Effective enforcement of EU labour law: A comparative example

Abstract

The article looks at the outcome of the two legal proceedings in the Schüth and IR cases. In both cases employees of the Catholic Church – a choirmaster and organist in a Catholic parish and a trained physician working as Head of the Internal Medicine Department of a Catholic hospital - were dismissed because of the violation of the Basic Regulations on Employment Relationships in the Service of the Church. In the Schüth case Article 8 of the European Convention on Human Rights (ECHR), which protects the right to private and family life, had been violated. In the IR case the Charter of Fundamental Rights of the European Union and the Directive establishing a general framework for equal treatment in employment and occupation were applicable. The dismissal in IR was held to be unequal treatment in employment. But the outcome of both cases was very different. We find that Union law and in particular Article 47 of the Charter of Fundamental Rights of the European Union makes all the difference. In the Schüth case, the employment relationship was terminated and the claimant’s only consolation was a claim for damages from the State. In the IR case, on the other hand, the termination was declared invalid and the employment relationship continued, i.e. the head physician did not lose his job. The comparison of the cases demonstrates that European law, backed by Article 47 of the Charter of Fundamental Rights of the European Union, has not only permeated procedural law, it has also led to an increase in judicial reviews of substantive law which in the application of Union law is a far cry from a mere plausibility review.

Keywords

Charter of fundamental rights of the European union European Convention on Human Rights termination of employment equal treatment in employment catholic church outcome of the judicial process

Jeremias Prassl has unequivocally described the development of the basic principles underlying the effective enforcement of European labour law at the level of Community law, but also at the level of national law, which is influenced by Community law. Based on the principles of effectiveness and equivalence, he elaborates in detail how the right to an effective remedy provided for in Article 47 of the Charter of Fundamental Rights of the European Union now facilitates improved enforcement of European labour law. It certainly seems reasonable to highlight this provision’s strong potential, which removes national obstacles to the enforcement of EU labour law and has the capacity to impact the legal relationship between the employer and employee in the private sector as well, and not only in the public sector. To use the words of Jeremias Prassl: EU labour law is not a paper tiger and Article 47 of the Charter of Fundamental Rights of the European Union gives it teeth that can be razor-sharp. Prassl asserts that the reference to Article 47 of the Charter represents an important step towards enforcement of European law for the protection of the individual employee. I would like to illustrate this with a comparative example.

I. The comparative example

As a national judge who is required to transpose and apply EU law in the field of labour law, I would like to exemplify the weight and scope of Article 47 of the Charter of Fundamental Rights of the European Union in two cases that, in my view, clearly demonstrate the difference in outcome when EU labour law permeates the facts of a case – in this instance, in terms of time. The two cases are the Schüth and the IR cases. The comparison clearly shows the impact of Article 47 of the Charter of Fundamental Rights of the European Union on the enforcement of law. Although national law in both cases provides that the legal consequence of wrongful dismissal is the ineffectiveness of the termination, European law reflected in Article 47 of the Charter of Fundamental Rights of the European Union, ultimately makes a significant difference. The anti-discrimination Directive was not yet in force at the time of the Schüth case. EU labour law was not referred to. Reference to European law was only expressed through the European Convention on Human Rights. It was different in the IR case. The following took place:

1. The Schüth Case

The claimant had been employed full-time in a Catholic parish as a choirmaster and organist since 1983. The parish terminated the employment relationship on 15 July 1997, effective from 31 March 1998. Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation did not enter into force until 2 December 2000, with a transposition deadline of 2 December 2003, and the option of extending this deadline by an additional three years from that date. At the date of termination on 15 July 1997, as well as on the expiry of the notice period, European law had not yet been transposed in Germany as a Member State pursuant to Article 51(1) of the Charter of Fundamental Rights of the European Union. The unfavourable effect within the meaning of Directive 2000/78/EC took effect when the employee was dismissed.¹ A dismissal that had become legally valid prior to the expiry of the transposition deadline of Directive 2000/78 and that had exhausted its effects on the Directive’s date of entry into force could not be challenged on the basis of the Directive.² After the expiry of the notice period, there was no continuing legal relationship to which EU labour law could be applied.

