The European Court of Justice (ECJ) has developed a general principle of state responsibility for non-compliance with EU law. State liability derives from the fact that EU Member States are responsible for the creation and above all for the implementation and enforcement of EU law. Enforcement of state liability for violations of rights granted to individuals by EU law, including in the fields of employment and industrial relations, is carried out through the national courts of the Member States.
Many EU rights, particularly those in the many directives in the fields of employment and industrial relations, are enforced through the doctrine of direct effect of directives: the state and emanations of the state are liable, even where responsibility for the non-implementation of the EU directive lies with other organs of the State. The impact of directives remains limited, however, by the insistence of the ECJ on the exclusively vertical responsibility of the state (vertical direct effect) which prevents enforcement of directives against private individuals (horizontal direct effect) even where EU law imposes responsibilities on these persons.
The ‘useful effect’ (from the French effet utile) rationale for direct effect requires a remedy where private individuals fail to respect provisions of EU law. To circumvent the limitations of the doctrine of horizontal direct effect, the ECJ developed a general principle of state responsibility for compliance with EU law. This doctrine was created by a case in the field of employment rights: Andrea Francovich and Others v. Italian Republic, Joined Cases C-6/90 and C-9/90,  ECR I-5357, and the resulting principle of state liability is called the Francovich principle.
The elements of liability, which comprise the Francovich principle, that emerged from the decision of the ECJ include: (i) a breach of EU law; (ii) attributable to the Member State; (iii), which causes damage to an individual. If these elements are established, compensation may be claimed in a legal action before a national court.
The principle of state liability was said to be also explicit in Article 4(3) TEU. It relies on a basic principle of the EU legal order: that national courts must protect the rights conferred by EU law on individuals, including enforcement of these rights where the state is responsible.
The breach of EU law in the Francovich case itself was a violation of the EU directive by reason of the national legislator failing to act to implement it. However, total failure to implement a directive is only one type of violation of EU law. Implementation of a directive by a Member State may be partial or incorrect or inadequate. There are numerous decisions of the European Court upholding complaints against Member States for faulty implementation of a directive.
The Member State remains responsible even when it has entrusted ‘management and labour, at their joint request, with the implementation of directives adopted pursuant to paragraphs 2 and 3’, according to article 153(3) TFEU. In this case, the Member State must ensure that ‘management and labour have introduced the necessary measures by agreement’ and must take ‘any measure enabling it at any time to be in a position to guarantee the results imposed by that directive’.
Violations of EU law by different organs of the state will engage liability; the state is responsible for acts of public law bodies or others to which the state has delegated the performance of its responsibilities. For example, the Court has held that failure to transpose a directive into national law within the prescribed time limit amounts of itself to a sufficiently serious breach, giving rise to state liability (Dillenkoffer and others v. Federal Republic of Germany, Cases C-178-9/94, 188-190/94 ).
The principle of state responsibility has potentially far-reaching implications for the enforcement of EU labour law. If an individual has a definable interest protected by the directive, failure by the state to act to protect that interest may lead to state liability where the individual suffers damage, provided causation can be demonstrated. The directives on health and safety at work, on equal treatment of women and men, and an increasing number of directives regulating individual and collective interests of workers, are a fertile field for exploration of the scope of state liability.