OPINION OF ADVOCATE GENERAL
WAHL
delivered on 26 September 2013 (1)
Case C‑361/12
Carmela Carratù
v
Poste Italiane SpA
(Request for a preliminary ruling from the Tribunale di Napoli (Italy))
(Social policy – Directive 1999/70/EC – Framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP – Clause 4 – Employment conditions – Compensation for the unlawful insertion of a fixed-term clause in an employment contract – Equal treatment – Concept of ‘emanation of the State’)
1. By seven different questions, the Tribunale di Napoli (Naples District Court) (Italy) asks the Court whether Italian law is consistent with a number of general principles of European Union (‘EU’) law, such as the principle of equality of arms in judicial proceedings, and with particular rules applicable to fixed-term employment contracts, such as the bar on discrimination, which reflects in terms specific to such contracts the general EU principle of non-discrimination.
2. It is not the first time – nor will it be the last – that litigation involving both Poste Italiane SpA (‘Poste Italiane’) and Directive 1999/70/EC (2) makes its way before the Court. (3) A large number of cases have been brought against Poste Italiane before the courts. (4) Similar cases have also been brought against Italian government ministries and local authorities concerning, inter alia, the interpretation of Directive 1999/70. (5)
3. The referring court has already found it to be unlawful for Poste Italiane to have employed the applicant in the main proceedings, Ms Carratù, under a fixed-term contract. That court now seeks guidance as to the amount of compensation due. In this connection, it asks whether the principle of non-discrimination as laid down in Directive 1999/70 requires such compensation to accrue until the day on which the referring court hands down its final decision. (6)
4. For the reasons which follow, I do not consider that, in these circumstances, the unlawful conclusion of a fixed-term contract is comparable to unlawful dismissal under a contract of indefinite duration. Consequently, the situation at issue in the main proceedings cannot be construed as a case of discrimination.
I – Legal framework
A – EU legislation
5. Directive 1999/70 incorporates into EU law the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP (‘the framework agreement’). (7) The framework agreement itself can be found in the Annex to Directive 1999/70.
6. The principle of non-discrimination, laid down in clause 4 of the framework agreement, provides:
‘1. In respect of employment conditions, fixed-term workers shall not be treated in a less favourable manner than comparable permanent workers solely because they have a fixed-term contract or relation unless different treatment is justified on objective grounds.
2. Where appropriate, the principle of pro rata temporis shall apply.
3. The arrangements for the application of this clause shall be defined by the Member States after consultation with the social partners and/or the social partners, having regard to Community law and national law, collective agreements and practice …’
B – Italian legislation
1. Law No 604/1966
7. Law No 604 of 15 July 1966 (8) (‘Law 604/1966’) lays down general rules to govern cases of non-collective dismissal. Article 8 of that law provides, in substance, that where an employee has been unlawfully dismissed, the employer must reinstate the employee within 3 days, failing which, the employer must provide compensation, the amount of which is to be calculated in the light of the number of employees, the size of the undertaking and the seniority of the employee in question, ranging in equivalence to 2.5 to 6 months’ pay. The upper level of that compensation bracket may be raised to up to 10 months’ pay where the employee’s length of service exceeds 10 years, and up to 14 months’ pay where the length of service exceeds 20 years and the undertaking employs more than 15 employees.
2. Law No 300/1970
8. Law No 300 of 20 May 1970 (9) (‘Law No 300/1970’) lays down certain rules on the protection of the freedom and dignity of workers, freedom of association and trade union activity in the workplace, as well as regulations on employment.
9. Article 18 of Law No 300/1970, previously entitled ‘Reinstatement in the workplace’, lays down specific provisions to apply in the case of unlawful dismissal, as well as rules governing the calculation of any compensation payable in that connection. At the material time, Law No 300/1970 stated that, if more than 15 persons were employed in the workplace (or 5 employees in the case of an agricultural undertaking), the employer was to reinstate a dismissed employee if the dismissal was found to be unlawful under Law No 604/1966. In the event of reinstatement, the compensation payable to the employee was to be equivalent to full pay (including the payment of social security contributions) from the day of dismissal until the date of actual reinstatement, but never less than the equivalent of 5 months’ full pay. Lastly, without prejudice to the right to compensation for the interim period, it was open to the employee to waive the right to be reinstated, in return for supplementary compensation equivalent to 15 months’ full pay.
3. Legislative Decree No 368/2001
10. Legislative Decree No 368 of 6 September 2001 (10) (‘Legislative Decree No 368/2001’) implemented Directive 1999/70 in Italy.
11. Under Article 1(1) of Legislative Decree No 368/2001, an employment contract may set the date on which it is to end for technical, production or organisational reasons, or for the purposes of replacing a particular employee. However, pursuant to Article 1(2), any such fixed-term clause will be ineffective unless recorded, directly or indirectly, in a written document specifying the reasons in that particular case, which must fall within the categories set out in Article 1(1). Lastly, Article 1(3) provides that the employer is to send the employee a copy of the written document within five working days of the date on which work was commenced.
4. Law No 183/2010
12. Law No 183 of 4 November 2010 (‘Law No 183/2010’) (11) delegates certain powers to the Italian Government in the area of employment law and replaces various previously applicable provisions. Article 32 of that law concerns statutory time-limits and rules relating to fixed-term employment relationships.
13. Article 32(1) of Law No 183/2010, which replaced Article 6(1) and (2) of Law No 604/1966, provides that, in the case of dismissal, any challenge must be lodged – on pain of being time-barred – within 60 days of receipt of written notification of the dismissal (or of written notification of the grounds for dismissal, if received later). Moreover, such a challenge, which may take any written form capable of communicating the employee’s intention, must be followed up by an application lodged, within a period of 270 days, with the registry of the judicial body acting as labour court.
