of information to and consultation of workers' representatives in the event (subject to limited exceptions) of collective redundancies or transfers of undertakings or businesses, the United Kingdom has failed properly to fulfil its obligations under Community law.  Admittedly, the manner in which workers' representatives are involved in order to attain the prescribed result is a matter for the Member States, as is clear from the reference in Article 1(1)(b) of Directive 75/129 and Article 2(c) of Directive 77/187 to the laws or practices of the Member States. Those directives therefore do not in any way affect systems which are based on more extensive reciprocal agreement between management and labour. It is, however, for the Member States to adopt the laws, regulations and administrative provisions necessary, if no consensus can be reached, to ensure the designation of workers' representatives for the application of the directives.  Naturally, such measures must not go further than necessary to attain the result stipulated in the directives. Thus, there can certainly be no question of an obligation to introduce a general system of worker representation going beyond the scope of the directives. With regard to the matters and situations mentioned in the directives, the Member States would even in my opinion be doing enough if they were to provide for an ad hoc system, by which I mean an arrangement enabling the affected workers, or a majority of them, to designate ad hoc representatives in a particular case in which the provision of information and/or consultation are required under the directives (even if the application of such a system might give rise to numerous difficulties). The essential point, however, and I will repeat it, is that the designation of workers' representatives must not depend exclusively on the free choice or recognition of the employer.  15. If the Court should share my conclusion, then there are grounds for upholding the Commission' s first head of complaint in both Case C-382/92 and Case C-383/92. Admittedly, the Court has consistently held that "the scope of an action brought under Article 169 of the Treaty is delimited by the preliminary administrative procedure provided for by that article" (21) and that "in proceedings under Article 169 of the EEC Treaty for failure to fulfil an obligation, it is incumbent on the Commission to prove the allegation that the obligation has not been fulfilled". (22) It is for that reason necessary to consider how the Commission formulated its head of complaint in each case in the pre-litigation procedure. It is clear from point 2 of the Commission' s reasoned opinion that the complaint related to the absence in United Kingdom law "of any legal provision for the designation of employee representatives for bargaining and other purposes where this does not occur voluntarily in practice". That strikes me as being a particularly broad definition which makes it clear that the Commission was prepared to accept any rules under which the role of the workers' representatives, as provided for in the relevant directives, was not made totally dependent on a free choice of the employer. The complaint must for that reason be upheld.  Other heads of complaint in Case C-382/92  Second head of complaint: the requirement of transfer of ownership  16. This complaint concerns the scope of Directive 77/187, more specifically the term "transfer" as used in Article 1(1) of that directive. According to the case-law of the Court, on which there is no dispute as between the parties, the directive is applicable "where, following a legal transfer or merger, there is a change in the legal or natural person who is responsible for carrying on the business and who by virtue of that fact incurs the obligations of an employer vis-à-vis employees of the undertaking, regardless of whether or not ownership of the undertaking is transferred". (23)  17. With reference to two judicial decisions, (24) the Commission argues that the decided case-law in the United Kingdom in matters relating to the surrender of a franchise, the termination of a subcontract or other transfer of management functions does require a transfer of ownership in order for the provisions of the 1981 Regulations implementing Directive 77/187 to become applicable.  The United Kingdom disputes the contention that its national law incorrectly implements the directive on this particular point and claims that the Commission has in any event provided insufficient evidence to support its argument. According to Regulation 3(2) of the 1981 Regulations, they apply "whether the transfer is effected by sale or by some other disposition or by operation of law". In the view of the United Kingdom, national case-law on this point is consistent with the case-law of the Court, as is apparent from a decision of the House of Lords, in which it was stated that the Regulations, including Regulation 3, had to be interpreted in accordance with the Court of Justice' s interpretation of Directive 77/187. (25) The United Kingdom points out that decisions of the House of Lords are binding on the lower courts.  