Joined cases C-569/16 and C-570/16 Bauer et al: (Most of) the Charter of Fundamental Rights is Horizontally Applicable
By Eleni Frantziou
The EU case law on the horizontal effect of fundamental rights is not the average lawyer’s go-to example of coherence, clarity, or adequate judicial reasoning. To give credit where credit is due, however, in a series of cases over the last year, the Court has significantly improved this state of affairs. The Grand Chamber’s judgment in Bauer et al is the most noteworthy affirmation of this change of direction so far. This post maps out what might now be safely described as the current position on the horizontal effect of fundamental rights in the European Union and attaches a threefold (mostly positive) meaning to the Bauer judgment. However, using Bauer as a springboard, it also raises two broader questions regarding the status of social rights and the non-horizontality of directives, which may require further refinement in future case-law.
The factual and legal context and preliminary reference requests before the Court
It should be noted at the outset that Bauer is not a single case: it stems from two, in all but one respect identical, sets of facts. The first case, C‑569/16, concerned a dispute between Stadt Wuppertal and Mrs Maria Elisabeth Bauer. The second case, C‑570/16, concerned a dispute between Mr Volker Willmeroth, in his capacity as owner of TWI Technische Wartung und Instandsetzung Volker Willmeroth e.K. (a private company) and Mrs Martina Broßonn. The Stadt Wuppertal and Mr Willmeroth had been the last employers of the late husbands of Mrs Bauer and Mrs Broßonn, respectively. Both had refused to pay the claimants an allowance in lieu of annual leave not taken by their spouses before their death.
Under German law, paragraph 7(4) of the revised Bundesurlaubsgesetz (Federal law on leave) (BGBl. 2002 I, p 1529) [the ‘BUrlG’] provides for payment in lieu of leave in case of termination of the employment relationship, while paragraph 1922(1) of the Bürgerliches Gesetzbuch (Civil Code) [‘the BGB’] provides that the estate of a deceased person passes in whole to their heirs. The relevant legal context at the EU level, which was of course the subject of the preliminary references, is Article 31(2) of the Charter, which provides that ‘every worker has the right to limitation of maximum working hours, to daily and weekly rest periods and to an annual period of paid leave’, and Article 7 of Directive 2003/88, which provides that:
‘1. Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice.
2. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.’
Applying the finding of the Court of Justice in Case C-118/13 Bollacke that an annual leave entitlement cannot be altogether lost upon a person’s death, German courts had initially granted the claims of both Mrs Bauer and Mrs Broßonn. On appeal, however, the proceedings were stayed as they raised questions about the applicability of this finding in the present context, particularly in case it was impossible to interpret Articles 7(4) BUrlG and Article 1922(1) BGB as comprising death of the employee within the concept of ‘termination’, thus making a payment in lieu of leave part of their estate. Joining the two cases, the Court of Justice reconstructed the national courts’ questions as follows:
‘(1) Does Article 7 of Directive [2003/88] or Article 31(2) of the [Charter] grant the heir of a worker who died while in an employment relationship a right to financial compensation for the worker’s minimum annual leave prior to his death, which is precluded by Paragraph 7(4) of the [BUrlG], read in conjunction with Paragraph 1922(1) of the [BGB]?
(2) If the first question is answered in the affirmative: Does this also apply where the employment relationship is between two private persons?’
Thus, in summary, the first question was about the reach and nature of the right to paid annual leave, and the second question was procedural/constitutional, as it concerned the horizontal effect of a right further concretised in a directive. Indeed, whilst for those of us with an Anglo-Saxon keyboard calling the cases ‘Bauer’ avoids the uncomfortable Eszett in Mrs Broßonn’s surname, it was in fact her case that made the judgment especially significant. For, even though the right to paid annual leave was substantively engaged in both cases, as every EU law student (and academic) will recall, the Court has previously found ‘that a directive may not of itself impose obligations on an individual and that a provision of a directive may not be relied upon as such against such a person.’