14. Article 32(2) of Law No 183/2010 extends the scope of Article 32(1) to cover all cases of unlawful dismissal. Moreover, pursuant to Article 32(3) of that law, Article 32(1) is also to apply, inter alia, to actions for a declaration that a fixed-term clause, inserted in an employment contract, is invalid under Article 1 of Legislative Decree No 368/2001. Further, it is stated that time for the purposes of the 270-day time-limit is to begin to run on expiry of the contract.
15. At the time when the order for reference was issued, Article 32(5) of Law No 183/2010 provided, notably, that where a fixed-term contract is converted into a contract of indefinite duration, the employer must pay the employee compensation, on the basis of the criteria set out in Article 8 of Law No 604/1966, in an amount equivalent to 2.5 to 12 months’ pay. Moreover, under Article 32(7) of Law No 183/2010, that provision is to apply to all proceedings, including those pending on the date of entry into force of that law. In respect of the latter, however, the court may, where necessary, allow the parties to amend their written pleadings within a set period of time.
II – Facts, procedure and the questions referred
16. Ms Carratù was recruited by Poste Italiane to work at the Campania Postal Mechanisation Centre in Naples. Under the employment contract, her employment was to last from 4 June until 15 September 2004. Ms Carratù did not receive a copy of the contract signed by both parties until 15 June 2004.
17. Referring to Article 1 of Legislative Decree No 368/2001, the contract stated that its fixed duration was justified for reasons relating to staff replacement and, specifically, by the need to replace a member of staff at the Campania Centre from 1 June 2004 until 15 September 2004. The contract went on to state that it was understood that the employment relationship would be extinguished even prior to 15 September 2004 if the member of staff were to resume work, thereby ending the need for replacement.
18. On 21 September 2004, Ms Carratù sent Poste Italiane a letter by registered post, stating that she was available for work. Poste Italiane received that letter on 11 October 2004.
19. It emerges from the case-file forwarded to the Court that Ms Carratù brought proceedings against Poste Italiane before the referring court on 23 September 2008. In her application, she argued that there were no lawful reasons for placing a time limit on her employment. She therefore claimed that: (i) the clause relating to the time limit should be declared unlawful; (ii) the employment relationship between Poste Italiane and herself should be declared to be of indefinite duration; and (iii) she should be reinstated and Poste Italiane should be ordered to pay the remuneration which had accrued in the meantime (‘the compensation at issue’).
20. By part-judgment of 25 January 2012, the referring court found the fixed-term clause to be unlawful and held that an employment relationship of indefinite duration had commenced as of 4 June 2004. (12)
21. In the proceedings before the referring court, the outstanding issue is the amount of compensation owed to Ms Carratù. Having regard to the entry into force of Law No 183/2010, and entertaining doubts as to the compatibility of various provisions of national law with clause 4 of the framework agreement, as well as with a number of general principles of EU law, the Tribunale di Napoli decided to stay the proceedings and, by order of 13 June 2012, to refer the following seven questions to the Court:
‘(1) Is it contrary to the principle of equivalence if, in implementing [Directive 1999/70], national legislation makes provision, for cases where an employment contract containing a null and void fixed-term clause is unlawfully suspended, for economic consequences which are different from and considerably less favourable than the economic consequences which are to ensue in cases where an ordinary civil law contract containing a null and void fixed-term clause is unlawfully suspended?
(2) Is it consistent with the [EU] legal order that, within the scope of its application, the effectiveness of a penalty benefits the employer who has acted wrongfully, to the detriment of the employee who has been wronged, in such a way that the temporal and natural duration of the procedure directly damage the employee to the advantage of the employer, and the efficacy in remedial terms is inversely proportional to the length of the process, so far as almost to be cancelled out?
(3) Within the scope of the [EU] legal order as referred to in Article 51 of the [Charter of Fundamental Rights of the European Union], is it consistent with Article 47 of [that] Charter … and Article 6 of the [European Convention on Human Rights and Fundamental Freedoms] for the temporal and natural duration of the procedure directly to damage the employee to the benefit of the employer and for the efficacy in remedial terms to be inversely proportional to the length of the procedure, so far as almost to be cancelled out?
(4) In the light of the explanations given in Article 3(1)(c) of Directive 2000/78/EC [(13)] and Article 14(1)(c) of Directive 2006/54/EC, [(14)] does the notion of [“]employment conditions[”] in clause 4 of [Directive 1999/70] also cover the consequences ensuing from the unlawful interruption of an employment relationship?
(5) In the event that [Question 4] is answered in the affirmative, is the difference between the consequences normally provided for under the national legal order in relation to the unlawful interruption of a permanent employment relationship, on the one hand, and the consequences in the case of a fixed-term employment relationship, on the other, justifiable under clause 4 [of Directive 1999/70]?
(6) Must the general [EU] law principles of legal certainty, the protection of legitimate expectations, equality of arms in proceedings, effective judicial protection, and the right to an independent tribunal and, more generally, to a fair hearing, guaranteed by Article 6(2) [EU] (as amended by Article 1(8) of the Treaty of Lisbon and to which Article 46 [EU] refers) – in conjunction with Article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms …, and with Articles 46, 47 and 52(3) of the Charter … – be interpreted as precluding the adoption by the Italian State, after a significant length of time (9 years), of a provision such as Article 32(7) of Law No 183/2010, which modifies the consequences of ongoing proceedings directly to the detriment of the employee and to the benefit of the employer, the result being that the efficacy in remedial terms is inversely proportional to the length of the process, so far as almost to be cancelled out?
