Opinion of the Advocate-General
++++
Mr President,
Members of the Court,
A - Facts
1 . The Commission is seeking, in this case, a declaration that, by failing to adopt within the prescribed period all the necessary measures to implement Council Directive 80/987/EEC of 20 October 1980 ( 1 ) 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, the Italian Republic has failed to fulfil its obligations under the EEC Treaty .
The following brief preliminary observations are called for .
2 . According to Directive 80/987, Member States have to establish guarantee institutions to guarantee payment of employees' outstanding claims resulting from contracts of employment or employment relationships and relating to pay for the period prior to a given date ( onset of the employer' s insolvency; notice of dismissal on account of the employer' s insolvency; termination of the employment relationship on account of insolvency ) ( Article 3 ). Those guarantee institutions must comply with certain principles set out in Article 5 of the directive .
3 . Pursuant to Article 7 Member States have to ensure that non-payment of compulsory contributions due from the employer before the onset of his insolvency to the insurance institutions under national statutory social security schemes does not adversely affect employees' benefit entitlement in respect of such insurance institutions .
4 . Article 8 of the directive provides that Member States must ensure that the necessary measures are taken to protect the interests of employees and of persons who have already left the employer' s undertaking or business at the date of the onset of the employer' s insolvency in respect of rights conferring on them immediate or prospective entitlement to old-age benefits, including survivor' s benefits, under supplementary company or inter-company pension schemes .
5 . Article 1(2 ) of the directive provides that Member States may exclude claims by certain categories of employee from the scope of the directive, by virtue of the special nature of the employee' s contract of employment or employment relationship or of the existence of other forms of guarantee offering the employee protection equivalent to that resulting from the directive . The relevant categories in the case of Italy are listed in section IIC of the Annex as follows : "1 . Employees covered by benefits laid down by law guaranteeing that their wages will continue to be paid in the event that the undertaking is hit by an economic crisis ."
6 . Article 11 provides that the Member States had to take the measures necessary to comply with the directive within 36 months of its notification ( that is by 23 October 1983 ) and had to communicate to the Commission the texts of the provisions which they had adopted in the field governed by the directive .
7 . Since it had received no such communication from Italy, the Commission on 3 November 1983 asked the Italian Government what the position was . In March 1984 apparently the Commission was given a list of certain Italian laws which were relevant to the directive .
8 . After considering them, the Commission on 24 April 1985 sent a further letter to the Italian Government detailing the deficiencies in the implementation of the directive in Italy and again requesting a complete and detailed account of all the provisions relevant to the directive .
9 . The Commission received no reply to that letter and on 9 March 1986, therefore, it issued a reasoned opinion pursuant to Article 169 of the EEC Treaty . The Italian Permanent Representative replied by letter dated 25 April 1986 enclosing a memorandum from the Italian Ministry of Labour which contained an account of the relevant Italian provisions .
10 . At the end of the memorandum it was stated that certain obligations of Community law relating to the protection of all employees had not yet been fulfilled and appropriate solutions would have to be found . Similarly the accompanying letter from the Permanent Representative stated that there were still problems outstanding regarding the adaptation of national law in order that the obligations under the directive might be completely fulfilled and mentioned that an inter-ministerial committee had been requested to draft proposals to remedy the remaining deficiencies .
11 . Since the Commission heard nothing further of the work of that committee or of any transposition of its proposals into law it brought these proceedings against Italy on 23 January 1987 .
12 . The Commission makes three complaints :
( i ) Italian law makes insufficient provision for guarantee institutions as required by Articles 3 and 5 of the directive;
( ii ) there is insufficient protection of the claims of employees vis-à-vis the statutory system of social security;
( iii ) the Italian Republic has not adopted the measures required under Article 8 of the directive .
B - Analysis
The following observations may be made regarding those specific complaints .
