Yesterday all the attention was focused on the judgment of the Court of Justice on the Polish judiciary (more on that will follow in this blog). But on the same day, the Grand Chamber and the same reporting judge issued another important judgment that has passed by more discretely: the TSN case, on the scope of application of the Charter when Member States increase the level of protection provided in a Directive.
Does the Charter apply when a Member State goes beyond the level of protection provided in EU Law, in particular in a Directive in the field of social law? The question is a key issue for the general theory of fundamental rights in EU Law, for it is well known that Member States enjoy high degrees of discretion when implementing Directives. It is not uncommon for a Member State to go beyond the level of protection provided in a Directive, but when that happens… does the Charter apply?
The question had only half an answer in the case-law, but it had never been so directly confronted until the TSN case, a preliminary reference from a Finnish labour court, where the referring jurisdiction posed its doubts on the interpretation of the working time Directive and article 31(2) of the Charter on paid annual leave.
The case and the question was very blunt and clear: in Finland, workers can have five weeks of paid annual leave by collective agreement. If the worker falls ill during his or her leave, as a result of the working time Directive (as interpreted by the Court in previous case-law), the days of sick leave during annual leave can be carried over to the following year. However, in Finland, that carry-over effect only applies to the four weeks of the year. Therefore, if the worker falls ill for a week, that period is covered by the fifth “national” week which is only covered by national law, and therefore cannot be carried over to next year’s annual leave. As a result, most workers with five weeks of paid annual leave cannot carry over sick leaves during their holidays if they last under one week. The national court asked whether this regime is in line with the Directive, but also with the Charter. In addition, it also asked whether the Charter applied to a horizontal situation (as it was the case here).
The Court replied in two steps.
First, it gave a reply on the interpretation of the working time Directive, and ruled that Article 7(1) of the Directive must be interpreted as not precluding national rules or collective agreements which provide for the granting of days of paid annual leave which exceed the minimum period of 4 weeks laid down in that provision, and yet exclude the carrying over of those days of leave on the grounds of illness. Thus, as a question of EU secondary law, the rule limiting the carry-over effect is not in breach of the Directive.
And then, secondly, the Court goes straight into the question of the Charter and its article 31(2), which provides a right to paid annual leave. In contrast with other cases in which the Court has handled the peculiar situation produced by a combination of the Charter and a Directive, the reasoning is based exclusively on Article 51.1 and the scope of application of the Charter. And according to the Court, to conclude its findings, it stated as follows:
“It follows from all of the foregoing that, where the Member States grant, or permit their social partners to grant, rights to paid annual leave which exceed the minimum period of 4 weeks laid down in Article 7(1) of that directive, such rights, or the conditions for a possible carrying over of those rights in the event of illness which has occurred during the leave, fall within the exercise of the powers retained by the Member States, without being governed by that directive or falling within its scope […].
Where the provisions of EU law in the area concerned do not govern an aspect of a given situation and do not impose any specific obligation on the Member States with regard thereto, the national rule enacted by a Member State as regards that aspect falls outside the scope of the Charter and the situation concerned cannot be assessed in the light of the provisions of the Charter […]
Accordingly, by adopting national rules or authorising the negotiation of collective agreements which, like those at issue in the main proceedings, grant workers rights to days of paid annual leave which exceed the minimum period of 4 weeks laid down in Article 7(1) of Directive 2003/88 and lay down the conditions for any carrying over of such additional rights in the event of the worker’s illness, the Member States are not implementing that directive for the purposes of Article 51(1) of the Charter” (paragraphs 52-54)
Therefore, when Member States introduce a higher level of protection provided in a Directive, they are not acting within the scope of application of EU law and therefore the Charter will not apply.
This outcome might look counterintuitive, considering the past evolution of the case-law, but the judgment makes a series of caveats that should be closely followed.
First, the Court highlights the fact that the working time Directive is a social policy instrument, enacted under article 153(2) TFEU, which refers to “minimum requirements”. Also, article 15 of the working time Directive explicitly states that its provisions do not preclude Member States from introducing more favourable provisions in national law. Therefore, in the specific case of the working time Directive, considering its legal base and its wording, Member States must enjoy a particularly high degree of discretion if they decide to introduce more favourable provisions for workers.
Second, when the reasoning departs from the specific field of social policy, the Court sums up its position in the following way:
“Where the provisions of EU law in the area concerned do not govern an aspect of a given situation and do not impose any specific obligation on the Member States with regard thereto, the national rule enacted by a Member State as regards that aspect falls outside the scope of the Charter and the situation concerned cannot be assessed in the light of the provisions of the Charter” (paragraph 53).
This appears to be a combination of requirements (no provisions of EU law plus no specific obligation imposed on Member States) that triggers non-applicability of the Charter. But if one of the requirements is missing, the Charter applies.
Therefore, it could be argued that the judgment applies a strict interpretation of Article 51.1 of the Charter when it comes to areas with specific competence provisos in the Treaties (social policy) and when a combination of requirements is fulfilled. As a result, its restrictive effects may be rather confined to the specifics of social policy law.
However, this might be too optimistic a reading.
Similar provisos exist in environmental law policy, where Member States can introduce more favourable provisions and the Treaties explicitly say so. Furthermore, when the EU legislatives through article 114 TFEU it does not preclude Member States from doing the same on specific grounds. And there are plenty of Directives outside those areas of policy which contain similar provisions to article 15 of the working time Directive. Therefore, the effect could be quite wide in the long run.
On the other hand, from a policy point of view, the judgment is probably trying to avoid a chilling effect on Member State legislatures. If a national provision introduces more favourable standards, the fact that such standards will put that area of policy under Charter supervision may actually refrain Member States from going that way. If that is actually the effect, it is then reasonable to be cautious and avoid converting the Charter into an instrument that stops countries from protecting workers, consumers, the environment, etc…
The balance is not an easy one, but the Court has ruled on the side of caution. We shall wait and see how following developments unfold, but, for the time being, the restrictive interpretation of Article 51.1 of the Charter is slowly but relentlessly taking shape.