Collective redundancies in Greece – a difficult balancing exercise for the EU legal order

Collective redundancies in Greece – a difficult balancing exercise for the EU legal order

The Grande Chambre of the European Court of Justice is called upon to rule on the compatibility of the Greek law on collective redundancies with EU law amid economic crisis and socio-political controversies.

On the 25th of April 2016, I had the privilege of attending the hearing of the Grande Chambre Case C-201/15 AGET Iraklis in the Grande Salle of the Court of Justice of the European Union.

The case concerned collective redundancies in Greece, a politically sensitive topic which has always attracted public attention due to its social and economic implications and which has recently been in the limelight again as a result of the severe economic recession and the extremely high unemployment rates in Greece.

The question referred by the Greek Council of State was whether the system of prior ministerial authorisation for the implementation of a collective redundancies scheme provided for under Greek legislation was compatible with the freedom of establishment under Article 49 TFEU and the free movement of capital under Article 63 TFEU.

The request had been made in a dispute between the limited liability company AGET Iraklis, belonging to a French holding company and active in the production, distribution and trading of cement in Greece, on the one hand, and the Minister of Employment, Social Security and Social Solidarity, on the other, concerning the decision of the latter to reject the request for authorisation of a collective redundancies plan contemplated by the applicant company.

As a result of the adverse consequences of the economic recession in the construction sector, the company closed one of its factories, as it was no longer economically sustainable, and decided to implement a plan of collective redundancies of around 200 employees. In such a situation, Directive 98/59/EC on collective redundancies imposes on the employer an obligation to initiate consultations with the workers' representatives with a view to finding ways of avoiding collective redundancies or reducing the number of workers affected and of mitigating the consequences by recourse to accompanying social measures aimed at redeploying or retraining workers made redundant. The factual question whether these consultations actually took place in the case at hand was highly contested by both parties during their oral pleadings. On the one hand, the company claimed that the two scheduled attempts to engage in consultations were fruitless, as the workers' representatives never showed up. On the other hand, the workers' representatives argued that they were invited to consultations only after the decision to implement collective redundancies had already been taken in an irrevocable way with no intention on the part of the company to actually finding ways of avoiding the collective redundancies or mitigating their consequences.

In any event, after fruitless consultation attempts, the company submitted to the Minister a written request to approve the plan of collective redundancies by virtue of Article 5 (3) of the Greek Law no 13 87/1983, which was intended to transpose Directive 98/59/EC into the national legal order. This article provides that: 'In the absence of agreement between the parties, the Prefect or the Minister of Employment can, by reasoned decision published within ten days from the date of the submission of the above-mentioned minutes and after having examined the elements of the file and having assessed the conditions of the labour market, the situation of the undertaking as well as the interest of the national economy, either extend the consultations by twenty days from the filing of the filing of the application by one of the parties or object to the realisation of all or a part of the envisaged redundancies[…]'.

The Minister of Employment, after considering the criteria provided for by the law, issued a negative decision. The company thus filed an action for annulment of this decision before the Greek Council of State. It argued that the prior authorisation procedure was contrary to Directive 98/59/EC and Articles 49 and 63 TFEU.

In those circumstances, the Greek Council of State (Simvoulio tis Epikratias) decided to stay the proceedings and ask the Court of Justice whether the national provision at issue was compatible with EU law, especially in view of serious social reasons such as severe economic crisis and particularly high unemployment.

This Grande Chambre case is expected to be one of the most important cases of the year, as it raises crucial questions regarding the intersection between the internal market and fundamental rights and also the wider debate about the social market economy in Europe and whether it can be reconciled with the European Economic Constitution especially in countries like Greece, ravaged by a long lasting and grave economic crisis (an 'odyssey without end', as it was recently described in the Guardian) that have implemented a rigid package of austerity measures. All parties in the hearing submitted their arguments with respect to the Directive, the Treaty provisions as well as the Charter of Fundamental Rights. The company argued that the system of Ministerial prior authorisation undermines the effectiveness of the consultation procedure introduced by Directive 98/59/EC and restricts its fundamental freedoms under the Treaty and the Charter. The representatives of the workers argued that it was the practice of the company that undermined the effectiveness of the Directive, as the latter imposes an obligation on the employer to enter into consultations with the workers before the decision to implement collective redundancies is actually taken. The Greek State argued that it was entitled to introduce a prior authorisation requirement, as Article 5 of Directive 98/59/EC allows Member States to apply or introduce laws, regulations or administrative provisions which are more favourable to workers. The intervention of the Commission focused on the observance of the rule of law and the need to strike a fair balance between the internal market and legitimate public interests objectives. Finally, the EFTA Surveillance Authority sided with the company in supporting the view that the national provision at issue was not compatible with either the Directive or the Treaty provisions.

Irrespective of the various ideological beliefs that one might have, it must be acknowledged that this case raises fundamental questions of EU law regarding the eternal conflict between market integration and social objectives, enriched with a human rights dimension of a constitutional nature. The Court has now been assigned the difficult task of weighing the different conflicting interests and ensuring that the rule of law is respected in an extremely sensitive and delicate political, economic and social context. As it was announced at the end of the hearing, the Opinion of Advocate General Wahl is expected to be delivered on the 9th of June.


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