(7) In the event that the Court of Justice does not recognise the above principles as having the authority of fundamental principles of [EU] law for the purposes of their horizontal and general application, with the effect that a provision such as Article 32(5) to (7) of Law No 183/2010 is incompatible only with the obligations under [Directive 1999/70] and the [Charter of Fundamental Rights], must a company such as the defendant company, with the characteristics referred to [in the order for reference] be regarded as a State body for the purposes of the direct, vertically ascending application of EU law and, in particular, of clause 4 of [Directive 1999/70], and the [Charter of Fundamental Rights]?’
22. Written observations have been submitted by Poste Italiane, by the Italian and Polish Governments, and by the Commission. At the hearing on 5 June 2013, oral argument was presented by Ms Carratù, Poste Italiane, the Italian Government, and by the Commission.
III – Analysis
A – Introductory remarks
23. In the case under consideration, the referring court asks seven questions touching upon a broad range of issues. In short, Question 1 seems to raise the issue of the compatibility with the principle of equivalence of rules laid down by national law to remedy, on the one hand, fixed-term clauses which are unlawful under Directive 1999/70 and, on the other hand, clauses which are unlawful under the ordinary law of contract. Questions 2 and 3, albeit worded somewhat differently, both seem ultimately to concern the compatibility of the national rules at issue with the principle of effectiveness, given that the duration of proceedings can affect the compensation afforded to the worker. Questions 4 and 5 concern the interpretation and application of clause 4 of the framework agreement. Question 6 essentially relates to the conformity with a number of basic principles of EU law of rules adopted by the national legislature which have an impact on ongoing proceedings to the advantage of the public sector party to those proceedings. Lastly, Question 7 concerns the direct applicability of Directive 1999/70 to an entity such as Poste Italiane.
24. In my view, most of the questions referred lack clarity and coherence. I will therefore focus on the two questions which, to my mind, arguably raise new points of law which are sufficiently clear, namely Questions 4 and 5. As the answers to those questions will help with answering the other questions, I find it useful to begin the substantive part of my analysis with those two questions.
25. At the outset I should also stress that the order for reference paints no clear picture of the national legal framework. Besides referring extensively to a number of different provisions of national law without indicating clearly their respective relevance or interrelationship, the order also cites copiously from case-law of higher-ranking national courts with which the referring court seems to disagree, thereby obscuring the issues of EU law on which it wishes the Court to rule. In that sense, the order for reference does leave something to be desired.
26. Moreover, the description of the regulation of fixed-term workers in Italy which can be extracted from the order for reference is strongly contested by Poste Italiane and by the Italian Government. Unfortunately, the hearing did not do much to clarify the contentious issues, namely the rules applicable prior to and after the adoption of Law No 183/2010. (15)
27. However, it is not the task of the Court, in preliminary ruling proceedings, to resolve disputes concerning the proper interpretation of national law; nor does it fall to the Court to reconcile different strands of national case-law. The issue which the Court, accordingly, can and ought to focus on for the purposes of the main proceedings is the answer to Questions 4 and 5.
28. In the following, after dealing first with an objection raised by Poste Italiane as to the admissibility of the questions, I will narrow the scope of my analysis to focus on the question on which the whole case turns: whether Italian law gives rise to unjustified discrimination against fixed-term workers, such as Ms Carratù.
B – Admissibility
29. Poste Italiane submits that all the questions referred are inadmissible. It states that Law No 183/2010 was not adopted in order to implement Directive 1999/70 and, moreover, that those legal instruments have different aims and purposes. It argues that the matter at hand therefore falls outside the scope of EU law.
30. I will now briefly address this argument, whereas I will explore specific issues of inadmissibility whenever they arise in the course of my analysis of the individual questions.
31. In preliminary ruling proceedings, the questions referred enjoy a presumption of relevance. Owing to the spirit of judicial cooperation which underpins Article 267 TFEU, the Court only refuses to answer such questions in certain specific situations. (16)
32. The case under consideration concerns the interpretation of the framework agreement in the context of a legal dispute between Ms Carratù, who was hired under an unlawful fixed-term contract, and her employer, Poste Italiane. It is not at all obvious that the interpretation of EU law that is sought bears no relevance to the facts of the main action or its purpose; nor does the dispute in question appear to be hypothetical. (17)
33. When asked to interpret provisions of EU law by a national court, as in the case of Questions 4 and 5, such a request is, in principle, admissible. (18) The alleged inapplicability of a provision of EU law – such as clause 4 of the framework agreement – to the case before the referring court is not a matter of admissibility but rather one of substance. (19) Moreover, whether or not Law No 183/2010 was intended to implement Directive 1999/70 has no bearing on the issue of admissibility.
34. On this basis, I will now discuss the questions referred.
C – Question 4: The concept of ‘employment conditions’
35. By Question 4, the referring court asks whether the notion of ‘employment conditions’ in clause 4 of the framework agreement covers the ‘consequences ensuing from the unlawful interruption of an employment relationship’. I understand that question as referring to whether compensation such as that at issue comes within the concept of ‘employment conditions’ in clause 4 of the framework agreement.
36. In my view, the answer would have to be ‘yes’.
37. Directive 1999/70 does not define the term ‘employment conditions’ as used in clause 4 of the framework agreement. However, the Court has already had the opportunity to interpret that concept.