1 . The measures required under Articles 3 and 5 of the directive
13 . ( a ) The first Italian measure to consider in this context is Law No 297 of 29 May 1982 . It set up a special fund within the Istituto nazionale della previdenza soziale ( National Institution for Social Welfare ) which guarantees payment of the compensation for termination of contract provided for in Article 2120 of the Italian civil code . The Commission accepts that the fund meets the requirements of Article 5 of the directive, but objects that it is concerned only with compensation for termination of contractual relationships and not with the employees' unsatisfied claims for payment of wages for the period referred to in Article 3 of the directive, and for that reason considers that it does not suffice to comply with the directive . Moreover, where the employment relationship was of short duration the compensation, one month' s salary for every year of employment, is not equal to the minimum amount ( three months' salary ) provided for in Article 4 of the directive .
14 . The fact is also relevant here - and this is the point referred to by the aforementioned provision in section IIC 1 of the Annex to the directive - that the Cassa integrazione guadagni - gestione straordinaria, which is also a fund set up within the National Institution for Social Welfare, serves to ensure that employees may receive 80% of their salary without limitation of time if the undertaking which employs them is facing a crisis . However, that does not suffice, in the Commission' s opinion, to satisfy the obligations of the directive because, first of all, only certain undertakings are covered ( basically large and medium-sized industrial undertakings and large commercial undertakings but not agricultural undertakings, service industries or small traders ), secondly the provision does not apply to all kinds of employees ( namely managers, apprentices and out-workers ) and, thirdly, the Inter-ministerial Committee for Industrial Policy ( CIPI ) has a discretion in implementing the rules and since the criterion is the social significance of a crisis, that is it depends on the size of the undertaking and the employment position in the area, small and medium-sized undertakings and their employees rarely enjoy the benefit of the rules .
15 . ( b ) It is soon apparent that the arguments relied on by the Italian Government in its defence are not convincing in so far as concerns the special fund referred to first for guaranteeing compensation on the termination of a contract .
16 . It will be recalled that the primary argument was that in general more effective protection was thereby ensured than the directive provides for ( because compensation is as a rule greater than the minimum protection provided for in the directive of three months' salary ). It was secondly observed that Italian undertakings already bore the considerable burden of the said compensation ( since the guarantee fund is funded by contributions from employers ) and if in implementation of the directive additional measures were to be adopted, those undertakings would be adversely affected in a manner incompatible with the idea of harmonization on which the directive is based .
17 . One counter-argument ( I shall not now discuss further the fact that the contested compensation is in principle payable only on termination of the contractual relationship ) is that the method of determining the compensation payable by the compensation fund does not lead to the level of compensation laid down in the directive always being attained or even exceeded . That level is obviously not reached where the employment relationship has been of short duration which may be the case with young employees or may also be due to the mobility of employees, which can scarcely be described as being of just subsidiary importance in Italy .
18 . It is also significant that the directive provides for only a certain minimum protection, but does not require that the measures it envisages should be adopted in addition to measures already existing . If, however, national law is adapted to the requirements of the directive ( which is all that the latter requires ) so that there are no longer any lacunae in the protection of employees, that can certainly not be said to represent an excessive and unjustified burden for Italian producers . The defendant has itself admitted that in view of the high level of protection already achieved such cases would be of only marginal importance; it would not, therefore, lead to an excessive extra burden . On the contrary it would merely produce the greatest possible degree of uniformity for the whole Community .
19 . ( c ) Furthermore the evident lacunae in the rules relating to the Cassa integrazione guadagni - gestione straordinaria indicate to me that Articles 3 and 5 of the directive have not been adequately implemented and to that extent the Commission' s complaints appear justified .
20 . ( aa ) The ineluctable conclusion is that the rules do not apply to all undertakings but only to those specified on pp . 6 and 7 of the memorandum of the Italian Ministry of Labour, and thus they do not apply, in particular, to small and certain medium-sized undertakings .
