WRC makes first decisions on European Works Councils operating in Ireland

Background on European Works Councils in Ireland

A European Works Council (EWC) is a standing body that facilitates the information and consultation of European employees on transnational issues. EWCs are composed of employees’ representatives from each country that is a member of either or both of the European Union and the European Economic Area, in which a business has employees. They operate separately from national information and consultation bodies, such as local works councils.

The concept of a EWC dates from 1994, when the first EU directive on EWCs was enacted. That directive was transposed into Irish law by the Transnational Information and Consultation of Employees Act, 1996 (TICEA).

Relatively few Irish businesses need to operate an EWC and, until Brexit, relatively few other businesses had designated an Irish ‘representative agent’ and so had to operate their EWC under Irish law. However, this changed dramatically post-Brexit, with numerous businesses from Switzerland, the United Kingdom and the United States choosing to base their EWCs in Ireland with effect from the end of the Brexit transition period.

To date, the only cases concerning TICEA were two cases in which the Labour Court gave recommendations concerning the election process to be followed to elect Irish members of EWCs that fell outside of the framework of EU legislation. In part, this reflects that TICEA’s dispute resolution provisions are defective, a matter which has recently led the European Commission to commence infringement proceedings against the Irish state. For example, it was recently noted in proceedings before the Joint Committee on Enterprise, Trade and Employment that the relevant Minister will not appoint an arbitrator in a confidentiality dispute involving an EWC operating under TICEA unless it has at least one Irish member, notwithstanding that this deprived that particular EWC of any legal recourse as it has no Irish member.

Background to the Verizon dispute

Until shortly before the end of the Brexit transition period, Verizon’s EWC had operated under UK law under the terms of an EWC agreement. That agreement expired in October 2020 after the EWC rejected the draft agreement put to it during negotiations to replace it. In anticipation of the imminent end of the Brexit transition, Verizon began to operate its EWC under Irish law and, in particular, the default ‘subsidiary requirements’ set out in the Second Schedule to TICEA. These require managements without an EWC agreement to inform and consult their EWCs on an annual basis about transnational matters, such the performance of their businesses across the EU as a whole, and in the event of ‘exceptional circumstances or decisions’ affecting employees’ interests to a considerable extent, such as proposed collective redundancies that would affect a significant number of employees across the EU.

After its move to Ireland, Verizon promptly began the process of constituting its new EWC. Having regard to section 17(6) of TICEA providing that “the members of the… European Works Council… shall be provided with appropriate training by their employers without loss of wages”, it arranged for the EWC to be provided with training (on a virtual basis given that Covid restrictions were still in place) on the operation of an EWC under TICEA. This training was given by independent legal experts, including Kevin Duffy, former Chair of the Irish Labour Court.

Four members of the EWC decided that the training given had not been ‘training’ but the mere provision of ‘information’. Therefore, and despite Verizon having indicated that it would not cover the cost of them attending an additional in person training course provided by the EWC Academy in Hamburg, they attended that conference after complaining to the Workplace Relations Commission (WRC) when Verizon refused to pre-authorise the costs that they would incur.

Further, throughout early 2021, the EWC retained Dr Altmeyer of the EWC Academy to assist it with a range of tasks. However, it did not seek pre-approval for these costs or even flag in advance that they would be incurred. Whilst Verizon ultimately offered to pay some of the costs, it refused to pay them all, such as for Dr Altmeyer checking minutes of an internal EWC meeting. In response, one of the members filed a further complaint on the basis that section 17(1A) of TICEA entitles members of a EWC to “the means required… to represent the collective interests of employees”.

WRC Decisions

Preliminary matters
The WRC first provided guidance on a number of preliminary matters. It noted that:

• A winning party before the WRC is not entitled to recover its legal costs from the losing party.
• Hearings can be held remotely, which is helpful as members of EWCs will be based across Europe.
• TICEA must be interpreted in line with the underlying EU legislation and to give effect to it.
• TICEA contains no territorial restrictions. The protections afforded by TICEA must therefore be available irrespective of where a member of a EWC lives. This conclusion should not be controversial given that the principle of effectiveness is fundamental to EU law, even if it conflicts with the Minister’s position (noted above) that only Irish members may avail themselves of the rights afforded by TICEA.
• The WRC’s jurisdiction is not exclusive and so members of the EWC may enjoy additional rights under the national laws of the country in which they work.
• Members of EWCs operating under the ‘subsidiary requirements’ enjoy the protections set out in section 17 of TICEA, including section 17(1A) of TICEA on the ‘means required’ and section 17(6) of TICEA on training.
• The ‘spirit of cooperation’ permeates TICEA and the EU legislation on EWCs. This is not defined as a precise legal term but refers to due regard for the parties’ reciprocal rights and obligations. Crucially, it is “particularly relevant in circumstances where there is no agreement and subsidiary requirements apply”.
• Although TICEA defines an ‘expert’ as a natural person, they may act through the framework of limited liability afforded by company law. This means that their services may be invoiced through a limited liability company, such as the EWC Academy.
• There is an inherent imbalance between management and members of an EWC as management will always be a large, transnational business with access to resources, whereas members of an EWC are a small number of employees without legal capacity or a budget.
• The scope of section 17 of TICEA and the remit of the WRC do not concern or extend to whether management has complied with its information and consultation obligations. They are limited to the protection of members of an EWC and the means required for them to discharge their functions