38. In Del Cerro Alonso, (20) the Court was asked whether allowances for length of service (in concreto three-yearly allowances) were to be regarded as covered by that concept. The Court answered in the affirmative, holding that ‘the constituent parts of pay’ fall within the concept of ‘employment conditions’ in clause 4(1) of the framework agreement. (21)
39. In Impact, (22) which concerned the question whether pay and pensions fell within the concept of ‘employment conditions’ in clause 4 of the framework agreement, the Court confirmed and expanded on that view. In respect of pay, it stated that ‘in establishing both the constituent parts of pay and the level of those constituent parts, the national competent bodies must apply to fixed-term workers the principle of non-discrimination as laid down in [c]lause 4 of the framework agreement’. (23) As for pensions, referring to Article 157 TFEU, the Court went on to hold that ‘the term “employment conditions” within the meaning of [c]lause 4(1) of the framework agreement covers pensions which depend on an employment relationship between worker and employer, excluding statutory social-security pensions, which are determined less by that relationship than by considerations of social policy’. (24)
40. The Court has also interpreted the nearly identically worded clause 4 of the framework agreement on part-time work, annexed to Directive 97/81/EC. (25) In Bruno and Others, (26) the question under consideration concerned whether retirement pension rights formed part of the ‘employment conditions’ of part-time workers under clause 4 on non-discrimination of that framework agreement. Elaborating on the issue of pensions, the Court referred to case-law relating to Article 157 TFEU and, while reiterating the applicable conditions for treating pensions as ‘pay’ for the purposes of that provision, it applied those conditions by analogy to clause 4 of the framework agreement on part-time work. For the Court, the decisive criterion was ‘whether the retirement pension is paid to the worker by reason of the employment relationship between him and his former employer, that is to say, the criterion of employment’. (27)
41. In my view, that line of argument is also valid in respect of clause 4 of the framework agreement on fixed-term work, which is very similar to the framework agreement on part-time work. Indeed, apart from the fact that both judgments draw inspiration from the very same source – namely the case-law of the Court under Article 157 TFEU – it is the similarity between the two framework agreements which led the Court, in Bruno and Others, to refer by analogy to Impact. (28)
42. I should add at this point that the statutory nature of a benefit can disqualify it from constituting ‘employment conditions’. Indeed, the abovementioned case-law makes it quite clear that pensions paid under statutory social security schemes which are not based on the existence of an employment relationship but rather on considerations of social policy do not come within the notion of ‘employment conditions’. I do not see why that reasoning could not apply to all kinds of statutory benefit. However, if a statutory benefit were to concern only a particular category of workers, if it were to be directly related to the period of service completed and if its amount were to be calculated by reference to the last salary, then it would invariably constitute an ‘employment condition’, as the employment relationship would pre-dominate, rather than the social nature of the relevant legislation. (29)
43. To resume, the decisive test for when a measure falls within the scope of ‘employment conditions’ for the purposes of clause 4 of the framework agreement on fixed-term work is that of employment. In this regard, the Court has held that the constituent parts of pay, the level of those constituent parts, and pensions all come within the scope of that concept.
44. In the case under consideration, the compensation at issue is provided for under Italian law by reason of the employment relationship between the fixed-term worker and the former employer. It is designed, in particular, to give the worker what he would have earned if the fixed-term clause had not been unlawfully inserted. It therefore constitutes a form of deferred pay which meets the criterion of employment mentioned in the previous point and is therefore an ‘employment condition’.
45. I would like to observe that case-law on the notion of ‘pay’ under Article 157 TFEU confirms this view. According to that case-law, compensation granted by an employer to an employee on termination of his employment is a form of deferred ‘pay’ to which the worker is entitled by reason of his employment but which is paid to him on termination of the employment relationship so that he can adjust to the new circumstances arising from such termination. (30) Moreover, compensation awarded to an employee for unfair dismissal, which comprises a basic award and a compensatory award, is designed in particular to give the employee what he would have earned if the employer had not unlawfully terminated the employment relationship. (31) That case-law is relevant because one of the purposes of the framework agreement is to contribute to improving equality of opportunities between women and men in light of the fact that more than 50% of fixed-term workers in the EU are women. (32)
46. On that basis, the concept of ‘employment conditions’ in clause 4(1) of the framework agreement covers compensation owing to the unlawful termination of an employment contract, including the compensation at issue.
D – Question 5: Existence of an unjustified difference in treatment
1. General observations
47. By Question 5, the referring court asks whether ‘the difference between the consequences normally provided for under the national legal order in relation to the unlawful interruption of a permanent employment relationship, on the one hand, and the consequences in the case of a fixed-term employment relationship, on the other, [is] justifiable under clause 4’ of the framework agreement.
48. The wording of Question 5 thus presupposes that there is a ‘difference’ and that that difference constitutes, on the face of it, discrimination under clause 4 of the framework agreement. Indeed, the referring court merely asks whether such a difference in treatment can be justified under clause 4.
49. The difference in treatment, presumably, arises in so far as Article 32(7) of Law No 183/2010 does not grant fixed-term workers in undertakings employing more than 15 employees the same treatment as comparable permanent workers under Article 18 of Law No 300/1970. Indeed, under Article 32(5) of Law No 183/2010, Ms Carratù stands, at best, to receive 12 months’ pay, and possibly as little as 2.5 months’ pay. However, according to the referring court, under Law No 300/1970, she could have claimed compensation as from the date she challenged the validity of the fixed-term clause, that is to say, she would have been entitled to more than eight years’ full pay. (33)
50. The premiss on which the referring court appears to base its questions cannot be taken at face value. It is necessary first to consider whether an unlawful dismissal can truly be compared to the unlawful insertion of a fixed-term clause in an employment contract. As stated above, I do not consider that to be possible.
51. In what follows, before returning to the issue of an alleged discrimination, I will make some general observations on the non-discrimination provision under clause 4 of the framework agreement.
52. The principle of non-discrimination requires that comparable situations must not be treated differently and that different situations must not be treated in the same way. Such treatment may be justified only if it is based on objective considerations independent of the nationality of the persons concerned and only if it is proportionate to the objective legitimately pursued. (34)
53. However, the concept of non-discrimination as employed in clause 4 of the framework agreement is somewhat more restrictive. First, its scope is limited to ‘employment conditions’. Second, it provides that fixed-term workers must not be treated ‘in a less favourable manner’. Last, the use of the word ‘solely’, apart from implying a requirement of causation, seems to indicate that no other plausible reasons for the alleged discriminatory treatment may exist.
