EN EN
COMMISSION OF THE EUROPEAN COMMUNITIES
Brussels, 6.11.2006
COM(2006) 657 final
2006/0220 (COD)
Proposal for a
DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
on the protection of employees in the event of the insolvency of their employer
(Codified version)
(presented by the Commission)
EN 2 EN
EXPLANATORY MEMORANDUM
1. In the context of a people's Europe, the Commission attaches great importance to
simplifying and clarifying Community law so as to make it clearer and more
accessible to the ordinary citizen, thus giving him new opportunities and the chance
to make use of the specific rights it gives him.
This aim cannot be achieved so long as numerous provisions that have been amended
several times, often quite substantially, remain scattered, so that they must be sought
partly in the original instrument and partly in later amending ones. Considerable
research work, comparing many different instruments, is thus needed to identify the
current rules.
For this reason a codification of rules that have frequently been amended is also
essential if Community law is to be clear and transparent.
2. On 1 April 1987 the Commission therefore decided1
to instruct its staff that all
legislative acts should be codified after no more than ten amendments, stressing that
this is a minimum requirement and that departments should endeavour to codify at
even shorter intervals the texts for which they are responsible, to ensure that the
Community rules are clear and readily understandable.
3. The Conclusions of the Presidency of the Edinburgh European Council
(December 1992) confirmed this2
, stressing the importance of codification as it offers
certainty as to the law applicable to a given matter at a given time.
Codification must be undertaken in full compliance with the normal Community
legislative procedure.
Given that no changes of substance may be made to the instruments affected by
codification, the European Parliament, the Council and the Commission have agreed,
by an interinstitutional agreement dated 20 December 1994, that an accelerated
procedure may be used for the fast-track adoption of codification instruments.
4. The purpose of this proposal is to undertake a codification of Council
Directive 80/987/EEC of 20 October 1980 on the protection of employees in the
event of the insolvency of their employer3
. The new Directive will supersede the
various acts incorporated in it4
; this proposal fully preserves the content of the acts
being codified and hence does no more than bring them together with only such
formal amendments as are required by the codification exercise itself.
1
COM(87) 868 PV.
2
See Annex 3 to Part A of the Conclusions.
3
Carried out pursuant to the Communication from the Commission to the European Parliament and the
Council ­ Codification of the Acquis communautaire, COM(2001) 645 final.
4
See Annex I, Parts A and B, to this proposal.
EN 3 EN
5. The codification proposal was drawn up on the basis of a preliminary consolidation,
in all official languages, of Directive 80/987/EEC and the instruments amending it,
carried out by the Office for Official Publications of the European Communities, by
means of a data-processing system. Where the Articles have been given new
numbers, the correlation between the old and the new numbers is shown in a table
contained in Annex II to the codified Directive.
EN 4 EN
80/987/EEC
2006/0220 (COD)
Proposal for a
DIRECTIVE .../.../EC OF THE EUROPEAN PARLIAMENT AND OF THE
COUNCIL
of [...]
2002/74/EC Art. 1 pt. 1
on the protection of employees in the event of the insolvency of their employer
(Text with EEA relevance)
80/987/EEC (adapted)
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and in particular
Article  137(2)  thereof,
Having regard to the proposal from the Commission,
Having regard to the opinion of the European Economic and Social Committee1
,
 Having regard to the opinion of the Committee of the Regions2
, 
Acting in accordance with the procedure laid down in Article 251 of the Treaty3
,
Whereas:
(1) Council Directive 80/987/EEC of 20 October 1980 on the protection of employees in
the event of the insolvency of their employer4
has been substantially amended several
times5
. In the interests of clarity and rationality the said Directive should be codified.
1
OJ C [...], [...], p. [...].
2
OJ C [...], [...], p. [...].
3
OJ C [...], [...], p. [...].
4
OJ L 283, 28.10.1980, p. 23. Directive as last amended by Directive 2002/74/EC of the European
Parliament and of the Council (OJ L 270, 8.10.2002, p. 10).
5
See Annex I, Parts A and B.
EN 5 EN
2002/74/EC Recital 1
(2) The Community Charter of Fundamental Social Rights for Workers adopted on
9 December 1989 states, in point 7, that the completion of the internal market must
lead to an improvement in the living and working conditions of workers in the
Community and that this improvement must cover, where necessary, the development
of certain aspects of employment regulations such as procedures for collective
redundancies and those regarding bankruptcies.