21 . It is also clear that the Italian Government cannot argue that according to Article 2 of the directive the finding of insolvency depends on the initiation of formal proceedings, and such ( bankruptcy ) proceedings cannot be brought, pursuant to Royal Decree No 297 of 16 March 1942 in conjunction with Article 2083 of the civil code, against small undertakings such as farmers, manual workers, small traders and family undertakings . Even if that is true and accordingly to that extent protective measures are not necessarily prescribed by the directive, the fact remains that the undertakings excluded by the Italian rules are not only those which have just been mentioned but also other small and medium-sized undertakings for which proceedings for a declaration of insolvency are quite possible and which accordingly fall under the directive .
22 . ( bb ) It is further clear that the rules in respect of the Cassa integrazione guadagni - gestione straordinaria do not apply to all employees, that is they do not apply to managers, apprentices and out-workers, whose exclusion is likewise plainly unjustified .
23 . As far as managers are concerned, it can scarcely be said that the directive ( Article 2 of which states that the directive is without prejudice to national law as regards the definition of inter alia the term "employee ") does not apply to managers . The Commission has convincingly shown that according to Article 2095 of the civil code ( as amended by Law No 190 of 13 May 1985 ) the rules applicable to employees ( apart from specific exceptions ) also apply to managers and there is no doubt in that respect according to Italian legal commentators and case-law . It has also rightly pointed out that if special rules had been intended for this important group, they would have been expressly taken into account in the annex to the directive .
24 . In so far however as the Italian Government further alleged that appropriate protection was given to managers by other rules ( in particular often by collective agreements ) it must concede that ( pursuant to Article 11 of the directive ) it was under an obligation to give details and to produce evidence, of which there was no question in these proceedings .
25 . As far as apprentices are concerned, there can likewise be no doubt that they are regarded as employees under Italian law, as the Commission has shown by reference to Article 2134 of the civil code, Law No 25 of 19 January 1955 and the relevant case-law, and that accordingly the directive does in principle also apply to them . In that connection the reference to the duration of such employment relationships is certainly immaterial . It was rightly pointed out in reply to the Italian Government that there is in reality no question of such employment relationships being generally short in view of the maximum limit of five years under Article 7 of Law No 25 . In addition it is clear that under the directive ( Article 4 of which provides for minimum protection of only three months ) that factor is irrelevant . Equally immaterial in this connection is the reference to the said Article 1(2 ) ( according to which Member States may exclude claims by certain categories of employees from the scope of the directive ) and the statement that should apprentices in fact fall within the scope of the directive the Italian Government would apply to have the annex to the directive supplemented accordingly . For the present proceedings all that matters is that the current legal position is that apprentices are not excluded from the scope of the directive . Moreover, it must be quite doubtful whether such an amendment of the annex, which cannot be undertaken unilaterally by a Member State, but must be decided by the Council, is even conceivable, for there is evidently no other equivalent protection of apprentices within the meaning of Article 1(2 ) of the directive and it can scarcely be said that this is a special group of employees who do not need to be protected .
26 . There can be no serious doubt that out-workers must also be regarded as employees and in consequence fall in principle within the scope of the directive . It may be noted that in the case of Ireland it was considered necessary expressly to exclude them in the annex . Further significant factors are, as the Commission has shown, the Italian law on the subject, namely Articles 2094 and 2128 of the civil code, Law No 817 of 18 November 1973 with its definition of out-worker, and the case-law and the relevant criteria developed in it ( although admittedly in particular cases there may be problems of definition and consequently frequent disputes ).
27 . The Italian Government has based its divergent view on Law No 433 of 8 August 1985 ( according to which in certain circumstances no account is to be taken of out-workers in connection with the craft industry ) but in my view no serious argument can be drawn from that against including out-workers in the scope of the directive; the same applies to the bare assertion that the rules for the protection of employees cannot be extended to out-workers ( p . 5 of the rejoinder ).
28 . ( cc ) Finally the Commission has rightly objected to the rules governing the Cassa that even within the scope of those rules the Cassa is not invariably bound to pay benefits for it enjoys a discretion . Since the Cassa is mainly concerned with the social significance of an undertaking which is suffering a crisis, small and medium-size undertakings may fail to qualify for the system .