54. The expression ‘less favourable’ does not make it clear whether the treatment must not, on the whole, be less favourable, or whether an infringement of that provision arises merely if the treatment is less favourable in a specific case. Indeed, Poste Italiane and the Italian Government argue that the legal position of fixed-term workers in Italy has generally improved under Law No 183/2010. However, as the Commission stated at the hearing, the issue whether the legal protection afforded to fixed-term workers has generally increased or decreased seems rather to fall under clause 8(3) of the framework agreement (the ‘non-regression clause’). (35) I would therefore endorse a specific approach. (36)
55. Moreover, the test requires finding a ‘comparable permanent worker’. According to the definitions set out in clause 3(2) of the framework agreement, the term ‘comparable permanent worker’ means, where possible, ‘a worker with an employment contract or relationship of indefinite duration, in the same establishment, engaged in the same or similar work/occupation, due regard being given to qualifications/skills’. The last part of that definition seems to allow a significant measure of discretion.
56. The notion of discrimination in Directive 1999/70 is therefore subject to a number of qualifying circumstances. Such a test can at times prove to be not entirely straightforward.
57. In practice, however, the Court has kept the test relatively simple. In order to assess whether the persons concerned are engaged in the same or similar work for the purposes of the framework agreement, it must first be determined, in accordance with clauses 3(2) and 4(1) of that agreement, whether, in the light of a number of factors – such as the nature of the work, training requirements and working conditions – those persons can be regarded as being in a comparable situation. (37)
58. On the basis of these remarks, I will now discuss whether the present case involves an instance of discrimination.
2. Does the principle of non-discrimination apply to the case under consideration?
a) Preliminary remarks
59. It is useful to begin by recalling briefly the reasoning which the referring court seems to adopt in order to establish what the most favourable outcome in terms of compensation would have been for Ms Carratù. Indeed, it appears, on the basis of the information given in the order for reference in relation to the applicable national law, that in order to arrive at the most favourable outcome, it is necessary to:
– declare the fixed-term clause invalid under Article 1(2) of Legislative Decree No 368/2001 and consequently acknowledge that the contract is now of indefinite duration;
– compare Ms Carratù’s situation under clause 4 of the framework agreement to that of an unlawfully dismissed permanent worker in a workplace with more than 15 employees under Article 18 of Law No 300/1970; and
– establish a breach of clause 4 of the framework agreement and, consequently, acknowledge a right to reinstatement and total remuneration from the day of dismissal until effective reinstatement takes place under Article 18 of Law No 300/1970.
60. It thus appears that the referring court conflates several separate remedies arising from the unlawful insertion of a fixed-term clause in an employment contract, namely (i) the right to (monetary) compensation for the unlawful fixed-term clause, (ii) the right to convert the fixed-term employment contract into one of indefinite duration, and (iii) the right to reinstatement in the event of unlawful dismissal, which happens to include full pay in the interim if there are more than 15 employees in a given workplace.
61. I should recall, initially, that it is settled case-law that the framework agreement does not lay down a general obligation on the Member States to provide for the conversion of fixed-term employment contracts into contracts of indefinite duration. (38) This is a fortiori also the case as regards the rights under Article 18 of Law No 300/1970 to be reinstated and to receive payment in the interim. Such rights do not flow from the framework agreement but rather from national law, and the Court has no jurisdiction under Article 267 TFEU to interpret national law, or to set out the consequences arising under national law. In that sense, clause 4 requires only equal treatment, not a ‘most favoured’ treatment.
b) Comparing the contractual relationships and the illegalities at issue
62. On a more basic level, the present case raises the question of the limitations to clause 4 of the framework agreement. Some of the parties before the Court broach that issue, albeit in an indirect manner.
63. In its written submissions, the Commission asks whether, in a case such as that before the referring court, an objective justification does not lie in the fact that comparable permanent workers who have been unlawfully dismissed may – as compared with workers employed under unlawful fixed-term contracts – legitimately place greater trust in the stability of their employment relationship and therefore in the possibility of receiving pay beyond the duration of the contract. (39) Poste Italiane essentially puts forward the same argument.
64. The Italian Government takes a similar view, arguing that, unlike permanent workers, fixed-term workers cannot expect their contract to continue. Likewise, the Polish Government submits that, in respect of fixed-term contracts, the parties do not wish to create an enduring legal relationship of an indefinite nature.
65. Counsel for Ms Carratù did not voice an opinion in this regard.
66. I would agree with the basic sentiment expressed by Poste Italiane, the Italian Government and the Commission. As regards the amount of compensation for the unlawful termination of an employment relationship, fixed-term workers are not generally in a position to have the same expectations as comparable permanent workers.
67. I must confess, however, to more fundamental misgivings when it comes to accepting that the present case involves ‘discrimination’ that must in consequence be ‘objectively justified’ on pain of being unlawful under clause 4 of the framework agreement. Indeed, to elaborate on my comments above at point 61, I do not find it possible to compare unlawful dismissal to the unlawful insertion of a fixed-term clause.