The ground for the dismissal was the claimant’s separation from his spouse in 1995 and the start of a new relationship and subsequent birth of a child. The Federal Labour Court (BAG) reversed the Labour Appellate Court Düsseldorf’s (LAG Düsseldorf) judgment³ after both the Labour Court Essen (ArbG Essen) and the Labour Appellate Court Düsseldorf had upheld the unfair dismissal claim brought by the applicant.⁴ The Labour Appellate Court Düsseldorf dismissed the claim following another hearing and the presentation of evidence.⁵ According to the Basic Regulations on Employment Relationships in the Service of the Church of 22 September 1993 (GrO), starting an extramarital relationship constitutes a personal act of moral misconduct. The employee’s activity as the organist and choir director was closely connected to the Catholic Church’s proclamatory mission. The procedure pursuant to Article 5(1) GrO had been observed. A clarification interview had been conducted and the claimant was informed that his dismissal could only be prevented if he terminated his new relationship. The applicant’s request to appeal on points of law was found inadmissible by the Federal Labour Court on 29 May 2000. The Federal Constitutional Court disallowed the claimant’s constitutional complaint on 8 July 2002. The reasoning behind this was Article 140 of the German Basic Law, according to which certain provisions of the Weimar Constitution (WRV) continue to have constitutional status in Germany. Pursuant to Article 137(3) WRV, religious societies shall regulate and administer their affairs independently within the limits of the law that applies to all. They shall confer their offices without the involvement of central government or local authorities. This constitutional guarantee includes the right of Churches to choose the staff they need for the fulfilment of their mission and, accordingly, to conclude employment contracts. In the event of a dispute, labour courts must apply the criteria laid down by the Church to any assessment of the contractual duties of loyalty since the Constitution affords to Churches the right to decide on such matters autonomously. It is thus in principle for the established Churches to then determine what presupposes ‘the credibility of the Church and its proclamation’, what ‘specific ecclesiastical tasks’ are, what is meant by ‘proximity’ to the Church, what the ‘basic principles of religious and moral precepts’ are and what precisely constitutes a breach—and where applicable, a serious breach—of these precepts. The decision whether and to what extent a ‘scale’ of duties of loyalty should be applied to staff members working in the service of the Church also falls within the general scope of the Churches’ right of autonomy.⁶ In this respect, the German judiciary—according to Mr. Prassl—had only conducted a plausibility review. In consideration of these principles, the Federal Constitutional Court held that Mr. Schüth’s dismissal did not raise any legal concerns.

However, in its ruling of 23 September 2010, the European Court of Human Rights (ECtHR) held that Article 8 of the European Convention on Human Rights (ECHR), which protects the right to private and family life, had been violated. According to the ECtHR, it was not a problem in itself that the German labour courts had regarded the employing Church’s view as decisive in this connection and that the claimant’s conduct was deemed a serious breach within the meaning of Article 5 GrO. But the applicant’s proximity to the Church’s proclamatory mission had not been adequately examined and the competing rights and interests at stake had not been sufficiently weighed.⁷

What is so noteworthy about this case is that the European Charter of Human Rights was violated. The EU labour laws in force today were not of relevance at the time. What is the case’s concrete outcome? How effectively were Mr. Schüth’s rights enforced in this particular case?

The applicant claimed compensation from the Federal Republic of Germany before the ECtHR in respect of pecuniary damage and non-pecuniary damage. Due to the German judiciary’s insufficient weighing of the interests at stake, the loss of opportunities and the non-pecuniary damages, the European Court of Human Rights awarded the claimant compensation in the amount of EUR 40,000 to be paid by the Federal Republic of Germany.⁸ Two aspects should be pointed out: first, the amount of compensation is not particularly high considering that according to national law, the remedy for wrongful dismissal is the nullity of dismissal and thus the open-ended continuation of the employment relationship, even though in practice, the parties often sign a severance agreement. Secondly, the legal consequences exclusively cover the relationship between Mr. Schüth and the State. The primary reason for this payment is ultimately ‘State injustice’, i.e. to the insufficient weighing of the interests at stake by the German courts.

