Lauge & Ors (Approximation of laws) [1998] EUECJ C-250/97 (17 December 1998)

Judgment By order of 4 July 1997, received at the Court on 9 July 1997, the Civilret (Civil Court), Hillerød, referred to the Court for a preliminary ruling under Article 177 of the EC Treaty a question on the interpretation of the second subparagraph of Article 3(1) and Article 4(4) of Council Directive 75/129/EEC of 17 February 1975 on the approximation of the laws of the Member States relating to collective redundancies (OJ 1975 L 48, p. 29), as amended by Council Directive 92/56/EEC of 24 June 1992 (OJ 1992 L 245, p. 3, hereinafter 'the Directive'). The question was raised in proceedings between Dansk Metalarbejderforbund (Danish Metalworkers' Federation, hereinafter 'the Metalarbejderforbund'), acting on behalf of John Lauge and Others, and Lønmodtagernes Garantifond (Employees' Guarantee Fund, hereinafter 'the Garantifond') concerning payment by the latter to John Lauge and nine other employees of Ideal-Line A/S, a company incorporated under Danish law, of 30 days' salary which, according to the employees, their employer owes to them by reason of the fact that it did not comply with Law No 414 of 1 June 1994, 'the Varslingslov' (Law on Notification of Redundancies), which transposes the Directive into Danish law. Article 3 of the Directive provides: '1. Employers shall notify the competent public authority in writing of any projected collective redundancies. However, Member States may provide that in the case of planned collective redundancies arising from termination of the establishment's activities as a result of a judicial decision, the employer shall be obliged to notify the competent public authority in writing only if the latter so requests. ...' Article 4 of the Directive provides: '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. ... 4. Member States need not apply this Article to collective redundancies arising from termination of the establishment's activities where this is the result of a judicial decision.' The Directive was transposed into Danish law by Law No 414 of 1 June 1994. That law provides for a derogation in accordance with the second subparagraph of Article 3(1) and Article 4(4) of the Directive. On 2 November 1994 Ideal-Line A/S petitioned the Skifteret (Bankruptcy and Probate Court), FÊaborg, for a winding-up order. On the same day all hourly-paid employees of Ideal-Line received verbal notice that they were being made redundant with effect from the evening of 2 November 1994. The company's operations ceased from that point in time. The verbal notice of redundancy was confirmed by letters of 3 November 1994. On 8 November 1994 the Skifteret, FÊaborg, issued a winding-up order, in which it fixed the date on which the winding-up petition had been received ('fristdag') as 2 November 1994. Under Danish law the effects of insolvency are, for a number of legal purposes, calculated from that date. The redundancies were not notified to the Danish public authority competent to receive such notification under the Directive, the ArbejdsmarkedsrÊad, since the redundancies were caused by the fact that the employer had filed a winding-up petition. However, 10 employees of the Danish company considered that the redundancies should have been notified and accordingly claimed 30 days' pay as compensation for the failure to comply with the applicable provisions. The employees requested the Garantifond to meet that claim against the employer pursuant to Law No 77 of 12 February 1988 on the Garantifond, as amended by Law No 380 of 6 June 1991, which transposed Council Directive 80/987/EEC of 20 October 1980 on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer (OJ 1980 L 283, p. 23). The Garantifond rejected the claim on the ground that Ideal-Line A/S was not obliged to notify the redundancies to the ArbejdsmarkedsrÊad because Mr Lauge and the other claimants had in fact been made redundant when the employer's activities terminated as a result of a judicial decision, namely that the company should be wound up. On 11 April 1995 Dansk Metalarbejderforbund brought an action on behalf of John Lauge and the other claimants against the Garantifond in the Civilret, Hillerød, seeking a declaration that the persons concerned were not dismissed as the result of a judicial decision, that being a precondition, under the second subparagraph of Article 3(1) of the Directive, for derogation from the obligation to notify provided for in that article. Since the Civilret, Hillerød, considered that an interpretation of the Directive was needed before the dispute could be resolved, it stayed proceedings and referred the following question to the Court: 'Does the phrase "collective redundancies arising from termination of the establishment's activities as a result of a judicial decision" (see Article 3(1), second subparagraph, and Article 4(4) of Directive 75/129/EEC, as amended by Directive 92/56/EEC) cover the case in which the collective redundancies occur on the same day as that on which the employer filed a winding-up petition and terminated the undertaking's activities, and the Skifteret subsequently, and without any deferment other than that resulting from the date which the court set for the hearing, issues a winding-up order pursuant to the winding-up petition and takes the date of that winding-up petition as the operative date?' By