The Court’s case law on the scope of application of the Charter: what does ‘implementing EU law’ mean?

According to Article 51(1) of the Charter, the rights featured therein are binding upon the member states ‘only when they are implementing Union law’. This provision was adopted with a view to limiting the scope of judicial review of national measures under Charter rights. In so doing, the drafters of the Charter aimed to preserve the regulatory autonomy of national authorities in fields which are not governed exhaustively by EU law. ^{Footnote 16} However, the concept of implementation is not defined in the Charter itself.

In Åkerberg Fransson, the Court adopted a broad understanding of implementation which entails that ‘the Charter must be complied with where national legislation falls within the scope of EU law’. ^{Footnote 17} In other words, there can be no situation that is governed by EU law in which the Charter does not apply. ^{Footnote 18} It follows that EU fundamental rights are meant to apply only when another EU law provision applies. ^{Footnote 19} Although the exact categorisation is still ‘subject to much debate’, ^{Footnote 20} the Court has carved out a two-fold classification of national measures involving the implementation of EU law for the purposes of Article 51(1) of the Charter. ^{Footnote 21}

In the first place, the ERT doctrine prescribes that EU fundamental rights apply when the member states make use of the derogations provided for by EU law in order to justify a restriction on one of the free movement provisions. ^{Footnote 22} Even where national authorities rely on an exception to a Treaty freedom, they must still conform to EU fundamental rights insofar as the existence and exercise of that power is circumscribed by EU law. ^{Footnote 23} In other words, any obstacle to free movement falls within the ambit of EU law and must therefore meet the conditions imposed by EU law. ^{Footnote 24} In this respect, the scope of EU law extends far beyond EU legislative (positive) competences to capture the negative competences resulting from the judicial interpretation of the internal market freedoms featured in the Treaties. ^{Footnote 25}

In the second place, the Wachauf doctrine, also known as the ‘agency situation’, ^{Footnote 26} entails that national authorities are subject to compliance with the rights guaranteed by the Charter when they implement EU law sensu stricto. In such circumstances, national authorities are treated as Union bodies insofar as they are entrusted with the task of securing the implementation of EU law within their own domestic legal orders. In other words, the Charter applies in relation to national authorities ‘when they are acting as part of the decentralised administration of the Union’. ^{Footnote 27}

The notion of implementation ultimately hinges upon the question as to whether a sufficient degree of connection exists between the national act at issue and the concrete norm of EU law. ^{Footnote 28} That ‘specificity’ requirement entails that the Court must be satisfied that ‘the provisions of EU law in the area concerned [impose a] specific obligation on member states with regard to the situation at issue’. ^{Footnote 29} For that purpose, the Court adopts a contextual approach ^{Footnote 30} whereby it seeks to ascertain the relationship between EU law and the national measure in question. More specifically, it has regard to criteria such as ‘whether [that measure] is intended to implement a provision of EU law; the nature of the [measure] at issue and whether it pursues objectives other than those covered by EU law, even if it is capable of directly affecting EU law; and also whether there are specific rules of EU law on the matter or rules which are capable of affecting it’. ^{Footnote 31}

It follows from the Court’s reasoning in TSN that the legal basis and wording of the concrete norm of EU law must also be taken into account within the contextual assessment carried out by the Court in order to determine whether the specificity requirement is fulfilled. This approach falls in line with a trend in recent case law that suggests the existence of a correlation between the type of competence exercised by the EU and the scope of application of the Charter. ^{Footnote 32} In its judgment, the Court relies on an analysis of the legal basis of the Working Time Directive (Article 153 TFEU) to conclude that the adoption of more favourable paid leave rules on the basis of the minimum harmonisation clause contained in Article 15 does not come within the scope of EU law.

The Court’s unsettled case law on the relationship between minimum harmonisation and the scope of the Charter

In spite of the clarifications resulting from the Court’s case law, the relationship between national implementing measures and the jurisdictional reach of EU law remains contentious. One of the most controversial questions debated by commentators (and the Court ^{Footnote 33} ) is related to the interaction between minimum harmonisation and the scope of EU law. ^{Footnote 34} Prior to TSN, the identification of the scope of EU law with respect to higher national standards based on a minimum harmonisation clause was subject to diverging interpretations, but none of these interpretations was formally endorsed by the Grand Chamber.

