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EWCs cannot slow down managerial decision-making

02 August 2019

In the UK’s first appeal case on the operation of a European Works Council (“EWC”), the Employment Appeal Tribunal (“EAT”) has ruled that EWCs cannot slow down managerial decision-making by delaying the provision of an opinion after being informed and consulted.

Background

The Transnational Information and Consultation of Employees Regulations 1999 (“TICER”) transpose the European Works Councils Directive (the “EWC Directive”) into UK law. TICER provides that certain multinational employers must inform and, if requested, must also consult with their EWC in the event of “exceptional circumstances affecting employees’ interests to a considerable extent”. Such circumstances include large-scale redundancies across the EU.

TICER also provides that those employers must provide a reasoned response to any opinion that their EWCs choose to provide. However, it does not indicate that an employer must await any opinion to which it would have to respond before it finalises its proposals. This reflects the fact that EWCs may choose not to provide an opinion.

Decision of the CAC

Oracle decided to centralise its Systems Remote Support operations in Romania in 2016. It anticipated that this project would lead to large-scale redundancies across the EU. It recognised that this amounted to exceptional circumstances. It proceeded to meet with its EWC accordingly. It then implemented its proposals before it had received an opinion from its EWC.

The EWC filed complaints against Oracle at the Central Arbitration Committee (CAC) about its information and consultation process. The CAC made a number of findings including that:

  • Oracle’s EWC was wrong to allege that management cannot implement its proposals until the EWC has given its opinion. Both TICER and the EWC Directive provide that an information and consultation meeting held in exceptional circumstances “shall not affect the prerogatives of the central management”.
  • Employers are not prohibited from taking management action at a national level before national employees’ representatives have been able to consider the opinion of the EWC. TICER is clear that the EWC and national information and consultation processes must “begin within a reasonable time of each other”. However, TICER says nothing further about linkage between the processes.

Decision of the EAT

The EAT dismissed the EWC’s appeals against those decisions of the CAC. It confirmed that, if exceptional circumstances arise, then an employer must inform its EWC and, if requested, must also consult with it. It then upheld the CAC’s decisions for the following reasons:

  • There is no obligation in TICER or the EWC Directive requiring employers to await an opinion from their EWC before taking and implementing a decision. This means that, as long as an employer has complied with the requirements to inform and consult, there is no UK or EU statutory prohibition on taking decisions or implementing proposals before the EWC has given an opinion.
  • As there is no prohibition in either TICER or the EWC Directive on employers taking or implementing decisions once consultation has concluded then there is no basis to read words into TICER that employers cannot take management action at a national level before national employees’ representatives have been able to consider the opinion of the EWC.

Comment

The EAT’s decision is unsurprising but welcome for employers nonetheless. The EWC Directive reflects a careful balancing of employers’ and employees’ interests. It provides that if exceptional circumstances arise then employers must inform their EWC and, if requested, must also consult with it. However, the EWC Directive does not give the EWC a veto over managerial decision-making by way of temporarily withholding an opinion. This was a deliberate choice as a matter of public policy by the European Parliament and European Council notwithstanding pressure from trade unions to include such a provision when recasting the EWC Directive in 2009.

The practical implication for employers of the EAT’s decision is that, if there are exceptional circumstances, they must inform and, if requested, consult their EWC. The CAC’s decision confirms that an employer must “do all it can in terms of arrangements for information and consultation to facilitate the EWC being able to give an opinion in a timely fashion which ‘will be useful in the decision-making process’”.

Employers must also provide a reasoned response to any opinion that they receive. In practice, this is a very important step from a labour relations perspective. However, whilst an employer must do all it can to enable the EWC to give an opinion in a timely manner, the EWC cannot delay its opinion in order to slow down managerial decision-making.

Lewis Silkin advised Oracle on successfully defending these complaints before the CAC and the EAT. As we have previously written, a “no-deal” Brexit will lead to the end of EWCs operating under TICER. However, employers who choose to follow the example of HPE (whose relocation to Ireland has recently been upheld by the CAC) can take comfort that this EAT decision is likely to be of significant precedent value in future EWC cases before the Irish Courts given the similarity of the two states’ legal systems and EWC legislation.

Mr Hans-Peter Hinrichs & Others v Oracle Corporation UK Ltdjudgment available here

 

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