29 . The Italian Government' s counter-argument founded on a decision of the Inter-ministerial Committee for the Coordination of Industrial Policy of 12 June 1984 is to no avail . Apart from the fact that greater authority is to be attributed to the law on which the decision was based ( which, as stated, is concerned mainly with the social significance of the undertakings affected ), it is clear from the decision as a whole that there can be no question of any automatic obligation to pay in all cases ( I refer in particular to the fifth recital which mentions the "eccezionale rilevanza della situazione occupazionale" ( exceptional importance of the employment situation ) and to the operative part which refers to the "eccezionale rilevanza dei provvedimenti, da desumersi in rapporto all' organico aziendale, alla localizzazione d' impresa e al settore di attività in cui operavano i lavoratori sospesi" ( exceptional importance of the measures, to be determined having regard to the staff of the undertaking, its location and the sector of activity in which the suspended workers were engaged ) ).
30 . It is no use contending that Article 1 of the directive allows categories of employees to be excluded from the scope of the directive and accordingly the annex refers in relation to Italy to the abstract category of employees to which the Cassa system applies . As the Commission contended, the exception has to be seen in the context of the whole system, that is, it presupposes that the directive is basically complied with and that there is comprehensive protection for employees which is of general application subject to certain exceptions . Above all it is also clear from the sense of the rule in Article 1 ( avoidance of overlapping protection where equivalent protection is guaranteed ) that the important factor is the specific effects of an exception and that is consistent with the wording of the part of the annex applicable to Italy in which it is stated that "employees covered by benefits laid down by law guaranteeing that their wages will (( that is, not 'may' )) continue to be paid in the event that the undertaking is hit by an economic crisis ". The exception thus in fact covers only cases to which the Cassa system applies in practice and therefore the Commission has rightly pointed out the significance of the discretionary power in that respect .
31 . ( d ) It is to no avail finally that the Italian Government seeks to justify generally the obvious deficiencies in Italian law with regard to Articles 3 and 5 of the directive by contending that there are other effective guarantees which afford effective protection .
32 . That certainly applies to the contention that the claims of employees enjoy priority in bankruptcy proceedings since plainly no security is provided in cases of insolvency as is intended by means of the guarantee institutions pursuant to Articles 3 and 5 of the directive in respect of claims relating to pay .
33 . That also applies to the reference to the collective agreements said to exist in commerce and in the tourist industry, for example . No details were given and above all it was not demonstrated that all the aforementioned deficiencies are adequately and comprehensively covered .
2 . The measures to be adopted under Article 7 of the directive
34 . The relevant provision in this respect is Article 2116 of the Italian civil code under which benefits under the statutory social security scheme are payable even if the employer has not regularly paid contributions . The Commission however points out that that article makes a proviso in respect of exceptions contained in special laws which is relevant in respect of old-age, invalidity and survivor' s insurance governed by Law No 485 of 11 August 1972 . That law provides ( in Article 23b ) that the obligation to pay contributions is deemed to be satisfied even if payments have not in fact been made; however that depends on whether the period of limitation ( 10 years ) has not yet expired . If that period has expired, the employee may lose his rights ( which the Commission regards as a defect of the system ) and his only remedy is pursuant to Article 2116(2 ) of the civil code, namely a claim for compensation against the defaulting employer . Obviously such a remedy is completely useless for the purposes of the directive for it is time-consuming and expensive and moreover has little prospect of success in the cases contemplated by the directive ( insolvency of an undertaking ) because at most it can lead to a claim against the assets of the insolvent undertaking .
35 . ( a ) It is no defence for the Italian Government to refer to Article 6 of the directive which provides that Member States may stipulate that Articles 3 to 5 shall not apply to contributions due under national statutory social security schemes .
