JUDGMENT OF THE COURT (Fifth Chamber)
5 November 2014 (*)
(Protection of employees in the event of the employer’s insolvency – Directive 80/987/EEC – Employee who is a third-country national and who does not hold a valid residence permit — Refusal to grant an insolvency benefit)
In Case C‑311/13,
REQUEST for a preliminary ruling under Article 267 TFEU from the Centrale Raad van Beroep (Netherlands), made by decision of 4 June 2013, received at the Court on 7 June 2013 in the proceedings
O. Tümer
v
Raad van bestuur van het Uitvoeringsinstituut werknemersverzekeringen,
THE COURT (Fifth Chamber),
composed of T. von Danwitz (Rapporteur), President of the Chamber, A. Rosas, E. Juhász, D. Šváby and C. Vajda, Judges,
Advocate General: Y. Bot,
Registrar: V. Tourrès, Administrator,
having regard to the written procedure and further to the hearing on 15 May 2014,
after considering the observations submitted on behalf of:
– O. Tümer, by G.T.M. Evers, advocaat,
– the Raad van bestuur van het Uitvoeringsinstituut werknemersverzekeringen, by I. Eijkhout, acting as Agent,
– the Netherlands Government, by B. Koopman, M. Bulterman, H. Stergiou and M. de Ree, acting as Agents,
– the European Commission, by M. van Beek and J. Enegren, acting as Agents,
after hearing the Opinion of the Advocate General at the sitting on 12 June 2014,
gives the following
Judgment
1 This request for a preliminary ruling concerns the interpretation of 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 amended by Directive 2002/74/EC of the European Parliament and of the Council of 23 September 2002 (OJ 2002 L 270, p. 10) (‘Directive 80/987’).
2 The request has been made in proceedings between Mr Tümer and the Raad van bestuur van het Uitvoeringsinstituut werknemersverzekeringen (Management Board of the Employee Insurance Schemes Implementing Body; ‘the Uwv’) concerning the Uwv’s refusal to pay Mr Tümer an insolvency benefit on the ground that he is a third-country national who is not legally resident in the Netherlands.
Legal context
EU law
Directive 80/987
3 Recital 1 in the preamble to Directive 2002/74 states:
‘The Community Charter of Fundamental Social Rights for Workers adopted on 9 December 1989 states, in point 7, that the completion of the internal market must lead to an improvement in the living and working conditions of workers in the European Community and that this improvement must cover, where necessary, the development of certain aspects of employment regulations such as procedures for collective redundancies and those regarding bankruptcies.’
4 Article 1 of Directive 80/987 provides:
‘1. This Directive shall apply to employees’ claims arising from contracts of employment or employment relationships and existing against employers who are in a state of insolvency within the meaning of Article 2 (1).
2. Member States may, by way of exception, exclude claims by certain categories of employee from the scope of this Directive, by virtue of the existence of other forms of guarantee if it is established that these offer the persons concerned a degree of protection equivalent to that resulting from this Directive.
3. Where such provision already applies in their national legislation, Member States may continue to exclude from the scope of this Directive:
(a) domestic servants employed by a natural person;
(b) share-fishermen.’
5 Under Article 2(2) and (3)of Directive 80/987:
‘2. This Directive is without prejudice to national law as regards the definition of the terms “employee”, “employer”, “pay”, “right conferring immediate entitlement” and “right conferring prospective entitlement”.
However, the Member States may not exclude from the scope of this Directive:
(a) part-time employees within the meaning of Directive 97/81/EC;
(b) workers with a fixed-term contract within the meaning of Directive 1999/70/EC;
(c) workers with a temporary employment relationship within the meaning of Article 1(2) of Directive 91/383/EEC.
3. Member States may not set a minimum duration for the contract of employment or the employment relationship in order for workers to qualify for claims under this Directive.’
6 Article 3 of Directive 80/987 provides:
‘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.’
7 Article 4 of that directive provides:
‘1. Member States shall have the option to limit the liability of the guarantee institutions referred to in Article 3.
2. When Member States exercise the option referred to in paragraph 1, they shall specify the length of the period for which outstanding claims are to be met by the guarantee institution. However, this may not be shorter than a period covering the remuneration of the last three months of the employment relationship prior to and/or after the date referred to in Article 3. Member States may include this minimum period of three months in a reference period with a duration of not less than six months.
Member States having a reference period of not less than 18 months may limit the period for which outstanding claims are met by the guarantee institution to eight weeks. In this case, those periods which are most favourable to the employee are used for the calculation of the minimum period.
