Case C-418/13, Napolitano and others – objecting to an abusive use of fixed-term contracts

For more than a decade, Italy has employed hundreds of thousands of teachers and admin staff on endlessly-renewed ‘school-year’ contracts. Is this employer not simply abusing its use of fixed-term contracts contrary to Directive 1999/70/EC? Or is Italy correct that its policy is objectively justified and it would certainly be contrary to the principle of good administration if countless numbers of people were to be employed on permanent contracts, particularly in times of public-spending retrenchment?

Facts
The claimants in this case are either teachers or they are admin staff. Either way, they work in the Italian high school system, and their employer is the Italian Ministry of Education [the Ministero dell’Istruzione, dell’Università e della Ricerca].

After years of being repeatedly employed on ‘one school-year’ contracts, the claimants decided to ask a couple of local labour law courts, in Rome and Calabria, for a judicial declaration to the effect that the Ministry was acting illegally and that their contracts of employment should either be converted into permanent ones, or compensation paid since they had been forced to work in breach of mandatory legal provisions.

A key plank of the claimants’ request was the fact that the Italian Education Ministry had been endlessly offering and renewing fixed-term contracts. They thought this constituted an employer abusing its position contrary to the EU fixed term worker Directive (Council Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP (OJ [1999] L175/43])).

Namely, Clause 5 of the Directive states:

Measures to prevent abuse
1. To prevent abuse arising from the use of successive fixed-term employment contracts or relationships, Member States, after consultation with social partners in accordance with national law, collective agreements or practice, and/or the social partners, shall, where there are no equivalent legal measures to prevent abuse, introduce in a manner which takes account of the needs of specific sectors and/or categories of workers, one or more of the following measures:
(a) objective reasons justifying the renewal of such contracts or relationships;
(b) the maximum total duration of successive fixed-term employment contracts or relationships;
(c) the number of renewals of such contracts or relationships.

Clause 5 of the Directive had been implemented in Italian statute to the effect that a person can only be employed for up to 3 years on a fixed-term contract or succession of fixed-term contracts.

Despite the wording of the Italian legislation, the Education Ministry mounted a defence. It submitted that in this case it was not bound by the 3-year rule. The claimants had in fact been employed on the basis of a different set of rules namely emergency statutory measures which had been adopted with a view to preserving the continuity of education between 2009 and 2010. These formed part of a raft of administrative law provisions which stipulated that people filling vacant teaching positions had to be employed on a fixed-term basis, even if that basis was repeated.

There was also nothing in the administrative law provisions governing the Italian education system to suggest that there was a limit on the duration of a fixed-term contract, or the number of times such a contract could be renewed. Consequently, the Ministry was of the view that the claimants’ claim lacked proper a legal footing and it should therefore be denied.

The first instance labour courts seemed to take a very a dim view of the Ministry’s submissions. Both first instance labour courts held that the administrative provisions contravened the EU’s fixed-term worker Directive. The courts even went as far as to say that, in their view, the State’s legal provisions were simply to save the public purse, and such a goal could not be thought of as a proper goal of social law, and certainly could not serve to justify the repeated use of fixed-term contracts.

Nevertheless, the first instance labour courts admitted they were in effect powerless to help the claimants. Although the courts could see a legal contradiction between on the one hand, the Italian legislative system in the education sector, and Clause 5(1) of the EU’s fixed-term worker Directive on the other; the problem was that the EU’s legislation was not directly effective. The CJEU itself had said as much when, in Case C-268/06 Impact, it had held that Clause 5(1) of the framework agreement did not contain any unconditional and sufficiently precise obligation capable of being relied upon by an individual before a national court. In light of the CJEU’s reasoning, therefore, the local Italian labour courts could not resolve the legal contradiction by applying EU law at the expense of the national provisions. Equally, the local labour courts were stymied by the fact no amount of ‘interpretation’ could ‘bring’ the national legislation into line with the requirements set down in the Directive.

Consequently, the first instance labour courts decided to use the only option left open to them, namely, invoking Article 117 of the Italian Constitution. The Article states that ‘legislative power is to be exercised by the state and the regions taking into account both the Italian Constitution and in light of Community and international law’. This meant that the local labour courts could refer the matter up to the Italian Constitutional Court. It would then be left to the Constitutional Court to determine whether the national provisions were contrary to the Italian Constitution, as supplemented by the relevant provision of the EU fixed-term workers Directive.