36 . It is extremely unlikely that the purpose of this provision ( obviously inserted by the Council alone ) was simply to permit exceptions to Articles 7 and 8 . Contrary to the specific wording of both articles, that would mean reducing the provisions of Articles 7 and 8 which are important for the protection of employees to mere recommendations and would leave a serious lacuna in the system for protecting employees who are threatened by the insolvency of their employer . On the contrary it is implicit from the scheme of the directive and the wording of Article 6 that the latter article concerns the problem of social security contributions not paid by the employer and not a restriction of the protection of claims to benefit under social security . Thus when Article 6 authorizes, in relation to contributions ( alone ), derogations from Articles 3 to 5, that simply means that no guarantee institutions have to be set up in respect of them under the said articles . In that respect, protection can be secured by different means, for example, as is the general rule in Italy, by making the social security institutions bear the risk of non-payment of contributions .
37 . ( b ) I am not convinced by the Italian Government' s contention that the disadvantage in the Italian system pointed out by the Commission can be avoided by means of the checking mechanisms in the social security system ( whereby the social security authorities send employees annual statements to enable them to check that the compulsory contributions have been paid and accordingly claims cannot become time-barred if the employer is reported for not fulfilling his obligations ). The observation that the system to which the Commission objects is of only marginal practical significance is in my view immaterial .
38 . According to its wording, Article 7 has a far-reaching protective function . It provides that non-payment of social security contributions should not adversely affect employees' benefit entitlement ( which enshrines the principle of automatic benefit without regard to payment of contributions ) and that is scarcely reconcilable with a system which places a considerable responsibility on the employees concerned and obviously, as the case-law on Article 2116(2 ) of the civil code cited by the Commission shows, does not function satisfactorily either ( although it was not clear whether that was solely due to the negligence of the employees or to defects in the system of annual statements from the social security authorities ).
39 . As far as concerns the practical effects of the rules in issue and their alleged marginal significance, it may be noted that pursuant to the directive comprehensive and watertight protection must be provided in the context of Article 7 . Since in proceedings under Article 169 of the EEC Treaty the principle de minimis non curat praetor does not apply, the complaint that there has not been a correct transposition is justified even if the national law is such that the aim of the directive is not achieved in only a few cases . Accordingly there is no need to go further into the question whether the cases cited by the Commission are in fact all relevant . It suffices that it was clearly shown that at least in a number of cases there were actions for damages under Article 2116(2 ) for non-payment of contributions by the employer and because the 10-year period of limitation had expired .
40 . ( c ) In so far as the Italian Government also referred in relation to the obligation under Article 7 of the directive to the possibility of some assistance being afforded by Law No 1338 of 12 August 1962 ( whereby in the case of non-payment of contributions by the employer and the expiry of the period of limitation entitlement to benefit may be restored by subsequent payment of the contributions by the employer or the employee ), obviously that does not answer the complaint of incomplete transposition of Article 7 .
41 . It is unnecessary to comment on the last-mentioned case ( payment by the employee ) where the adverse effects within the meaning of Article 7 are self-evident . On the other hand, the possibility of subsequent payment by the employer naturally presupposes that he is solvent ( which is precisely not the case in the situations envisaged by the directive ). Moreover it is significant, as the case-law cited by the Commission makes clear, that there is no obligation on the employer and in consequence if he does not take the appropriate action to remedy matters the only course open to the employee is an action for damages, which must be regarded as unsatisfactory .
42 . ( d ) It is thus in fact clear that the Commission has rightly included Article 7 of the directive in the list of provisions in respect of which the Italian legal system does not satisfy the requirements of the directive .
3 . The measures required under Article 8 of the directive
43 . According to the Commission' s observations which have not been challenged, the only relevant Italian provision in this respect is Article 2117 of the civil code according to which special funds established by the employer for social welfare cannot be applied for other purposes and cannot be the subject of execution by creditors of the employer or employee . The result is, as we were told, that in the event of insolvency the contributions made to the fund by the employer in the year preceeding the insolvency are not subject to challenge .