Analysis of the Opinion and judgment
The fate of these cases was, to a great extent, determined by the elaborate Opinion that preceded the judgment. Maintaining an interpretation he has defended in a series of cases from Kücükdeveci onwards, AG Bot invited the Court to reconsider previous categorisations based on general principles or ‘particularly important principles of EU social law’ (C‑214/16, King, EU:C:2017:914, § 32) and to confirm, once and for all, that the social rights enshrined in the Charter are equally indivisible and fundamental as its other provisions (§57).
Developing his argument in close conversation with earlier case law and taking care to distinguish this case from Association de Médiation Sociale, the Advocate General argued that Article 31 is specific enough to be relied upon as such in a dispute between private parties (§79). His argument was built upon the holy grail of the precedent in this field – paragraph 39 of Defrenne v Sabena: insofar as a rule is of a mandatory nature (as, in AG Bot’s view, was the case with Article 31), then it must apply not only to the action of public authorities, but also to employment relationships established between private individuals (§81). Thus, the Advocate General asked the Court to reaffirm its position in Egenberger by declaring the right horizontally applicable as such and removing any remaining ambiguity regarding the need for further implementation of a right in a directive.
The Court laid down its interpretation of the right to paid annual leave in similar terms to those suggested by AG Bot. Yet, in stark contrast to its earlier case law (as already aptly pointed out by Sarmiento), its analysis was remarkably detailed. First, the Court unpacked the content of the right carefully and explained that the proviso limiting payment in lieu of leave to cases of termination was intended to ensure the meaningfulness of that right both during (so that employers do not coerce their employees not to take leave) and after the end of employment relationship (§42-43). The reason for termination was immaterial: death marks the unfortunate but inevitable end of many employment relations (§46). Furthermore, as the Court reasoned, annual leave has a measurable, pecuniary dimension, which does not dissipate upon the death of an employee, as it has been accumulated during his/her employment (§48).
Having thus set out the meaning of the right to paid annual leave, the Court revised the overcomplicated and unconvincing distinction between rights which are ‘general principles’ or ‘particularly important’ principles of EU law, lingering in a long line of case law in this field, from Mangold to Egenberger, via Dominguez and AMS. It clarified that:
‘the right to paid annual leave, as a principle of EU social law, is not only particularly important, but is also expressly laid down in Article 31(2) of the Charter, which Article 6(1) TEU recognises as having the same legal value as the Treaties.’ (§51)
It thus appears implicit in the ruling that this right has a concrete constitutional status within the EU legal order. This finding leads the Court to its answer to the first question, concerning the interpretation of the right to paid annual leave. Leaving the directive aside, the Court finds that Article 31(2) of the Charter in itself has the effect of limiting the Member States’ discretion to retroactively remove the enjoyment of the right, e.g. by prohibiting payment in lieu after a person’s death (§61-63). In turn, the Directive, too, can only be interpreted in accordance with that core right.
When it comes to the procedural part of the case (the question of direct effect), the Court firstly affirms the possibility of reliance on directives against the State (§70-72). It thus deals quickly with Mrs Bauer’s case, which concerned a public employer, before turning to the more complicated question raised by Mrs Broßonn’s circumstances. The Court re-affirms the non-horizontality of directives, even when these are clear, precise, and unconditional, so that Mrs Broßonn cannot rely upon the Directive in a dispute with her late husband’s employer (§77). The Court then returns to the nature of Article 31(2) of the Charter and examines its potential for horizontality. In this regard, a noteworthy element of the judgment is that the Court acknowledges the debate over the scope of application of the Charter, which has been ongoing since its entry into force, and now definitively (and, in my view, correctly) puts it to rest:
[A]lthough Article 51(1) of the Charter states that the provisions thereof are addressed to the institutions, bodies, offices and agencies of the European Union with due regard for the principle of subsidiarity and to the Member States only when they are implementing EU law, Article 51(1) does not, however, address the question whether those individuals may, where appropriate, be directly required to comply with certain provisions of the Charter and cannot, accordingly, be interpreted as meaning that it would systematically preclude such a possibility (§87).
