CJEC, April 10, 1984, No 79-83

THE COURT

1 By order of 5 july 1982, which was received at the court on 3 may 1983, the arbeitsgericht (labour court) Hamburg referred to the court for a preliminary ruling pursuant to article 177 of the eec treaty several questions on the interpretation of council directive no 76-207-eec of 9 february 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions (official journal 1976, l 39, p. 40).

2 Those questions were raised in the course of proceedings between dorit Harz, a graduate in business studies, and Deutsche Tradax GmbH. It appears from the grounds of the order for reference that the arbeitsgericht considers that the defendant undertaking practised sex discrimination in the recruitment procedure commenced by it in which mrs Harz was a candidate.

3 In the arbeitsgericht ' s view, under german law, the only sanction for discrimination in a recruitment procedure is compensation for ' ' vertrauensschaden ' ', namely the loss incurred by candidates who are victims of discrimination as a result of their belief that there would be no discrimination in the establishment of the employment relationship. Such compensation is provided for in paragraph 611a (2) of the burgerliches gesetzbuch.

4 Under that provision, in the event of discrimination regarding access to employment, the employer is liable for ' ' damages in respect of the loss incurred by the worker as a result of his reliance on the expectation that the establishment of the employment relationship would not be precluded by such a breach (of the principle of equal treatment) ' '. That provision purports to implement council directive no 76-207.

5 Consequently the arbeitsgericht found that, under german law, it could order the payment only of minimal compensation, of dm 2.31 in the case in point, in respect of expenses incurred by mrs Harz in relation to her application. It considered that such compensation was not sufficient to ensure compliance with the community directive, since it would not serve to ensure that employers conduct themselves in conformity with the law.

6 In order to determine the rules of community law applicable in the event of discrimination regarding access to employment, the arbeitsgericht referred the following questions to the court of justice:

1. In an established case of discrimination, does the principle of equal treatment for men and women as regards access to employment contained in articles 1 (2), 2 (1) and 2 (3) of council directive no 76-207-eec of 9 february 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions (official journal 1976, l 39, p. 40) confer on a female applicant a right to a contract of employment against an employer who has refused to engage her on account of her sex?

2. In the case of an affirmative reply to question 1 does that answer apply only

(a) Where the female applicant discriminated against is the best qualified of all the appalicants, whether male or female, or

(b) Also where, although there was discrimination in the selection procedure, in the result a better qualified male applicant was appointed?

3. If questions 1, 2 (a) and 2 (b) are answered in the negative, does it follow, as a legal consequence, from the principle of equal treatment for men and women as laid down by the provisions of directive no 76-207-eec that a financially appreciable sanction is necessary, for example a right in favour of the female worker discriminated against to damages to be assessed, according to the position in the particular case, in a sum not exceeding the earnings which she could properly have expected to receive for the period of six months, the period in which under the law of the federal republic of Germany workers may not plead socially unjustified dismissal, and/or that the state must impose penalties or administrative fines?

4. If question 3 is answered in the affirmative, does that answer apply only

(a) Where the female applicant discriminated against is the best qualified of all the candidates, whether male or female, or

(b) Also where, even though there was discrimination in the selction procedure, in the result a better qualified male candidate was appointed?

5. If questions 1, 2, 3 or 4 are answered in the affirmative, are articles 1, 2 and 3 of directive no 76-207-eec directly applicable in the member states?

7 Those questions are intended primarily to establish whether directive no 76-207 requires member states to lay down legal consequences or specific sanctions in the event of discrimination regarding access to employment (questions 1 to 4) and whether individuals may, where appropriate, rely on the provisions of the directive before the national courts where the directive has not been transposed into the national legal order within the periods prescribed. (question 5).

(a) question 1

8 In its first question the arbeitsgericht asks essentially whether directive no 76-207 requires discrimination on grounds of sex in the matter of access to employment to be penalized by an obligation, imposed on an employer who is guilty of discrimination, to conclude a contract of employment with the candidate who was the victim of discrimination.

9 According to the arbeitsgericht the sanctions which may be envisaged in order to enforce the principle of equal treatment for men and women regarding access to employment are an automatic right to be given a post or a right to damages, which in german law are classified as compensation for a ' ' positive interest ' ' (ersatz des positiven interesses). The arbeitsgericht considers that directive no 76-207 has not yet been transposed into german law inasmuch as the sanction provided for in paragraph 611a (2) of the burgerliches gesetzbuch is not, in its view, sufficent in that respect.

