A recent opinion of the ECJ's Advocate General Mengozzi*, gives guidance on the proper interpretation of the expression "contemplating collective redundancies" when dealing with a proposal of a parent company to shutdown a subsidiary. The EC Collective Redundancies Directive provides that "where an employer is contemplating collective redundancies he shall being consultation with the workers' representatives in good time with a view to reaching agreement."

The Advocate General's opinion is that:

  1. The obligation to consult arises only when a planned shutdown moves from a proposal or probability to an actual intention.
  2. In the case of a group of companies, a parent company may foresee redundancies as a result of shutdown plans or proposals, however the obligation to consult arises only when the parent company identifies the subsidiary which will be affected by the redundancies.
  3. The triggering of the employer's obligation to consult cannot be delayed on the basis that the employer does not have all of the information which it is required to give to the worker's representatives as the Directive provides that the information be given during the course of the consultation period.
  4. In the case of a group of companies, the final decision of the parent company on collective redundancies at a subsidiary cannot be made until consultations with the worker's representatives have been concluded.  

Comment:

The ECJ follows the Advocate General's opinion in the majority of cases and the Court's decision is in this case is due towards the end of 2009. If the ECJ follows the Advocate General's opinion in this case, then it is possible that their decision may render Section 9 of the Protection of Employment Act 1977 incompatible with EU law. Section 9 provides that the requirement to consult with employee's representatives is triggered when an employer proposes to create collective redundancies. The Advocate General is clear that in his view, the obligation to consult does not arise when the employer makes plans or proposals to adopt measures, as a consequence of which, if the measures are adopted, redundancies are expected (such as a proposal to shutdown which is under consideration but has not yet been adopted by the Board). Rather the consultation requirement is triggered only when it is apparent that the employer intends to make collective redundancies, or at the very least foresees the possibility of doing so.

*Akavan Erityisalojec Keskusliitto AEK ry and Others –v Fujitsu Siemens Computers Oy – Opinion of Advocate General Mengozzi delievered on 22 April 2009. Case C-44/08.