Out-Law / Your Daily Need-To-Know

EU protection for workers’ salaries if employer insolvent

Out-Law News | 25 Apr 2002 | 12:00 am | 1 min. read

A committee of the European Parliament approved this week a report on a draft Directive for the protection of employees in the event of the insolvency of their employer. The aim is to harmonise the laws of the Member States in this area.

The Parliament’s Committee on Employment and Social Affairs approved a draft Directive that requires Member States to set up a “guarantee institution” to ensure that employees who find themselves in this situation receive the salaries and benefits due to them.

The text, prepared by the European Commission, is intended to amend a 1980 directive by bringing it into line with developments in the labour market and insolvency legislation in the Member States.

In its common position, the Council accepted many of the amendments adopted by Parliament at first reading on 29th November 2001. However it rejected certain amendments covering “new forms of work and work relations”. Nevertheless, the committee wanted to ensure that the new Directive can be adopted and implemented as soon as possible and has therefore refrained from re-tabling amendments, which means that these issues will not be dealt with by the Directive.

In fact, MEPs tabled only a few amendments. These seek to broaden the scope of the rules on severance pay where this is provided for under national law. They also want Member States to observe certain principles when regulating the organisation, funding and operation of the guarantee institutions. Lastly, the Commission is asked to submit within five years an assessment of the implementation of the directive in the Member States.

The full Parliament will vote on this report at the May plenary session in Strasbourg.