A recent decision of the European Court of Justice (ECJ) in relation to collective redundancies (Akavan Erityisalojen Keskuslitto AEK ry v Fujitsu Siemens Computers) has confirmed that:

  • the obligation to consult with employee representatives is triggered when a strategic decision is taken that will result in the employer contemplating or planning for redundancies;
  • in the context of group companies, a subsidiary employer's duty to consult applies whether the decision is taken by the parent company or the subsidiary itself and even if the subsidiary employer has not been properly or immediately informed of the decision;
  • the obligation is triggered regardless of whether the subsidiary employer is able to supply representatives with all the information required by the Directive, which requires the information to be supplied during the consultation. It need not all be supplied before consultation commences;
  • the subsidiary employer must conduct consultations before the parent company takes the decisions to terminate employment contracts.

This is not new law but acts as a timely reminder that subsidiary companies will bear the consequences of the parent company's action. The parent company should seek advice in the relevant legal jurisdiction before taking actions or making decisions that might breach local employment laws.