Where an employee proposes to make 20 or more employees redundant at the same establishment in a 90 day period, the requirement to consult collectively is triggered. In the case of United States of America v Nolan, the European Court of Justice has been asked to consider when exactly that requirement must be implemented. Last week the Advocate General gave a preliminary opinion that the obligation on an employer to consult on collective redundancies is triggered when it makes a strategic or commercial decision that compels it to contemplate or plan for collective redundancies.
This is the background to the case. In March 2006, the US decided to close one of its UK army bases by the end of September 2006. On 24th April, the 200 civilian employees working there were told about the closure. In June, their representatives were told that all employees were at risk of redundancy. Collective consultation on the redundancies began on 5th June.
On 30th June, the employees were given notice of dismissal, to take effect at the end of September 2006. Ms Nolan, an employee representative during the collective consultation process, brought a claim on behalf of those employees that the US had failed to comply with its collective consultation obligations by not consulting on the decision to close the base or consulting before 5thJune.
The US argued before the Court of Appeal that the collective consultation obligation does not arise when an employer proposes to close a workplace, but only when that decision has been made and the intention to make redundancies has been formed. The Court of Appeal decided to make a reference to the ECJ. It asked the Court for guidance when the duty to consult on collective redundancies arises, giving two options.
- When the employer is proposing, but has not yet made a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies.
- Alternatively, does it only arise when that decision has actually been made and the employer is then proposing consequential redundancies?
In the Nolan case, the Advocate General said that neither of the Court of Appeal's alternatives was correct. On the first alternative, consultation would have been premature. On the second alternative, consultation would have been too late if the US had made the strategic decision without leaving any time for it to contemplate collective redundancies. The Advocate General’s opinion on the Court of Appeal’s reference was that the EU Collective Redundancies Directive must be interpreted as meaning that the obligation on an employer to consult on collective redundancies is triggered when a strategic or commercial decision that compels it to contemplate or plan for collective redundancies is made by a body or entity that controls the employer. In this case, it is for the Court of Appeal to identify which of the events prior to 5th June 2006 amounted to a strategic decision that exerted compelling force on the US for the purpose of giving effect to the consultation obligation, and the date on which that decision was made.
If the ECJ agrees with the Advocate General’s opinion, the correct approach for national courts in future, to determine when an employer’s duty to consult on collective redundancies arose, will be to identify the decision of the employer that compelled it to contemplate or plan for those redundancies.
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