The training complaint
The WRC noted that the term ‘training’ is not defined in TICEA but should be construed having regard to the work of an EWC being “complex” and dealing with “challenges” and litigation. It outlined that, in the circumstances of the “significant change” of Verizon’s EWC migrating from the UK to Ireland and becoming governed by TICEA, it was “entirely appropriate” for the training that Verizon provided in 2021 to concern the Irish legal landscape. In person training, as opposed to virtual training, was also noted as being “more productive, both in the formal sessions, but also informal contact on the margins”.

It further outlined that the adequacy of training should be assessed over the course of a calendar year. This was on the basis that there is a “complex and developing set of transnational issues, arising across the Member States, to assess and provide training on” and the concept of training “ordinarily includes regular, ongoing training”.

Finally, it outlined that members of an EWC enjoy rights not only to training provided by or via their employer but also to obtain training for which it has identified a particular need and which management does not provide. Nonetheless, the right to training remains subject to the spirit of cooperation.

In light of all of the above, the WRC concluded that:

• Verizon had provided the four members of the EWC with training within the ambit of TICEA in 2021, as the training that it had organised had addressed the EU legal framework and TICEA.
• That training met Verizon’s training obligations for 2021, with it being “entirely appropriate” that the training that year covered the Irish legal landscape because of the migration of the EWC to Ireland and “entirely reasonable” to provide the training virtually in the context of the Covid pandemic.
• The four members’ decision to attend the Hamburg training and claim the cost retrospectively, despite Verizon having made it clear that it would not pay for it, was not in accordance with the spirit of cooperation required of the parties.

The complaint over EWC Academy’s invoice
The WRC noted that, independently of the right to the ‘means required’ under section 17(1A) of TICEA, an EWC operating under the ‘subsidiary requirements’ is entitled to be assisted by one expert per meeting, with this meaning one expert per meeting with central management. However, it also noted that the ‘means required’ can also involve an expert assisting an EWC.

In light of this, the WRC concluded that:

• The EWC needed expert assistance in early 2021 in light of the particular circumstances of the previous EWC agreement having expired and the EWC having migrated to Ireland.
• It was understandable that Verizon was very concerned about the EWC Academy undertaking billable work when it had not been notified of this in advance. The WRC went so far as to indicate that the EWC procuring billable expert support without even alerting Verizon that the advice was being obtained could, per the spirit of cooperation, result in the support being outside of the ‘means required’ to which an EWC is entitled.
• The particular circumstances of early 2021, alone meant that the EWC was nonetheless entitled to the ‘means required’ despite Verizon having been surprised by the engagement and extent of billable expert support, meaning that the EWC had failed to comply with the spirit of cooperation required of all parties.
• On the individual items of expert assistance, these were not all required or reasonable. In particular, expert assistance was not necessary: (1) to review the minutes of an internal EWC meeting; (2) to understand that UK delegates were no longer entitled to participate in the EWC after Brexit; or (3) in connection with an aborted information and consultation process (relating to a possible transaction that Verizon had given the EWC a ‘heads up’ about but which it was quickly made clear would not be proceeding), on the basis that it would dissuade management from giving an early ‘heads-up’ if doing so would lead to financial liability. However, expert assistance was necessary for the EWC to prepare its own internal rules of procedure.
• In light of the above, Verizon should pay 50% of the total invoice.

Implications for employers

Overall, the outcome of this case, in which Lewis Silkin’s Dublin office acted for Verizon, is welcome news for employers with an EWC operating under Irish law. Most importantly, the WRC’s clear emphasis on the importance of the spirit of cooperation means that employers can take comfort that their EWC cannot surprise them with expert or third-party fees for them to discharge after the event and without any forewarning of incurring them. The WRC has also thankfully adopted a far more pragmatic approach than the UK’s Central Arbitration Committee in similar claims. For example, the WRC has ensured that employers are not financially liable if they choose to go above and beyond their obligations, such as by giving an early and voluntary ‘heads-up’ to its EWC. In contrast, the CAC recently ruled that a business could expect to lose in court if it failed to provide financial resources to its EWC after adopting such an approach.

In respect of training, employers will welcome the clear guidance that the provision of in-person training at each annual meeting should discharge its obligation, so long as it has first engaged with the EWC on the content of the training in the spirit of co-operation.

In respect of an EWC’s entitlement to expert assistance, employers will also welcome the clear conclusion that the EWC was only entitled to have Verizon pay any of its invoice on the basis of the exceptional circumstances of a previous EWC agreement having expired and the EWC having become subject to Irish law. Nonetheless, the WRC’s decision referred to expert assistance having included advice regarding “legal issues arising from the invoice itself”, but then failed expressly to determine whether this advice was required or reasonable.

Jean-Philippe Charpentier & others v Verizon Ireland Limited – judgment available here