The Advocate-General (AG) of the Court of Justice of the European Union (CJEU) has delivered his opinion in the case of USA v Nolan, prior the case being heard before the full Court later this year, on the point at which the obligation to collectively consult on redundancies arises.  The question asked of him was did the obligation arise either when an employer is proposing, but has not yet made, a business decision that will lead to collective redundancies, or only after that decision is made and the collective redundancies are actually proposed.  The Advocate General said “neither” was the correct test and proposed an alternative.

Nolan was a civilian employee of a US naval base in the UK.  A decision was made to close the base on 13 March 2006.  The British military authorities were informed of this decision in April 2006, and on 9 May the UK government was informed the base would be returned to the UK on 30 September 2006.  Formal collective consultation with the 200 employees who were all to be made redundant commenced in June 2006.  Nolan, an employee representative, brought claims on behalf of those employees that collective consultation had not begun “in good time”.  The Tribunal upheld the claims on the basis that the US had not explained why consultation had not begun before 13 March 2006, or at least before 9 May 2006.  The US appealed this decision to the Employment Appeal Tribunal (EAT), and then the Court of Appeal, who referred the question on the point at which the duty to collectively consult arises to the CJEU.

Before the case is heard before the full Court, the Advocate-General has issued his opinion that the obligation to consult arises when “a strategic or commercial decision is taken that compels the employer to contemplate or plan collective redundancies”.  He felt that consultation before the business decision had been taken would be premature, but it would be too late if left until the redundancies were actually proposed.

Given that consultation must concern ways of avoiding the redundancies, it is clear that consultation must commence at a time when there is still a possibility of avoiding the redundancies.  Therefore, if a business decision is taken making redundancies unavoidable, and consultation begins after that decision is taken, it will have commenced too late.  However, consultation should not begin prematurely, if factors that had to be consulted over were still to be determined.

Impact for employers

  • Regrettably this opinion doesn’t bring much clarity to the issue of when the duty to consult arises, and so doesn’t provide much assistance to the Court of Appeal in interpreting the Directive in this case.  Whilst the CJEU generally always follows the opinion of the AG, it is not bound to do so, and so we may get further clarity when the CJEU issues its judgment in due course. 
  • In the meantime, employers should continue to ensure that they begin collective consultation at an early stage, before redundancies are a foregone conclusion.  Whether this occurs before or after a business decision has been taken will depend on the particular circumstances of the case.