68. Admittedly, both contracts are brought to an end by unlawful conduct. Yet, if unlawfulness is taken out of the equation, in the default scenario, only one contract would have endured. Besides, the unlawful actions at issue take rather different forms. An unlawful dismissal is an illegal unilateral interruption by the employer of an otherwise valid and lasting employment relationship. In contrast, an unlawful fixed-term clause concerns the conclusion of the contract itself, which should end automatically at such time as both parties desire, and where the illegality arises either ab initio or after the contract has been agreed, depending on the relevant national law (which may also lay down formalistic rules, as the present case demonstrates). Unlike unlawful dismissal, it would therefore seem that both parties may be responsible for the illegality. The only truly comparable situations would be, on the one hand, the unlawful dismissal of a worker employed under a contract of indefinite duration and, on the other, the premature unlawful dismissal of a fixed-term worker employed under a very long fixed-term contract. (40)
69. As regards the essential characteristics of the contracts, a fixed-term contract is simply not the same as a contract of indefinite duration. The Court seems to recognise these differences also. When a fixed-term contract comes to the end of its term, its non-renewal has been held, in principle, not to be comparable to a dismissal. (41) Application of the non-discrimination clause cannot ‘remedy’ the distinction between non-renewal and dismissal without entirely abolishing the intrinsic differences between the two types of contract. Such differences do not, in my view, fall anywhere within the scope of the protection against discrimination provided for under clause 4 of the framework agreement. In the following, I will try to illustrate why.
70. Fixed-term workers, as opposed to part-time workers, may very well work the same full weekly or monthly timetable as comparable permanent workers. However, unlike part-time contracts, a fixed-term contract is set to end at a given time, reflecting the will of both parties. Such an instrument enables both the employer and the worker to plan ahead in light of the scheduled lapse of the employment relationship.
71. Obviously, by mutual agreement, fixed-term contracts can last for several years and are therefore not necessarily of shorter duration. However, there is some merit in the argument that, in the long run, fixed-term workers cannot generally be considered to have worked for the same employer to the same extent as comparable permanent workers.
72. That is the rationale behind the pro rata temporis rule in clause 4(2) of the framework agreement. That rule can apply only to contracts for divisible performance (including, in particular, payments such as salaries, wage supplements and certain premiums), (42) meaning that the work performance is reduced correspondingly. (43) It is therefore implicit in the very system of the framework agreement that, over time, fixed-term workers may work less than comparable permanent workers.
73. Moreover, as regards employment law as such, it is by no means uncommon, generally speaking, for the protection of employees to increase gradually, in step with the length of their service (seniority). (44) As the case may be, the longer the period of service, the longer the notice to be provided beforehand by the employer in the event of dismissal and the greater the (monetary) compensation in the event of unlawful dismissal. In consequence, not all differences which result from the length of employment amount to discrimination. (45)
74. Under a fixed-term contract, the employer and the worker have agreed not to enter into a permanent employment relationship. The remuneration of a fixed-term worker is therefore intended to end at some predetermined point in time. A corollary of this is that fixed-term workers cannot legitimately expect the compensation for unlawful insertion of a fixed-term clause to be the same as that payable in the event of the unlawful dismissal of a permanent worker.
75. Against this view, it can, of course, correctly be argued that the worker is the weaker party in the employment relationship. (46) Contracts of an indefinite duration are the general form of employment relationships, and contribute to the quality of life of the workers concerned and improve performance. (47) Moreover, the aim of the framework agreement is to improve the quality of fixed-term work by ensuring the application of the principle of non-discrimination. (48)
76. It goes without saying, however, that use of fixed-term employment contracts is not unlawful per se. Such contracts may indeed lend a measure of flexibility to the employment markets of the various Member States. (49) Depending on the situation, a fixed-term contract may even constitute a stepping stone on the way to a contract of indefinite duration. (50) Nonetheless, the aim of clause 4 of the framework agreement is not necessarily to create permanent jobs. (51) Indeed, it is only unjustified differences in the treatment of fixed-term workers as regards employment conditions (see clause 4), or abusive recourse to successive fixed-term employment contracts (see clause 5), that are at odds with the aim of the framework agreement.
77. For those reasons, the expiry of a fixed-term contract does not constitute discrimination, since that is in the nature of a fixed-term contract. (52) This is equally true as regards the compensation at issue, which, albeit directly linked to the expiry of the contract, is payable because, in the circumstances, the fixed-term clause was unlawful. To say otherwise would imply that such clauses must generally be considered invalid.
78. Accordingly, I do not find that clause 4 of the framework agreement precludes national rules under which the compensation payable as a consequence of the unlawful insertion of a fixed-term clause in a contract of employment is limited to a bracket ranging from 2.5 to 12 months’ pay, as such rules do not come within the scope of that provision.
c) Comparing the regimes applicable to fixed-term workers and permanent workers respectively
79. However, in case the Court, as a point of principle, finds otherwise and equates an invalid fixed-term clause with unlawful dismissal, I will explain why, in any event, the different employment regimes under consideration cannot meaningfully be compared for the purposes of clause 4 of the framework agreement.
80. A difference in treatment would seem to depend on the answer to the following question: Does Ms Carratù, solely because of her fixed-term status, stand to receive less favourable compensation than that to which an unlawfully dismissed permanent worker with comparable qualifications/skills would have been entitled, after working for a comparable length of time and performing comparable tasks?
81. Providing an answer to that question is no simple matter.
82. As the case under consideration involves a ‘larger’ undertaking, I will confine my remarks to undertakings with more than 15 employees in the workplace, that is to say, those to which Article 18 of Law No 300/1970 applies.
83. In the case of workers subject to an unlawful fixed-term clause, such a contract would, by definition – owing to the ineffectiveness of the fixed-term clause pursuant to Article 1(2) of Legislative Decree No 368/2001 – become a contract of indefinite duration, thereby entailing a higher level of protection for the future.
84. As for the matter of compensation due, this appears to be explicitly regulated by Article 32(5) of Law No 183/2010. That compensation may vary according to the number of employees, the size of the undertaking and the seniority of the employee. Under that provision, Ms Carratù would receive at least 2.5 months’ pay, and at best 12 months’ pay.