Thus, the Charter’s horizontality is affirmed in principle, and must be determined based on the nature of its specific provisions. On this point, the Court follows the Advocate General’s approach, finding that Article 31(2) is ‘mandatory’ in nature (§82-83). As the Court puts it:
‘The right to a period of paid annual leave, affirmed for every worker by Article 31(2) of the Charter, is thus, as regards its very existence, both mandatory and unconditional in nature, the unconditional nature not needing to be given concrete expression by the provisions of EU or national law, which are only required to specify the exact duration of annual leave and, where appropriate, certain conditions for the exercise of that right.’ (§ 85)
The Court, therefore, affirms last April’s judgment in Egenberger (and, more recently, in IR), finding that Article 31(2) – yet presumably not others – is sufficient in itself to provide redress to individuals in private disputes. The immediate implication of the case is thus not only that there is a right to paid annual leave, but also a corresponding obligation on (all) employers to comply with it (§90). Indeed,
‘if the court is unable to interpret the national legislation at issue in a manner ensuring its compliance with Article 31(2) of the Charter, it will therefore be required, in a situation such as that in the particular legal context of Case C‑570/16, to ensure, within its jurisdiction, the judicial protection for individuals flowing from that provision and to guarantee the full effectiveness thereof by disapplying if need be that national legislation (see, by analogy, judgment of 17 April 2018, Egenberger, C‑414/16, EU:C:2018:257, paragraph 76)’. (§91)
The threefold significance of the judgment: the status of social rights; horizontal effect in principle; and horizontal direct effect in particular
In my view, the judgment is significant for three main reasons: the first is that it affirms, albeit somewhat more hesitantly than one might have hoped, the constitutional status of the fundamental social rights enshrined in the Charter. It thus confirms (at last) that these rights, too, have a normative core that is applicable in all disputes that fall within the scope of EU law, so that they do not become, as the Advocate General had so aptly put it, a ‘mere entreaty.’ (§95 of the Opinion)
The second point of note is that the judgment fits into a series of cases offering more detailed guidance on the horizontal effect of the Charter, thus presenting a glimmer of hope that the lack of clarity following Mangold, Kücükdeveci, and Association de Médiation Sociale, is finally behind us. What is an especially welcome dimension is indeed the joining of the Bauer and Broßonn cases, which draws out in the clearest way the problems of non-horizontality, both for the protection of fundamental rights in the Union and for the coherence of EU law: in bringing together a case against a public employer and a case against a private employer in the same factual scenario, the Court offers an illustration of the substantive unfairness in which the lack of horizontal direct effect of directives could have resulted. Indeed, echoed not only in the academic literature, but also in Advocate Generals’ Opinions as early as Faccini Dori, one of the key critiques of the non-horizontality of directives had been that like cases should be treated alike. In Bauer et al, the Court appears fully to recognise this problem in the fundamental rights context and comes as close as it ever has to overruling its earlier case law.
The final positive point of significance in this case is what I interpret as a tentative clarification of the existing doctrine on direct effect in horizontal disputes. The omission of an explicit reference to direct effect in paragraph 91 of the ruling might be easy to overlook. However, in my view, the judgment appears to make a careful and accurate procedural refinement to the horizontality case law (one that the reporting judge had herself fervently defended during her academic career): the direct effect of EU law, i.e. its invocability in a dispute before national courts, depends on the mandatory nature of the right. In cases against the state, there is parity between that invocability and the remedy offered. Yet, in horizontal disputes, different legal systems have traditionally incorporated fundamental rights in a variety of ways – say, by imposing the obligation on the employer directly or by requiring the state to step in. Bauer suggests that, as long as the right is offered effectively, some space is starting to be carved out for this additional constitutional complexity of horizontality to be accommodated.
