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On the allocation of payments for employees of insolvent enterprises from the Guarantee Fund

Case No. 22/2011-28/2011

 THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

IN THE NAME OF THE REPUBLIC OF LITHUANIA

 RULING

ON THE COMPLIANCE OF PARAGRAPH 12 (WORDING OF 26 JUNE 2008) OF ARTICLE 5 OF THE REPUBLIC OF LITHUANIA’S LAW ON THE GUARANTEE FUND WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

 14 April 2014, No. KT13-N5/2014

Vilnius

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Elvyra Baltutytė, Vytautas Greičius, Danutė Jočienė, Pranas Kuconis, Gediminas Mesonis, Vytas Milius, Egidijus Šileikis, Algirdas Taminskas, and Dainius Žalimas

The court reporter—Daiva Pitrėnaitė

The Constitutional Court of the Republic of Lithuania, pursuant to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1 and 531 of the Law on the Constitutional Court of the Republic of Lithuania, at the Court’s hearing, on 11 April 2014, considered, under written procedure, constitutional justice case No. 22/2011-28/2011 subsequent to the petitions (No. 11B-22/2011 and 1B-30/2011) of the Vilnius City Second Local Court (now—the Vilnius City Local Court), the petitioner, requesting an investigation into whether Paragraph 12 (wording of 26 June 2008) of Article 5 of the Republic of Lithuania’s Law on the Guarantee Fund is not in conflict with Article 52 of the Constitution of the Republic of Lithuania as well as the constitutional principles of justice and a state under the rule of law.

By the Constitutional Court’s decision of 25 March 2014, the foregoing petitions were joined into one case, and it was given reference No. 22/2011-28/2011.

 

The Constitutional Court

has established:

I

The petitions of the Vilnius City Second Local Court, the petitioner, are substantiated by the following arguments.

Article 52 of the Constitution prescribes that the state, inter alia, guarantees its citizens the right to receive social assistance in the event of unemployment. The provision of social assistance to the persons who lost their job due to the bankruptcy of their employer is one of such cases. Although, under Paragraph 1 of Article 3 of the Law on the Guarantee Fund, the funds from the Guarantee Fund are allocated for payments, in the amount established by the Law on the Guarantee Fund, to the employees of enterprises in bankruptcy and bankrupt enterprises, who worked in the enterprise prior to the day of the passing of a court’s ruling to institute bankruptcy proceedings against the enterprise or prior to the day of the decision of the creditors’ meeting to carry out bankruptcy procedures by extrajudicial means; however, under the impugned Paragraph 12 of Article 5 of the same law, an opportunity to receive such payments is partly denied, since, under the regulation established therein, a payment is not allocated to the employees who concluded an employment contract with an insolvent enterprise after the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings. Such notifications are not public; legal acts do not establish an obligation to make information of that kind about the employer public or enter it on relevant registers, therefore, an employee who intends to conclude an employment contract with them is deprived of the opportunity to know it. Invoking the doctrine formulated in the Constitutional Court’s ruling of 21 December 2006, the petitioner states that the state is under the constitutional obligation to take measures so that its citizens and other residents would receive the most accurate information about the things they need to know in order to participate in taking decisions related to the implementation of their rights and freedoms. In addition, the principles of the protection of legitimate expectations, legal certainty and legal security, which stem from the constitutional principle of a state under the rule of law, imply the state’s obligation to ensure the certainty and stability of any legal regulation, to protect the rights of persons, and to respect legitimate interests and legitimate expectations. Paragraph 12 of Article 5 of the Law on the Guarantee Fund entrenches certain exceptions to the legal regulation established in Paragraph 1 of Article 3 of the same law. As mentioned before, an employee is deprived of the opportunity to know such exceptions. Therefore, the legal regulation established in Paragraph 12 of Paragraph 5 of the Law on the Guarantee Fund is in conflict with the constitutional principle of a state under the rule of law.

After the legal regulation has been established in Paragraph 12 of Article 5 of the Law on the Guarantee Fund to the effect that, by violating the constitutional principle of a state under the rule of law and the constitutional principle of justice that is inseparable from the former, it unreasonably limits the opportunities of the employees of enterprises in bankruptcy or bankrupt enterprises to receive, in the event of unemployment, the social assistance which is provided for in the Constitution and the Law on the Guarantee Fund, Article 52 of the Constitution is also violated.

II

In the course of the preparation of the case for the Constitutional Court’s hearing, written explanations were received from Mečislovas Zasčiurinskas, a member of the Seimas, acting as the representative of the Seimas of the Republic of Lithuania, the party concerned, in which it is maintained that the impugned Paragraph 12 of Article 5 of the Law on the Guarantee Fund is not in conflict with the Constitution. The position of the representative of the party concerned is substantiated by the following arguments.

  1. The provision of Article 52 of the Constitution that the state guarantees social assistance in the event of unemployment ensures the entirety of legal and economic measures established by the state. In the event of unemployment, a person acquires a right to the payments established in the Republic of Lithuania’s Law on Unemployment Social Insurance which compensate for part of the work income lost due to unemployment. Active labour market policy measures provided for in the Republic of Lithuania’s Law on Support for Employment are aimed at increasing the employability of jobseekers and matching labour supply and demand, whilst the Law on the Guarantee Fund is aimed at ensuring the minimum level of protection for an employee in the event of the insolvency of their employer. This is a supplementary type of social assistance, and the legislature, while taking account of the resources, material and financial capabilities of the state and society, has broad discretion in regulating these relations.

It should be noted that the payments provided for in the Law on the Guarantee Fund are intended to compensate for part of the work remuneration that is not paid due to the insolvency of the employer and for part of the payments related to employment relations (monetary compensation for unused leave, severance pay, lay-off pay, etc.). A person has the right to receive these payments regardless of the fact whether they are unemployed or not, the right to a payment is also granted to those persons who at the same time work under several employment contracts or organise other forms of their occupational activity.