In Alemo-Herron and Others, ^{Footnote 35} the Court seemed to espouse the view that the Charter applies in instances of employee protection beyond the field harmonised by an EU directive. According to Article 3 of Directive 2001/23, ^{Footnote 36} the transferee undertaking is bound to observe the rights and obligations agreed upon in the collective agreement applicable to the relevant sector at the time of the transfer. However, the UK authorities relied on the minimum harmonisation clause enshrined in Article 8 of that Directive to provide for the incorporation of the rights and obligations arising from collective agreements concluded even after the date of the transfer. In this context, the Court was requested to ascertain whether the dynamic approach adopted by the UK authorities was compatible with the right to conduct a business featured in Article 16 of the Charter.

In its judgment, the Court remained oblivious to the issue of the relationship between the scope of EU law and the minimum character of the Directive. Instead, the Court embarked on an assessment of the compatibility of the dynamic interpretation of Directive 2001/23 in the light of Article 16 of the Charter. It concluded that this Directive ‘cannot be interpreted as entitling the member states to take measures which, while being more favourable to employees, are liable to adversely affect the very essence of the transferee’s freedom to conduct a business’. ^{Footnote 37} Although the Court did not explicitly address the scope of the Charter, this conclusion relies on the assumption that, when the member states make use of the option granted to them by Article 8 of Directive 2001/23, they must be deemed to implement this Directive for the purposes of Article 51(1) of the Charter. ^{Footnote 38}

By contrast, in Julian Hernandez, ^{Footnote 39} the Court took the view that ‘a provision of national law … which merely grants employees more favourable protection resulting from the exercise of the exclusive competence of the member states … cannot be regarded as coming within the scope of [EU law]’. ^{Footnote 40} If an employer becomes insolvent, Article 3 of Directive 2008/94 ^{Footnote 41} mandates the member states to set up a body which is responsible to guarantee, during a period of at least three months of remuneration, the payment of the ‘employees’ outstanding claims resulting from contracts of employment or employment relationships’. The request for a preliminary ruling referred to the Court concerned a measure whereby the Spanish authorities extended the temporal scope of that provision in accordance with the minimum harmonisation clause laid down in Article 11 of that Directive. More specifically, the contested national legislation guaranteed the payment by the Spanish state of outstanding remuneration after the minimum period of at least three months enshrined in the Directive. This provision was adopted with a view to compensate employers for the loss incurred as a result of undue delays – or ‘irregularities’– in the administration of justice. ^{Footnote 42}

In its judgment, the Court considered that Article 11 of Directive 2008/94 merely ‘recognises the power which the member states enjoy under national law to provide for such more favourable provisions outside the framework of the regime established by the Directive’. ^{Footnote 43} The Court then inferred from the foregoing that, in the exercise of the power to adopt more favourable provisions, national authorities were acting outside the confines of EU law. As a result, they were not bound to comply with EU fundamental rights in the enactment of such provisions.

In the light of the somewhat contrasting approaches adopted by several chambers of the Court, it remained quite unclear as to whether national ‘opt-ups’ adopted on the basis of a minimum harmonisation clause fell within the scope of EU law. In its judgment in TSN, the Grand Chamber of the Court seized the opportunity to clarify the relationship between minimum harmonisation and the scope of EU law. According to the Court, the adoption of more protective paid leave guarantees on the basis of the minimum harmonisation clauses incorporated in Article 153(4) TFEU and Article 15 of Directive 2003/88 did not come within the scope of EU law. As a result, it is not subject to Charter rights and, specifically, Article 31(2) of the Charter.

The Court’s assessment of the requirement of specificity: towards a new approach to the relationship between the national and EU fundamental rights’ standards?

The Court’s understanding of the scope of the Charter revolved around an intricate assessment of the specific features of the competences conferred upon the EU in the employment-related social policy field. In particular, the Court focused on the regulatory context of Directive 2003/88 in order to ascertain whether a sufficiently specific link existed between that Directive and national paid leave rules that go beyond the minimum level of protection established by that Directive. As the Court pointed out, the EU institutions’ room for manoeuvre in the field of social policy is constrained constitutionally by sector-specific Treaty provisions set forth in Article 153 TFEU. Accordingly, the Union should strive to ‘support and complement the activities of the member states in the field of improvement of the working environment to protect the safety and health of workers’. ^{Footnote 44} In any event, it cannot go further than to adopt, ‘by means of directives, minimum requirements for gradual implementation, having regard to the conditions and technical rules obtaining in each of the Member States’. ^{Footnote 45} At the same time, the Court stressed that the member states remain free to adopt more protective rules in that field on the basis of the minimum harmonisation clauses enshrined in Article 153(4) TFEU and Article 15 of the Working Time Directive.

