Court of Appeal: Woman awarded €16,000 against the State for failing to transpose EU legislation
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A woman who was awarded €16,818.75 by the Rights Commissioner for being unfairly dismissed by her employer, and who was unable to collect the award before her employer became insolvent, has successfully argued that the State failed to implement EU legislation which would have allowed her to be paid the award from the Social Insurance Fund.
About this case:
- Judgment:
Ms Justice Finlay Geoghegan held that the State failed to transpose Directive 2008/94/EC by failing to provide in Irish law for the procedure required to protect employees in the event of the insolvency of their employer, and made an award of damages against the State in the sum of €16,818.75
Background
Ms Magdalena Glegola was employed by the Metro Spa Ltd, but was dismissed on 30th November 2011, having been informed that Metro was going into liquidation – the reason given was redundancy.
However, Metro Spa continued to trade, and Ms Glegola made a complaint to the Rights Commissioner in May 2012 under the Payment of Wages Act 1991, the Organisation of Working Time Act 1997 and the Unfair Dismissals Acts 1977 to 2001.
The Rights Commissioner issued a recommendation in October 2012 awarding Ms Glegola €16,818.75.
The recommendation of the Rights Commissioner, not having been appealed by Metro Spa, became binding and was subsequently a debt due to Ms Glegola.
In October 2013, Metro Spa was struck off the Register of Companies for failing to file accounts.
In March 2014, Ms Glegola issued a petition – the purpose of which was to have her award from the Rights Commissioner paid from the Social Insurance Fund established pursuant to the Protection of Employees (Employers’ Insolvency) Act 1984.
It was submitted that Ms Glegola was unable to afford the costs of a liquidator and therefore was seeking a determination under s. 251 of the Companies Act 1990 by reason of advice she had received that this would be sufficient to comply with the requirements of Article 2.1 of the Directive which, it was contended, had direct effect.
High Court
It was contended that the declaration pursuant to s. 251 of the Companies Act 1990 was sufficient to trigger Article 2(1)(b) of Directive 2008/94/EC, which it was submitted has direct effect in the State.
It was intimated that in default of payment within 21 days, judicial review proceedings would issue, and it was further stated that Ms Glegola was reserving her right to seek damages from the State for its failure to transpose European law in accordance with the decision of the European Court of Justice in Francovich v. Italy
The trial judge concluded that on the facts, and on the procedures up to that moment in time undertaken by or on behalf of Ms Glegola, she had not satisfied the requirements of Article 2(1)(b) of the Directive and hence could not sustain a claim against the State in reliance upon the direct effect of Article 2(1)(b) of the Directive. The trial judge did not consider the alternative claim for damages pursuant to the Francovich principles.
Court of Appeal
On appeal, counsel for Ms Glegola pursued two distinct submissions in the alternative:
or
Failure to Transpose
Directive 2008/94/EC repealed and replaced Council Directive 80/987/EEC. It was now sought that the protection of employees in the event of the insolvency of their employers be codified.
The Directive was sought to be implemented by the Protection of Employees (Employers’ Insolvency) Act 1984.
In the present case, no receiver or manager was appointed to Metro Spa; no possession was taken by a debenture holder, and no resolution was passed for voluntary winding up.
The entitlement of a person to recover from the Social Insurance Fund pursuant to s. 6 of the Protection of Employees (Employers’ Insolvency) Act 1984 is confined to a situation where the employment was “by an employer who has become insolvent”.
Pursuant to the Protection of Employees (Employers’ Insolvency) Act 1984, Metro Spa was considered to have become insolvent “if, but only if”, a winding up order has been made, or one of the other situations in s. 1(3)(c) applied, none of which applied on the facts of this situation between Ms Glegola and Metro Spa.
The requirement that a winding up order is made in order that a company will be taken to have become insolvent has the effect that the Protection of Employees (Employers’ Insolvency) Act 1984 does not permit a person to make a claim against the Social Insurance Fund in circumstances of a deemed state of insolvency following an application and decision by a court of a type specified in Article 2(1)(b) of Directive 2008/94/EC.
Accordingly, Ms Justice Geoghegan concluded that the State failed to correctly transpose Article 2(1) of Directive 2008/94/EC.
Allowing the appeal, Ms Justice Finlay Geoghegan made an order to vacate the order of the High Court; and granted a declaration that the State failed to correctly transpose Directive 2008/94/EC by failing to provide in Irish law for the procedure required by Article 2(1)(b) of the Directive and make an award of damages against the State in the sum of €16,818.75.
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