  1. In respect of Paragraph 1 of Article 3 of the Law on the Guarantee Fund, Paragraph 12 of Article 5 of the said law is a special norm that establishes an exception to the general rule, i.e. a case when the claims of an employee, in the event of the insolvency of their employer, are not protected and their monetary claims regarding employment relations are not satisfied from the funds of the Guarantee Fund. The impugned provision of the Law on the Guarantee Fund, as it is indicated in the explanatory note of the Republic of Lithuania’s Draft Law Amending and Supplementing Articles 1, 3, 4, 5, 6, 10, and 13 of the Law on the Guarantee Fund, and Amending the Annex to the Law, was adopted in order to implement the right of the Member States to take the measures necessary to avoid the abuse of the guarantees provided for in laws and ensure the satisfaction of outstanding claims arising from actual employment relations, which is established in Article 10 of Council Directive 80/987/EEC of 20 October 1980 on the protection of employees in the event of the insolvency of their employer (as amended by Directive 2002/74/EC of the European Parliament and of the Council of 23 September 2002 amending Council Directive 80/987/EEC on the approximation of the laws of the Member States relating to the protection of employees in the event of the insolvency of their employer) (hereinafter referred to as the Directive).

In Paragraph 12 of Article 5 of the Law on the Guarantee Fund, the legislature aimed at setting the criteria for establishing an employee’s abuse of the right to the payment of a payment from the Guarantee Fund in the event of the insolvency of their employer. According to the representative of the person concerned, the Constitutional Court has held on more than one occasion that justice is one of the basic objectives of law as a means of regulating social relations, that it may be implemented by ensuring a certain balance of interests, by avoiding fortuity and arbitrariness, instability of social life and conflict of interests. Therefore, the legislature was under the obligation to establish, in the Law on the Guarantee Fund, the legal regulation to the effect that social assistance could not be abused.

  1. The right of a person, who intends to conclude an employment contract, to know information about the financial status of their employer was regulated by Item 14 of the Regulations of the Guarantee Fund implementing the Law on the Guarantee Fund, which were approved by the Resolution of the Government of the Republic of Lithuania (No. 685) “On the Establishment of the Guarantee Fund” of 7 June 2001 (hereinafter referred to as the Regulations of the Guarantee Fund). The said item established that the moment at which the insolvency of an enterprise arises is set on the basis of notices in periodical publications and other media, on the enterprise’s official information to creditors, creditors’ notifications to the enterprise of their intention to institute bankruptcy proceedings, the conclusions of the representatives authorised by state institutions, the decisions on, and certificates of, the tax not paid by an insolvent enterprise to the state budget of the Republic of Lithuania for at least two consecutive months or the contributions not paid by an insolvent enterprise to the State Social Insurance Fund for at least two consecutive months, other factual data submitted by the parties to bankruptcy proceedings and other parties concerned. The representative of the party concerned emphasises that the Law on the Guarantee Fund and the Regulations of the Guarantee Fund have been officially published, therefore, under the Constitution, the subjects of legal relations are under the obligation to make attempts themselves to find out what legal acts require of them.

The Constitutional Court

holds that:

  1. On 12 September 2000, the Seimas adopted the Law on the Guarantee Fund, which, under Paragraph 1 of Article 12 of the said law, came into force on 1 October 2000.

The Law on the Guarantee Fund (wording of 12 September 2000) has subsequently been amended and supplemented on more than one occasion.

1.1. On 23 March 2006, the Seimas adopted the Republic of Lithuania’s Law Amending and Supplementing Articles 1, 3, 4, 5, 6, 10, and 13 of the Law on the Guarantee Fund, and Amending the Annex to the Law, which, save the exceptions established in Article 8 of the said law, came into force on 13 April 2006. By means of Paragraph 10 of Article 4 of the same law, Article 5 (wording of 12 September 2000) of the Law on the Guarantee Fund was supplemented with Paragraph 11 which prescribed:

“Payments from the funds of the Guarantee Fund shall not be allocated to the employees who concluded an employment contract with an insolvent enterprise after the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings or after the day that the enterprise made a public announcement or gave another notification to the creditor (creditors) of its inability or lack of intent to discharge its liabilities, or after the day that a petition was filed with a court for the institution of bankruptcy proceedings against the enterprise (in view of the fact which of these dates is earlier), or after the day that a proposal was sent to the creditors to carry out bankruptcy procedures by extrajudicial means. In these cases, the decision shall be made by the Council of the Guarantee Fund.”

1.2. On 26 June 2008, the Seimas adopted the Republic of Lithuania’s Law Amending and Supplementing Articles 1, 2, 4, 5, 6, 8, 9, 10, 12, and 13 of the Law on the Guarantee Fund, which came into force on 12 July 2008. By means of Paragraph 3 of Article 4 of the said law, Article 5 (wording of 12 September 2000) of the Law on the Guarantee Fund was supplemented with a new Paragraph 4, whilst, in Paragraph 4 of the same article, it was indicated that the former Paragraphs 4, 5, 6, 7, 8, 9, 10, 11, and 12 of Article 5 will be regarded as Paragraphs 5, 6, 7, 8, 9, 10, 11, 12, and 13 respectively. Thus, Paragraph 11 (wording of 23 March 2006) of Article 5 of the Law on the Guarantee Fund became Paragraph 12 (wording of 26 June 2008).

1.3. On 19 June 2012, the Seimas adopted the Republic of Lithuania’s Law Amending the Law on the Guarantee Fund, which, save the exception established in Article 2 thereof, came into force on 1 January 2013. By means of Article 1 of the said law, the Law on the Guarantee Fund (wording of 12 September 2000) was amended and set forth in its new wording.

It should be noted that the Law on the Guarantee Fund (wording of 19 June 2012) no longer contains the provisions of the former Paragraph 12 (wording of 26 June 2008) of Article 5, which are impugned by the petitioner in the constitutional justice case at issue.

  1. Under Paragraph 4 of Article 69 of the Law on the Constitutional Court, the annulment of the impugned legal act shall be grounds to adopt a decision to dismiss the instituted legal proceedings. The Constitutional Court has held that this also applies to cases when the impugned legal act (part thereof) has not been repealed but the legal regulation established therein has been changed (inter alia, the Constitutional Court’s decision of 14 March 2006, its rulings of 28 May 2010, 6 January 2011, 31 January 2011, and 10 December 2012).