80/987/EEC Recital 1 and
2002/74/EC Recital 2, second part
(adapted)
(3) It is necessary to provide for the protection of employees in the event of the
insolvency of their employer, in particular in order to guarantee payment of their
outstanding claims,  and to ensure a minimum degree of protection,  while
taking account of the need for balanced economic and social development in the
Community.  To this end, the Member States must establish a body which
guarantees payment of the outstanding claims of the employees concerned. 
2002/74/EC Recital 5 (adapted)
(4) In order to ensure equitable protection for the employees concerned, the state of
insolvency should be  defined in the light of the  legislative trends in the
Member States and that concept should also include insolvency proceedings other than
liquidation. In this context, Member States should, in order to determine the liability of
the guarantee institution, be able to lay down that where an insolvency situation results
in several insolvency proceedings, the situation is to be treated as a single insolvency
procedure.
2002/74/EC Recital 6
(5) It should be ensured that the employees referred to in Council Directive 97/81/EC of
15 December 1997 concerning the Framework Agreement on part-time work
concluded by UNICE, CEEP and the ETUC6
, Council Directive 1999/70/EC of
28 June 1999 concerning the framework agreement on fixed-term work concluded by
the ETUC, UNICE and CEEP7
and Council Directive 91/383/EEC of 25 June 1991
supplementing the measures to encourage improvements in the safety and health at
work of workers with a fixed-duration employment relationship or a temporary
employment relationship8
are not excluded from the scope of this Directive.
6
OJ L 14, 20.1.1998, p. 9. Directive as amended by Directive 98/23/EC (OJ L 131, 5.5.1998, p. 10).
7
OJ L 175, 10.7.1999, p. 43.
8
OJ L 206, 29.7.1991, p. 19.
EN 6 EN
2002/74/EC Recital 7 (adapted)
(6) In order to ensure legal certainty for employees in the event of insolvency of
undertakings pursuing their activities in a number of Member States, and to strengthen
 employees'  rights in line with the established case law of the Court of Justice
of the European Communities, provisions should be  laid down  which expressly
state which institution is responsible for meeting pay claims in these cases and
establish as the aim of cooperation between the competent administrative authorities
of the Member States the early settlement of employees' outstanding claims.
Furthermore it is necessary to ensure that the relevant arrangements are properly
implemented by making provision for collaboration between the competent
administrative authorities in the Member States.
2002/74/EC Recital 8
(7) Member States may set limitations on the responsibility of the guarantee institutions.
Those limitations must be compatible with the social objective of the Directive and
may take into account the different levels of claims.
2002/74/EC Recital 9
(8) In order to make it easier to identify insolvency proceedings, in particular in situations
with a cross-border dimension, provision should be made for the Member States to
notify the Commission and the other Member States about the types of insolvency
proceedings which give rise to intervention by the guarantee institution.
2002/74/EC Recital 11
(adapted)
(9) Since the objectives of the action  to be taken  cannot be sufficiently achieved
by the Member States and can therefore be better achieved at Community level, the
Community may adopt measures, in accordance with the principle of subsidiarity as
set out in Article 5 of the Treaty. In accordance with the principle of proportionality,
as set out in that Article, this Directive does not go beyond what is necessary in order
to achieve that objective.
2002/74/EC Recital 12
(10) The Commission should submit to the European Parliament and the Council a report
on the implementation and application of this Directive in particular as regards the
new forms of employment emerging in the Member States.
(11) This Directive should be without prejudice to the obligations of the Member States
relating to the time-limits for transposition into national law and application of the
Directives set out in Annex I, Part C,
EN 7 EN
80/987/EEC
HAVE ADOPTED THIS DIRECTIVE:
2002/74/EC Art. 1 pt. 2
(adapted)
CHAPTER I
Scope and definitions
Article 1
1. This Directive shall apply to employees' claims arising from contracts of employment or
employment relationships and existing against employers who are in a state of insolvency
within the meaning of Article 2(1).
2. Member States may, by way of exception, exclude claims by certain categories of
employee from the scope of this Directive, by virtue of the existence of other forms of
guarantee if it is established that these offer the persons concerned a degree of protection
equivalent to that resulting from this Directive.
3. Where such provision already applies in their national legislation, Member States may
continue to exclude from the scope of this Directive:
(a) domestic servants employed by a natural person;
(b) share-fishermen.
Article 2
1. For the purposes of this Directive, an employer shall be deemed to be in a state of
insolvency where a request has been made for the opening of collective proceedings based on
insolvency of the employer, as provided for under the laws, regulations and administrative
provisions of a Member State, and involving the partial or total divestment of the employer's
assets and the appointment of a liquidator or a person performing a similar task, and the
authority which is competent pursuant to the said provisions has:
(a) either decided to open the proceedings; or
(b) established that the employer's undertaking or business has been definitively closed
down and that the available assets are insufficient to warrant the opening of the
proceedings.