Yet what about the legal relationship between the employing Church and Mr. Schüth? What were the legal consequences in this regard and how effective were they?

aa) Mr. Schüth initially brought a motion for the resumption of his case. German law rejected this motion. The German Code of Civil Procedure (ZPO) now, however, explicitly prescribes that a judgment of the ECtHR is a valid ground for the resumption of a case (Section 580(8) ZPO). Mr. Schüth may thereby have been able to achieve the resumption of his case and possibly a ruling that his dismissal was unfair. The German Code of Civil Procedure’s provision was, however, not yet applicable to his case (Section 35 EGZPO). The ECHR did not change this.⁹ The Convention’s guarantees have constitutional significance in that they influence the interpretation of fundamental rights and the Basic Law’s constitutional principles. At the level of ordinary law, specialised courts also have the obligation to take into account the Convention’s guarantees and to make them an integral part of the national legal order. The possibilities of a Convention-friendly interpretation, however, end where this no longer seems justifiable according to the accepted methods of interpretation of the law and of the Constitution. In the present case, this implied that European Convention law did not override the deadline provision contained in national law (Section 35 EGZPO), as it could no longer be interpreted in a Convention-friendly way. Moreover, neither the ECHR nor the ECtHR’s case law obligated the legislator to re-open the proceedings in the event of an established breach of the Convention. As the decision to deny a motion to reopen the proceedings was within the discretion of the legislator, only reopening cases that had been formally concluded with legal effect from 31 December 2006 (according to Section 35 EGZPO) was fully legitimate.¹⁰

bb) Mr. Schüth then sought reinstatement in the parish. Contrary to an application for re-examination of the case, which would have reopened the wrongful dismissal proceedings, he changed his request, demanding re-establishment of his employment relationship on 23 September 2010, i.e. on the date of the ECtHR’s decision. This application was also unsuccessful before the Labour Appellate Court Düsseldorf and the Federal Labour Court.¹¹ The national dogmatics of civil law and of civil procedure law are at odds with the judicial approval of the right to reinstatement, despite the ECtHR’s finding that the Convention had been violated by the legally binding decision to dismiss the action in the wrongful dismissal proceedings. The legal force protected by constitutional and Convention law resulting from the rule of law principle would be diminished if a judicial claim for reinstatement due to violation of the Convention were approved, despite a legally binding judgment dismissing the action in the wrongful dismissal proceedings. The Federal Labour Court summed this up as follows: the ECHR as well as national constitutional law require ECtHR judgments to be taken into account when interpreting national statutory law if a renewed judgment on the subject matter in a ‘different guise’ is pending, thus being possible under procedural law despite the legal effects of the preceding verdict on the matter of dispute. It is, however, not possible to ‘first create a new piece of clothing’ based on substantive law to render a renewed judicial decision possible in favour of the losing party in a matter that has already been adjudicated.

cc) Mr. Schüth’s claim for compensation before the Labour Appellate Court Düsseldorf based on intentional damage contrary to public policy (Section 826 German Civil Code (BGB)) in the amount of EUR 275,067 for loss of remuneration taking into account his earnings as a church musician for a Protestant parish, as well as for pensions loss compensation, has thus far remained unsuccessful.¹² The parish church and defending Diocese had not surreptitiously obtained the legally binding judgments by submitting grounds for dismissal to the national courts between 1997 and 2000, which in actuality were not enshrined in ecclesiastical law. Deeming the claimant’s long-term extramarital relationship as a justified ground for dismissal according to ecclesiastical law was objectively justifiable in this particular case. The claimant’s proximity to the proclamatory mission was found to be a justifiable legal position in line with ecclesiastical law. The Second Vatican Council asserted, for example, that church music constitutes a necessary and integral part of the solemn liturgy. As the ECtHR’s decision did not provide grounds for the claimant to resume his initial wrongful dismissal proceedings, the deciding Chamber was not required to conduct another in-depth substantive review of the dismissal’s validity. Re-litigation of the preceding judgment based on a claim for damages in accordance with Section 826 BGB was not an option because the strict conditions required for such a motion were not given, even when taking the ECtHR’s decision into account. If the parish church and Diocese adopted an objectively justified position which—despite resulting in a flawed decision—underpinned the court’s judgment, they cannot be accused of causing intentional damage at a later point, which according to Section 826 BGB gives rise to a claim for compensation for damage and has preclusive effects. Mr Schüth's claim for compensation was not successful even before the Federal Labour Court.¹³

The generally accepted outcome is that the claimant’s dismissal remains in effect. At best, secondary rights in the form of damages are still at issue. These have thus far been unsuccessful in relation to the employer, i.e. in terms of their horizontal application. Only the Federal Republic of Germany was ordered to pay EUR 40,000 for not adequately weighing the competing interests within the scope of the wrongful dismissal proceedings.