Considering the degree of discretion that they retain on the basis of the minimum harmonisation clauses featured in those provisions, the Court found that the jurisdictional requirement of specificity was not satisfied. In paragraph 53 of TSN, the Court held that ‘where the provisions of EU law in the area concerned do not govern an aspect of a given situation and do not impose any specific obligation on the member states with regard thereto, the national rule enacted by a member state as regards that aspect falls outside the scope of the Charter’. ^{Footnote 46} The Court’s understanding of the specificity requirement therefore entailed that the scope of EU law hinges upon the degree of regulatory autonomy retained by the member states when they adopt paid leave rules that exceed the EU minimum of four weeks’ paid annual leave. ^{Footnote 47} This approach suggests that the distribution of powers between the EU and its member states as regards fundamental rights protection is ultimately determined by reference to the level of discretion attributed to national authorities in the implementation of specific legislative instruments adopted at EU level. ^{Footnote 48}

In this perspective, this judgment seems to usher in a new approach towards the relationship between the national and EU systems of fundamental rights protection in regulatory areas where the member states enjoy a wide degree of discretion. In particular, the Court’s approach stands in stark contrast to previous case law. In Åkerberg Fransson, the jurisdictional threshold of the Charter was interpreted broadly so as to encompass national measures that are only loosely connected to EU law. ^{Footnote 49} Although national authorities enjoyed ample discretion in the fight against tax evasion, the Court considered that a national legislation setting out penalties intended to sanction value added tax (VAT) offences fell within the scope of EU law. In support of this conclusion, the Court stressed that the enforcement of tax penalties was necessary to ensure the effectiveness of the system of collection of VAT set up at Union level. ^{Footnote 50} With this judgment, the Court made clear that, in the exercise of discretion inherent in the implementation of EU law, national authorities are bound to comply with the EU fundamental rights featured in the Charter.

The Court also confirmed that, when member state action falls within the scope of EU law, both the national and EU standards of fundamental rights protection may overlap. ^{Footnote 51} The crux of the matter, then, pertains to the interaction between the national and EU approaches towards specific fundamental rights in areas of parallel application. ^{Footnote 52} It follows from Melloni and Taricco II that the determination of the appropriate standard of review of national action under Article 53 of the Charter ultimately boils down to the level of discretion attributed to the member states. ^{Footnote 53} This means that, in situations involving a certain degree of discretion in the implementation of EU law, the Charter acts as a ‘minimum standard’ or ‘safety net’. ^{Footnote 54} The member states are thus allowed to make use of that discretion in order to increase the level of protection enshrined in the Charter. ^{Footnote 55} In other words, national authorities may opt for a higher standard of fundamental rights protection only to the extent that the subject-matter has not been fully regulated at EU level. ^{Footnote 56}

By contrast, the Court’s approach in TSN suggests that the jurisdictional reach of the Charter hinges upon the degree of regulatory autonomy retained by the member states when they adopt national ‘opt-ups’ in the field of social law. This means that the relationship between the national and EU standards of fundamental rights protection is structured along the lines of the distribution of powers between the EU and its member states in that policy area. In relation to national implementing measures, a distinction is struck between the matters that are determined at EU level, which may be subject to Charter rights, and the matters left to the discretion of the member states, which may be subject to national fundamental rights.

By drawing a clear-cut division of competences as regards fundamental rights protection, the Court steered the debate from issues of rights (i.e. what is the appropriate level of fundamental rights protection?) towards issues of competence – who has the power to define the content of rights? In doing so, the Court failed to define the core normative content of the right to paid annual leave enshrined in Article 31(2) of the Charter. In particular, it remains unclear whether the principle of four weeks’ paid annual leave set out by Article 7(1) of the Working Time Directive can be considered as the specific expression of Article 31(2) of the Charter.

Judicial deference towards national regulatory autonomy in the field of social policy

In the previous section, I have described the Court’s analysis of the regulatory context in which the member states operate when they adopt national measures on paid leave. That assessment enables the Court to determine the degree of regulatory autonomy left to the member states in the field of social policy and, especially, the protection of the workers’ health and safety. In this respect, the Court’s emphasis on the distribution of powers between the EU and its member states in that policy area seems to justify its cautious approach towards the application of Charter rights in relation to more protective national paid leave rules.