Two critical queries
Should we content ourselves with only a near-rejection of non-horizontality? To my mind, it is here that the Court does not go quite as far as it perhaps ought to. Firstly, a case like AMS might now be confined to its well-deserved ‘isolated corner’, yet the Court’s appeal to the differences between rights such as information and consultation within the undertaking and rights such as paid annual leave is, as I have argued elsewhere, far from obvious. To my mind, an important interpretive gap remains in the case law, in respect of social rights with collective, rather than individual (or pecuniary) dimensions, including information and consultation within the undertaking and the right to strike. Secondly, it is perhaps now time to reconsider the broader constitutional qualities of horizontality within EU law. While Bauer seeks to address the important issues surrounding the effective protection of fundamental rights in horizontal situations, concerns around equality of treatment are relevant to purely ‘private law’ disputes as well. There, as Bauer appears to clarify, the non-horizontality of directives remains good law. An effort to resist a continued fragmentation of the principle of horizontality and some overarching attempt further to define its contours, could be significant further improvements.
Where, then, does Bauer leave us in respect of the current state of the law on the horizontal effect of fundamental rights in the EU? To my mind, taking account of the recent Grand Chamber judgments in this field, the position now appears to be that:
- The Charter is horizontally applicable in principle and Article 51 (regarding its scope of application) does not preclude such a finding;
- All provisions of the Charter are applicable in all situations governed by EU law and Member State laws must, as far as possible, be interpreted in conformity with those rights;
- Where an interpretation of national law through consistent interpretation is impossible, and the right has a mandatory nature that determines the obligations imposed in a sufficiently clear manner, the right can be invoked as such, both in a public and in a private dispute, and the Member State must ensure that a remedy is offered within that dispute;
- Failing that, state liability in damages may be claimed.
As such, it is perhaps high time we stopped teaching the Mangold saga as the exception to the non-horizontality of directives and entirely reversed our analysis. The constitutional norm, now affirmed in Dansk Industri, Egenberger, IR and, most recently, Bauer, appears to be that the Charter of Fundamental Rights is horizontally applicable, at least indirectly and, in many cases, directly as well. There are two limited and, as I have tried to highlight above, hopefully revisable, exceptions to this basic premise: the first is that some of the Charter’s provisions which are not concrete enough ‘as such’ may not enjoy direct effect in horizontal relations, although they may still enjoy indirect effect therein. The second is the lack of direct horizontality for provisions enshrined in directives, other than fundamental rights. Still, albeit perhaps swayed by a sense of hope or optimism, I think that Grand Chamber judgments like Bauer and Egenberger suggest a broader receptiveness on the part of the Court to revisit this problematic line of case law.
I am very interested in your opinion about C-122/17, Smith, in conection with the horizontality you mention. Thanks!!
I say that because, in my opinion, the Court, in Smith, has taken a shy approach to the effectiveness of the supremacy of EU Law, when it says that, in a “horizontal” case, a directive cannot be invoked to set aside the application of incosistent national law, based on the classic formula according to which “If the possibility of relying on a provision of a directive that has not been transposed, or has been incorrectly transposed, were to be extended to the sphere of relations between individuals, that would amount to recognising a power in the European Union to enact obligations for individuals with immediate effect, whereas it has competence to do so only where it is empowered to adopt regulations”. IMHO, in the case the individuals were not trying to impose on other individuals obligations contained in a directive, but just avoiding the application to them of obligations contained in national law inconsistent with EU Law (in the case, a directive). Willing to read your point of view!
You are right to raise this – thanks and apologies only to have seen your comment now. I think the difference with Smith lies in the reliance upon a provision of the Charter (in that case, the state should have complied with the Directive and therefore the state must compensate, in line with Francovich, but directives do not in their own right produce horizontal direct effect). I would read this into para 47 of the judgment, which appears to me to distinguish this scenario from non-discrimination and other rights of the Charter capable of being relied upon as such, incl. art 31. In Bauer, the Court does not -technically- go back on the non-horizontality of directives: it is just that, in cases such as Bauer, the relevant protections are not sourced in a directive but in primary law (the Charter). Having said that, it would have been interesting to read Smith in light of the relationship of the Directive with Art 38 of the Charter (albeit, as a principle, it is likely that the Court would have decided the case the same way – in line with C-176/12 AMS).