However, as it has been held by the Constitutional Court on more than one occasion, when a court considering a case applies to the Constitutional Court after it has doubts concerning the compliance of a law or another legal act applicable in that case with the Constitution (another legal act of higher power), the Constitutional Court has a duty to consider a petition of the court regardless of the fact whether the impugned law or another legal act is valid or not.

  1. It has been mentioned that the petitioner requests an investigation into whether Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund was not in conflict with Article 52 of the Constitution as well as the constitutional principles of justice and a state under the rule of law. The said paragraph prescribed:

“Payments from the funds of the Guarantee Fund shall not be allocated to the employees who concluded an employment contract with an insolvent enterprise after the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings or after the day that the enterprise made a public announcement or gave another notification to the creditor (creditors) of its inability or lack of intent to discharge its liabilities, or after the day that a petition was filed with a court for the institution of bankruptcy proceedings against the enterprise (in view of the fact which of these dates is earlier), or after the day that a proposal was sent to the creditors to carry out bankruptcy procedures by extrajudicial means. In these cases, the decision shall be made by the Council of the Guarantee Fund.”

3.1. Although the petitioner impugns the compliance of the entire Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund with the Constitution, the arguments of its petitions and civil cases under consideration make it clear that the said paragraph is impugned insofar as it established that payments from the funds of the Guarantee Fund are not allocated to the employees who concluded an employment contract with an insolvent enterprise after the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings.

3.2. The Constitutional Court has held on more than one occasion that the constitutional principle of justice is an inseparable element of the content of the constitutional principle of a state under the rule of law, therefore, a petition requesting an investigation into the compliance of the impugned legal regulation with the constitutional principles of a state under the rule of law and justice should be treated as a petition requesting an investigation into the compliance of the said regulation with the constitutional principle of a state under the rule of law.

3.3. Thus, in the constitutional justice case at issue, the Constitutional Court will investigate whether Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund, insofar as it established that payments from the funds of the Guarantee Fund are not allocated to the employees who concluded an employment contract with an insolvent enterprise after the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings, was not in conflict with Article 52 of the Constitution and the constitutional principle of a state under the rule of law.

  1. In construing the provision (impugned by the petitioner) of Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund, it should be held that it regulated a case when a payment from the Guarantee Fund was not allocated to the employees of an insolvent enterprise; the said case is associated with the moment at which an employment contract is concluded between them, i.e. the day that the creditor (creditors) notifies (notify) an insolvent enterprise of their intention to apply to a court for the institution of bankruptcy proceedings. If an employment contract is concluded after the creditor (creditors) notifies (notify) an insolvent enterprise of their intention to apply to a court for the institution of bankruptcy proceedings, a payment from the Guarantee Fund is not allocated, and vice versa—if it is concluded prior to the day that the creditor (creditors) gives (give) the aforementioned notification to an insolvent enterprise, an employee has the right to the aforementioned payment.
  2. The provision (impugned by the petitioner) of Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund should be construed in the context of the other provisions of the Law on the Guarantee Fund that was in force at that time.

5.1. Under Paragraph 1 (wording of 23 March 2006) of Article 3 of the Law on the Guarantee Fund, the funds from the Guarantee Fund are allocated for payments, in the amount established by this law, to the employees of enterprises in bankruptcy and bankrupt enterprises, who worked in the enterprise prior to the day of the passing of a court’s ruling to institute bankruptcy proceedings against the enterprise or prior to the day of the decision of the creditors’ meeting to carry out bankruptcy procedures by extrajudicial means, irrespective of the fact whether the employment relations continue or have terminated, as well as to the former employees of the enterprises that have been liquidated due to bankruptcy after the entry into force of this law, when the said enterprises are indebted to them. Under Paragraph 1 (wording of 12 September 2000) of Article 5 of the Law on the Guarantee Fund, the employees specified in Article 3 of this law are paid, from the Guarantee Fund, the following payments which have not been paid by the date of the application to the Guarantee Fund:

1) work remuneration for the work performed, in accordance with an employee’s claim, but not exceeding the amount of work remuneration paid for the last three consecutive months. When the amount of work remuneration paid during the three months referred to in this item is lower than three minimum monthly salaries, the sum of three minimum monthly salaries is regarded as the maximum size of a payment to compensate for debts for work remuneration. The amount  of such a payment may not exceed the size established by the Government upon the submission of the Council of the Guarantee Fund;

2) monetary compensation for unused annual leave, but not exceeding the size established by the Government upon the submission of the Council of the Guarantee Fund;

3) severance payment provided for in Article 140 and Paragraph 4 of Article 297 of the Labour Code or Article 19 of the Law on Enterprise Bankruptcy. The sum of such a payment may not exceed the size established by the Government upon the submission of the Council of the Guarantee Fund;

4) compensation for the damage caused by occupational accidents or diseases which is established in the Provisional Law on Compensation for the Damage Caused by Occupational Accidents or Diseases, when, under the procedure established by the law referred to, this obligation is not transferred to the state;

5) idle-time pay. The sum of such a payment may not exceed the size established by the Government upon the submission of the Council of the Guarantee Fund.

To sum up the said legal regulation that is established in Paragraph 1 (wording of 23 March 2006) of Article 3 and in Paragraph 1 (wording of 12 September 2000) of Article 5 of the Law on the Guarantee Fund, it should be held that:

– the funds from the Guarantee Fund are allocated, in the sizes established by law and by sub-statutory legal act, for work remuneration for the work performed, in accordance with an employee’s claim, as well as for monetary compensation for unused annual leave, severance payment,   compensation for the damage caused by occupational accidents or diseases and idle-time pay, i.e. for the payments that arise out of employment relations and that are earned by and belong to an employee,

– these payments are paid to the employees of enterprises in bankruptcy and bankrupt enterprises, who worked in the enterprise prior to the specified moment—the day of the passing of a court’s ruling to institute bankruptcy proceedings against the enterprise or prior to the day of the decision of the creditors’ meeting to carry out bankruptcy procedures by extrajudicial means (when paying the said payments, account is not taken of the fact whether employment relations continue or have terminated)—as well as to the former employees of enterprises which have been liquidated due to bankruptcy after the entry into force of this law,

– the said payments are paid when enterprises in bankruptcy, bankrupt enterprises and enterprises that have been liquidated due to bankruptcy are indebted to these employees.