The member states enjoy considerable discretion to adopt national ‘opt-ups’ on the basis of the minimum harmonisation clauses featured in Article 153(4) TFEU and Article 15 of the Working Time Directive. In that context, the extension of the scope of Charter review to more protective paid leave guarantees would not only unsettle the division of competences between the EU and its member states but also, potentially, affect the level of regulatory autonomy available to the member states. ^{Footnote 57} The member states’ room for manoeuvre may indeed be inhibited to a considerable extent if they are bound to comply with Charter rights and, especially, the right to paid annual leave featured in Article 31(2) of the Charter when they adopt national ‘opt-ups’. ^{Footnote 58} This may, in turn, have a chilling effect on the willingness of states to make use of their power to pass more favourable measures in the field of workers’ protection. ^{Footnote 59}

This is all the more problematic in the light of the limited regulatory powers available to the EU in relation to social policy and, more specifically, the adoption of measures designed to protect the workers’ health and safety. A regulatory vacuum might indeed arise as a result of the application of Charter rights in relation to national measures adopted in a policy field where the Union has no or only limited regulatory powers. ^{Footnote 60} This problem is further compounded by the fact that, as recent attempts to reform the protective rules adopted in that field demonstrate, the EU institutions are unable to reach a political compromise on the adoption of legislative measures on social matters. ^{Footnote 61}

Against that background, one of the most striking features of TSN is that it embodies a particularly narrow conception of the jurisdictional requirement of specificity. In the light of the degree of discretion afforded to the member states, the Court adopts a cautious approach towards negative integration, by means of judicial interpretation, of domestic standards of workers’ protection. The Court’s cautious assessment of the scope of the Charter in relation to national ‘opt-ups’ adopted in the field of social law seems to reflect a trend towards ‘retroceding space for domestic social spheres’. ^{Footnote 62} This trend is illustrated by recent case law on the entitlement to social benefits of economically inactive Union citizens in the context of the free movement of persons in the EU. ^{Footnote 63}

In Dano, ^{Footnote 64} the question was raised as to the compatibility with the rights enshrined in the Charter of a refusal to grant a jobseeker allowance to an EU citizen. This case concerned the refusal to grant Ms Dano, an unemployed Romanian residing in Germany with her son Florin, ‘special non-contributory cash benefits’ as defined by Article 70 of Regulation 883/2004. Ms Dano could not rely on the principle of equality of treatment laid down in Article 24 of Directive 2004/38 insofar as she did not meet the residence requirements of that Directive. ^{Footnote 65} In particular, she did not have sufficient resources for herself and her son not to become a burden on the social assistance system of Germany. Therefore, she invoked Regulation 883/2004 in order to be granted a jobseeker allowance, to no avail.

In that context, the Grand Chamber of the Court was requested to determine whether the refusal to grant ‘special non-contributory cash benefits’ was Charter-compliant. It concluded that the Charter did not apply in relation to this refusal insofar as Article 70(4) of that Regulation made clear that the ‘special non-contributory cash benefits’ defined therein should be provided in the host member state ‘in accordance with its legislation’. In other words, ‘Article 70 of Regulation No 883/2004, which defines the term “special non-contributory cash benefits”, is not intended to lay down the conditions creating the right to those benefits’. ^{Footnote 66} In the absence of harmonisation as regards the conditions creating that right under EU law, it is for the host member state itself to lay down the conditions for granting those benefits and to ‘define the extent of the social coverage provided for that type of benefit’. ^{Footnote 67} The exercise of these regulatory powers was regarded as falling outside the notion of implementation of EU law within the meaning of Article 51(1) of the Charter.

It appears from the reasoning set forth by the Court that the finding of non-applicability of the Charter is justified by the fact that Regulation 883/2004 does not seek to harmonise the member states’ social security systems. In particular, this Regulation leaves it open to them to ‘determine the rights and duties associated with social security insurance as well as the conditions for benefit entitlement’. ^{Footnote 68} By contrast, the judgment handed down by the Court in TSN concerns an area where the Union legislator has actually reached a legislative compromise on the definition of a minimum standard of harmonisation with respect to paid annual leave guarantees.