18. I would accept the United Kingdom' s argument that the Commission has provided insufficient evidence that United Kingdom law incorrectly implemented the directive on this point. Reference to decisions of two lower courts in which the directive was incorrectly applied cannot constitute evidence of defective implementation. In fact, the relevant national provision which the House of Lords, pursuant to Community law, stated had to be interpreted in accordance with the case-law of the Court (26) seems to me not in itself to be contrary to the directive. As counsel for the United Kingdom pointed out at the hearing, without being contradicted on this point by the Commission' s representative, the expression "by some other disposition" in Regulation 3(2) enables the directive to be correctly applied.  Third head of complaint: the requirement that the undertaking be in the nature of a commercial venture  19. Regulation 2(1) of the 1981 Regulations defines an "undertaking" as including "any trade or business but ... not ... any undertaking or part of an undertaking which is not in the nature of a commercial venture". According to the Commission - and on this point it was not contradicted by the United Kingdom - the term "commercial venture" is interpreted as referring to the investment of capital with a view to making profits and accepting the risk of losses. Undertakings which do not aim to be profit-making are unlikely to be regarded as "commercial ventures" even though they may to all intents and purposes operate as "businesses" offering products or services for remuneration. That definition of "undertaking" in the 1981 Regulations is, in the Commission' s view, too restricted in view of the fact that Directive 77/187 applies to all undertakings, even those which do not aim to be profit-making. This last point becomes clear from the Court' s judgment in Case C-29/91 Dr Sophie Redmond Stichting, which concerned the transfer of activities of a foundation financed wholly out of public funds. (27)  20. In its defence, the United Kingdom points out that Directive 77/187 was adopted on the basis of Article 100 of the EC Treaty, which authorizes the Community legislature to issue directives "for the approximation of such provisions laid down by law, regulation or administrative action in Member States as directly affect the establishment or functioning of the common market". According to the United Kingdom, the scope of Directive 77/187 cannot be more extensive than that allowed under the Treaty basis. National rules concerning the transfer of undertakings can directly affect the establishment or functioning of the common market only to the extent to which they relate to the transfer of undertakings or parts thereof which constitute part of the economic activity of the transferor and/or the transferee. They can have such an effect only if they render more difficult the establishment of undertakings in other Member States or give rise to unequal conditions of competition between the Member States. With regard to the establishment of undertakings, non-profit-making bodies are excluded under the EC Treaty (Articles 58 and 66). And so far as the prohibition of distortion of competition within the common market is concerned, as specified in Article 3(f) of the EEC Treaty (now Article 3(g) of the EC Treaty), a restricted definition of the term "undertaking" would be more in line with the recent decision in Poucet and Pistre. (28)  21. In its reply, the Commission states that it agrees with the United Kingdom that the directive, on the ground that it is based on Article 100 of the Treaty, is concerned only with economic activities. That, however, does not mean that a non-profit-making body must be excluded from the scope of the directive, so long as it is engaged in economic activities. The Commission considers that the United Kingdom' s criticism of the judgment in Dr Sophie Redmond Stichting is unjustified. The activities of the foundation in that case were of an economic nature, in the sense that the same type of activity could equally have been carried on by a profit-making body; moreover, there was no reason why one type of organization should have a competitive advantage over another by virtue of being excluded from the scope of the directive. The Commission therefore concludes that all undertakings within the meaning of Community law (which therefore have by definition an economic nature) fall within the scope of Directive 77/187 and must for that reason be covered by national law implementing it.  22. Let me first of all point out that the United Kingdom amended its legislation in 1993. The exclusion of "any undertaking or part of an undertaking which is not in the nature of a commercial venture" in the definition of "undertaking" in Regulation 2(1) of the 1981 Regulations was thereby removed. (29) That fact does not in itself have any bearing on the questions for consideration here since the case-law on Article 169 proceedings is to the effect that the question whether a Member State has failed to fulfil obligations must be examined on the basis of the position in which the Member State found itself at the end of the period laid down in the reasoned opinion. (30)  In my opinion, the underlying principle must be that the EC Treaty, by virtue of the fundamental provision in Article 2, covers "economic activities" "throughout the Community" and that the Community, in order to promote a harmonious (and henceforth also a balanced) development of those activities, has as its task to establish a common market. The Court has consistently conferred a broad meaning on the term "economic activities". As early as its judgment in Donà, the Court held that:  "the pursuit of an activity as an employed person or the provision of services for remuneration must be regarded as an economic activity within the meaning of Article 2 of the Treaty". (31)  In order for an activity to be described as economic, it is thus evident that it must be performed for remuneration. It is clear from the Court' s judgment in Lawrie-Blum that the decisive importance does not attach to the sector within which the activity is performed or even the legal provisions under which it takes place. In Lawrie-Blum, the Court ruled inter alia as follows:  "All that is required for the application of Article 48 is that the activity should be in the nature of work carried out for remuneration, irrespective of the sphere in which it is carried out (see the judgment of 12 December 1974 in Case 36/74 Walrave v Union Cycliste Internationale [1974] ECR 1405). Nor may the economic nature of those activities be denied on the ground that they are performed by persons whose status is governed by public law since, as the Court pointed out in its judgment of 12 February 1974 in Case 152/73 (Sotgiu v Deutsche Bundespost [1974] ECR 153), the nature of the legal relationship between employee and employer, whether involving public law status or a private law contract, is immaterial as regards the application of Article 48." (32)  23. In its case-law on the provision of services, the Court has defined the term "remuneration". (33) In its judgment in Humbel, the Court ruled in that connection that:  "The essential characteristic of remuneration thus lies in the fact that it constitutes consideration for the service in question, and is normally agreed upon between the provider and the recipient of the service." (34)  The judgment in Steymann, in particular, makes it clear that the element of remuneration, in the sense of economic consideration, does not necessarily presuppose the existence of a profit-making motive. In that case, which concerned inter alia the question of the extent to which specific tasks performed by a member of the Bhagwan Community could be regarded as an economic activity within the meaning of the EC Treaty, the Court ruled:  "In so far as the work, which aims to ensure a measure of self-sufficiency for the Bhagwan Community, constitutes an essential part of participation in that community, the services which the latter provides to its members may be regarded as being an indirect quid pro quo for their work." (35)  24. It follows from the foregoing that the economic activities covered by the EC Treaty must not be confined to those performed with a view to making profit or with the acceptance of commercial risks. On the contrary, the term covers all activities performed directly or indirectly for remuneration in the sense of economic consideration.  It is in this light that the term "undertaking" within the meaning of Directive 77/187 must be understood. In the absence of a specific definition in the directive itself, that term must cover all undertakings which pursue an economic activity within the meaning of the EC Treaty and certainly not only profit-making undertakings (although this will be the case in most instances). Under this interpretation, which is entirely consistent with the judgments in Dr Sophie Redmond Stichting (36) and Watson Rask, (37) there is in no way a breach of the legal basis of the directive, in view of the fact, as stated here, that the expression "common market" covers, pursuant to Article 2 of the Treaty, the entire panoply of economic activity within the Community.  25. That cannot be affected by the arguments which the United Kingdom believes it can derive from Articles 58 and 66 of the EC treaty and from the Court' s case-law on competition matters. With regard to the first argument: it is correct that the second paragraph of Article 58 of the EC Treaty excludes companies or firms "which are non-profit-making" from the freedom of establishment (and, by virtue of Article 66, from the freedom to provide services). However, it strikes me as going too far to use that as the basis for an argument restricting the scope of Directive 77/187. That directive is in no way concerned with the freedom of establishment or freedom to provide services within the Community context but rather constitutes, in the same way as Directive 75/129, a part of the Community' s social action programme. (38)  26. So far as concerns the United Kingdom' s argument based on the Court' s case-law regarding the meaning of the term "undertaking" in Community competition law and, more specifically, on the judgment in Poucet and Pistre, I would make the following comments. In its judgment in those cases, the Court essentially applied the criterion of "economic activities" only in the manner which I have described above. The issue there was whether sickness insurance funds, membership of which was compulsory under French law, could be regarded as undertakings within the meaning of Article 85 of the EC Treaty. The Court held:  "Sickness insurance funds or bodies responsible for the management of the public social security service perform a function which is exclusively social in character. That function is based on the principle of national solidarity and has no profit-making objective. Benefits provided are statutory benefits and are independent of the amount of contributions paid.  