Checa Honrado (Protection of employees in the event of the insolvency of their employer - Judgment) [2018] EUECJ C-57/17 (28 June 2018)

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(Reference for a preliminary ruling — Social policy — Protection of employees in the event of the insolvency of their employer — Directive 2008/94/EC — Article 3, first paragraph — Payment guaranteed by the guarantee institution — Severance pay on termination of employment relationships — Transfer of workplace obliging the worker to change residence — Change to a fundamental element of the contract of employment — Termination of the contract of employment by the worker — Principle of equality and non-discrimination)

REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal Superior de Justicia de la Comunidad Valenciana (High Court of Justice of the Community of Valencia, Spain), made by decision of 19 January 2017, received at the Court on 3 February 2017, in the proceedings

composed of A. Rosas, President of the Chamber, A. Prechal and E. Jarašiūnas (Rapporteur), Judges,

having regard to the written procedure and further to the hearing on 25 January 2018,

– the European Commission, by C. Valero and I. Galindo Martín, acting as Agents,

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

1 This request for a preliminary ruling concerns the interpretation of the first paragraph of Article 3 of Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 on the protection of employees in the event of the insolvency of their employer (OJ 2008 L 283, p. 36).

2 The request was submitted in the course of proceedings between Ms Eva Soraya Checa Honrado and the Fondo de Garantía Salarial (Wages Guarantee Fund, ‘the Fogasa’) concerning the latter’s refusal to guarantee her, on account of the insolvency of her employer, payment of the severance pay payable on termination of her contract of employment.

3 Directive 2008/94 codified and repealed Council Directive 80/987/EEC of 20 October 1980 relating to the protection of employees in the event of the insolvency of their employer (OJ 1980 L 283, p. 23), as last amended by Directive 2002/74/EC of the European Parliament and of the Council of 23 September 2002 (OJ 2002 L 270, p. 10).

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

‘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.’

‘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”.’

‘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.’

8 Under Article 4(1) of Directive 2008/94, Member States have the option to limit the liability of guarantee institutions, referred to in Article 3 of Directive 2008/94. In accordance with Article 4(2) and (3), the limitation of liability may apply to both the length of the period for which outstanding claims are to be met by the guarantee institution and the ceiling on the payments made by the guarantee institution.

10 Article 33 of Real Decreto Legislativo 1/1995, por el que se aprueba el texto refundido de la Ley del Estatuto de los Trabajadores (Royal Legislative Decree 1/1995 approving the consolidated text of the Law on the Workers’ Statute) of 24 March 1995, in its version applicable to the dispute in the main proceedings (‘the Workers’ Statute’), is worded as follows:

‘1. The [Fogasa] … shall pay to workers any remuneration which is unpaid on account of the insolvency of the employer …

2. In the cases referred to in the previous paragraph, the [Fogasa] shall pay the compensation fixed by a judgment, an order, a judicial conciliation settlement or an administrative decision in favour of workers by reason of the dismissal or the termination of contracts in accordance with Articles 50, 51 and 52 of the present Law …

‘1. The transfer of workers who have not been recruited specifically to work in companies with mobile or itinerant workplaces to a different workplace of the same company which necessitates changes of residence will have to be justified on economic, technical, organisational or production grounds. Grounds shall be deemed to be such if they relate to competitiveness, productivity or technical or labour organisation, and also recruitment relating to the business.

Once notified of the transfer decision, the worker will have the right to choose between the transfer, recovery of compensation for transport costs or the termination of his contract, in which case he will receive severance pay of 20 days’ salary for every year worked, periods shorter than a year being calculated pro rata on a monthly basis up to a maximum of 12 monthly payments.

12 Article 41(3) of the Workers’ Statute provides that, in certain circumstances referred to in the first paragraph of that article, if the worker is adversely affected by the business decision, he has the right to opt to terminate his contract of employment and receive severance pay of 20 days’ wages per year worked.

13 Article 50 of Workers’ Statute regulates termination of the contract of employment at the wish of the worker and sets out various grounds for termination. Article 50(1)(a) refers to substantial changes in the worker’s working conditions made by the employer without due regard for the provisions of Article 41 of the statute and adversely affecting the dignity of the worker. Article 50(1)(b) and (c) cover, respectively, non-payment or continual delay in payment of the agreed salary and any other serious infringement of his obligations by the employer, other than situations of force majeure. Article 50(2) provides that, in such cases, the worker is entitled to the forms of compensation provided for in the case of improper dismissal.

14 Article 51 of the Workers’ Statute regulates collective redundancy, which, according to this provision, means the termination of contracts on economic, technical, organisational or production grounds, when it affects a given minimum number of workers over a specific period.