2. The IR case

The result of the legal proceedings differs considerably in the case of the Catholic Head Physician from Düsseldorf.

IR is a limited liability company established under German law. Its purpose is to conduct the work of Caritas (the international confederation of charitable organisations of the Catholic Church) as an expression of the life and essence of the Roman Catholic Church, through, inter alia, the operation of hospitals. IR is primarily a non-profit organisation and is subject to the supervision of the Catholic Archbishop of Cologne (Germany). JQ was of the Catholic faith. He was a trained physician and had worked as Head of the Internal Medicine Department of an IR hospital under an employment contract concluded on the basis of GrO 1993. He was married in accordance with the Catholic rite. He separated from his first wife in 2005, and they were divorced in March 2008. In August 2008, JQ married his new partner in a civil ceremony without his first Catholic marriage having been annulled. Having learned of the second marriage in a letter dated 30 March 2009, IR terminated JQ’s employment contract with effect from 30 September 2009. JQ brought an action against his dismissal.

The Labour Court Düsseldorf upheld JQ’s claim of wrongful dismissal.¹⁴ The appeal lodged by IR against the court’s decision was dismissed by the Labour Appellate Court of Düsseldorf.¹⁵ The hospital’s appeal to the Federal Labour Court was unsuccessful as well.¹⁶ JQ’s dismissal was found to be unjustified because IR did not dismiss non-Catholic employees in the event of remarriage, who occupied the same position as JQ. It should be mentioned that the labour courts were very much in agreement about this.

IR, however, filed a constitutional complaint against this decision and was successful. The Federal Constitutional Court set aside the Federal Labour Court’s judgment and referred the case back to the latter court.¹⁷ It established—and this is of significance—that German constitutional law had been violated, namely the above-mentioned provision in the Weimar Constitution (WRV) on Churches’ right to self-determination. Pursuant to Article 137(3) WRV, State courts in accordance with the Federal Constitutional Court’s case law, may only review in terms of the plausibility criterion whether a religious organisation or body is participating in the implementation of the church’s fundamental mission, whether a specific obligation of loyalty is an expression of a tenet of the church’s faith and what weight this obligation of loyalty and an infringement of it should be given in accordance with the self-perception of the church.

The Federal Constitutional Court found that the Federal Labour Court as well as the other instances of the labour court system had discounted and thereby relativised the Roman Catholic Church’s own assessment of the obligation of loyalty, and that the courts, due to the inconsistency of the penalties for equivalent breaches of loyalty, had concluded that other violations of duties were generally tolerated and that the underlying principles of such violations were being neglected. The Federal Constitutional Court’s referral back to the Federal Labour Court entailed a clearly defined task: the Federal Labour Court was to conduct—if necessary, following the collection of additional evidence—a detailed assessment of the individual case taking all substantial facts and the relevant legal positions of the complainant and the claimant in the initial proceedings into account. This includes, inter alia, Article 6 of the Basic Law (Marriage – Family – Children), Article 137 WRV as well as voluntary contractual commitments to duties of loyalty. What is of particular significance is that European law has thus far not been mentioned.

How did the Federal Labour Court execute this task? Ultimately, the Court refused to carry it out and referred the case to the ECJ. This is truly noteworthy and is in fact an open conflict with the Federal Constitutional Court; according to Section 31.1 of the Act on the Federal Constitutional Court (BVerfGG), the decisions of the Federal Constitutional Court are binding upon the constitutional organs of the Federation and of the Länder as well as on all courts and public authorities. No other provisions apply to the steps in the appeal process: in the event a judgment is reversed and referred back to the lower court, it must base its decision on the legal assessment of the higher court (Section 563(2) Code of Civil Procedure (ZPO)). Only European law provides some additional leeway. It thus permeates national procedural law and even prevails in the steps of the appeal process. The IR case clearly exemplifies this. The Federal Labour Court issued two resolutions, namely a request to the European Court of Justice for a preliminary ruling¹⁸ and a separate resolution on the merits of the case, elaborating why it was not bound by the Federal Constitutional Court’s decision on the legal assessment on which the judgment’s reversal is based.¹⁹