3. Furthermore, Member States may set ceilings on the payments made by the guarantee institution. These ceilings must not fall below a level which is socially compatible with the social objective of this Directive.
When Member States exercise this option, they shall inform the Commission of the methods used to set the ceiling.’
8 Directive 80/987 was codified by 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), which reproduces in identical terms the content of Articles 2 to 4 of Directive 80/987. Directive 2008/94 entered into force on 17 November 2008.
Directive 2003/109/EC
9 Article 3(1) of Council Directive 2003/109/EC of 25 November 2003 concerning the status of third-country nationals who are long-term residents (OJ 2003 L 16, p. 44) provides:
‘This Directive applies to third-country nationals residing legally in the territory of a Member State.’
10 Article 4(1) of that directive is worded as follows:
‘Member States shall grant long-term resident status to third-country nationals who have resided legally and continuously within its territory for five years immediately prior to the submission of the relevant application.’
11 Under Article 11(1)(d) of Directive 2003/109, long-term residents are to enjoy equal treatment with nationals as regards ‘social security, social assistance and social protection as defined by national law’.
12 Article 13 of that directive, which is entitled ‘More favourable national provisions’, provides:
‘Member States may issue residence permits of permanent or unlimited validity on terms that are more favourable than those laid down by this Directive. Such residence permits shall not confer the right of residence in the other Member States as provided by Chapter III of this Directive.’
Decision No 1/80
13 An Association Council was created by the Agreement establishing an Association between the European Economic Community and Turkey, signed at Ankara on 12 September 1963 by the Republic of Turkey, of the one part, and by the Member States of the EEC and the Community, of the other part, and concluded, approved and confirmed on behalf of the Community by Council Decision 64/732/EEC of 23 December 1963 (OJ 1973 C 113, p. 1).
14 Article 6(1) of Decision No 1/80 of the Association Council of 19 September 1980 on the development of the Association states:
‘Subject to Article 7 on free access to employment for members of his family, a Turkish worker duly registered as belonging to the labour force of a Member State:
– shall be entitled in that Member State, after one year’s legal employment, to the renewal of his permit to work for the same employer, if a job is available;
– shall be entitled in that Member State, after three years of legal employment and subject to the priority to be given to workers of Member States of the Community, to respond to another offer of employment, with an employer of his choice, made under normal conditions and registered with the employment services of that State, for the same occupation;
– shall enjoy free access in that Member State to any paid employment of his choice, after four years of legal employment.’
15 Article 7 of Decision No 1/80 is worded as follows:
‘The members of the family of a Turkish worker duly registered as belonging to the labour force of a Member State, who have been authorised to join him:
– shall be entitled — subject to the priority to be given to workers of Member States of the Community — to respond to any offer of employment after they have been legally resident for at least three years in that Member State;
– shall enjoy free access to any paid employment of their choice provided they have been legally resident there for at least five years.
…’
Netherlands law
16 Article 3(1) of the Law on Unemployment (Werkloosheidswet; ‘the WW’) is worded as follows:
‘An “employee” is a natural person under the age of 65 years who is employed on the basis of a relationship governed by private law or by public law.’
17 Article 3(3) of the WW provides that, by way of derogation from Article 3(1) of that law, a third country national who is not residing legally in the Netherlands for the purposes of Article 8(a) to (e) and (l) of the Law on Foreign Nationals of 2000 (Vreemdelingenwet 2000; ‘the Vw 2000’) is not to be regarded as an employee.
18 Under Article 61 of the WW, an employee is to be entitled to an insolvency benefit on the basis of Chapter IV of that law if he has a claim relating to pay, holiday pay or holiday allowances against an employer who has been declared insolvent or if he is liable to suffer financial loss because that employer has failed to pay to third parties amounts owed in respect of the employment relationship with the employee.
19 Under Article 8(a) to (e) and (l) of the Vw 2000, a foreign national is to be regarded as residing legally in the Netherlands only:
‘(a) on the basis of a fixed-period residence permit within the meaning of Article 14;
(b) on the basis of a residence permit of indefinite duration within the meaning of Article 20;
(c) on the basis of a fixed-period residence permit within the meaning of Article 28;
(d) on the basis of a residence permit of indefinite duration within the meaning of Article 33;
(e) by virtue of his status as a Community national so long as the person resides on the basis of arrangements established under the Treaty establishing the European Community or the Agreement on the European Economic Area;
...
