Redacción

LABOR CREDITS VS. REAL GUARANTEES: THE CJEU REDEFINES HIERARCHY IN CORPORATE INSOLVENCY

Por Diego Ricardo Molinari Chiarappa / 02 de octubre de 2025

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📎 Labor credits vs. real guarantees: The CJEU redefines hierarchy in corporate insolvency
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👉 🧑‍⚖️ Labor credits and real guarantees: What does the CJEU say about their hierarchy?
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💬 The protection of labor credits in corporate insolvency contexts has historically been a cornerstone of Labor Law. Its foundation lies in the subsistence nature of wages and social benefits, which requires stronger protection against other creditors. However, this protection comes into tension when confronted with the system of real guarantees, pillars of Civil and Commercial Law that ensure the stability of credit and investment. In this scenario, the Court of Justice of the European Union (CJEU) has had to rule on the primacy of labor credits over real guarantees, generating a far-reaching legal debate. ✍️
⚖️ The hierarchy conflict: labor privileges vs. real guarantees
Labor credits enjoy a “super-privilege” in many legal systems, meaning that, in case of bankruptcy or liquidation, they are granted priority even over secured creditors. This preference is justified by reasons of social justice and worker protection, considered the weaker party in the labor relationship.
On the other hand, real guarantees —such as mortgage or pledge— represent credit rights backed by specific assets, and their effectiveness depends precisely on their precedence over other credits. If subordinated to labor credits, the confidence of the financial system is weakened, affecting the availability of credit and investment.
🏛️ The CJEU’s position: balance between social protection and legal certainty
The CJEU has addressed this tension in various rulings, especially in the framework of Directive 2008/94/EC on the protection of employees in the event of the employer’s insolvency. This rule obliges Member States to guarantee the payment of unpaid labor credits but does not establish an absolute hierarchy over real guarantees.
In its rulings, the CJEU has adopted a balanced position. It recognizes the need to protect labor credits but also warns that such protection cannot deprive secured creditors’ rights of substance. In other words, the primacy of labor credits must not be automatic or absolute, but weighed according to the legal and economic context of each case.
📌 Balancing criteria: when does one prevail over the other?
The CJEU has suggested that the solution must involve a harmonized interpretation that respects the principles of proportionality, legal certainty, and effective protection. Some of the criteria that may influence the hierarchy between labor credits and real guarantees are:
• Nature of the asset under guarantee: If it concerns assets essential for the continuity of the business, a labor preference may be justified.
• Timing of the guarantee creation: Guarantees created in fraud of creditors or close to insolvency may be subordinated.
• Existence of public wage guarantee funds: If the State guarantees payment of labor credits, the need for primacy over real guarantees may be relaxed.
• Economic impact of subordination: The effect on the credit system and investment may justify the prevalence of real guarantees.
🔍 Where is European case law heading?
The CJEU’s trend seems to move toward an intermediate solution: recognizing the special protection of labor credits, but without distorting the real guarantee system. This stance seeks to avoid turning labor protection into an obstacle to economic development, while ensuring that workers are not left unprotected in insolvency situations.
In this sense, the door opens to legislative reforms establishing compensation mechanisms, such as guarantee funds, mandatory insurance, or subrogation clauses, allowing the reconciliation of both interests without sacrificing the effectiveness of either.
📝 Conclusion: relative primacy or balanced coexistence?
The question of whether labor credits should prevail over real guarantees admits no single or categorical answer. The CJEU has made it clear that worker protection is essential, but it cannot be automatically imposed over consolidated property rights. The key is to design a system that allows the balanced coexistence of both, ensuring social justice without compromising legal certainty or economic efficiency.
This debate remains open, and new CJEU rulings will likely continue to define the boundaries of this relationship. For legal practitioners, employers, and workers, understanding this dynamic is crucial to anticipate risks, design strategies, and contribute to a fairer and more functional insolvency model.
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⚓️ Labor credits, real guarantees, CJEU, corporate insolvency, labor privilege, wage protection, secured creditors, credit hierarchy, social justice, legal certainty, Directive 2008/94/EC, bankruptcy proceedings, regulatory balance, property rights, worker protection.

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