10 According to the plaintiff in the main action, by restricting the right to compensation solely to ' ' vertrauensschaden ' ', paragraph 611a (2) of the burgerliches gesetzbuch excluded the possibilities of compensation afforded by the general rules of law. Directive no 76-207 requires member states to introduce appropriate measures with a view to avoiding discrimination in the future. It should, therefore, at least be accepted that paragraph 611a (2) must be left out of account. The result of that would be that the employer would be required to conclude a contract of employment with the candidate discriminated against or, if that proves impossible or out of the question in the particular case, at least to pay him appreciable damages.

11 The government of the federal republic of Germany is aware of the need for an effective transposition of the directive but stresses the fact that, under the third paragraph of article 189 of the eec treaty, each member state has a margin of discretion as regards the legal consequences which must result from a breach of the principle of equal treatment. The german government submits, moreover, that it is possible for the german courts to work out, on the basis of private national law and in conformity with the substance of the directive, adequate solutions which satisfy both the principle of equal treatment and the interests of all the parties. Finally an appreciable legal consequence is in its view sufficient to ensure compliance with the principle of equal treatment and that consequence should follow only if the victim of discrimination was better qualified for the post than the other candidates; it should not apply where the candidates ' qualifications were equal.

12 The Netherlands government takes the view that the directive does not require a specific sanction, for example by giving victims of discrimination the automatic right to be offered a post. On the other hand, an order requiring the employer to pay a purely nominal sum does not satisfy the requirement that the person discriminated against must be able to rely on his rights under the directive.

13 The united kingdom is also of the opinion that it is for member states to choose the measures which they consider appropriate to ensure the fulfilment of their obligations under the directive. The directive gives no indication as to the measures which member states should adopt and the questions referred to the court themselves clearly illustrate the difficulties encountered in laying down appropriate measures.

14 The commission considers that although the directive is intended to leave to member states the choice and the determination of the sanctions, nevertheless the transposition of the directive must produce effective results. The principle of the effective transposition of the directive requires that the sanctions must be of such a nature as to constitute, for the candidate discriminated against, appropriate compensation and, for the employer, a means of pressure which it would be unwise to disregard and which would prompt him to respect the principle of equal treatment. A national measure which provides for compensation only for losses actually incurred through reliance on an expectation (' ' vertrauensschaden ' ') is not sufficient to ensure compliance with that principle.

15 According to the third paragraph of article 189: ' ' a directive shall be binding, as to the result to be achieved, upon each member state to which it is addressed, but shall leave to the national authorities the choice of form and methods ' '. Although that provision leaves member states free to choose the ways and means of ensuring that the directive is implemented, that freedom does not affect the obligation, imposed on all the member states to which the directive is addressed, to adopt, within the framework of their national legal systems, all the measures necessary to ensure that the directive is fully effective, in accordance with the objective which it pursues.

16 It is therefore necessary to examine directive no 76-207 in order to determine whether it requires member states to provide for specific legal consequences or sanctions in respect of a breach of the principle of equal treatment regarding access to employment.

17 The object of that directive is to implement in the member states the principle of equal treatment for men and women, in particular by giving male and female workers real equality of opportunity as regards access to employment. With that end in view. Article 2 defines the principle of equal treatment and its limits, while article 3 (1) sets out the scope of the principle specifically as regards access to employment. Article 3 (2) (a) provides that member states are to take the measures necessary to ensure that any laws, regulations and administrative provisions contrary to the principle of equal treatment are abolished.

18 Article 6 requires member states to introduce into their national legal systems such measures as are necessary to enable all persons who consider themselves wronged by discrimination ' ' to pursue their claims by judicial process ' '. It follows from that provision that member states are required to adopt measures which are sufficiently effective to achieve the objective of the directive and to ensure that those measures may in fact be relied on before the national courts by the persons concerned. Such measures may include, for example, provisions requiring the employer to offer a post to the candidate discriminated against or giving the candidate adequate financial compensation, reinforced where necessary by a system of fines. However the directive does not prescribe a specific sanction; it leaves member states free to choose between the different solutions suitable for achieving its objective.

19 The reply to the first question should therefore be that directive no 76-207 does not require discrimination on grounds of sex regarding access to employment to be made the subject of a sanction by way of an obligation imposed upon the employer who is the author of the discrimination to conclude a contract of employment with the candidate discriminated against.

(b) question 2

20 It is not necessary to answer the second question, since it is put only on the supposition that an employer is required to offer a post to the candidate discriminated against.