15 Article 52 of the Workers’ Statute regulates termination of the contract of employment on objective grounds including: the worker’s incompetence, the worker’s failure to adapt to the technical changes made at his workplace, individual redundancies on objective grounds (economic, technical, organisational and production), and intermittent absences from work, even if justified, reaching 20% of working days in two consecutive months in certain circumstances.

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

16 From 1 November 2000, Ms Checa Honrado worked as a cleaner in the theme park ‘Terra Mítica’ in Benidorm (Alicante, Spain). She was employed by Cespa SA until 1 March 2010, and then by Soroma patrimonial SL (‘Soroma’). She had a full-time contract of employment.

17 It is apparent from the order for reference that Soroma informed Ms Checa Honrado and five other workers in writing of its intention to transfer, from 15 May 2011, their workplace to another theme park in San Martin de la Vega (Madrid, Spain).

18 According to the facts as set out by the referring court, that transfer meant that Ms Checa Honrado would have to change her place of residence, since there was a distance of more than 450 kilometres between the old and new workplaces. Ms Checa Honrado therefore opted to terminate her contract of employment, pursuant to Article 40 of the Workers’ Statute. That option was accepted by Soroma.

19 As the company did not, however, voluntarily pay the severance pay statutorily owed in respect of that termination, Ms Checa Honrado brought an action before the Juzgado de lo Social n^o 1 de Benidorm (Social Court No 1, Benidorm, Spain). By decision of 16 September 2011, that court ordered Soroma to pay the sum of EUR 7 453.77 pursuant to Article 40 of the Workers’ Statute.

20 As Soroma executed that judgment only in part, Ms Checa Honrado applied for the opening of judicial enforcement proceedings. In the course of those proceedings, on 11 June 2013, Soroma was declared insolvent. The insolvency decision was notified to the Fogasa. Ms Checa Honrado thus requested the Fogasa to take over the amount of severance pay left outstanding by Soroma, owing to its insolvency. The Fogasa refused that request on the ground that severance pay arising from the termination of a contract of employment at the request of the worker affected by her employer’s decision to change workplace is not guaranteed by Article 33(2) of the Workers’ Statute.

21 Ms Checa Honrado brought an action against that refusal decision before the Juzgado de lo Social n^o 2 de Alicante (Social Court No 2, Alicante, Spain), which that court dismissed.

22 Hearing the case on appeal, the Tribunal Superior de Justicia de la Comunidad Valenciana (High Court of Justice of the Community of Valencia, Spain), which is the referring court, states that it harbours doubts as to the compatibility of Article 33(2) of the Workers’ Statute with EU law, on the ground that this provision limits the guarantee of severance pay being taken over by the Fogasa in the cases of dismissal or termination of contract of employment regulated in Articles 50 to 52 of the statute. It states that the guarantee mechanism thus excludes claims arising from other legal forms of termination of the employment relationship that give rise to severance pay, such as that established in Article 40 of the statute, which, although presented as an option, in fact includes actual termination of the contract of employment on objective grounds.

23 Referring to the judgment of 11 November 2015, Pujante Rivera (C‑422/14, EU:C:2015:743), the referring court considers that Article 33(2) of the Workers’ Statute ought to have included all the situations of termination of contract not attaching to the individual worker concerned. Accordingly, that provision of the statute, in not covering other legal forms of termination of the employment relationship that give rise to lawfully calculated severance pay, such as that established in Article 40 of the statute, constitutes an unjustified exclusion not authorised by Directive 2008/94.

24 Furthermore, the referring court observes that the incorrect transposition of Directive 2008/94 into Spanish law has led, in the present case, to the Fogasa ‘according unequal treatment to the various employees affected’.

25 In those circumstances, the Tribunal Superior de Justicia de la Comunidad Valenciana (High Court of Justice of the Community of Valencia) decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:

‘May statutory severance pay payable by a company to a worker, on termination of the employment relationship as a consequence of a change to a fundamental element of the contract of employment, such as geographic mobility obliging the worker to change residence, be understood to constitute “severance pay on termination of employment relationships”, as referred to in the first paragraph of Article 3 of Directive 2008/94?’

26 By its question, the referring court asks, in essence, whether the first paragraph of Article 3 of Directive 2008/94 must be interpreted as meaning that, where, according to the national legislation in question, some forms of statutory compensation payable on termination of a contract of employment at the worker’s request and those payable in the case of dismissals on objective grounds, such as those envisaged by the referring court, fall within the concept of ‘severance pay on termination of employment relationships’, within the meaning of that provision, statutory compensation payable on termination of a contract of employment at the worker’s request on account of a transfer of workplace by the employer, obliging the worker to change residence, must also fall within that concept.

27 In that regard, it should be recalled that Article 1(1) of Directive 2008/94 provides that the directive applies to employees’ claims arising from contracts of employment or employment relationships and existing against employers who are in a state of insolvency.

