The Advocate General's (AG's) opinion has been handed down today on when the obligation to collectively consult begins.

Background

In 2006, the United States (US) closed a US military base near Southampton. The UK EAT subsequently upheld an Employment Tribunal's decision that the US was in breach of its collective redundancy consultation duties by failing to:

  • consult representatives of civilian employees about the reasons for its closure, and
  • start consultation in good time (consultation started several weeks after the decision to close had been made).

The EAT confirmed that, where the closure of a workplace would inevitably lead to the redundancy of those working there, employers are under an obligation to consult over the reason for the closure (not just the implications), following its decision in UK Coal Mining Ltd v National Union of Mineworkers (Northumberland Area) and another [2008] ICR 163 (see HR e-briefing 330).

Court of Appeal

On appeal, the US argued that the EAT's interpretation of the EU Collective Redundancies Directive in UK Coal, above (and in the earlier case of R v. British Coal Corporation, Ex parte Vardy and Others [1993] ICR 720), had been superseded by the CJEU's decision in Akavan Erityisalojen Keskusliitto Alek RY and others v Fujitsu Siemens Computers OY Case C-44/08 2009 IRLR 944.

In UK Coal and Vardy, the EAT decided that the Directive required consultation over the formation of a clear, albeit provisional, intention to close a workplace, when such closure was contemplated as giving rise to collective redundancies. The CJEU's ruling in Fujitsu can be read as deciding that, upon the true interpretation of the Directive, the consultation obligation is not triggered by a proposed business decision to close a workplace; and that the consultation obligation only arises at the later stage when the business decision has been made and the intention to make the employees redundant has been formed.

On reviewing these arguments and studying  the Fujitsu decision, the Court decided that this point was unclear and it was unable to decide whether the consultation obligation arises (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 the employer is then proposing consequential redundancies. If option (ii) were correct, then the decision in UK Coal was made in error.

The Court concluded that it would only be able to decide the appeal with the benefit of  further guidance from the CJEU and accordingly referred the case.

Advocate General's opinion

The Opinion of the Advocate General has been published this morning as a precursor to Judgement of CJEU in the coming months. The opinion may or not be followed by the European Court but will be of  some comfort to employers in the meantime since it  suggests that employers should not be compelled to consult over the strategic or operational business decisions. The Opinion futhermore specifically states that consultation would be premature if it was initiated when no strategic or commercial decision had been taken. What is important, suggests the Advocate General, is to know whether or not such a decision compels the employer to contemplate collective redundancies.

In conclusion, the Advocate General is of the view that neither (i) or (ii) was the correct approach. The consultations would have been premature in (i) as no strategic or operational decision had been taken. On the other hand, the consultations would be late if the strategic decision had been made without leaving the employer any time to contemplate collective redundancies. The Advocate General's opinion is that an employer's obligation to consult arises when a strategic or commercial decision is taken which compels him to contemplate or plan for collective redundancies, it being for the UK to determine when that strategic decision is taken.

This particular case, as many others, is complicated by the fact that the decision on closure may be taken by another entity and  the employer may not be the party which initiates the  redundancies. Indeed redundancies can often be the inevitable consequence of a decision taken far above the employer's head. The Opinion specifically addresses that scenario and expresses the view that the duty to consult should not arise until the strategic or commercial decision which results in redundancies being contemplated has been taken by a body or entity which controls the employer.

Comment

The Opinion is of some comfort to employers in that, if it is followed by the CJEU in due course, employers will not be obliged to consult employees over commercial issues such as whether or not to close their business. However, the Advocate General's role is that of independent advisor to the Court and though an opinion carries considerable weight, there are plenty of recent examples of the CJEU disagreeing with its Advocate General's views. The Opinion is therefore persuasive at best. The CJEU will give its final ruling in the case later this year and we await the decision with interest.

Please click here to read the case.