Andrea Francovich & Danila Bonifaci et al. v. Italian Republic

A European Union (EU) directive required member states to ensure that an employee is protected against employer insolvency. The directive provided that measures must be taken to ensure payment of outstanding claims by employees against insolvent employers arising from an employee contract relating to employee payment. The directive gave discretion to member states to set the cutoff date for determining the outstanding claims as the date of the employer’s insolvency, the date of notice of dismissal to the employee, or the date on which the employment contract was terminated due to employer insolvency. Further, member states were required to enact rules for the operation of the institutions that guarantee payment to the employees (guarantee institutions), including that (1) assets of the guarantee institutions were to be independent of the employer’s operating capital, (2) employers were required to contribute to the financing of the guarantee institutions unless the institutions were fully funded by public authorities, and (3) the guarantee institutions would be liable to pay employees even if the obligations to contribute to financing the institutions had not been met. Italy did not implement the directive through domestic legislation in a timely manner. Andrea Francovich (plaintiff) was an employee of a company that had become insolvent. Francovich sued Italy (defendant) in an Italian court, arguing that the directive created an individual right for employee protection against insolvent employers that individuals in EU member states were entitled to rely on in a national court. The Italian court asked the European Union Court of Justice for a preliminary ruling.