its question the national court is asking essentially whether the second subparagraph of Article 3(1) and Article 4(4) of the Directive must be interpreted as meaning that the derogations for which they provide apply to collective redundancies occurring on the same day as that on which the employer files a winding-up petition and terminates the undertaking's activities, and the competent court subsequently, and without any deferment other than that resulting from the date which it sets for the hearing, issues a winding-up order pursuant to the winding-up petition which takes effect for a number of purposes from the date on which the petition was filed. The Garantifond submits that the question should be answered in the affirmative. It maintains that the collective redundancies which gave rise to the dispute in the main proceedings are directly covered by the wording of the second subparagraph of Article 3(1) and Article 4(4) of the Directive, even though they took place before the winding-up order. Since Ideal-Line A/S was insolvent, the winding-up was a reality at the time when the winding-up petition was filed. The fact that the winding-up order was not made on the day on which the petition was filed was due solely to the schedule of hearings in the Skifteret, which did not enable the petition to be dealt with immediately. It is, moreover, for that reason that Danish law provides that winding-up takes effect for a number of legal purposes retroactively, from the date on which the petition is filed. The Garantifond contends further that an interpretation of the Directive in the light of its purpose would suggest that the situation in point in the main proceedings should be treated in the same way as a situation in which redundancies take place following a winding-up order. In both cases the redundancies are motivated by the need to terminate the activities of the establishment because they are being pursued at a loss and the employer is insolvent, so that the employer's assets must be made the subject of a winding-up order. It must be noted that the wording of the second subparagraph of Article 3(1) and Article 4(4) of the Directive indicates clearly that the termination of the activities of the establishment and the collective redundancies must not take place prior to the judicial decision, which consists, in a case such as that in the main proceedings, in a winding-up order. The fact that certain effects of the winding-up are retroactive from the date on which the winding-up petition is filed, as the national legislation provides, does not affect that conclusion. That interpretation is confirmed by the purpose of the Directive. It is clear from the first recital in its preamble that the Directive is aimed at affording protection to workers in the event of collective redundancies. As the Commission observed, that purpose was reinforced by the amendment introduced by Directive 92/56, which extended application of the Directive to the case where the termination of activities is the result of a judicial decision, subject to recourse to the possibility of derogation provided for in the second subparagraph of Article 3(1) and Article 4(4). In order not to jeopardise the attainment of the fundamental objective pursued by the Directive, that derogation must be construed narrowly. In the light of the foregoing, the reply to the question referred to the Court must be that the second subparagraph of Article 3(1) and Article 4(4) of Directive 75/129/EEC is to be interpreted to the effect that the derogations provided for therein do not apply to collective redundancies occurring on the same day as that on which the employer files a winding-up petition and terminates the undertaking's activities, and the competent court subsequently, and without any deferment other than that resulting from the date which it sets for the hearing, issues a winding-up order pursuant to the winding-up petition, that order taking effect for a number of purposes from the date on which the petition was filed. Costs 21. The costs incurred by the Commission, which has submitted observations to the Court, are not recoverable. 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. On those grounds, THE COURT (Sixth Chamber), in answer to the question referred to it by the Civilret, Hillerød, by order of 4 July 1997, hereby rules: The second subparagraph of Article 3(1) and Article 4(4) of Council Directive 75/129/EEC of 17 February 1975 on the approximation of the laws of the Member States relating to collective redundancies, as amended by Council Directive 92/56/EEC of 24 June 1992, must be interpreted to the effect that the derogations provided for therein do not apply to collective redundancies occurring on the same day as that on which the employer files a winding-up petition and terminates the undertaking's activities, and the competent court subsequently, and without any deferment other than that resulting from the date which it sets for the hearing, issues a winding-up order pursuant to the winding-up petition, that order taking effect for a number of purposes from the date on which the petition was filed. Hirsch Mancini Murray RagnemalmIoannou Delivered in open court in Luxembourg on 17 December 1998. R. Grass P. J. G. Kapteyn Registrar President of the Sixth Chamber 1: Language of the case: Danish. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII