The employer of Ms Gomes Viana Novo stopped paying her salary from April 2003 and she terminated her contract of employment on 15 September 2003, as she was entitled to do under the relevant applicable national law. On 10 February 2004 Ms Gomes Viana Novo brought an action before the Labour Court (Barcelos), seeking a judicial determination of the amount of her wage claim and an enforcement order to recover that sum. Her action was upheld.

As the goods comprising the employer’s assets were insufficient to cover the claims, on 28 November 2005 Ms Gomes Viana Novo brought an action before the Commercial Court (Vila Nova de Gaia) seeking a declaration that the employer was insolvent. After that declaration had been made, her wage claim was registered.

On 26 July 2006, Ms Gomes Viana Novo applied to the Fundo de Garantia Salarial IP (“FGS”) for payment of her claim. By orders of 21 and 26 December 2006, the President of the FGS dismissed the claim on the ground that it had fallen due more than six months before the action, seeking a declaration that the employer was insolvent, had been brought.

Ms Gomes Viana Novo appealed the ruling and the court decided to stay proceedings and refer a question to the CJEU for a preliminary ruling on the interpretation of Council Directive 80/987/EC (as amended by Directive 2002/74/EC).

In essence, the referring court asks whether Directive 80/987, as amended, must be interpreted as meaning that it precludes national legislation which does not guarantee wage claims falling due more than six months prior to the commencement of the action seeking a declaration that the employer is insolvent even though the workers brought legal proceedings before the commencement of the six-month period against their employer with a view to obtaining a determination of the amount of those claims and an enforcement order to recover those sums.

The CJEU took the view that Directive 80/987, as amended, does not preclude a Member State from fixing the date from which the reference period must be calculated as the date on which the action for a declaration of an employer’s insolvency is commenced. Likewise, where a Member State decides to exercise the option to limit the guarantee by setting a reference period, it may choose to limit that reference period to six months provided that it guarantees pay for the last three months of the employment relationship.

The CJEU held that:

Council Directive 80/987/EC, relating to the protection of employees in the event of the insolvency of their employer, must be interpreted as meaning that it does not preclude national legislation which does not guarantee wage claims falling due more than six months before the commencement of an action seeking a declaration that the employer is insolvent, even where the workers initiated, prior to the start of that period, legal proceedings against their employer with a view to obtaining a determination of the amount of those claims and an enforcement order to recover those sums.

Why is this decision important?

Given the number of employer insolvencies since 2008, the payments which can be made to employees by the National Insurance Fund (UK) is of particular importance. This judgment means employees must act quickly and take advice regarding the level of unpaid wages that can be claimed from the NIF.