5.2. Assessing the legal regulation established in Paragraph 1 (wording of 23 March 2006) of Article 3 and in Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund in a systemic manner, insofar as the compliance of the said paragraphs with the Constitution is impugned by the petitioner, it should be held that, under the said legal regulation, payments from the funds of the Guarantee Fund are allocated to the employees who worked in an enterprise prior to the day of the passing of a court’s ruling to institute bankruptcy proceedings against the enterprise or prior to the day of the decision of the creditors’ meeting to carry out bankruptcy procedures by extrajudicial means, but who, at the same time, concluded an employment contract with an insolvent enterprise not later than prior to the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings, i.e., the aforesaid provision of Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund was an exception in respect of Paragraph 1 (wording of 23 March 2006) of Article 3 of the said law.

  1. In view of the fact that the provision (impugned by the petitioner) of Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund is linked to enterprise bankruptcy relations, the said provision should be construed in conjunction with the provisions of the Republic of Lithuania’s Law on Enterprise Bankruptcy.

6.1. Paragraph 2 (wording of 22 December 2011) of Article 6 of the Law on Enterprise Bankruptcy prescribes:

“The creditor (creditors) must notify the enterprise in writing of their intention to apply to a court for the institution of bankruptcy proceedings by registered mail, via courier or bailiff. In the event of failure to deliver the notification in one of the specified ways, the creditor (creditors) must send the notification to the address of the office of the enterprise. The notification shall be considered delivered five days after the dispatch thereof. The notification shall indicate the undischarged liabilities of the enterprise and shall contain a warning that in case of failure to discharge the aforementioned liabilities within the time limit specified in the notification, the creditor (creditors) will apply to a court for the institution of bankruptcy proceedings against the enterprise. The creditor (creditors) shall set a period of at least 30 days from the date of the delivery of the notification for the discharge of liabilities.”

The said legal regulation established in the Law on Enterprise Bankruptcy shows that the creditor (creditors) must notify the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings in writing and in the specified ways; the time limit (of at least 30 days) is set for the enterprise within which it must discharge its liabilities to the creditor (creditors); the enterprise is warned that in case of failure to discharge the aforementioned liabilities within the time limit specified in the notification, the creditor (creditors) will apply to a court for the institution of bankruptcy proceedings against the enterprise.

6.2. Under Article 3 (wording of 20 March 2001) of the Law on Enterprise Bankruptcy, creditors are natural and legal persons entitled to require the enterprise to discharge its obligations and liabilities, inter alia, such creditors are also employees of the enterprise (successors thereof) in the event of the non-payment of work remuneration and compensation for the damage resulting from employment relations (Item 2).

Thus, the creditors of the enterprise may be different natural and legal persons, inter alia, the employees of the enterprise, if work remuneration is not paid to them or they are not compensated for the damage resulting from employment relations.

6.3. Neither Paragraph 2 (wording of 22 December 2011) of Article 6 of the Law on Enterprise Bankruptcy, nor the other provisions of the said law prescribe that the enterprise which, in accordance with the established procedure, was notified by the creditor (creditors) of their intention to apply to a court for the institution of bankruptcy proceedings, must give the notification of this fact to the other creditors that have not applied to it with such a notification, inter alia, to the employees to whom work remuneration is not paid or who are not compensated for the damage resulting from employment relations. Laws do not prescribe such an obligation to an insolvent enterprise and in respect of those persons who intend to conclude an employment contract with it.

Thus, information about the fact that an insolvent enterprise has received the creditor’s (creditors’) notification to the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings is not public and, inter alia, persons who work in an insolvent enterprise under employment contracts and those who intend to conclude an employment contract with it may be unaware of such information.

6.4. Under Paragraph 3 (wording of 20 March 2001) of Article 1 of the Law on Enterprise Bankruptcy, the provisions of other laws, which regulate the relations linked to the enterprise bankruptcy process, are applied to the extent the they do not contradict the provisions of this law. Under Article 1 (wording of 15 April 2008) of the Code of Civil Procedure of the Republic of Lithuania, this code establishes the procedures for conducting bankruptcy proceedings as well as delivering and enforcing judgments. Bankruptcy proceedings are conducted in accordance with the rules of this code, save the exceptions established in other laws of the Republic of Lithuania. Thus, bankruptcy proceedings are conducted, inter alia, under the rules established in the Code of Civil Procedure.

Article 178 (wording of 15 April 2008) of the Code of Civil Procedure establishes that parties must prove the circumstances on the basis of which they substantiate their claims and rebuttals, save the cases where one invokes the circumstances that, under the procedure established in this code, do not have to be proven.

Under Paragraph 1 of Article 5 (wording of 20 March 2001) of the Law on Enterprise Bankruptcy, the following persons have the right to file a petition with a court for the institution of bankruptcy proceedings against an enterprise:

1) the creditor (creditors);

2) the owner (owners);

3) the head of the enterprise administration.

Paragraph 7 (wording of 20 March 2001) of Article 9 of the Law on Enterprise Bankruptcy establishes the grounds for instituting bankruptcy proceedings, i.e. bankruptcy proceedings are instituted if a court has established the presence of at least one of the following conditions:

1) an enterprise is insolvent or is late with the payment of work remuneration and payments linked to  employment relations to an employee (employees). Under Paragraph 8 (wording of 20 March 2001) of Article 2 of the Law on Enterprise Bankruptcy, the insolvency of an enterprise is understood as the state of the enterprise when the enterprise fails to discharge its liabilities (pay debts, carry out work paid for in advance, etc.) and when the overdue liabilities of the enterprise (debts, unperformed work, etc.) are in excess of half of the value of the assets entered in the enterprise’s balance;

2) an enterprise has publicly announced to or notified the creditor (creditors) in any other manner of its inability or lack of intent to discharge its liabilities.