28 The first paragraph of Article 3 of Directive 2008/94 provides that Member States are to take the measures necessary to ensure that guarantee institutions guarantee, subject to Article 4 of the directive, 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 second paragraph of that article states that the claims taken over by the guarantee institution are the outstanding pay claims relating to a certain period determined by the Member States.

29 Article 2(2) of Directive 2008/94 provides that the directive is without prejudice to national law as regards the definition of the term ‘pay’.

30 It follows from a combined reading of those provisions that it is for national law to specify which forms of compensation fall within the scope of the first paragraph of Article 3 of Directive 2008/94 (see, to that effect, judgment of 2 March 2017, Eschenbrenner, C‑496/15, EU:C:2017:152, paragraph 54 and the case-law cited).

31 However, the Court has repeatedly held that the power of national law, recognised by that directive, to specify the benefits payable by the guarantee institution is conditional upon the requirements flowing from the general principle of equality and non-discrimination (judgment of 21 February 2008, Robledillo Núñez, C‑498/06, EU:C:2008:109, paragraph 30 and the case-law cited).

32 That principle requires that comparable situations should not be treated differently unless such difference in treatment is objectively justified (judgments of 12 December 2002, Rodríguez Caballero, C‑442/00, EU:C:2002:752, paragraph 32; of 7 September 2006, Cordero Alonso, C‑81/05, EU:C:2006:529, paragraph 37; and of 17 January 2008, Velasco Navarro, C‑246/06, EU:C:2008:19, paragraph 36).

33 In the present case, it is apparent from the order for reference that Article 33(2) of the Workers’ Statute explicitly provides for the guarantee of payment of compensation by the Fogasa for the cases of dismissal or termination of contract of employment laid down in Articles 50 to 52 of the statute, but does not cover other legal forms of termination of the employment relationship that give rise to statutory severance pay, which includes inter alia that laid down in Article 50 of the statute, pursuant to which the employment relationship at issue in the main proceedings was terminated.

34 In that regard, the referring court points out, first of all, that Article 40 of the Workers’ Statute provides that the transfer of workers, by the employer, to another workplace under the same employer and obliging those workers to change residence must be justified on economic, technical, organisational or production grounds and that, in such a case, the worker has the right to opt to terminate his contract of employment, in which case he will receive severance pay of 20 days’ salary for every year worked.

35 Next, it states that Articles 50 to 52 of the Workers’ Statute, referred to in Article 33(2) of the statute, regulate, respectively, termination of the employment relationship by a worker, termination of the employment relationship as a result of a collective redundancy and termination of the employment relationship on objective grounds.

36 More specifically, it is apparent from the order for reference that Article 50 of the Workers’ Statute sets out the grounds that entitle the worker to request termination of the employment relationship, which include, inter alia, substantial changes in working conditions made by the employer without due regard for the provisions of Article 41 and adversely affecting the dignity of the worker and any other serious infringement of his obligations by the employer, and that the worker is entitled in such cases to the forms of compensation provided for in the case of improper dismissal.

37 Article 51 of the Workers’ Statute regulates collective redundancy, which concerns the termination of contracts of employment on economic, technical, organisational or production grounds, when it affects a minimum number of workers over a certain period. Article 52 of the statute regulates termination of the contract on objective grounds, including inter alia the worker’s incompetence, the worker’s failure to adapt to the technical changes made at his workplace and individual redundancies on objective grounds, namely economic, technical, organisational and production grounds.

38 Finally, the referring court states that the termination of the employment relationship laid down in Article 40 of the Workers’ Statute is an actual termination of the contract of employment on objective grounds, in so far as that provision requires economic, technical, organisational or production grounds justifying a substantial change to the working conditions, and because the option given to the worker to terminate the employment relationship is linked to the clear damage involved by changing his place of work, which necessarily means changing residence.

39 In those circumstances, it must be considered that workers who opt to terminate the employment relationship pursuant to Article 40 of the Workers’ Statute are in a situation comparable to that of workers who opt to terminate the employment relationship pursuant to Article 50 of the Workers’ Statute, in so far as they choose that termination as a result of the fact that the employer is making substantial changes to their working conditions which, in the view of the Spanish legislature, may not be forced upon the workers, as it has provided, in both cases, that the worker may opt to terminate the contract of employment and would also receive compensation.

40 It must also be stated that workers whose employment relationship has been terminated pursuant to Article 40 of the Workers’ Statute are in a situation comparable to that of workers made redundant on one of the objective grounds set out in Articles 50 to 52 of the statute, in so far as it is apparent from the order for reference that termination of the employment relationship on the basis of Article 40 is also regarded as termination of the contract of employment on objective grounds.