In spite of these differences, the Court’s approach should be read along the lines of growing judicial deference towards the exercise of the regulatory autonomy retained by the member states in the field of social policy. ^{Footnote 69} By insulating national regulatory settlements in that field from the intrusive reach of EU law, the Court goes a long way towards preserving the member states’ room for manoeuvre on social matters. It is arguable that, in so doing, the Court aims to avoid the creation of a regulatory vacuum resulting from the discrepancy between, on the one hand, the application of EU law in relation to domestic measures ^{Footnote 70} and, on the other hand, the limited regulatory powers vested in the EU in the social policy field. ^{Footnote 71}

Implications beyond the field of social law: the thorny relationship between minimum harmonisation and other types of national discretion

From the foregoing it may be inferred that the Court’s cautious approach towards the jurisdictional reach of the Charter should be confined to the peculiarities of the social policy field. However, its approach is likely to have implications beyond that policy area. As the judgment in TSN demonstrates, the Court’s understanding of the requirement of specificity hinges upon the level of regulatory autonomy retained by the member states in the relevant area. This means that the scope of EU law ultimately depends on the assessment carried out by the Court for the purpose of defining the regulatory context within which the member states operate when they implement specific legislative instruments adopted at EU level. In this respect, the Court’s interpretation of the requirement of specificity may also have implications in relation to other regulatory areas where the member states retain a wide margin of discretion.

The Court’s approach may first of all warrant the exclusion of the applicability of the Charter as regards national ‘opt-ups’ maintained or introduced pursuant to other minimum harmonisation clauses adopted at EU level. One may indeed find constitutional – i.e. Treaty-based ^{Footnote 72} – minimum harmonisation clauses in relation to other sensitive policy fields such as criminal law, ^{Footnote 73} environmental protection ^{Footnote 74} and consumer protection. ^{Footnote 75} The model of legislative minimum harmonisation is also often included in internal market measures based upon functional Treaty provisions such as Article 114 TFEU that affect, even incidentally, welfare-orientated policies of high political salience such as the protection of the interests of consumers ^{Footnote 76} and public health. ^{Footnote 77} Although the conclusion reached by the Court pertains to a constitutional minimum harmonisation clause, it also seems justified in relation to other minimum harmonisation legislations given that they do not impose any specific obligation on national authorities with respect to the adoption of national ‘opt-ups’. ^{Footnote 78}

In the absence of a clear-cut legal standard to distinguish between minimum harmonisation and other types of national discretion, it is also unclear how to reconcile the requirement of specificity with several legislative techniques by which the EU leaves a wide margin of discretion to the member states in the implementation of EU law. ^{Footnote 79} The Court itself is eager to differentiate between a situation involving discretion in the implementation of EU law and the enactment of national paid leave rules going beyond the EU minimum of four weeks’ paid annual leave. According to the Court, the adoption of national ‘opt-ups’ differs ‘from the situation in which an act of the Union gives the member states the freedom to choose between various methods of implementation or grants them a margin of discretion which is an integral part of the regime established by that act, and from the situation in which such an act authorises the adoption, by the member states, of specific measures intended to contribute to the achievement of the objective of that act’. ^{Footnote 80}

It remains to be seen, however, how the distinction struck by the Court might work out in practice. ^{Footnote 81} From the outset, this distinction may be warranted in the light of the varying degrees of regulatory autonomy afforded to national authorities by either legislative mechanisms. In the exercise of national implementing discretion bestowed upon national authorities through legislative devices such as optional or remedial rules, ^{Footnote 82} each member state is bound to ensure the attainment of the concrete and specific regulatory objectives defined at EU level. ^{Footnote 83} By contrast, minimum harmonisation clauses leave them free to make use of the option to set higher national standards. In other words, the member states are under no obligation ‘to act at all, nor to act in a specific way’. ^{Footnote 84}

Nevertheless, that does not mean that national authorities enjoy an unfettered freedom in the enactment of more favourable or protective national standards. On the contrary, the exercise of such power is limited by a negative obligation not to ‘infringe on the EU minimum level of protection or violate the Treaty’, ^{Footnote 85} as specified in Article 153(4) TFEU. ^{Footnote 86} At the same time, other types of national discretion may also leave considerable leeway to the member states in the implementation of EU secondary legislations. As a result, there may sometimes be a very thin line between minimum harmonisation and other types of national implementing discretion. As a recent order handed down by the Court demonstrates, ^{Footnote 87} the regulatory autonomy afforded to national authorities by either legislative devices may be such that it seriously complicates the task of identifying the requisite specific obligation addressed to national authorities in order to conclude that EU law applies. ^{Footnote 88} This is hardly surprising given that, as TSN demonstrates, the Court’s interpretation of the scope of EU law ultimately depends on its assessment of the regulatory context within which the member states operate when they implement specific EU legislative instruments.