2. This Directive is without prejudice to national law as regards the definition of the terms
`employee', `employer', `pay', `right conferring immediate entitlemenť and `right conferring
prospective entitlemenť.
EN 8 EN
However, the Member States may not exclude from the scope of this Directive:
(a) part-time employees within the meaning of Directive 97/81/EC;
(b)  employees  with a fixed-term contract within the meaning of
Directive 1999/70/EC;
(c)  employees  with a temporary employment relationship within the meaning of
Article 1(2) of Directive 91/383/EEC.
3. Member States may not set a minimum duration for the contract of employment or the
employment relationship in order for  employees  to qualify for claims under this
Directive.
4. This Directive does not prevent Member States from extending employee protection to
other situations of insolvency, for example where payments have been de facto stopped on a
permanent basis, established by proceedings different from those mentioned in paragraph 1 as
provided for under national law.
Such procedures shall not however create a guarantee obligation for the institutions of the
other Member States in the cases referred to in Chapter  IV  .
80/987/EEC
CHAPTER II
Provisions concerning guarantee institutions
2002/74/EC Art. 1 pt. 3
Article 3
Member States shall take the measures necessary to ensure that guarantee institutions
guarantee, subject to Article 4, payment of employees' outstanding claims resulting from
contracts of employment or employment relationships, including, where provided for by
national law, severance pay on termination of employment relationships.
The claims taken over by the guarantee institution shall be the outstanding pay claims relating
to a period prior to and/or, as applicable, after a given date determined by the Member States.
Article 4
1. Member States shall have the option to limit the liability of the guarantee institutions
referred to in the first paragraph of Article 3.
2. If Member States exercise the option referred to in paragraph 1, they shall specify the
length of the period for which outstanding claims are to be met by the guarantee institution.
EN 9 EN
However, this may not be shorter than a period covering the remuneration of the last three
months of the employment relationship prior to and/or after the date referred to in the second
paragraph of Article 3.
Member States may include this minimum period of three months in a reference period with a
duration of not less than six months.
Member States having a reference period of not less than 18 months may limit the period for
which outstanding claims are met by the guarantee institution to eight weeks. In this case,
those periods which are most favourable to the employee shall be used for the calculation of
the minimum period.
2002/74/EC Art. 1 pt 3
(adapted)
3. Member States may set ceilings on the payments made by the guarantee institution. These
ceilings must not fall below a level which is socially compatible with the social objective of
this Directive.
If Member States exercise this option, they shall inform the Commission of the methods used
to set the ceiling.
80/987/EEC (adapted)
Article 5
Member States shall lay down detailed rules for the organisation, financing and operation of
the guarantee institutions, complying with the following principles in particular:
(a) the assets of the institutions must be independent of the employers' operating capital
and be inaccessible to proceedings for insolvency;
(b) employers must contribute to financing, unless it is fully covered by the public
authorities;
(c) the institutions' liabilities must not depend on whether or not obligations to
contribute to financing have been fulfilled.
CHAPTER III
Provisions concerning social security
Article 6
Member States may stipulate that Articles 3, 4 and 5 shall not apply to contributions due
under national statutory social security schemes or under supplementary  occupational or
inter-occupational  pension schemes outside the national statutory social security schemes.
EN 10 EN
Article 7
Member States shall take the measures necessary to ensure that non-payment of compulsory
contributions due from the employer, before the onset of his insolvency, to their insurance
institutions under national statutory social security schemes does not adversely affect
employees' benefit entitlement in respect of these insurance institutions in so far as the
employees' contributions have been deducted at source from the remuneration paid.
Article 8
Member States shall ensure that the necessary measures are taken to protect the interests of
employees and of persons having 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 survivors' benefits, under
supplementary  occupational or inter-occupational  pension schemes outside the
national statutory social security schemes.
2002/74/EC Art. 1 pt. 4
(adapted)
CHAPTER IV
Provisions concerning transnational situations
Article 9
1. If an undertaking with activities in the territories of at least two Member States is in a state
of insolvency within the meaning of Article 2(l), the institution responsible for meeting
employees' outstanding claims shall be that in the Member State in whose territory they work
or habitually work.
2. The extent of employees' rights shall be determined by the law governing the competent
guarantee institution.
3. Member States shall take the measures necessary to ensure that, in the cases referred to in
paragraph 1, decisions taken in the context of insolvency proceedings referred to in
Article 2(1), which have been requested in another Member State, are taken into account
when determining the employer's state of insolvency within the meaning of this Directive.