aa) In terms of content, the Federal Labour Court addresses, inter alia, the interpretation of Article 4 of Directive 2000/78/EC. Can the Church determine with binding effect that an organisation such as the defendant in the present proceedings, i.e. IR, where employees in managerial positions are required to act with loyalty and in good faith, shall differentiate between employees who belong to the Church and those who belong to another church or to none at all? Must the provision of national law, such as Section 9(2) of the General Act on Equal Treatment (AGG) in the present case, according to which unequal treatment of this kind on the basis of the employee’s religious affiliation is justified in accordance with the Church’s self-perception, be disapplied in these proceedings? In view of the fact that these proceedings involved private entities, the Federal Labour Court, following the ECJ’s judgment in Simmenthal,²⁰ argued that the claimant’s subjective rights based on Article 21 of CFR and on general principles justifies the precedence of EU labour law over national law.

bb) In terms of procedural law, the Federal Labour Court asserted that the Court of Justice’s interpretation of Union law takes precedence in the appeal decision. The Federal Labour Court maintained that the senate had acknowledged that in accordance with Section 563(2) ZPO, it is bound by the Constitutional Court’s legal assessment on which its reversal of the judgment of 22 October 2014 is based.²¹ It is not entirely clear, however, whether this should even be taken into consideration due to the lack of compatibility with Union law. This would correspond to the ECJ’s case law. In its recent judgment in Zsuzsanna Dunai vs ERSTE Bank Hungary Zrt,²² the ECJ with reference to Article 47 of the Charter of Fundamental Rights of the European Union held that a Member State’s highest court is not precluded, in the interest of ensuring uniform interpretation of the law, from adopting binding decisions concerning the modalities for implementing a Directive. This may not, however, prevent the competent court from ensuring the full effect of the norms laid down in the Directive and from offering consumers an effective remedy for the protection of the rights that they can derive therefrom, or from referring a question for a preliminary ruling to the ECJ. This is a clear win on points for European law in the national appeal process. Those are sharp teeth. Union law does not only apply material rules. It also permeates procedural law and private law. Union law may in fact preclude the highest court’s binding judgment in the same proceedings to give full effect to Union law.

What was the ECJ’s judgment in the Federal Labour Court’s request for a preliminary ruling? Following its judgment in the Egenberger case²³ and with reference to Article 47 of the Charter of Fundamental Rights of the European Union, the ECJ’s position differed significantly from that of the Federal Constitutional Court in terms of content.²⁴ Religion must by reason of the nature of the activities concerned or the context in which the activities are to be carried out constitute a genuine, legitimate and justified occupational requirement, having regard to the ethos of the church or organisation. It must also be possible for such an assertion to be subject, if need be, to effective judicial review by which it can be ensured that the criteria set out in the provision are met in the particular case. In terms of content, Article 47 of the Charter of Fundamental Rights of the European Union clearly provides for a narrower approach to judicial control. Unlike the Federal Constitutional Court, the ECJ did not simply settle for a plausibility review in terms of content. Article 4 of Directive 200/78/EC does contain a reference to national law at the time of the Directive’s adoption. This should not, however, be understood to mean that the above-mentioned criteria cannot be subject to effective judicial review. Rather, the criteria must be objectively verifiable. And the ECJ took it even further. In paragraph 58 of the judgment, it reviewed the matter itself. Adherence to the Catholic notion of marriage does not appear necessary for the provision of medical care because non-Catholics who were in the same position as JQ, i.e. who had remarried, were not dismissed. This goes beyond an abstract preliminary ruling and clearly precludes the Federal Constitutional Court’s position. The ECJ is also aware that European law prevails. A national court that is in the same situation as described here has the obligation to provide, within the limits of its jurisdiction, the legal protection individuals derive from Union law and to ensure the full effectiveness of that law, disapplying, if need be, any provision of national legislation contrary to the principle prohibiting discrimination on grounds of religion or belief.