44 . In the Commission' s view that does not satisfy the requirements of the directive; measures are necessary for the case where the employer fails to set up such a fund with the necessary means .
45 . ( a ) The Italian Government defended its position in that regard in the written procedure only by citing the aforementioned Article 6 of the directive and alleging that there are few such systems in Italy ( for example, for managers and bank employees ); only in recent years have there been any significant developments in this area .
46 . It is clear that that argument is to no purpose . It has already been shown that the Italian Government is proceeding on a misconception of Article 6 of the directive which in reality envisages only the possibility of excluding contributions from employers under supplementary company or inter-company pension schemes from the provisions on guarantee institutions in Articles 3 and 5 . But there is no doubt that it is not only when a considerable category of the working population is affected that there is a failure to implement the directive . Accordingly in the present connection the Italian Government' s admission that supplementary social security schemes of the kind referred to in Article 8 of the directive exist in Italy is enough and there is no need to consider the question whether in fact the Commission' s observation is correct that there are already 200 such supplementary pension schemes in Italy for more than 1 million employees or whether the Italian Government is right in claiming that that statement, which is taken from a newspaper report about a congress of insurance undertakings, relates to funds of a quite different kind which has nothing to do with the schemes within the meaning of Article 8 of the directive .
47 . ( b ) The Italian Government surprisingly changed its defence completely at the hearing ( surprisingly, especially, because in the written procedure it had said, as regards Article 8, that a law would be drafted to ensure the solvency of such supplementary funds, for example by setting up a central guarantee fund ). Now, as we have heard, the Italian Government' s position is that the provisions of Article 2117 of the civil code are sufficient to comply with Article 8 of the directive; it alleges that Article 8 does not require the further measures of whose absence the Commission complains and there can therefore be no question of insufficient compliance on the part of Italy .
48 . That argument can hardly be accepted either . Of primary importance in my view is that Article 8 clearly requires measures to protect vested rights or rights in the process of being acquired under supplementary pension schemes . Since in general such rights depend on the length of employment in the undertaking, protection which is confined to the inviolability of funds actually set up and is not concerned with the adequacy of payments into such funds is obviously insufficient .
49 . I am not convinced by counter-arguments based on comparison of Article 8 with Article 7, like the Italian Government' s reference in particular to the fact that, in contrast to Article 8, Article 7 expressly mentions non-payment of contributions . On the one hand, the failure to mention the payment of contributions may be due to the fact that supplementary pension schemes may be funded not only in that way but for example by internal transfers to reserves . It is above all borne out by reference to Article 6 in which contributions to supplementary pension schemes are in fact mentioned . It may be said that the fact that provision is expressly made for the possibility of dispensing with the guarantee institutions envisaged under Articles 3 to 5 ( and only thereunder ) is evidence that the authors of the directive plainly also intended to cover the problem of funding in connection with Article 8 as well .
50 . Finally, in my view, support for the Commission' s interpretation comes from the introductory wording of Article 8 adopted by the Council, which departed from the Commission' s proposal : "Member States shall ensure ..." ( instead of : "Member States shall adopt the necessary measures ..."). Its purpose is not to show that the provision is any less mandatory; it is rather due to the fact that in this connection measures adopted by the State ( such as Article 2117 of the civil code ) are not sufficient in themselves but that measures by undertakings and associations of undertakings are of crucial importance and Member States can merely encourage their adoption .
51 . ( c ) The Commission' s complaint of inadequate implementation of Article 8 of the directive is therefore also justified .
C - Conclusion
52 . 4 . To summarize, therefore, I can only propose that the Commission' s application be upheld and that it be declared that by failing to adopt within the prescribed period all the necessary measures to implement Council Directive 80/987/EEC 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 the Italian Republic has failed to fulfil its obligations under the EEC Treaty . Moreover the Italian Republic should be ordered to pay the costs as claimed .
(*) Original language : German .
( 1 ) OJ 1980, L 283, p . 23 .
Full & Egal Universal Law Academy