To sum up the legal regulation specified in the Code of Civil Procedure and established in the Law on Enterprise Bankruptcy, it should be held that parties, i.e. the creditor (creditors) of the enterprise, the owner (owners) of the enterprise and the head of the enterprise administration, being under the obligation to substantiate their claims and rebuttals, must, when applying to a court for the institution of bankruptcy proceedings, submit evidence on the solvency or insolvency of the enterprise. The court adopts a procedural document on whether there are grounds to institute bankruptcy proceedings against the enterprise only after it assesses evidence on the solvency or insolvency of the enterprise submitted by the parties concerned. In itself, an application to a court for the institution of bankruptcy proceedings does not oblige the court to institute bankruptcy proceedings. Thus, the moment at which the insolvency of the enterprise arises is established by a court when it adopts a procedural decision for the institution of bankruptcy proceedings and it may not be established on the basis of notices in periodical publications and in the media, as prescribed in Item 14 (wording of 25 August 2006) of the Regulations of the Guarantee Fund. In the context of the constitutional justice case at issue, it should be noted that, for the specified reasons, inter alia, persons who work in an insolvent enterprise under employment contracts and those who intend to conclude an employment contract with it may be unaware of the fact of the insolvency of the enterprise.

  1. The aforementioned explanatory note of the Draft Law Amending and Supplementing Articles 1, 3, 4, 5, 6, 10, and 13 of the Law on the Guarantee Fund, and Amending the Annex to the Law makes it clear that the provision (impugned by the petitioner) of the Law on the Guarantee Fund was related to the implementation of the right of the Member States to take the measures necessary to avoid the abuses of the guarantees provided for in laws, which is established in Article 10 of Council Directive 80/987/EEC of 20 October 1980 on the protection of employees in the event of the insolvency of their employer (as amended by Directive 2002/74/EC of the European Parliament and of the Council of 23 September 2002). Thus, Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund should also be construed in the context of the Directive.

7.1. Recital 2 of the Directive established that the Directive aims to provide a minimum degree of protection for employees in the event of the insolvency of their employer. Under Article 1 of the Directive, the Directive shall apply to employees’ claims arising from contracts of employment or employment relationships and existing against employers who are in a state of insolvency within the meaning of Paragraph 1 of Article 2, whilst under Article 10(a), the Directive does not affect the option of the Member States to take the measures necessary to avoid abuses. It should be mentioned that the Directive was codified upon the adoption of Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 on the protection of employees in the event of the insolvency of their employer (codified version), Article 12(a) whereof established a provision that was analogous to the aforesaid Article 10(a) of the Directive.

7.2. The Constitutional Court has noted on more than one occasion that the jurisprudence of the Court of Justice of the European Communities (now—the Court of Justice of the European Union (hereinafter referred to as the CJEU), as a source of the construction of law, is also important to the construction and application of the Lithuanian law (the Constitutional Court’s rulings of 21 December 2006, 15 May 2007, 4 December 2008, 27 March 2009, and 22 December 2011).

In construing the provision of Article 10(a) of the Directive, the CJEU held that it allows for the adoption of the measures that do not provide a minimum level of protection accorded by Article 4 of the Directive for employees, however, it emphasised that the application of the national legal regulation, intended to prevent the aforementioned abuses, in national courts cannot compromise the objectives pursued by the Directive. Inasmuch as Article 10(a) of the Directive establishes an exception to the general rule, it must be construed narrowly. In addition, it must be construed in such a way that is compatible with the social purpose of the Directive, which is to guarantee employees a minimum level of protection in the event of the employer’s insolvency through the payment of payments resulting from employment contracts or employment relationships and payable for a specific period. Under Article 10(a) of the Directive, abuses are considered such measures (practices) that adversely affect guarantee institutions by artificially giving rise to a claim for salary, thereby illegally triggering a payment obligation on the part of those institutions (the judgment of the CJEU of 11 September 2003 in Case C-201/01 Maria Walcher v Bundesamt für Soziales und Behindertenwesen Steiermark, Paragraphs 36–39).

  1. It has been mentioned that the petitioner requests an investigation into whether Paragraph 12 (wording of 26 June 2008) (to the extent indicated) of Article 5 of the Law on the Guarantee Fund was not in conflict with Article 52 of the Constitution and the constitutional principle of a state under the rule of law.

8.1. Article 52 of the Constitution prescribes: “The State shall guarantee its citizens the right to receive old age and disability pensions as well as social assistance in the event of unemployment, sickness, widowhood, loss of the breadwinner, and in other cases provided for by law.”

This article of the Constitution specifies the types of pensions (old age and disability) and the types of social assistance (in the event of unemployment, sickness, widowhood, loss of the breadwinner) (the Constitutional Court’s rulings of 10 February 2000, and 14 December 2010). The pensions and social assistance specified in Article 52 of the Constitution are one of the forms of social protection (the Constitutional Court’s rulings of 25 November 2002, 5 March 2004, 7 February 2005, 29 April 2008, and 14 December 2010). The Constitutional Court has held on more than one occasion that, under the Constitution, a law may also establish other types of pensions and social assistance, not only those which are expressis verbis specified in Article 52 of the Constitution.

When construing Article 52 of the Constitution, the Constitutional Court has held in its rulings on more than one occasion that: under the Constitution, the State of Lithuania is socially oriented and every citizen has the right to social security; social maintenance, i.e. contribution by society to the support of those of its members who, for the reasons provided for by law, are unable to support themselves through work or other means, or whose maintenance is insufficient, has the status of a constitutional value; measures of social security express the idea of social solidarity and help a person to protect themselves from possible social hazards.

The provisions of Article 52 of the Constitution which guarantee the right to social maintenance at the same time oblige the state to establish adequate measures for the implementation and legal protection of the said right (inter alia, the Constitutional Court’s rulings of 2 September 2009, 20 April 2010, 14 December 2010, 6 February 2012, and 7 February 2013). The state must create such a system of social maintenance that would help to maintain living conditions corresponding to personal dignity, and, in case of need, would provide a person with necessary social help (inter alia, the Constitutional Court’s rulings of 26 September 2007 and 6 February 2012).