Following the ECJ’s preliminary ruling, the Federal Labour Court again ruled in favour of the head physician and against the Federal Constitutional Court’s judgment.²⁵ The dismissal was deemed socially unjustified because it was not based on reasons relating to the conduct or to the person of the claimant (Paragraph 1(2) Law on Protection Against Dismissal (KSchG)). By remarrying, he neither breached any of the terms previously agreed upon, nor any legitimate expectation of loyalty by the defendant. The agreement between the parties included in the employment contract, which refers to GrO 1993, is void according to Section 7(2) AGG, insofar as entering into a marriage that is invalid according to the canon law of the Catholic Church is deemed a grave breach of loyalty. This provision discriminated against the claimant on religious grounds compared with other employees in managerial positions who were not of the Catholic faith, i.e. he was discriminated against on grounds prohibited in Section 1 AGG, without justification for such discrimination under Section 9(2) AGG. According to the Federal Labour Court, national constitutional law neither precludes an interpretation of Section 9(2) AGG in conformity with Union law, nor the provision’s non-applicability. The Federal Labour Court initially reported on the Federal Constitutional Court’s judgment. Accordingly, different gradations of loyalty requirements that depend on the religious denomination of the church employee, who is essentially classified as Catholic (Article 4(3) GrO 1993), non-Catholic Christian (Article 4(2) GrO 1993) and non-Christian (Article 4(3) GrO 1993), are as constitutionally justified as disciplinary actions in case of violations of the religion’s principles, on the one hand, and of the managerial position, on the other. This also implies that the Federal Labour Court held that the Federal Constitutional Court’s statements corresponded to German constitutional law. Yet the Federal Labour Court—with reference to the ECJ’s judgment—determined:²⁶ within the scope of application of Union law, it takes precedence over conflicting national law. This is also the case in relation to national constitutional law. Such primacy of application necessitates an effective evolvement of European Union law. This corresponds to an endorsement in Article 21(1) of the Basic Law for the Federal Republic of Germany (GG), which contains an oath to effectiveness and implementation. The Federal Labour Court denied that the ECJ exceeded its jurisdiction in its judgment on the request for a preliminary ruling in the IR case.

II. Conclusion

If we look at the outcome of the two legal proceedings in the Schüth and IR cases, we find that Union law and in particular Article 47 of the Charter of Fundamental Rights of the European Union makes all the difference. In the Schüth case, the employment relationship was terminated and the claimant’s only consolation was a claim for damages from the State. In the IR case, on the other hand, the termination was declared invalid and the employment relationship continued, i.e. the head physician did not lose his job. The comparison of the cases demonstrates that European law, backed by Article 47 of the Charter of Fundamental Rights of the European Union, has not only permeated procedural law, it has also led to an increase in judicial reviews of substantive law which in the application of Union law is a far cry from a mere plausibility review. It remains to be seen how the Federal Constitutional Court will assess the relationship between Union law and national constitutional law, as a constitutional complaint is pending in the Egenberger case. The Catholic Church, on the other hand, has not lodged a constitutional complaint challenging the Federal Labour Court’s latest judgment in the IR case. The Archdiocese of Cologne explained this as follows: after weighing up all the arguments in favour of and against lodging a constitutional complaint, the Archdiocese decided against an appeal to the Federal Constitutional Court to re-examine the case. What was also of particular significance in the Archdiocese’s decision is the fact that the case no longer has any labour law relevance due to amendments introduced to the Church’s dismissal laws in 2015.²⁷ The employment relationship between IR and JQ will continue. Lastly, I would like to point out that Article 47 of the Charter of Fundamental Rights of the European Union also has its limitations. The provision does not entail an entitlement to initiate additional proceedings. What must be highlighted is the provision’s inherent nature to protect the individual based on the fact that ‘every individual whose rights have been breached’ can invoke the Article, but a third party may not. As Advocate General Bobek pointed out in the El Hassani case,²⁸ this is about concrete, discernible individual rights and freedoms guaranteed by Union law. The application of Article 47(1) of the Charter of Fundamental Rights of the European Union presupposes the existence of a concrete right or a concrete freedom that is guaranteed by Union law. This—according to Bobek in Paragraph 82—has practical effects, such as, inter alia, the exclusion of popular action (action popularis). I share the same thoughts for labour law.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.