In today's decision the European Court of Justice has declined to answer an important question on collective redundancies posed by the Court of Appeal nearly two years ago. The ECJ has said that it has no jurisdiction to deal with the reference, mainly because the United States Government could have relied on sovereign immunity to avoid the litigation.
This will be disappointing news not just to the Court of Appeal, but to all employers who do not happen to be independent states outside the EU. The Court of Appeal had thought that the question it asked – about the precise timing of the requirement to commence consultation – was “too important” to risk getting wrong. Given the stance taken by the ECJ, it will presumably now have to take just that risk.
In the reference, the Court of Appeal asked whether the Collective Redundancies Directive required an employer to start consultation at the point when it is proposing, but has not yet made, a strategic or operational decision that will foreseeably or inevitably lead to collective redundancies. Alternatively it asked whether the obligation was only triggered once that decision had already been made and the employer is then proposing consequential redundancies.
In some cases these two stages in the decision-making process are hard to distinguish, but in others it could make a crucial difference to the point at which consultation needs to start. It will now be some time before the law is clarified, because even after the Court of Appeal has ruled on the point, the law will not be completely settled until the next suitable reference comes before the ECJ. In the meantime employers wishing to minimise the risk of a protective award would do best to work on the basis that the stricter interpretation of the Directive (ie the first option posed by the Court of Appeal) is the correct one.