85. If, instead, Ms Carratù had been unlawfully dismissed under a contract of indefinite duration, she would have had a right to be reinstated under Article 18 of Law No 300/1970. The amount of compensation, however, would not be clear. Under Article 18 of Law No 300/1970, a worker in that situation would be entitled to at least 5 months’ pay. However, such a worker would also have a right to be compensated in the interim period, and the amount would increase indefinitely until effective reinstatement. Once unlawfulness is established, the worker would, moreover, have the right to forego reinstatement and receive 15 month’s pay on top of the interim compensation.
86. Although 5 months’ pay is the lower limit under Article 18 of Law No 300/1970, there does not appear to be any upper limit. Indeed, in the case of reinstatement, that provision does not cap the amount of compensation. The amount may therefore reflect arbitrary variables such as the swiftness of the court proceedings; the refusal of the employer to acknowledge the unlawfulness of the dismissal; or the time at which the employee might decide to bring proceedings. Such uncertainty makes it impossible to establish an upper level of compensation which is valid across the board.
87. Now, on comparing the two regimes more closely, it might be claimed that these rules generally imply a level of compensation for an unlawfully dismissed permanent worker which is higher and therefore more favourable than that provided for a fixed-term worker under Article 32(5) of Law No 183/2010. However, such an argument would be stillborn, as that would not be true in all cases. Indeed, if the unlawfully dismissed worker were to be reinstated after only a few months, his compensation might very well be lower than the compensation payable because of an unlawful fixed-term clause. (53)
88. Moreover, as confirmed at the hearing and by the case-law of the Corte Costituzionale (54) (Constitutional Court) (Italy), compensation afforded in the interim to the worker under Article 18 of Law No 300/1970 is, in principle, subject to deductions in the case of other remuneration. Any advantage in the interim period is at risk, therefore, of being off-set. In contrast, according to the same case-law of the Corte Costituzionale, compensation under Article 32(5) of Law No 183/2010 clearly assumes the character of a sanction. It is payable in all situations, even without injury, where the worker has swiftly found different work. Such compensation therefore assumes less the character of damages to repair an actually sustained injury and is more akin to a lump sum compensatory payment. Unlike compensation for unlawful dismissal, the level of compensation for an unlawful fixed-term clause, which is determined by statute, makes for legal certainty as well as procedural expediency in the handling of such cases. At the hearing, it was also mentioned that a fixed-term worker still has the possibility of bringing an action against his employer for damages exceeding the statutory amount of compensation set out in Law No 183/2010, in accordance with the ordinary rules of the Italian Code of Civil Procedure.
89. Moreover, I find it problematic to base a comparison between the different regimes on the assumption that an unlawfully dismissed permanent worker would invariably exercise the right to forego reinstatement in favour of 15 month’s pay – ‘to take the money and run’, so to speak. It is conceivable that such a worker would prefer to remain in that workplace (particularly in times of recession), thereby cancelling out the alleged advantage over a worker employed under a contract with an unlawful fixed-term clause.
90. In light of the different variables mentioned above, it is impossible, in my view, to compare in abstracto the different regimes of compensation that apply, on the one hand, to unlawfully dismissed permanent workers and, on the other, to workers employed under an unlawful fixed-term contract, let alone to determine which regime is the more favourable. However, that is exactly what the referring court invites the Court to do.
91. In essence, the referring court would like this Court to review the fairness of the fact that the time spent dealing with unlawful termination means that, on the whole, unlawfully dismissed permanent workers have an advantage over workers employed under an unlawful fixed-term contract, as they receive compensation in the meantime. I, on the other hand, would point out, first, that account must be taken of the discretion which Directive 1999/70 affords to the Member States; (55) notably with regard to the need to keep their employment markets flexible. Second, I would argue that comparability in circumstances such as the case under consideration – which concerns the situation of a private individual and not infringement proceedings under Article 258 TFEU, concerning the compatibility of a Member State’s legislation with clause 4 of the framework agreement (56) – requires not a global and abstract assessment, but a specific and concrete one in the light of the benefit concerned, as illustrated above in points 79 to 89. (57)
92. For all the reasons stated in the preceding paragraphs, I cannot see any other conclusion than that the circumstances in the case under consideration do not amount to discrimination for the purposes of clause 4 of the framework agreement.
93. Therefore, I propose that the answer to Question 5 be that clause 4(1) of the framework agreement is to be interpreted as not precluding, in a situation such as that in the main proceedings, national rules under which the compensation payable for the unlawful insertion of a fixed-term clause in a contract of employment is limited to a bracket ranging from 2.5 to 12 months’ pay.
3. Implications for Question 1
94. As mentioned above in point 23, on the face of it, the referring court appears to request the Court to rule on the compatibility with the principle of equivalence of rules provided under national law to remedy, on the one hand, fixed-term clauses which are unlawful under Directive 1999/70 and, on the other hand, clauses unlawful under the ordinary law of contract.
95. It seems, however, that the referring court in reality wishes the Court to rule again – but this time only in terms of the principle of equivalence – on the fairness of the fact that, on the whole, the time taken up in remedying the unlawful termination of a contract places workers employed under an unlawful fixed-term contract at a disadvantage. This becomes clear when it is remembered that Article 32(3) of Law No 183/2010 operates a renvoi to Article 32(1) and that, consequently, the procedural rules applicable to actions for a declaration that the expiry date set in an employment contract is invalid are the same as those for actions challenging dismissal.