41 However, pursuant to Article 33(2) of the Workers’ Statute, only workers who fall within the scope of Articles 50 to 52 of the statute and not those falling within the scope of Article 40 of the statute are entitled to have their outstanding claims resulting from severance pay for termination of employment relationships taken over by the Fogasa.

42 The difference in treatment thus afforded by Article 33(2) to workers whose claims result from compensation for termination of the employment relationship based on Article 40 of the Workers’ Statute can therefore be accepted, in accordance with the case-law recalled in paragraph 32 above, only if it is objectively justified (see also, to that effect, judgment of 16 December 2004, Olaso Valero, C‑520/03, EU:C:2004:826, paragraph 36 and the case-law cited).

43 In that regard, the argument put forward by the Spanish Government that, in essence, the discretion left to Member States by Directive 2008/94 permits the Spanish legislature to opt for the guarantee institution to take over only ‘severance pay for termination of the contract of employment for reasons beyond the control of the worker’ and that institution therefore does not guarantee claims arising from a voluntary choice on the part of the worker concerned, cannot be accepted.

44 In actual fact, that argument seeks to challenge the comparability of the situations of workers who have opted to terminate their contracts of employment pursuant to Article 40 of the Workers’ Statute, on the one hand, and workers whose contract of employment has been terminated pursuant to Articles 50 to 52 of the statute, on the other. It is apparent from the order for reference that termination of a contract of employment pursuant to Article 40 cannot be regarded as stemming from the worker’s choice, since it is the consequence of the fact that the employer intends to make a change to the worker’s contract of employment as substantial as a transfer of workplace to a distance obliging the worker to change residence and that the law provides for the payment of compensation by the employer where the worker refuses to accept that transfer and opts to terminate the employment relationship.

45 Furthermore, it must be noted that the Spanish Government, questioned in that regard by the Court, has not provided any information liable to justify the different treatment in the Fogasa’s taking over of claims resulting from the compensation laid down in Article 40 of the Workers’ Statute and claims resulting from the compensation laid down in Articles 50 to 52 of the statute.

46 The interpretation of the first paragraph of Article 3 of Directive 2008/94 defended by the Spanish Government is not, moreover, compatible with the social objective of that directive, which is, as follows from Article 1(1) thereof, read in conjunction with recital 3 of the directive, to guarantee employees a minimum of protection at EU level in the event of the employer’s insolvency through payment of outstanding claims resulting from contracts of employment or employment relationships (see, to that effect, judgment of 2 March 2017, Eschenbrenner, C‑496/15, EU:C:2017:152, paragraph 52 and the case-law cited).

47 Furthermore, it must be recalled, first, that Article 1(2) of Directive 2008/94 provides that Member States may, by way of exception, exclude claims by certain categories of employee from the scope of the 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 the directive. Secondly, Article 12(a) of the directive permits Member States to take the measures necessary to avoid abuses.

48 However, it must be noted that it is not apparent from the file submitted to the Court and, in particular, the observations of the Spanish Government, that circumstances such as those of the case in the main proceedings would be regarded as being exceptional within the meaning of Article 1(2) of Directive 2008/94 or as constituting an abuse for the purposes of applying Article 12(a) of the directive.

49 Consequently, the answer to the question referred is that the first paragraph of Article 3 of Directive 2008/94 must be interpreted as meaning that, where, according to the national legislation in question, some forms of statutory compensation payable on termination of a contract of employment at the worker’s request and those payable in the case of dismissals on objective grounds, such as those envisaged by the referring court, fall within the concept of ‘severance pay on termination of employment relationships’, within the meaning of that provision, statutory compensation payable on termination of a contract of employment at the worker’s request on account of a transfer of workplace by the employer, obliging the worker to change residence, must also fall within that concept.

50 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

The first paragraph of Article 3 of Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 on the protection of employees in the event of the insolvency of their employer must be interpreted as meaning that, where, according to the national legislation in question, some forms of statutory compensation payable on termination of a contract of employment at the worker’s request and those payable in the case of dismissals on objective grounds, such as those envisaged by the referring court, fall within the concept of ‘severance pay on termination of employment relationships’, within the meaning of that provision, statutory compensation payable on termination of a contract of employment at the worker’s request on account of a transfer of workplace by the employer, obliging the worker to change residence, must also fall within that concept.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Checa Honrado (Protection of employees in the event of the insolvency of their employer - Judgment) [2018] EUECJ C-57/17 (28 June 2018) URL: http://www.bailii.org/eu/cases/EUECJ/2018/C5717.html Cite as: [2018] EUECJ C-57/17, ECLI:EU:C:2018:512, EU:C:2018:512

Court of Justice of the European Communities (including Court of First Instance Decisions)