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18 September 2019
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:
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:
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.
For further information on this topic please contact David Hopper at Lewis Silkin by telephone (+44 207 074 8000) or email (firstname.lastname@example.org). The Lewis Silkin website can be accessed at www.lewissilkin.com.
(1) Mr Hans-Peter Hinrichs v Oracle Corporation UK Ltd is available here.
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