02 April 2012 #Employment
In the case of the United States of America v Nolan, the Advocate General considered when the obligation to consult workforce representatives arises in the context of a collective redundancy.
On 20 September 2006, a US army base in Hampshire was closed leading to approximately 200 civilian redundancies. Christine Nolan, one of those made redundant, made a claim for a protective award on the grounds that the USA had not consulted workforce representatives ‘in good time’ as required under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992, which transposes the EU Collective Redundancies Directive 98/59 (‘Directive 98/59’) at national level. She submitted that collective consultations had only commenced on 5 June 2006, when the Secretary of the US Army had in fact made the decision to close the base no later than 13 March 2006 and the British military authorities had been notified of the decision in April 2006.
The Court of Appeal sought clarification from the European Court of Justice of whether the obligation to consult about collective redundancies, pursuant to Directive 98/59, arose:
(i) When the employer is proposing, but has not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies; or
(ii) Only when that decision has actually been made and he is then proposing consequential redundancies.
Under article 2(2) of Directive 98/59, the purpose of collective consultation is to find ways and means of avoiding redundancies, reduce the number of workers affected and to mitigate the consequences of any job losses. As such, the Advocate General confirmed that the employer’s obligations must arise whilst there is still the possibility of preserving the effectiveness of the consultations. Accordingly, consultations should not be launched too late, as would be the case if the employer began after the decision to terminate the employment contracts had already been taken, as per alternative (ii).
On the contrary, the Advocate General held that consultations would be premature if the employer was required to initiate consultations even when no strategic decision had been taken, as suggested in alternative (i).
The Advocate General held that the reasoning engaged by the ECJ in Akavan and others v Fujitsu Siemens Computers, regarding subsidiary companies, could equally apply to the instant case. Consequently, the Advocate General found that the obligation to collectively consult was triggered when an entity which controlled the employer, made a strategic or commercial decision, which compelled the employer to contemplate or plan for collective redundancies.
The Advocate General further suggested that the case should be referred back to the Court of Appeal to determine which of the events constituted a strategic decision exerting ‘compelling force’ on the employer thereby giving rise to the duty to commence collective consultations.
Although the ECJ often follows the opinion of the Advocate General, it is not obliged to do so; the ECJ will subsequently give its final response to the Court of Appeal’s reference in due course.
In summary consultation should not be started too soon nor should it be started too late. It is important to get the timing right as employers can be sued for failing to consult for protective awards which can amount to 90 days actual pay per employee.