In the United Kingdom's first appeal case on the operation of a European works council, the Employment Appeal Tribunal (EAT) has ruled that European works councils cannot slow down managerial decision making by delaying the provision of an opinion after being informed and consulted.(1)
The Transnational Information and Consultation of Employees Regulations (TICER) 1999 transpose the European Works Councils Directive into UK law. TICER provides that certain multinational employers must inform and, if requested, consult with their European works council in the event of "exceptional circumstances affecting employees' interests to a considerable extent". Such circumstances include largescale redundancies across the European Union.
TICER also sets out that those employers must provide a reasoned response to any opinion that their European works councils 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 European works councils may choose not to provide an opinion.
Oracle decided to centralise its systems remote support operations in Romania in 2016. It anticipated that this project would lead to largescale redundancies across the European Union. It recognised that this amounted to exceptional circumstances. It proceeded to meet with its European works council accordingly. It then implemented its proposals before it had received an opinion from its European works council.
The European works council filed complaints against Oracle at the Central Arbitration Committee (CAC) about its information and consultation process. The CAC made several findings, including as follows:
- Oracle's European works council had been wrong to allege that management cannot implement its proposals until the European works council has given its opinion. Both TICER and the European Works Council 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 the national level before national employees' representatives can consider the European works council's opinion. TICER is clear that the European works council 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.
The EAT dismissed the European works council's appeals against the CAC's findings. It confirmed that, if exceptional circumstances arise, an employer must inform its European works council and, if requested, consult with it. It then upheld the CAC's findings for the following reasons:
- Neither the TICER nor the European Works Council Directive require employers to await an opinion from their European works council 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 European works council has given an opinion.
- As neither TICER nor the European Works Council Directive prohibit 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 can consider the European works council's opinion.
The EAT's decision is unsurprising but nonetheless welcome for employers. The European Works Council Directive reflects a careful balancing of employers' and employees' interests. It provides that if exceptional circumstances arise, employers must inform their European works council and, if requested, must also consult with it. However, the European Works Council Directive does not give the European works council 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 the European Council, notwithstanding pressure from trade unions to include such a provision when recasting the European Works Council Directive in 2009.
The practical implication of the EAT's decision is that, if there are exceptional circumstances, employers must inform and, if requested, consult their European works council. 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 [European works council] 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 an important step from a labour relations perspective. However, while an employer must do all it can to enable the European works council to give an opinion in a timely manner, the European works council cannot delay its opinion in order to slow down managerial decision making.
Finally, a no-deal Brexit will lead to the end of European works councils operating under TICER (for further details please see "Will Brexit frustrate your European works council?"). However, employers that choose to follow the example of Hewlett-Packard Enterprises (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 European works council cases before the Irish courts, given the similarity of the two states' legal systems and European works council legislation.
Endnotes
(1) Mr Hans-Peter Hinrichs v Oracle Corporation UK Ltd is available here.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