The formulation “the state shall guarantee” of Article 52 of the Constitution means, inter alia, that various types of social assistance are guaranteed for those persons and on those bases that are established by law (the Constitutional Court’s rulings of 23 April 2002, 7 February 2005, 26 September 2007, and 29 April 2008, and its decision of 20 April 2010). Separate types of social assistance, the persons who are granted social assistance, the grounds and conditions for granting and paying social assistance and the amounts thereof may be established solely by law (the Constitutional Court’s rulings of 5 March 2004, 7 February 2005, 29 April 2008, 2 September 2009, and 14 December 2010).

8.2. The Constitutional Court has held that the constitutional principle of a state under the rule of law is a universal principle upon which the entire legal system of Lithuania and the Constitution itself are based. The constitutional principle of a state under the rule of law is especially capacious and it comprises a wide range of various interrelated imperatives.

The Constitutional Court has held on more than one occasion that the principle of a state under the rule of law, which is consolidated in the Constitution, in addition to other requirements, also implies that human rights and freedoms must be ensured (inter alia, the Constitutional Court’s rulings of 23 February 2000, 22 December 2010, 16 May 2013, and 9 October 2013).

The Constitutional Court has also held in its acts on more than one occasion that the constitutional principle of proportionality is one of the elements of the constitutional principle of a state under the rule of law, which means that the measures provided for by law must be in line with legitimate objectives which are important to society, that these measures must be necessary in order to reach the said objectives, and that these measures must not restrict the rights and freedoms of a person clearly more than necessary in order to reach the said objectives (inter alia, the Constitutional Court’s rulings of 11 December 2009, 15 February 2013, 16 May 2013, and 9 October 2013).

The requirement, while complying with the constitutional principle of proportionality, not to limit the rights and freedoms of a person more than necessary in order to reach legitimate objectives that are important to society, inter alia, implies the requirement for the legislature to establish the legal regulation that would create preconditions for the sufficient individualisation of the limitations on the rights and freedoms of a person: the legal regulation limiting the rights and freedoms of a person, which is provided for by law, must be such that would create preconditions for assessing, to the extent possible, an individual position of each person and, in view of all the important circumstances, for individualising as appropriate the specific measures that are applicable to and limit the rights of that person (the Constitutional Court’s ruling of 7 July 2011).

The Constitutional Court has noted that the content of the constitutional principle of a state under the rule of law should be disclosed by taking account of the content of various other constitutional principles, including the principle of justice (which comprises, inter alia, natural justice). Any disregard for the principle of justice, which is consolidated in the Constitution, would also mean disregard for the constitutional principle of a state under the rule of law (the Constitutional Court’s rulings of 3 November 2005, 22 December 2010, and 9 October 2013). Justice may not be achieved through the satisfaction of the interests of exclusively one group and the simultaneous denial of the interests of others (the Constitutional Court’s rulings of 4 March 2003 and 9 October 2013).

The Constitutional Court has held on more than one occasion that the protection of legitimate expectations, legal certainty and legal security are inseparable elements of the principle of a state under the rule of law. The constitutional principles of the protection of legitimate expectations of a person, legal certainty and legal security imply the state’s obligation to ensure the certainty and stability of any legal regulation, to protect the rights of persons, and to respect legitimate interests and legitimate expectations. These principles, inter alia, imply that the state must fulfil all its obligations undertaken to a person. If the protection of legitimate expectations, legal certainty and legal security were not ensured, a person’s trust in the state and law would not be ensured, either.

8.3. The constitutional principle of a state under the rule of law is also inseparable from the principle of the equality of rights of persons consolidated in the Constitution, inter alia, in Article 29 thereof. A violation of the constitutional principle of the equality of rights of persons is, at the same time, a violation of the constitutional imperatives of justice and harmonious society, thus, it is also a violation of the constitutional principle of a state under the rule of law (inter alia, the Constitutional Court’s rulings of 6 February 2012, 14 December 2012, 30 April 2013, and 1 July 2013).

Paragraph 1 of Article 29 of the Constitution prescribes that all persons shall be equal before the law, the court, and other state institutions and officials. The constitutional principle of the equality of persons before the law requires that in law the main rights and duties be established equally to all (inter alia, the Constitutional Court’s rulings of 24 December 2008, 2 March 2009, 22 December 2011, 29 March 2012, 4 June 2012, and 24 May 2012).

It should be noted that the constitutional principle of the equality of persons before the law, which means the innate right of a human being to be treated equally with others, obliges one to assess the same facts in the same manner and prohibits the arbitrary assessment of the facts that are essentially the same in a different manner, but it does not deny that a law may establish a different legal regulation with respect to certain categories of persons who are in different situations. The constitutional principle of the equality of persons before the law would be violated if certain persons or their groups were treated in a different manner, even though there are no differences of such a character and to such an extent between the said persons or their groups that such uneven treatment could be objectively justified (inter alia, the Constitutional Court’s rulings of 29 June 2012, 14 December 2012, 15 February 2013, 16 May 2013, and 15 November 2013).

  1. It has been mentioned that the petitioner’s doubt regarding the compliance of Paragraph 12 (wording of 26 June 2008) (to the extent indicated) of Article 5 of the Law on the Guarantee Fund with Article 52 of the Constitution is substantiated by the fact that, by violating the constitutional principles of a state under the rule of law and justice, the regulation impugned by the petitioner unreasonably limits the opportunities of the employees of enterprises in bankruptcy or bankrupt enterprises to receive, in the event of unemployment, social assistance provided for by the Constitution and the Law on the Guarantee Fund. According to the petitioner, social assistance to the persons who lost their job due the bankruptcy of their employer is the social assistance that is guaranteed, in the event of unemployment, by the state in Article 52 of the Constitution.

