Background
Former employees of the Portuguese charter airline Air Atlantis challenged their 1993 collective redundancy after the company was wound up. TAP, Air Atlantis’s majority shareholder, subsequently operated charter flights previously contracted by Air Atlantis, took over four leased aircraft and other equipment, and reassigned two TAP employees who had been seconded to Air Atlantis. The employees argued that these events constituted a transfer of a business requiring their employment rights to pass to TAP.
In 2009, Portugal’s Supreme Court held that no transfer had occurred and declined to seek a preliminary ruling from the CJEU. In an earlier ruling arising from the employees’ resulting damages action, the CJEU held that the circumstances did constitute a transfer and that the Portuguese Supreme Court had been required to make a reference. The present reference asked whether, based on the EU case law available in 2009, the Supreme Court’s errors amounted to a sufficiently serious breach capable of triggering Portuguese State liability and whether employees’ receipt of statutory redundancy compensation could prevent them from challenging their dismissals.
The Court’s Holding
The Grand Chamber identified three circumstances contributing to a finding that the Portuguese Supreme Court committed a sufficiently serious breach of Article 1(1) of Directive 77/187. Its 2009 judgment combined several interpretive errors inconsistent with then-existing CJEU case law; it disregarded its obligation as a court of last instance to request a preliminary ruling; and it could not have been unaware that the compatibility of its methodological approach with EU law was already the subject of a pending CJEU reference. The CJEU nevertheless left the referring court to make the ultimate assessment of seriousness and to determine whether a direct causal link existed between the breach and the employees’ alleged harm.
The Court also held that Article 3(1) of Directives 77/187 and 2001/23 precludes national legislation treating receipt of statutory collective-redundancy compensation as acceptance of dismissal when that consequence prevents an employee from challenging the dismissal and invoking rights protected by the directives. Those employee protections are mandatory and cannot be waived or restricted to the employee’s detriment, even with consent.
Key Takeaways
- Liability for a final national court’s breach of EU law requires a rule conferring individual rights, a sufficiently serious breach, and a direct causal link to the claimed harm.
- A last-instance court’s failure to request a preliminary ruling does not alone establish a sufficiently serious breach, but it can contribute to that finding when accompanied by a breach of an EU rule conferring individual rights.
- Employees do not lose mandatory transfer-of-undertaking protections merely by accepting statutory redundancy compensation.
Why It Matters
The judgment clarifies how national courts should assess Member State liability for judicial decisions: the relevant benchmark is the CJEU case law reasonably available when the challenged decision was issued, and multiple interpretive errors, failure to refer, and awareness of a pending reference may together demonstrate a manifest infringement.
For employment disputes, the ruling reinforces that transfer protections cannot be neutralized through a statutory presumption that accepting redundancy compensation amounts to acceptance of dismissal.