(l) if the foreign national derives his right of residence from Decision No 1/80 of the EEC-Turkey Association Council;
...’
The dispute in the main proceedings and the question referred for a preliminary ruling
20 Mr Tümer is a Turkish national who has lived in the Netherlands since 1988.
21 During the period between 18 August 1988 and 31 March 1995, Mr Tümer held a fixed-period residence permit issued subject to the condition that he live with his spouse. He was divorced in 1996.
22 On 14 October 2005, Mr Tümer applied for a residence permit of indefinite duration. That application was refused by the State Secretary for Justice. The objection lodged against that refusal was declared unfounded by decision of 16 April 2007. On 28 August 2008, the Rechtbank ’s- Gravenhage (District Court, The Hague) dismissed the action contesting that decision on the ground that Mr Tümer could not rely on any rights under Articles 6 or 7 of Decision No 1/80. No appeal was brought against that judgment. Since 25 April 2007, Mr Tümer has not held a residence permit.
23 After 1997, Mr Tümer worked intermittently in the Netherlands. On 3 January 2005, he was engaged by Halfmoon Cosmetics BV, which paid contributions under the WW on his behalf in 2007. From August 2007, Halfmoon Cosmetics paid only part of Mr Tümer’s salary and the company was declared insolvent on 22 January 2008. On 26 January 2008, Mr Tümer was dismissed.
24 Mr Tümer applied for insolvency benefit under the WW on the basis of his right to payment by Halfmoon Cosmetics that the company had not honoured between August 2007 until Mr Tümer’s dismissal, that is to say, a period during which he did not hold a residence permit. That application was refused by decision of 8 February 2008. Mr Tümer challenged that refusal. On 10 June 2008, the Uwv declared that objection unfounded on the ground that Mr Tümer was not an ‘employee’ within the meaning of Article 3(3) of the WW, since he was not legally resident in the Netherlands. On the same ground, the Rechtbank ’s-Hertogenbosch (District Court, ’s Hertogenbosch) dismissed, by judgment of 18 December 2009, Mr Tümer’s action contesting the decision of 10 June 2008.
25 Mr Tümer lodged an appeal against that judgment with the Centrale Raad van Beroep (Higher Social Security Court; or ‘the referring court’), before which he argued that he was an employee, even if he was a third-country national who fell to be regarded as illegally resident in the Netherlands. The Uwv contended that the scope of Directive 80/987 cannot be broader than the legal basis for that instrument — that is to say, Article 137 EC — and, accordingly, it does not apply to third-country nationals who are not legally resident in the Netherlands. In that context, the Uwv additionally argued that Directive 2003/109, under which long-term residents are to enjoy equal treatment in relation to social security, concerns only third-country nationals who are legally resident in the territory of the European Union.
26 According to the information provided by the referring court, Mr Tümer is owed unpaid wages arising from his contract of employment and relating to a period preceding the reference period for the purposes of Article 3 of Directive 80/987. As regards Mr Tümer’s status as an ‘employee’ within the meaning of Article 2(2) of that directive, the referring court states that, as a third-country national who is not legally resident in the Netherlands, Mr Tümer is not an ‘employee’ within the meaning of the WW, but, under the civil law of the Netherlands, his relationship with the employer is a contract of employment and, on that basis, he is to be regarded as an employee. In that capacity, Mr Tümer could also bring judicial proceedings, on the basis of his contract of employment, for payment of his wages by the employer.
27 In those circumstances, the Centrale Raad van Beroep decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:
‘Should Directive 80/987 and, in particular, Articles 2 to 4 of that directive be interpreted — in the light of Article 137(2) of the EC Treaty (now Article 153(2) TFEU), the legal basis for that directive — as precluding national legislation such as Article 3(3) and Article 61 of the WW, under which a third-country national who is not legally resident in the Netherlands within the meaning of Article 8(a) to (e) and (l) of the [Vw] 2000 is not to be regarded as an employee, even in a case such as that of [a third country national], who has applied for an insolvency benefit, who under civil law must be regarded as an employee and who meets the other conditions for the grant of that benefit?’
Consideration of the question referred
28 By its question, the national court asks, in essence, whether Directive 80/987 must be interpreted as precluding national legislation on the protection of employees in the event of the insolvency of their employer, such as that at issue in the main proceedings, under which a third-country national who is not legally resident in the Member State concerned is not to be regarded as an employee with the right to an insolvency benefit — on the basis, in particular, of claims relating to unpaid wages — in the event of his employer’s insolvency, even though that third-country national is recognised under the civil law of the Member State as having the status of an ‘employee’ with an entitlement to pay which could be the subject of an action against his employer before the national courts.