96. Against that background, in light of my proposed answer to Question 5, there is no need to answer this question.
4. Implications for Questions 2, 3 and 6
97. As in the case of Question 1, these questions appear, in one way or another, to concern the fairness of the lengthiness of the proceedings in respect of fixed-term workers. I therefore concur with the Commission that, in view of the proposed answer to Question 5, it is not necessary for the Court to answer these questions. (58)
E – Question 7: The concept of ‘emanation of the State’
98. By Question 7, the referring court essentially asks if Directive 1999/70 may be relied upon directly against Poste Italiane as an ‘emanation of the State’. Poste Italiane vehemently contests that possibility. (59)
99. I must confess that I am somewhat at a loss as to why this question has been put to the Court.
100. Indeed, none of the parties dispute the fact that Legislative Decree No 368/2001 implemented Directive 1999/70 into Italian law. Apart from the submission that Law No 183/2010 is incompatible with clause 4 of the framework agreement, it has never been alleged that Directive 1999/70 has not been implemented correctly into Italian law. Neither the wording of the questions nor the terms of the order for reference refer to that issue and, in the light of my proposed answer to Question 5, I do not find that that law compromises the Italian implementation of that directive. Moreover, the Italian Government states in response to this question that it is devoid of relevance, given the general scope of the legislation, which affects both the public and the private sectors.
101. Consequently, I have doubts as to the admissibility of Question 7, as the answer to the question does not appear to be necessary for the resolution of the underlying dispute. (60) Nonetheless, I will make some brief remarks, in case the Court wishes to provide an answer.
102. The Court has already held clause 4 of the framework agreement to have direct effect, (61) at least in the ‘vertical’ sense.
103. It should also be recalled that this is not the first case before the Court dealing with the obligations of Poste Italiane under Directive 1999/70. (62) Indeed, Poste Italiane has previously contested the idea that the directive can be relied upon directly against it. (63)
104. The answer to Question 7 depends on the application of the Court’s dictum in Foster (64) to the facts. In Foster, the Court stated those famous words according to which a body, whatever its legal form, which has been given responsibility, pursuant to a measure adopted by the State, for providing a public service under the control of the State and has for that purpose special powers beyond those which result from the normal rules applicable in relations between individuals, is included in any event among the bodies against which the provisions of a directive capable of having direct effect may be relied upon. (65) As the expression ‘included in any event’ shows, Foster does not restrict the case-law as to when an entity must be considered to be an ‘emanation of the State’. Rather, that concept is broad, for – as the Court has put it – ‘the obligations arising from Community directives are binding, inter alia, on bodies or entities which are subject to the authority or control of a public authority or the State’. (66)
105. There may be some truth in the contention raised by Poste Italiane that the concept of the ‘State’ is flexible, in the sense that there are no water-tight boundaries between the private and public spheres, depending furthermore on the area of EU law concerned. (67) However, the criteria to be applied in order to determine when an entity must definitely be considered to be an ‘emanation of the State’ against which a directive may be relied upon directly were stated in Foster. (68) As for the distinction made in Italian law between public and private law bodies, that distinction is of no relevance for the case under consideration, whatever Poste Italiane claims.
106. The order for reference states that Poste Italiane is wholly owned by the Italian State through its sole shareholder, the Minister for Economy and Finances. Moreover, it is under the supervision of the State and the Corte dei Conti (Court of Auditors), a member of which sits on its Board of Directors. The order goes on to state that a universal service obligation has been conferred on Poste Italiane in various sectors, including the postal sector, by the Minister, who exercises general powers of supervision and accountancy. Furthermore, Poste Italiane’s budget is linked to that of the State, which provides it with funds to cover the costs of that service obligation.
107. In the light of those considerations, it falls to the referring court to establish whether, having regard to all the relevant facts, Poste Italiane comes within the Foster doctrine, that is to say, whether it has been endowed with powers beyond those which result from the normal rules. (69)
108. For its part, Poste Italiane mainly relies on Directive 2004/17/EC (70) and two Commission decisions, (71) arguing that it has been exempted from complying with certain aspects of that directive. However, such a view is misguided.
109. First, the scope of a particular directive is not the same as the question whether, under Article 288 TFEU, the State as such may, through the exercise of its legal autonomy in the form of associations or organisations which do not formally come under public law, avoid complying with a directive. Indeed, Member States cannot simply restructure their organisation so as to escape accountability under EU law. (72)
110. Second, decisions taken in accordance with Article 30(4) of Directive 2004/17, such as those referred to by Poste Italiane, are concerned with the issue of whether a given sectoral activity is directly exposed to competition on markets to which access is unrestricted, and not whether a particular entity comes within the scope ratione personae of that directive.
111. Third, Poste Italiane is explicitly listed in Annex VI to Directive 2004/17 as a contracting entity in the postal services sector. Therefore, in accordance with Article 2(2) of that directive, Poste Italiane must be: (i) a contracting authority as defined in Article 2(1)(a); or (ii) a public undertaking as defined in Article 2(1)(b); or (iii) an undertaking with special or exclusive rights as defined in Article 2(3). Thus, although none of those three situations is sufficient in itself, (73) I find Directive 2004/17 to be suggestive rather of the view that Poste Italiane is an ‘emanation of the State’ under the Foster doctrine.
112. In sum, there is no need to answer Question 7. However, should the Court nonetheless find it useful to deal with that question, it would be for the referring court to establish whether the Foster doctrine can be applied to Poste Italiane, in the light of all the relevant facts.
IV – Conclusion
113. To conclude, I propose that the Court answer Questions 4 and 5 referred by the Tribunale di Napoli (Italy) as follows:
– The notion of ‘employment conditions’ as referred to in clause 4(1) of the Annex to Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP is to be interpreted as covering compensation for the unlawful termination of an employment contract, including the insertion of an unlawful fixed-term clause;
– Clause 4(1) of the framework agreement is to be interpreted as not precluding, in a situation such as that at issue in the main proceedings, national rules under which the compensation for the unlawful insertion of a fixed-term clause in a contract of employment is limited to a bracket ranging from 2.5 to 12 months’ pay.