Article 10
1. For the purposes of implementing Article 9, Member States shall make provision for the
sharing of relevant information between their competent administrative authorities and/or the
guarantee institutions mentioned in the first paragraph of Article 3, making it possible in
particular to inform the guarantee institution responsible for meeting the employees'
outstanding claims.
EN 11 EN
2. Member States shall notify the Commission and the other Member States of the contact
details of their competent administrative authorities and/or guarantee institutions. The
Commission shall make  that information  publicly accessible.
80/987/EEC (adapted)
CHAPTER V
General and final provisions
Article 11
This Directive shall not affect the option of Member States to apply or introduce laws,
regulations or administrative provisions which are more favourable to employees.
2002/74/EC Art. 1 pt. 5
(adapted)
Implementation of this Directive shall not under any circumstances be sufficient grounds for a
regression in relation to the current situation in the Member States and in relation to the
general level of protection of  employees  in the area covered by it.
80/987/EEC (adapted)
Article 12
This Directive shall not affect the option of Member States:
(a) to take the measures necessary to avoid abuses;
(b) to refuse or reduce the liability referred to in the first paragraph of Article 3 or the
guarantee obligation referred to in Article 7 if it appears that fulfilment of the
obligation is unjustifiable because of the existence of special links between the
employee and the employer and of common interests resulting in collusion between
them;
2002/74/EC Art. 1 pt. 6
(c) to refuse or reduce the liability referred to in the first paragraph of Article 3 or the
guarantee obligation referred to in Article 7 in cases where the employee, on his or
her own or together with his or her close relatives, was the owner of an essential part
of the employer's undertaking or business and had a considerable influence on its
activities.
EN 12 EN
2002/74/EC Art. 1 pt. 7
(adapted)
Article 13
Member States shall notify the Commission and the other Member States of the types of
national insolvency proceedings falling within the scope of this Directive, and of any
amendments relating thereto.
The Commission shall publish these communications in the Official Journal of the European
 Union  .
80/987/EEC Art 11 (adapted)
Article 14
2002/74/EC Art. 2(2) (adapted)
Member States shall communicate to the Commission the text of the  main  provisions
 of national law  which they adopt in the field  covered  by this Directive.
2002/74/EC Art. 4 (adapted)
 Article 15 
 By 8 October 2010 at the latest, the Commission shall submit to the European Parliament
and to the Council a report on the implementation and application in the Member States of
Articles 1 to 4, Articles 9 and 10, Article 11, second paragraph, Article 12, point (c), and
Articles 13 and 14. 
Article 16
Directive 80/987/EEC, as amended by the acts listed in Annex I, is repealed, without
prejudice to the obligations of the Member States relating to the time-limits for transposition
into national law and application of the Directives set out in Annex I, Part C.
References to the repealed Directive shall be construed as references to this Directive and
shall be read in accordance with the correlation table in Annex II.
Article 17
This Directive shall enter into force on the twentieth day following that of its publication in
the Official Journal of the European Union.
EN 13 EN
80/987/EEC
Article 18
This Directive is addressed to the Member States.
Done at Brussels, [...]
For the European Parliament For the Council
The President The President
[...] [...]
EN 14 EN
ANNEX I
Part A
Repealed Directive with its successive amendments
(referred to in Article 16)
Council Directive 80/987/EEC (OJ L 283, 28.10.1980, p. 23)
Council Directive 87/164/EEC (OJ L 66, 11.3.1987, p. 11)
Directive 2002/74/EC of the European Parliament
and of the Council
(OJ L 270, 8.10.2002, p. 10)
Part B
Non-repealed amending act
(referred to in Article 16)
1994 Act of Accession
Part C
List of time-limits for transposition into national law and application
(referred to in Article 16)
Directive Time-limit for transposition Date of application
80/987/EEC 28 October 1983
87/164/EEC 1 January 1986
2002/74/EC 8 October 2005
_____________
EN 15 EN
ANNEX II
CORRELATION TABLE
Directive 80/987/EEC This Directive
Article 1 Article 1
Article 2 Article 2
Article 3 Article 3
Article 4 Article 4
Article 5 Article 5
Article 6 Article 6
Article 7 Article 7
Article 8 Article 8
Article 8a Article 9
Article 8b Article 10
Article 9 Article 11
Article 10 Article 12
Article 10a Article 13
Article 11(1) _______
Article 11(2) Article 14
Article 12 _______
________ Article 15
________ Article 16
________ Article 17
Article 13 Article 18
________ Annex I
________ Annex II
_____________