29 In its observations to the Court, the Commission asked the Court to examine the premiss on which the request for a preliminary ruling is based, which is that, during the period material to the main proceedings, Mr Tümer was not legally resident in the Netherlands under the terms of the Association Agreement with Turkey and, specifically, of Decision No 1/80. Raising no questions on that point, the referring court stated that, by judgment of 28 August 2008 against which Mr Tümer lodged no appeal, the Rechtbank ’s-Gravenhage refused his application for a residence permit of indefinite duration on the basis, inter alia, of Articles 6 and 7 of Decision No 1/80.
30 In those circumstances, it must be determined whether Directive 80/987 precludes national legislation such as that at issue in the main proceedings, under which a third-country national, such as Mr Tümer, is excluded from the employee protection provided for under that directive because his residence situation is illegal.
31 In their observations to the Court, the Uwv and the Netherlands Government argue that Directive 80/987 does not apply to ‘illegally staying third-country nationals’, since Article 137(2) EC, the legal basis for that directive, does not cover third-country nationals. The application of Directive 80/987 to that category would, moreover, be contrary to the European Union’s policy on immigration and, in particular, to Directive 2003/109, which confers a right to equal treatment, notably in relation to social security, only on third-country nationals who are legally resident in a Member State.
32 In that regard, suffice it to state, first, that — as the Advocate General pointed out in point 51 of his Opinion — competence under Article 137(2) EC, the legal basis for Directive 2002/74, to adopt minimum requirements to improve living and working conditions, the objective referred to in Article 136 EC, is not limited so as to concern only the living and working conditions of nationals of Member States, to the exclusion of third-country nationals.
33 Secondly, as regards Directive 2003/109, it should be noted that, although Article 3(1) of that directive makes the status of long-term resident, with the attendant right to equal treatment in the areas covered by Article 11 of that directive, conditional upon legal residence, that directive in no way precludes other EU acts, such as Directive 80/987, from conferring, subject to different conditions, rights on third-country nationals with a view to achieving the individual objectives of those acts.
34 Under Article 1(1) of Directive 80/987, that directive applies 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) of that directive.
35 Although Directive 80/987 does not itself define the term ‘employee’ and although the first subparagraph of Article 2(2) of that directive states that the directive is without prejudice to national law as regards the definition of that term, it is clear from Article 1(2) and (3) and the second subparagraph of Article 2(2) of Directive 80/987 that the discretion enjoyed by Member States under the first subparagraph of Article 2(2) for the purposes of defining the term ‘employee’ is nevertheless not wholly unfettered.
36 In that regard, it should be noted, first of all, that neither Article 1(1) nor the other provisions of Directive 80/987 exclude third-country nationals from the scope of the directive; nor do they expressly permit Member States to do so.
37 Next, it should be borne in mind that, under the terms of Article 1(1) of Directive 80/987, that directive is intended to apply to wage claims held by any employee against his employer. On the other hand, the possibility under Article 1(2) and (3) of Directive 80/987 for Member States to exclude certain categories of employee from the scope of that directive concerns only specific cases and is subject to conditions.
38 In that context, it should be emphasised that Article 1(2) of Directive 80/987, which makes it possible, by way of exception, to exclude certain categories of employee by virtue of the existence of other forms of guarantee, does not release Member States from every obligation to provide those employees with protection in the event of their employer’s insolvency; rather, it requires that the employees concerned be offered protection equivalent to that arising from the directive.
39 As regards the legislation at issue in the main proceedings, it can be seen from the information provided by the referring court that Netherlands civil law categorises every person who has a contract of employment with an employer as an ‘employee’ who is entitled, whatever his nationality or the lawfulness of his residence in that Member State, to receive pay.
40 However, although Article 3(1) of the WW in principle categorises every natural person under the age of 65 years who is employed on the basis of a legal relationship governed by private law or by public law as an ‘employee’ with entitlement to insolvency benefit under Article 61 of that law, Article 3(3) of the WW excludes ‘illegally staying third-country nationals’ from the definition of ‘employee’ and, accordingly, from any entitlement to the insolvency benefit.
41 In view of the fact that Article 3(3) of the WW does not grant ‘illegally staying third-country nationals’ protection equivalent to the insolvency benefit, it does not satisfy the conditions that must be met in order to exclude certain categories of ‘employee’ under Article 1(2) of Directive 80/987. Moreover, it is common ground that Article 3(3) of the WW is unrelated to Article 1(3) of Directive 80/987.
