Wagner Miret v Fondo de Garantía Salarial [1993]

European Law

Wagner Miret v Fondo de Garantía Salarial
‘Coastal Fort, Catalonia’ by Alan Page Smith

Directive 80/987/EEC was drafted to protect the lost earnings of employees subject to the liquidation of their employers, however when a higher management employee was later made redundant through company dissolution he was subsequently denied lost earnings under Spanish law on grounds that when adopting the effects of the Directive the government had chosen to exclude domestic servants from the guarantees afforded them, and yet applied that caveat when deciding his case in the Juzgado de lo Social (Social Courts).

Having challenged the judgment in the Tribunal Superior de Justice (Superior Court of Justice) it was argued that when applying the terms of Directive 80/987/EEC the legislature had relied upon Royal Decree No.1382/85 to deliberately deny higher management the rights afforded other employees through the pay guarantee fund, as established under art.33 of Law No 8/80 (‘The Employees’ Statute’).

This left the Court unable to fully address the claim without reference to the European Court of Justice for a preliminary ruling under art.177 EC, and so three questions asked:

1. Whether the terms of Directive 80/987/EEC included all employees of the Member States?

2. Whether the failure of the Spanish government to encompass higher management staff within the annexe excluding domestic servants, provided for prevention of a claim?

3. If the answer to question 1. was yes, should the payment should come from the guarantee fund or State compensation?

With consideration of the historic debate surrounding this contentious matter the Court held that when transposing the terms of the Directive the Member States should determine what constitutes employment under the meaning of national law, and where agreed those employees were to be protected under the effects of art.1(2) of the Directive.

In relation to the exclusion of higher management it was agreed that unless expressly contained in the annexe to Directive 87/987/EEC (later amended to Directive 87/164/EEC) those occupying such roles were entitled to received compensatory payment, while with regard to the source of payment the Court clarified that in similar instances it was the role of the Member State to devolve payment to the fund created, or if no such fund existed the compensation was due from the Member State itself, before reminding the parties that:

“[I]n so far as national law classifies members of the higher management staff as employees, a Member State cannot exclude that category of employee from the scope of application of Directive 80/987/EEC, as amended by Directive 87/164/EEC, if it is not included in the Annex to that directive.”

R v HM Treasury ex p British Telecommunications plc (1996)

European Law

R v HM Treasury ex parte British Telecommunications
‘Red Telephone Box’ by Debbie Fisher

The successful transposition of EU Directives requires delicate application when ensuring the overriding objective of the Directive remains intact. On this occasion, the rules of Directive 90/531/EEC while specific in their construction, caused immediate conflict between the domestic government and a dominant telecommunications provider.

Basing their argument on principles examined in Francovich and others v Italy British Telecom (BT) took issue with Parliament’s decision to edit the transposed Directive in a way that precluded them from perceived equal rights in a highly competitive industry. In fact by all accounts, the telecommunications giant was already bound to cap its tariff rates, provide connection services irrespective of national geography, and publish its commercial intentions for all to see. However, when put in its proper context, the domestic market was disparagingly divided in such a way that afforded BT a ninety-percent share, while those new to the field were limited to only a collective three-percent stake.

This extended enormous advantage to the applicants, and yet they still felt that under the prescribed terms of the Directive, the EU Commission had intended that any exclusions to the benefit of Community law were decidable between those contracting, and not to the discretion of the Member State. It was understood that in circumstances providing a balanced economic market, the Directive required no degree of intervention, as the playing field would, in many events, present itself fairly, yet the UK government, having enjoyed the monopoly of BT as a state funded enterprise, were only too aware that without marshalling of the transposition, the essence of equality would be lost in translation, and the integrity of domestic contract law held to account.

By exercising its discretion, the applicants were (rightly or wrongly) denied access to the terms of the Directive, and therefore unable to determine for themselves which services they felt were excludable and why, a process that would have inevitably relied upon the wisdom of the EU Commission to decide, and so was not in any way affected by those preventative measures.

When transposing Directives, it is the duty of Member States to incorporate the relevant terms ‘as far as possible’, whereby on this occasion it was deemed that the steps taken reflected that ethos. This resulted in the Court of Justice reserving the rights of the legislature to act where appropriate, and that despite any sufferance on the part of the applicants, there were no grounds for either ‘direct effect’ damages nor compensatory award for economic loss, as the ends ultimately justified the means, while holding that for future reference:

“[I]t is not open to a Member State, when transposing the Directive into national law, to determine which telecommunications services are to be excluded from its scope in implementation of article 8(1), since that power is vested in the contracting entities themselves.”