(c) questions 3, 4 and 5

21 In its third and fourth questions the arbeitsgericht essentially asks whether it is possible to infer from the directive that a financially appreciable sanction is necessary. The fifth question asks whether the directive, as properly interpreted, may be relied on before national courts by persons who have suffered injury.

22 In that respect it must be remarked that it is impossible to establish real equality of opportunity without an appropriate system of sanctions. That follows not only from the actual purpose of the directive but more specifically from article 6 thereof which, by granting applicants for a post who have been discriminated against recourse to the courts, acknowledges that those candidates have rights of which they may avail themselves before the courts.

23 Although, as has been stated in the reply to the first question, full implementation of the directive does not require a specific form of sanction for breach of the prohibition of discrimination, it does entail that that sanction be such as to guarantee real and effective judicial protection. Moreover it must also have a real deterrent effect on the employer. It follows that where a member state chooses to penalize the breach of the prohibition of discrimination by the award of compensation, that compensation must in any event be adequate in relation to the damage sustained.

24 In consequence national provisions limiting the right to compensation of persons who have been discriminated against as regards access to employment to a purely nominal amount, such as for example the rembursement of expenses incurred in connexion with their application, would not satisfy the requirements of an effective transposition of the directive.

25 The nature of the sanctions provided for in the federal republic of Germany in respect of discrimination regarding access to employment and in particular the question whether the rule in paragraph 611a (2) of the burgerliches gesetzbuch excludes the possibility of compensation on the basis of the general rules of law were the subject of lengthy discussion before the court. The german government maintained in the oral procedure that that provision did not necessarily exclude the application of general rules of law regarding compensation. It is for the national court alone to rule on that question concerning the interpretation of its national law.

26 However, the member states ' obligation arising from a directive to achieve the result envisaged by the directive and their duty under article 5 of the treaty to take all appropriate measures, whether general or particular, to ensure the fulfilment of that obligation, is binding on all the authorities of member states including, for matters within their jurisdiction, the courts. It follows that, in applying national law and in particular the provisions of a national law specifically introduced in order to implement directive no 76-207, the national court is required to interpret its national law in the light of the wording and the purpose of the directive in order to achieve the result referred to in the third paragraph of article 189.

27 On the other hand, as the above considerations show, the directive does not include any unconditional and sufficiently precise obligation as regards sanctions for discrimination which, in the absence of implementing measures adopted in good time, may be relied on by individuals in order to obtain specific compensation under the directive, where that is not provided for or permitted under national law.

28 It should, however, be pointed out to the national court that although directive no 76-207-eec, for the purpose of imposing a sanction for the breach of the prohibition of discrimination, leaves the member states free to choose between the different solutions suitable for achieving its objective, it nevertheless requires that if a member state chooses to penalize breaches of that prohibition by the award of compensation, then in order to ensure that it is effective and that it has a deterrent effect, that compensation must in any event be adequate in relation to the damage sustained and must therefore amount to more than purely nominal compensation such as, for example, the reimbursement only of the expenses incurred in connection with the application. It is for the national court to interpret and apply the legislation adopted for the implementation of the directive in conformity with the requirements of community law, in so far as it is given discretion to do so under national law.

Costs

29 The costs incurred by the governments of the federal republic of Germany and the Netherlands, by the united kingdom and by the commission of the european communities, which have submitted observations to the court, are not recoverable. As the proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds,

The court

In answer to the questions referred to it by the arbeitsgericht Hamburg by order of 5 july 1982, hereby rules:

1. Directive no 76-207-eec does not require discrimination on grounds of sex regarding access to employment to be made the subject of a sanction by way of an obligation imposed on the employer who is the author of the discrimination to conclude a contract of employment with the candidate discriminated against.

2. As regards sanctions for any discrimination which may occur, the directive does not include any unconditional and sufficiently precise obligation which, in the absence of implementing measures adopted within the prescribed time-limits, may be relied on by an individual in order to obtain specific compensation under the directive, where that is not provided for or permitted under national law.

3. Although directive no 76-207-eec, for the purpose of imposing a sanction for the breach of the prohibition of discrimination, leaves the member states free to choose between the different solutions suitable for achieving its objective, it nevertheless requires that if a member state chooses to penalize breaches of that prohibition by the award of compensation, then in order to ensure that it is effective and that it has a deterrent effect, that compensation must in any event be adequate in relation to the damage sustained and must therefore amount to more than purely nominal compensation such as, for example, the reimbursement only of the expenses incurred in connection with the application. It is for the national court to interpret and apply the legislation adopted for the implementation of the directive in conformity with the requirements of community law, in so far as it is given discretion to do so under national law.