At the Italian Constitutional Court
Counsel for the Italian State claimed that the claimants’ petition was either inadmissible or ill-founded. It objected to the finding made by the local labour courts that the State’s actions had been guided by economic motives. Instead, the State sought to persuade the Constitutional Court that it was acting in a way that guaranteed the right of a child to education. In that context, the Ministry needed to ensure flexibility in the Italian education system because pupil numbers in a particular area fluctuated. Furthermore, it would be contrary to the principle of reasonable administration enshrined in Article 97 of the Italian Constitution for an unlimited recruitment to take place on the basis of permanent contracts, particularly at a time of a retrenchment in public spending.

After hearing the parties, the Italian Constitutional Court not only recognised that Clause 5(1) did not have direct effect but also that a temporary need to replace workers with fixed-term workers could constitute an objective reason for the purposes of the EU Directive.

The Constitutional Court also remarked that it would not be possible to employ everyone who was on ‘school-year’ contracts on the basis of permanent contracts otherwise the state would risk having more staff than it needed, and that situation had to be avoided at a time when the government urgently needed to cut public spending and in light of the obligations placed upon it by the EU.

Further, the Court flagged up a number of factors which were structural in nature and sometimes beyond control of the Government. These factors meant flexibility was unavoidable. For example, there were the sheer numbers of women employed in the education sector, particularly in the primary school system, which meant there was a need to provide cover in response to staff going on maternity leave. Then there were about 4 million immigrants who needed integration into the education system. Then there were also the population shifts inside and between Italy’s regions, and then there were of course the schools in isolated mountainous areas of the country or on the islands. Then there was also the state’s policy of merging schools and also reducing the sorts of schools to which parents could send their children. In light of these factors, if the state school system was going to meet these demands, then flexibility and employment on a fixed-term basis was unavoidable for both teachers and admin staff.

The Constitutional Court recalled that only one year earlier, it had held that in response to the needs of the regions, employing people in the education sector on fixed-term contracts was not contrary to Clause 5 of the EU fixed-term workers directive even though the Italian rules did not limit the number, or duration, of those contracts (20 June 2012, judgment number 10127).

The Constitutional Court also noted that there was a downward trend in the numbers of people who were being employed on temporary contracts – down from nearly 230 000 in 2007 to 125 000 in 2012.

Nevertheless, it did appreciate that there had not been a recruitment competition since 1999 and that passing a recruitment competition was the only way of becoming a civil servant. There had not been a competition in more than a decade. It was only in 2012 that a new recruitment competition had been announced and, even by the Summer of 2013, that competition was still running. Moreover, at the end of recruitment competition, there was only provision to recruit roughly 11 500 teaching staff, and 5300 non-teaching staff on a permanent basis.

Since there was doubt about the correct interpretation of Clause 5 of the fixed-term workers Directive, and further doubt on whether Italian law was correct to offer no compensation to fixed-term workers in the education sector who might have been forced to work on perhaps illegal contracts, President Gallo and 14 other judges of the Italian Constitutional Court decided to refer a number of questions to the CJEU.

Questions Referred
According to the Curia website, the Italian Constitutional Court has asked:

1. Must clause 5(1) of the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP annexed to Council Directive No 1999/70/EC […] be interpreted as precluding the application of Article 4(1) infine and (11) of Law No 124 of 3 May 1999 adopting urgent provisions concerning school employees (Legge No 124, disposizioni urgenti in material di personale scolastico) which, after laying down rules on the allocation of annual replacements for ‘posts that are in fact vacant and free by 31 December’, goes on to provide that this is to be done by allocating annual replacements ‘pending the completion of competition procedures for the recruitment of permanent members of the teaching staff’ – a provision that permits fixed-term contracts to be used without a definite period being fixed for completing the competition, and in a clause that provides no right to compensation for damage?
2. Do the requirements of the organisation of the Italian school system set out above constitute objective reasons within the meaning of clause 5(1) of Directive No 1999/70/EC of 28 June 1999 of such a kind as to render compatible with the law of the European Union legislation, such as the Italian legislation, that does not provide a right to compensation for damage in respect of the appointment of school staff on fixed-term contracts?