42 Furthermore, according to the case-law of the Court, the first subparagraph of Article 2(2) of Directive 80/987 must be interpreted in the light of the social objective of that directive, which is 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 and relating to pay for a specific period. Member States therefore cannot define at will the term ‘employee’ in such a way as to undermine the social objective of that directive (see, by analogy, judgment in van Ardennen, C‑435/10, EU:C:2011:751, paragraphs 27 and 34).
43 The discretion enjoyed by Member States under the first subparagraph of Article 2(2) of Directive 80/987 to define the term ‘employee’, referred to in paragraph 35 above, is thus circumscribed by the social objective of Directive 80/987, which the Member States are required to respect.
44 In that regard, it should be noted that, in view of the social objective of Directive 80/987 and the terms of Article 1(1), under which the directive is to apply ‘to employees’ claims arising from contracts of employment or employment relationships’, the definition of the term ‘employee’ necessarily refers to an employment relationship that gives rise to a right, held vis-à-vis the employer, to receive payment for work done. In the present case, those elements are present in the definition of the term ‘employee’ under the civil law of the Netherlands.
45 It is thus contrary to the social objective of Directive 80/987, referred to in paragraph 42 above, to deny the protection provided for under that directive in the event of the employer’s insolvency to individuals to whom national legislation generally attributes the status of employees and who, by virtue of that legislation, have wage claims vis-à-vis their employer arising from contracts of employment or employment relationships, as referred to in Article 1(1) and the first paragraph of Article 3 of that directive.
46 It follows that Directive 80/987 precludes national legislation on the protection of employees in the event of the insolvency of their employer, such as that at issue in the main proceedings, under which a third-country national has no right to an insolvency benefit because he is not lawfully resident, even though that third-country national is recognised under the civil law of that Member State as having the status of an ‘employee’ with an entitlement to pay.
47 The fact, referred to by the Uwv and the Netherlands Government at the hearing before the Court, that ‘illegally staying third-country nationals’ do not have the right to work in the Netherlands does not invalidate that conclusion. According to the information provided by the referring court, confirmed by the Uwv and by the Netherlands Government, ‘illegally staying third-country nationals’ who work without the proper authorisation are, under national civil law, ‘employees’ with an entitlement to payment for work done, that is to say, with a claim of the kind that Article 1(1) and the first paragraph of Article 3 of Directive 80/987 are intended to make secure.
48 It is true that Article 10(a) of Directive 80/987 permits Member States to take the measures necessary to prevent abuse. However, it does not emerge from the documents submitted to the Court and, in particular, from the observations of the Netherlands Government that the circumstances of the case before the referring court reflect the constituent elements of an abuse for the purposes of that provision. Furthermore, the Court notes in that regard that, during the period material to the main proceedings, Mr Tümer’s employer — Halfmoon Cosmetics — fulfilled its obligation to pay contributions in accordance with national legislation on the protection of employees in the event of the employer’s insolvency.
49 In the light of all the above considerations, the answer to the question referred is that Directive 80/987 must be interpreted as precluding national legislation on the protection of employees in the event of the insolvency of their employer, such as that at issue in the main proceedings, under which a third-country national who is not legally resident in the Member State concerned is not to be regarded as an employee with the right to an insolvency benefit — on the basis, in particular, of claims relating to unpaid wages — in the event of his employer’s insolvency, even though that third-country national is recognised under the civil law of the Member State as having the status of an ‘employee’ with an entitlement to pay which could be the subject of an action against his employer before the national courts.
Costs
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.
On those grounds, the Court (Fifth Chamber) hereby rules:
Council Directive 80/987/EEC of 20 October 1980 relating to the protection of employees in the event of the insolvency of their employer, as amended by Directive 2002/74/EC of the European Parliament and of the Council of 23 September 2002, must be interpreted as precluding national legislation on the protection of employees in the event of the insolvency of their employer, such as that at issue in the main proceedings, under which a third-country national who is not legally resident in the Member State concerned is not to be regarded as an employee with the right to an insolvency benefit — on the basis, in particular, of claims relating to unpaid wages — in the event of his employer’s insolvency, even though that third-country national is recognised under the civil law of the Member State as having the status of an ‘employee’ with an entitlement to pay which could be the subject of an action against his employer before the national courts.
[Signatures]