It follows that this activity is not an economic activity and that the bodies responsible for its performance are not undertakings within the meaning of Articles 85 and 86 of the Treaty." (39)  However, it in no way follows from that decision that the Court regards the pursuit of profit as the decisive criterion for the term "undertaking" as used in competition law. Indeed, the contrary is the case, since the Court expressly confirmed in its judgment in Poucet and Pistre the broad definition of that concept developed in its judgment in Hoefner and Elser as encompassing "every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed". (40) Admittedly, the judgment in Poucet and Pistre makes clear that there are limits to the Community concept of "economic activities". It does not cover the activities of bodies or authorities established by statute to attain purely social objectives and which operate on the basis of the concept of solidarity between members and redistribution of income (41) rather than on that of clearly specified economic consideration. (42)  27. The conclusion which I draw from the foregoing is that the scope of Directive 77/187 covers all undertakings which pursue an economic activity within the meaning of Article 2 of the EC Treaty and not only those which operate with a view to making profit. As the version of Regulation 2(1) of the 1981 Regulations, prior to the 1993 legislative amendment, included only the latter undertakings within the expression "undertaking", the United Kingdom has failed in that regard to fulfil its obligations under the Treaty and the Commission' s application must be upheld.  Fourth head of complaint: consultation with a view to agreement on the measures to be adopted at the time of transfer  28. Article 6(2) of Directive 77/187 provides that if the transferor or transferee is envisaging measures in relation to his own employees he must consult the representatives of the employees in good time on such measures "with a view to seeking agreement". The objective of reaching agreement, however, is nowhere mentioned in Regulation 10(5) or (6) of the 1981 Regulations.  The United Kingdom accepts that the 1981 Regulations incorrectly implement the directive in this regard and points out that the legislation in issue was recently brought into line. Although the Commission did express its satisfaction with that amendment during the hearing, it does none the less request the Court to rule that there has been a failure to fulfil obligations. In view of the established case-law to the effect that "under the scheme established by Article 169 of the Treaty, the Commission enjoys a discretionary power in deciding whether to institute proceedings for a declaration that a Member State has failed to fulfil obligations and that it is not for the Court to decide whether that discretion was wisely exercised", (43) and in view of the fact, as already stated, that the question whether there has been a failure to fulfil obligations must be examined at the time when the period laid down in the reasoned opinion expired, the Commission' s application should be upheld on this point.  Fifth head of complaint: failure to provide for effective sanctions  29. The Court has consistently held that:  "when a Community regulation does not provide any specific penalty in case of breach but refers on this matter to national provisions, the Member States retain a discretion as to the choice of penalties. However, under Article 5 of the EEC Treaty, which requires the Member States to take all measures necessary to guarantee the application and effectiveness of Community law, they must ensure that infringements of a Community regulation are penalized under conditions, both procedural and substantive, which are analogous to those applicable to infringements of national law of a similar nature and importance and which, in any event, make the penalty effective, proportionate and dissuasive." (44)  30. The Commission argues that the sanctions provided under the 1981 Regulations for cases in which employers fail to inform or consult workers' representatives are insufficiently deterrent and effective. Regulation 11 entitles the trade union in question to present a complaint to an industrial tribunal, which may order the employer to pay appropriate compensation. That compensation cannot, however, amount to more than the equivalent of two weeks' pay for each employee affected. Furthermore, the amount of compensation may be reduced by any amount received as damages for breach of contract or any amount which the employer must pay for failure to comply with the obligation to consult the trade union as required under section 99 of the Employment Protection Act in the case of collective redundancies.  31. The United Kingdom accepts that this second element, namely the set-off against other forms of compensation, has the result that the sanction is insufficiently effective and deterrent and that the United Kingdom has thereby failed to fulfil its obligations under the Treaty. The United Kingdom legislation was for that reason recently amended accordingly. On the other hand, the United Kingdom argues that the first element, namely the limitation to the equivalent of two weeks' pay, is not of such a nature as to render the sanction insufficiently effective or deterrent. That notwithstanding, the same recent legislative amendment did raise the ceiling to four weeks. This last amendment, according to the United Kingdom, is intended as a demonstration of loyal cooperation with the Commission and not as an acknowledgement of any previous shortcoming.  