Advocate General Opinion on When Collective Redundancy Consultation Obligations are Triggered

The obligation to consult on collective redundancies is triggered when a strategic or commercial decision is taken which compels the employer to contemplate or to plan collective redundancies.

In United States of America v Nolan, the ECJ was asked whether the obligation to consult arises:

• When the employer is proposing, but has not made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies; or
• Only when the decision has actually been made and he is then proposing consequential redundancies.

The Advocate General has suggested that neither of these options is correct.  Instead, the obligation to consult is triggered when a strategic or commercial decision is taken which compels the employer to contemplate or to plan collective redundancies. Consultation would be premature under the first option (because factors that have to be consulted on will not yet have been determined) and too late under the second option (as if a decision has already been made which makes redundancies necessary, it is too late for consultation about alternative options which might avoid redundancies). 

To sum up, the Advocate General stated that where collective redundancies arise directly from a choice made by the employer, the obligation to consult arises when the employer contemplates collective redundancies or draws up a plan for collective redundancies.  Where the prospect of collective redundancies results from a choice made by a parent company, the obligation to consult arises when the other entity adopts a strategic or commercial decision which compels the employer to contemplate or to plan collective redundancies.

Where the employer is a subsidiary in a group of companies and the decision which makes contemplating redundancies necessary is taken by the parent, it is still the employer that must carry out consultation and consultation can only begin once it is known which subsidiary is affected by the parent company’s decision.  However, a final decision can only be taken by the parent company once the subsidiary has concluded consultation with its employees, otherwise the subsidiary will be in breach of its collective consultation obligations.

The employer in this case was seeking to establish whether the Directive requires consultation about the business reasons for redundancies (in this case the decision to close a military base) - something which the EAT in the case of UK Coal Mining Ltd v National Union of Mineworkers considered necessary.  Unfortunately the Advocate General did not comment directly on the correctness or otherwise of that decision case but the suggestion that the first option put forward as a trigger point might be premature indicates that the UK Coal Mining case might be wrong.  By failing to adopt one of the options put forward as the consultation trigger point, employers may feel that they are none the wiser as a result of this opinion and it is to be hoped that the ECJ gives greater clarity on precisely when collective consultation obligations are triggered when it gives its judgment in this case.  The ECJ is not bound to follow the Advocate General although it does so in the majority of case.

In the mean time, it seems that where a parent company is making decisions which may result in redundancies in a subsidiary, it should be careful not to present the decision as being final – otherwise the subsidiary will be in breach of its collective consultation obligations.