It should be noted that, as mentioned before, under the Law on the Guarantee Fund, the funds from the Guarantee Fund are allocated, in the sizes established by law and by sub-statutory legal act, for the payments that arise from employment relations and that are earned by and belong to an employee: the said payments are paid irrespective of whether the employment relations of an employee and an enterprise in bankruptcy (bankrupt enterprise or enterprise liquidated due to bankruptcy) continue or have terminated. This means that these funds are also allocated if, after the termination of the aforementioned employment relations, a former employee has another job and receives income. Thus, the allocation of the funds from the Guarantee Fund is not the social assistance guaranteed, in the event of unemployment, by the state. Such allocation of the funds is not another kind of social assistance either that is expressis verbis not identified in Article 52 of the Constitution, since payments from the Guarantee Fund are allocated not in order to maintain (support) persons who, for the reasons established by law, cannot provide for themselves with income from work or other income or who are not provided for sufficiently, but in order to, without exceeding the sizes established by legal acts, pay remuneration earned by them and other payments related to employment relations, which their employer (enterprise) is indebted to them or unable to pay to them due to their insolvency.

Thus, it should be held that the Law on the Guarantee Fund, inter alia, Paragraph 12 (wording of 26 June 2008) of Article 5 thereof, regulated the relations of a different character than those established in Article 52 of the Constitution. For this reason, there is no ground to hold that Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund, insofar as it established that payments from the funds of the Guarantee Fund are not allocated to the employees who concluded an employment contract with an insolvent enterprise after the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings, was in conflict with Article 52 of the Constitution.

  1. It has been mentioned that the petitioner’s doubt regarding the compliance of Paragraph 12 (wording of 26 June 2008) (to the extent indicated) of Article 5 of the Law on the Guarantee Fund with the constitutional principle of a state under a rule of law is substantiated by the fact that, under the legal regulation established in Paragraph 1 of Article 3 of the Law on the Guarantee Fund, the funds from the Guarantee Fund are allocated for payments, in the size established by the Law on the Guarantee Fund, to the employees of enterprises in bankruptcy or bankrupt enterprises, who worked in the enterprise prior to the day of the passing of a court’s ruling to institute bankruptcy proceedings against the enterprise or prior to the day of the decision of the creditors’ meeting to carry out bankruptcy procedures by extrajudicial means, however, this regulation is partly negated after Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund has established the exceptions to, and conditions of, the allocation of payments from the Guarantee Fund, where an employee who concludes an employment contract is unaware of and is unable to find out about such exceptions and conditions. Thus, the principles of the protection of legitimate expectations of a person, legal certainty and legal security, which imply the state’s obligation to ensure the certainty and stability of any legal regulation, to protect the rights of persons, and to respect legitimate interests and legitimate expectations, are not complied with.

10.1. It has been held in this Constitutional Court’s ruling that, assessing the legal regulation established in Paragraph 1 (wording of 23 March 2006) of Article 3 and in Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund in a systemic manner, insofar as the compliance of these paragraphs with the Constitution is impugned by the petitioner, under the said legal regulation, payments from the funds of the Guarantee Fund are allocated to the employees who worked in an enterprise prior to the day of the passing of a court’s ruling to institute bankruptcy proceedings against the enterprise or prior to the day of the decision of the creditors’ meeting to carry out bankruptcy procedures by extrajudicial means, but who, at the same time, concluded an employment contract with an insolvent enterprise not later than prior to the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings, i.e. the aforesaid provision of Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund was an exception in respect of Paragraph 1 (wording of 23 March 2006) of Article 3 of the said law. It should be noted that the mere fact that, in view of a certain legal regulation, an exception is made, does not mean that the principles of the protection of legitimate expectations of a person, legal certainty and legal security are violated.

10.2. As mentioned before, the constitutional principle of proportionality is one of the elements of the constitutional principle of a state under the rule of law, which means that the measures provided for by law must be in line with legitimate objectives which are important to society, that these measures must be necessary in order to reach the said objectives, and that these measures must not restrict the rights and freedoms of a person clearly more than necessary in order to reach the said objectives.

The aforementioned explanatory note of the Draft Law Amending and Supplementing Articles 1, 3, 4, 5, 6, 10, and 13 of the Law on the Guarantee Fund, and Amending the Annex to the Law makes it clear that the provision (impugned by the petitioner) of the Law on the Guarantee Fund was aimed at preventing the spreading practice of groundlessly increasing the number of employees before bankruptcy proceedings are instituted in insolvent enterprises (such a practice used to create the preconditions for such individuals to receive payments from the Guarantee Fund) and at ensuring the satisfaction of outstanding claims which stem out of actual employment relations.

Under the provision (impugned by the petitioner) of Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund, payments from the funds of the Guarantee Fund were not allocated to the employees who concluded an employment contract with an insolvent enterprise after the day that the creditor (creditors) had notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings, i.e. it was presumed that in all cases when an employee concluded an employment contract with an insolvent enterprise after the notification of such an intention, fake employment relations were created for the sole purpose that employees would receive law-established payments from the funds of the Guarantee Fund. Such a presumption is ungrounded, since, as mentioned before, information about the insolvency of the enterprise and about the fact that it has received the creditor’s (creditors’) notification of their intention to apply to a court for the institution of bankruptcy proceedings against it is not public and the persons who intend to conclude an employment contract with an insolvent enterprise may be unaware of such information.

10.3. It should be mentioned that, contrary to what has been maintained by the representative of the party concerned, Item 14 of the Regulations of the Guarantee Fund does not ensure an opportunity for a person who intends to conclude an employment contract with an insolvent enterprise to get information about the financial status of their employer.

The legal regulation established in Item 14 (wording of 25 August 2006) of the Regulations of the Guarantee Fund means that it entrenched only the sources of factual data, inter alia, the creditors’ notification to the enterprise of their intention to initiate a bankruptcy process, on the basis of which the moment at which the insolvency of an enterprise arises is established, however, it did not prescribe that such a notification had to be made public.