32. In my view, the United Kingdom' s acknowledgement regarding the set-off against other forms of compensation suffices to enable the Court to uphold the Commission' s application on this point and rule that the United Kingdom failed to fulfil its obligations through its failure "to provide for effective sanctions in case of failure to inform and consult workers' representatives as required by the directive". It is for that reason not necessary to consider whether the United Kingdom failed to meet that obligation by providing for a sanction limited to two weeks' pay (subsequently four weeks' pay). I merely wish to add that, when assessing the sanction, account must be taken of the importance which Directive 77/187 attaches to the obligation to inform and consult (see point 11 above).  Other heads of complaint in Case C-383/92  Second head of complaint: limitation of the scope  33. For the purposes of Directive 75/129, Article 1(1)(a) thereof provides that "' collective redundancies' means dismissals effected by an employer for one or more reasons not related to the individual workers concerned ...". In contrast, however, sections 99 and 100 of the Employment Protection Act 1975, which implement the directive in the United Kingdom, apply only in the case of employees dismissed "as redundant", which, according to section 81 of the Employment Protection (Consolidation) Act 1978, (45) relates to the situation where there is a cessation or reduction of business or a decline in demand for work of a particular kind.  The United Kingdom accepts that this narrowing of the scope constitutes a defective implementation of the directive and it has for that reason passed amending legislation designed to rectify the matter. The Commission has none the less requested the Court to hold that there was a failure to fulfil the obligation, and in view of the Court' s case-law (see point 22 above) that request ought to be upheld.  Third head of complaint: purpose and object of consultation  34. Article 2(1) of Directive 75/129 requires an employer contemplating collective redundancies to consult with workers' representatives "with a view to reaching an agreement". Article 2(2) provides that such consultations "shall, at least, cover ways and means of avoiding collective redundancies or reducing the number of workers affected, and mitigating the consequences". Section 99(7) of the Employment Protection Act, on the other hand, requires only that an employer should consult with the trade union representatives, consider any representations made by them, reply to those representations and, if he rejects any of them, state his reasons.  The United Kingdom also accepts that this has been a shortcoming in its legislation, and one which has already been put right. The Commission none the less seeks a declaration of failure to fulfil obligations, which, in the light of the Court' s case-law, should be granted.  Fourth head of complaint: inadequate nature of the sanctions  35. The Commission takes the view that the sanctions provided for under the Employment Protection Act for the case where an employer fails to meet his obligations regarding information and consultation are insufficiently effective and dissuasive in so far as any compensation payable may be reduced by other forms of compensation arising under the contract of employment or by virtue of breach thereof. This fourth head of complaint is similar to the second element of the fifth complaint in Case C-382/92.  Although the United Kingdom also does not dispute this complaint, the Commission nevertheless seeks a ruling that it was in breach of its obligations, a request which, in view of the case-law of the Court, must be acceded to.  Conclusion  36. On the basis of the foregoing, I propose that the Court should rule in Case C-382/92 that the United Kingdom has failed on the following grounds to fulfil its obligations under Article 5 of the EC Treaty and Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses or parts of businesses:- its failure to provide measures enabling workers' representatives to be designated with a view to the application of the directive in cases where an employer is not prepared voluntarily to recognize such representatives (first complaint);  - its exclusion of certain undertakings from the scope of the directive (third complaint);  - its failure to require a transferor or a transferee who envisages measures in relation to his employees and is under an obligation to consult the representatives of his employees to do so with a view to seeking agreement (fourth complaint); and  - its failure to provide for sufficiently effective and deterrent sanctions in the case of failure by an employer to inform and consult workers' representatives as required by the directive (fifth complaint).  I propose that for the rest the Court should dismiss the Commission' s application and that it should order each party to bear its own costs in accordance with the first subparagraph of Article 69(3) of the Rules of Procedure.  37. So far as Case C-383/92 is concerned, I propose that the Court should hold that the United Kingdom has failed on the following grounds to fulfil its obligations under Article 5 of the Treaty and Council Directive 75/129/EEC of 17 February 1975 on the approximation of the laws of the Member States relating to collective redundancies:  - its failure to provide measures enabling workers' representatives to be designated with a view to the application of the directive in cases where an employer is not prepared voluntarily to recognize such representatives (first complaint);  - its limitation of the scope of the legislation designed to implement the directive to a more restricted definition of collective redundancies than that envisaged by the directive (second complaint);  - its failure to require an employer who is contemplating collective redundancies and is required to consult workers' representatives to do so with a view to reaching an agreement and to require such consultation at least to cover the matters specified in the directive (third complaint); and  - its failure to provide for sufficiently effective and deterrent sanctions in the case of failure by an employer to consult workers' representatives as required by the directive (fourth complaint).  In view of the fact that the United Kingdom has been found to be in the wrong on all points in this case, I propose that the Court order that party to pay the costs under Article 69(2) of the Rules of Procedure.  (*) Original language: Dutch.  (1) - OJ 1977 L 61, p. 26.  (2) - OJ 1975 L 48, p. 29. This directive has in the meantime been amended by Council Directive 92/56/EEC of 24 June 1992 (OJ 1992 L 245, p. 3).  (3) - S.I. 1981 No 1794.  (4) - 1975 c. 71.  (5) - Translator' s note: it should be noted that the English-language version of Directive 75/129 uses the expression workers' representatives , while Directive 77/187 uses the expression representatives of the employees . Except in direct citations from Directive 77/187, the former expression is used in this translation for the sake of consistency.  (6) - At the time when Directive 75/129 was adopted, the Employment Protection Act 1975 had not yet become law, although the Industrial Relations Act had been repealed. The Commission stresses, however, that during the negotiations between the Member States with regard to Directive 75/129 (1972-1975), there was at all material times in the United Kingdom either existing legislation on the matter or draft legislation designed to improve the mechanisms in question. Thus, according to the Commission, that directive was also based on the premiss that every Member State would have a mechanism for the designation of workers' representatives.  (7) - Case 61/81 Commission v United Kingdom [1982] ECR 2601.  (8) - Case 235/84 Commission v Italy [1986] ECR 2291.  (9) - Judgment in Case 105/84 Danmols Inventar [1985] ECR 2639, paragraphs 26 and 28.  (10) - The fact that worker representation within undertakings is politically a very sensitive issue on which the views of the Member States differ is apparent from, inter alia, the difficulties which have arisen in connection with discussions on worker participation in the context of the proposal dating from 1972 for a Fifth Directive concerning the structure of public limited companies and the powers and obligations of their organs (OJ 1972 C 131, p. 49; for the amended proposal, see OJ 1983 C 240, p. 2; see also the second amendment at OJ 1991 C 7, p. 4, and the third amendment at OJ 1991 C 321, p. 9), the proposal for a regulation on the Statute for a European company (OJ 1989 C 263, p. 41; for the amended proposal, see OJ 1991 C 176, p. 1) and the complementary proposal for a directive with regard to the involvement of employees in the European company (OJ 1989 C 263, p. 69; amended version in OJ 1991 C 138, p. 8). See also the discussions on the proposal for a directive on the establishment of a European Works Council in Community-scale undertakings or groups of undertakings for the purpose of informing and consulting employees (OJ 1991 C 39, p. 10; for the amended proposal, see OJ 1991 C 336, p. 11).  (11) - In its judgment in Case 284/83 Nielsen & Soen [1985] ECR 553, the Court stated, at paragraph 10, that the object of Directive 75/129 is to provide for consultation with the trade unions and for notification of the competent public authority prior to such dismissals .  (12) - Judgment in Case 91/81 Commission v Italy [1982] ECR 2133, paragraph 11.  (13) - That the Community endeavours in its social policy to avoid imposing unduly onerous obligations with regard to worker protection on small and medium-sized undertakings also becomes clear from Article 118a(2) of the Treaty, which was added by the Single European Act. Although it does not apply to the United Kingdom, Article 2(2) of the Agreement on social policy concluded between the Member States of the European Community with the exception of the United Kingdom of Great Britain and Northern Ireland annexed to the Protocol on social policy , which in turn is annexed to the EC Treaty by the Treaty on European Union, may also be referred to.  (14) - A number of recent directives in the area of social law impose obligations of information and consultation of workers and/or their representatives : see, for example, Articles 6, 10 and 11 of Council Directive 89/391/EEC of 12 June 1989 on the introduction of measures to encourage improvements in the safety and health of workers at work (OJ 1989 L 183, p. 1); see also Directive 92/56/EEC (cited in footnote 2 above), which adds to Directive 75/129 an Article 5a concerning access to judicial and/or administrative procedures.  (15) - Council Directive 75/117/EEC of 10 February 1975 on the approximation of the laws of the Member States relating to the application of the principle of equal pay for men and women (OJ 1975 L 45, p. 19).  (16) - Judgment in Case 61/81, cited above in footnote 7, paragraph 9.  (17) - Judgment in Case 61/81, paragraph 13.  (18) - Judgment in Case 14/83 Von Colson and Kamann [1984] ECR 1891, paragraph 15.  (19) - Paragraph 20 of the judgment cited in footnote 8, with reference to the judgment in Case 143/83 Commission v Denmark [1985] ECR 427, paragraph 8, which concerned Directive 75/117 referred to in footnote 15.  (20) - The failure to fulfil obligations in Case 235/84 lay in the fact that Italy had implemented Article 6(1) and (2) by means of collective agreements which were limited to specific economic sectors (and which by reason of their contractual nature imposed obligations only in the relations between workers who were members of the trade unions in question and employers or undertakings on which the agreements were binding) and by way of legislation which applied only to undertakings declared by ministerial order to be in a state of crisis.  (21) - Judgment in Case 76/86 Commission v Germany [1989] ECR 1021, paragraph 8.  (22) - Judgment in Case 96/81 Commission v Netherlands [1982] ECR 1791, paragraph 6.  (23) - Judgment in Case 287/86 Ny Moelle Kro [1987] ECR 5465, paragraph 12; judgment in Case 324/86 Daddy' s Dance Hall [1988] ECR 739, paragraph 9.  (24) - Robert Seligman Corp. v Baker [1983] ICR 770; Hadden v University of Dundee Students' Association [1985] IRLR 449.  (25) - Per Lord Oliver in Litster v Forth Dry Dock Co Ltd [1990] 1 AC 546; [1989] 1 All ER 1134.  (26) - In its judgment in Case 235/84, which has already been mentioned several times and is cited in footnote 8, the Court held, admittedly, at paragraph 14 that the answer to the question whether a directive has been properly implemented will depend on how the national provisions which, according to the Member State in question, implement the directive have been applied in practice, in particular by the national courts . I therefore do not want to rule out the possibility that account may have to be taken of judicial decisions. In the present cases, however, there is a decision of the House of Lords which is binding on the lower courts and which calls for an interpretation consistent with the directive. Of course, even in the absence of such a decision, national courts are, according to the case-law of the Court of Justice, under an obligation to interpret legislation in a manner consistent with a directive: see inter alia the judgment in Case 14/83 Von Colson and Kamann, cited in footnote 18, paragraph 26, and the judgment in Case C-106/89 Marleasing [1990] ECR I-4135, paragraph 8.  (27) - Judgment in Case C-29/91 Dr Sophie Redmond Stichting [1992] ECR I-3189.  (28) - Judgment in Joined Cases C-159/91 and C-160/91 Poucet and Pistre [1993] ECR I-637.  (29) - This was done by way of section 26 of the Trade Union Reform and Employment Rights Act 1993.  (30) - See, inter alia, the judgment in Case C-200/88 Commission v Greece [1990] ECR I-4299, paragraph 13, and the judgment in Case C-347/88 Commission v Greece [1990] ECR I-4747, paragraph 40.  (31) - See the judgment in Case 13/76 Donà [1976] ECR 1333, paragraph 12. The quotation is taken from paragraph 10 of the judgment in Case 196/87 Steymann [1988] ECR 6159, which refers expressly to the judgment in Donà.  (32) - Judgment in Case 66/85 Lawrie-Blum [1986] ECR 2121, paragraph 20 (emphasis added).  (33) - This is no more than logical in view of the fact that the first paragraph of Article 60 of the EC Treaty treats only those services which are normally provided for remuneration as being services within the meaning of the Treaty.  (34) - Judgment in Case 263/86 Humbel [1988] ECR 5365, paragraph 17; recently confirmed at paragraph 15 of the Court' s judgment in Case C-109/92 Wirth [1993] ECR I-6447.  (35) - Judgment in Case 196/87 Steymann, cited above in footnote 31, paragraph 12.  (36) - Cited in footnote 27.  (37) - Judgment in Case C-209/91 Watson Rask [1992] ECR I-5755.  (38) - The directive was announced in the Council Resolution of 21 January 1974 concerning a social action programme (OJ 1974 C 13, p. 1, more specifically p. 4).  (39) - Judgment in Poucet and Pistre, paragraphs 18 and 19.  (40) - Judgment in Case C-41/90 Hoefner and Elser [1991] ECR I-1979, paragraph 21 (emphasis added), as cited again at paragraph 17 of the judgment in Poucet and Pistre.  (41) - See in extenso paragraphs 8 to 15 of the judgment in Poucet and Pistre.  (42) - The Court applied a similar restriction on the concept of economic activities in its judgment in Humbel, cited above. It there held that the characteristic of remuneration (and consequently the quality of the provision of services within the meaning of Article 60 of the EC Treaty) was absent in the case of courses provided under the national education system in view of the fact that the State, in establishing and maintaining such a system, was fulfilling its duties towards its own population in the social, cultural and educational fields (paragraph 18 of the judgment in Humbel, cited above in footnote 34).  (43) - Judgment in Case C-200/88 Commission v Greece, cited above in footnote 30, paragraph 9.  (44) - Judgment in Case C-7/90 Vandevenne and Others [1991] ECR I-4371, paragraph 11.  (45) - 1978 c. 44.