Latest in Employment Law>Case Law>Hogan and others v Minister for Social and Family Affairs [2013] CJEU Case C-398/11
Hogan and others v Minister for Social and Family Affairs [2013] CJEU Case C-398/11
Published on: 26/04/2013
Issues Covered: Pensions
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Background

This case was brought by employees of Waterford Wedgewood Limited following their employer’s insolvency. It concerned the protection of employees’ occupational pensions in the event of the insolvency of their employer and, anterior to this, on the failure of the Irish government to transpose fully into Irish law the Insolvency Directive, a measure designed to offer just such protection.

On 5 January 2009, a Receiver was appointed to Waterford Wedgwood Ltd. On 7 January 2009, the Receiver notified the trustees of the firm’s two staff pension schemes that Waterford Wedgewood Ltd. would not be making further contributions to the schemes. On 31 March 2009, both pension schemes were wound up, each with a significant deficit. In March 2010, the Plaintiffs issued proceedings against the Minister and the Irish Attorney General for failure to transpose provisions of the Insolvency Directive which, they argued would have guaranteed adequate protection of the employees’ pension entitlements in the event of a double insolvency (the insolvency of an employer and that of the pension scheme).

The Irish Commercial Court made a preliminary reference to the CJEU. Article 8 of the Directive obliges Member States to 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. Central to the workers’ argument was the factually-similar UK case Carol Marilyn Robins and Others v Secretary of State for Work and Pensions ("Robins") C-278/05. It, too, concerned the double insolvency of a company and an employee pension scheme, with a resultant deficit to the scheme. In Robins, in which the Plaintiff stood to obtain 49% of her pension entitlement (in contrast to the 18-28% promised to the Waterford employees); the then-ECJ held that the UK had failed to protect adequately the pension interests of employees.

The ECJ held that the UK was therefore in breach of Article 8 of the Directive, under which a State is obliged to put in place appropriate measures to ensure that employees' pension entitlements are protected. The Waterford Plaintiffs argued that, by failing to act in accordance with the Robins ruling implementing insolvency protections, the Irish State was in 'serious breach' of the Directive. The CJEU’s rulings merit recital at length. The CJEU ruled that the State cannot take into account the State pension the workers would receive because there is no link between that and occupational pensions. The CJEU also found that:

"... Directive 2008/94 must be interpreted as meaning that the fact that the measures taken by Ireland subsequent to Robins and Others have not brought about the result that the plaintiffs would receive in excess of 49% of the value of their accrued old-age pension benefits under their occupational pension scheme is in itself a serious breach of that Member State’s obligations."

The CJEU went on to find that:

"1. Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 on the protection of employees in the event of the insolvency of their employer must be interpreted as meaning that it applies to the entitlement of former employees to old-age benefits under a supplementary pension scheme set up by their employer.

2. Article 8 of Directive 2008/94 must be interpreted as meaning that State pension benefits may not be taken into account in assessing whether a Member State has complied with the obligation laid down in that article.

3. Article 8 of Directive 2008/94 must be interpreted as meaning that, in order for that article to apply, it is sufficient that the pension scheme is underfunded as of the date of the employer’s insolvency and that, on account of his insolvency, the employer does not have the resources to contribute sufficient money to the pension scheme to enable the pension benefits owned to the beneficiaries of that scheme to be satisfied in full. It is not necessary for those beneficiaries to prove that there are other factors giving rise to the loss of their entitlement to old-age benefits.

4. Directive 2008/94 must be interpreted as meaning that the measures adopted by Ireland following the judgment of the Court of Justice of the European Union of 25 January 2007 in Case C-278/05 Robins and Others do not fulfil the obligations imposed by that directive and that the economic situation of the Member State concerned does not constitute an exceptional situation capable of justifying a lower level of protection of the interests of employees as regards their entitlement to oldage benefits under a supplementary occupational pension scheme.

5. Directive 2008/94 must be interpreted as meaning that the fact that the measures taken by Ireland subsequent to Robins and Others have not brought about the result that the plaintiffs would receive in excess of 49% of the value of their accrued old-age pension benefits under their occupational pension scheme is in itself a serious breach of that Member State’s obligations."

The matter will now be referred back to the Irish courts so that they may determine the amount of pension the Plaintiffs should receive. Notably, the UK government agreed to restore 90% of the pensions in Robins: http://curia.europa.eu/juris/document/document.jsf?text=&docid=136782&pageIndex=0&doclang=en& mode=req&dir=&occ=first&part=1&cid=218241 Link to Hogan: http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62011CJ0398:EN:HTML

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Disclaimer The information in this article is provided as part of Legal Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article. This article is correct at 26/04/2013