After a period with losses, a German limited liability company wanted to close down its activities and to terminate all employees.
The company had 21 employees, whereof 19 definitely were defined as workers. The question was whether the two last employees were to be included in the calculation of workers according to the Directive on collective redundancies. The question concerned a trainee, who received payment of remuneration from the government, and a director.
If the trainee and the director were to be included in the calculation of workers, the limit of 20 terminated workers would be exceeded and the company would have to observe a specific procedure for the terminations.
In June 2015, the Court of Justice of the European Union (CJEU) decided on whether the trainee and the director were covered by the concept of worker.
The trainee was worker
Initially, CJEU stated that the concept of workers in the EU-legislation must be interpreted unconditioned of the legislation of the member states.
According to regularly practice in EU, the concept of workers also includes trainees and apprentices, who are employed on the same conditions as if they were employed on a permanent basis. This applies without regard to the number of working hours per week.
On this basis, CJEU ruled that the trainee was to be included in the calculation of workers.
The same applied to the director
According to CJEU, the director was also covered by the concept of workers.
Initially, CJEU stated that the most distinctive criteria for an employment relationship is that a person in a certain period of time receives remuneration for performing services for another person, who directs the tasks. At the same time, it is essential whether one of the parties is subordinated to the other, and whether there is a certain degree of dependency between the parties. Whether this is the case is to be decided in the specific case.
Overall, the assessment shall be taken on the basis of following terms: 1) the circumstances under which the employee is employed, 2) what kind of duties the employee is entrusted, 3) the scopes within which the work is performed, 4) the extent of the employee’s authority and the supervision he is subject to, and 5) the circumstances under which the employee can be terminated.
CJEU stated that the director was covered by the concept of workers, because he received remuneration for his work and was an integral part of the company. Furthermore, the Court emphasized the importance of the fact that the director received directions and was under supervision by another employee in the company. Additionally, the director could at any time be terminated without limitations.
Therefore, the director was to be included in the calculation of the amount of terminated employees.
The Court noticed that this would also have been the case if the director was shareholder in the company. The cause of this might be that the case concerned a limited liability company, where the board of directors is hired, supervised and instructed by the management / supervisory board, and not by the owners.
iuno’s opinion
The case is of interest, because it determines that directors under certain circumstances are covered by the concept of workers according to EU-legislation.
This specific case concerned the Directive on collective redundancies, but the ruling might get greater importance for the interpretation of the concept of workers in other directives. Previously, it has been discussed whether managing directors were covered by the discrimination- and equal treatment legislation. On basis of CJEU’s new ruling, it can now be concluded that directors are also covered by the legislations.
iuno recommends companies to be aware that even managing directors under certain circumstances might be considered as workers. This especially applies in cases where the issue is regulated by EU-legislation.
[Case C-229/14, The Court of Justice of the European Union, 9 July 2015]