10.4. In the context of the constitutional justice case at issue, it should be noted that, inter alia, such a situation may arise where, under the aforementioned legal regulation established in Paragraph 2 (wording of 22 December 2011) of Article 6 of the Law on Enterprise Bankruptcy, after receiving the creditor’s (creditors’) notification of their intention to apply to a court for the institution of bankruptcy proceedings, which sets a period of at least 30 days during which an enterprise must discharge its liabilities to the creditor (creditors), an insolvent enterprise concludes employment contracts with new employees in order to discharge the said liabilities and thereby to avoid bankruptcy. In this context, it should be mentioned that the Law on the Guarantee Fund and the Law on Enterprise Bankruptcy have never contained any prohibition for an insolvent enterprise to conclude employment contracts with new employees prior to the day of the passing of a court’s ruling to institute bankruptcy proceedings against the enterprise or prior to the day of the decision of the creditors’ meeting to carry out bankruptcy procedures by extrajudicial means. Thus, the provision (impugned by the petitioner) of Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund limits the right of a person, who was employed in good faith, to receive remuneration and other employment-related payments from the funds of the Guarantee Fund more than necessary in order to reach the objective—to prevent the right arising from fake employment relations to demand that the said payments be allocated—as well as it does not ensure the requirement, which stems from the constitutional principle of proportionality, for the legislature to establish the legal regulation that would create preconditions for the sufficient individualisation of the limitations on the rights and freedoms of persons.

10.5. Thus, it should be held that Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund, insofar as it established that payments from the funds of the Guarantee Fund are not allocated to the employees who concluded an employment contract with an insolvent enterprise after the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings, violated the constitutional principle of proportionality—an element of the constitutional principle of a state under the rule of law.

10.6. In the light of the foregoing arguments, the conclusion should be drawn that Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund, insofar as it established that payments from the funds of the Guarantee Fund are not allocated to the employees who concluded an employment contract with an insolvent enterprise after the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings, was in conflict with the constitutional principle of a state under the rule of law.

  1. It has been mentioned that, after summing up the legal regulation established in Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund and in Paragraph 2 (wording of 22 December 2011) of Article 6 of the Law on Enterprise Bankruptcy, information about the fact that an insolvent enterprise has received the creditor’s (creditors’) notification to the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings against it is not public, inter alia, persons who work in an insolvent enterprise under employment contracts and those who intend to conclude an employment contract with it may be unaware of this information. Therefore, from this aspect, the situation of persons who work in an insolvent enterprise under employment contracts and that of persons who intend to conclude an employment contract with such an enterprise does not differ in substance, however, the protection guarantees in the event of the insolvency of their employer and the ways of the protection of their rights, established for those groups in Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund and other laws, were different.

Where an employment contract had been concluded before the creditor (creditors) notified an insolvent enterprise of their intention to apply to a court for the institution of bankruptcy proceedings, an employee had, under Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund, to be allocated a payment in the size established by this law, from the funds of the Guarantee Fund; if such a contract was concluded after the day that the creditor (creditors) had notified an insolvent enterprise of such an intention, an employee had the right to file claims against an insolvent enterprise for the liabilities that had not been discharged by the said enterprise regarding employment relations solely under the procedure established by the Law on Enterprise Bankruptcy. In this context, it should be noted that these cases differ in substance only because of the fact that the Law on the Guarantee Fund ensures that an employee will be paid a payment in the size established by law, from the funds of the Guarantee Fund, whilst the satisfaction of the claims which are related to employment relations and filed against an insolvent enterprise under the procedure established by the Law on Enterprise Bankruptcy is not guaranteed since this depends on the funds of a relevant enterprise in bankruptcy or bankrupt enterprise. Thus, the provision (impugned by the petitioner) of Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund created such a situation where an employee with whom an insolvent enterprise concluded an employment contract after the creditor (creditors) had notified it of their intention to apply to a court for the institution of bankruptcy proceedings groundlessly found themselves in a worse situation than an employee with whom an employment contract had been concluded in an insolvent enterprise prior to the creditor’s (creditors’) aforesaid notification.

As mentioned before, under the Constitution, the constitutional principle of the equality of persons before the law means that the main rights and duties must be established in law equally to all; the constitutional principle of the equality of persons before the law would be violated if certain persons or their groups were treated in a different manner, even though there are no differences of such a character and to such an extent between the said persons or their groups that such uneven treatment could be objectively justified. The provision (impugned by the petitioner) of Paragraph 12 (wording 26 June 2008) of Article 5 of the Law on the Guarantee Fund created such a legal situation where an employee with whom an insolvent enterprise concluded an employment contract after it had been notified by the creditor (creditors) of their intention to apply to a court for the institution of bankruptcy proceedings, and where an employee with whom an employment contract had been concluded in an insolvent enterprise prior to the creditor’s (creditors’) aforesaid notification are treated in a different manner, even though there are no differences of such a character and to such an extent between the said persons or their groups that such uneven treatment could be objectively justified.

Thus, it should be held that Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund, insofar as it established that payments from the funds of the Guarantee Fund are not allocated to the employees who concluded an employment contract with an insolvent enterprise after the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings, violated the constitutional principle of the equality of persons before the law, which is consolidated in Paragraph 1 of Article 29 of the Constitution.

In the light of the foregoing arguments, the conclusion should be drawn that Paragraph 12 (wording of 26 June 2008) of Article 5 of the Law on the Guarantee Fund, insofar as it established that payments from the funds of the Guarantee Fund are not allocated to the employees who concluded an employment contract with an insolvent enterprise after the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings, was in conflict with Paragraph 1 of Article 29 of the Constitution.

Conforming to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1, 53, 531, 54, 55, 56, and 69 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania gives the following

ruling:

To recognise that Paragraph 12 (wording of 26 June 2008; Official Gazette Valstybės žinios, 2008, No. 79-3100) of Article 5 of the Republic of Lithuania’s Law on the Guarantee Fund, insofar as it established that payments from the funds of the Guarantee Fund are not allocated to the employees who concluded an employment contract with an insolvent enterprise after the day that the creditor (creditors) notified the enterprise of their intention to apply to a court for the institution of bankruptcy proceedings, was in conflict with Paragraph 1 of Article 29 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law.

This ruling of the Constitutional Court is final and not subject to appeal.

Justices of the Constitutional Court:                                   Elvyra Baltutytė

                                                                                                        Vytautas Greičius

                                                                                                        Danutė Jočienė

                                                                                                        Pranas Kuconis

                                                                                                        Gediminas Mesonis

                                                                                                        Vytas Milius

                                                                                                        Egidijus Šileikis

                                                                                                        Algirdas Taminskas

                                                                                                        Dainius Žalimas