Collective Redundancies
Cases
Junk v Kuhnel
[2005] EUECJ C-188/03
“The legal framework
Community law
In those circumstances, the Arbeitsgericht Berlin decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling:
-. Is [the directive] to be interpreted to the effect that -redundancy- [-Entlassung-] within the meaning of Article 1(1)(a) thereof is to be construed as meaning the notice of dismissal [Kündigung-] as the first act in bringing the employment relationship to an end or does -redundancy- mean the termination of the employment relationship upon expiry of the period of notice?
2. If -redundancy- [-Entlassung-] is to be construed as meaning the notice of dismissal, does the directive require that both the consultation procedure under Article 2 of the directive and the notification procedure under Articles 3 and 4 thereof must have been concluded before the notices of dismissal [-Kündigungen-] are announced?-
The questions submitted for a preliminary ruling
The object of the dispute in the main proceedings is to assess the lawfulness of a redundancy in the light of the consultation and notification procedures set out in Article 2 and in Articles 3 and 4 of the directive respectively. For the purposes of that appraisal, it is necessary to determine at what point in time a redundancy occurs, that is to say, the point in time at which the event constituting redundancy takes place.
The resolution of the dispute in the main proceedings thus calls for clarification of the content of the concept of -redundancy- within the meaning of the directive.
Article 1(1)(a) of the directive defines -collective redundancies- but fails to indicate the event triggering redundancy or to refer in this regard to the laws of the Member States.
In this connection, the need for uniform application of Community law and the principle of equality require that the terms of a provision of Community law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an autonomous and uniform interpretation throughout the Community, which must take into account the context of the provision and the purpose of the legislation in question (see, inter alia, Case C-287/98 Linster and Others [2000] ECR I-6917, paragraph 43, and Case C-55/02 Commission v Portugal [2004] ECR I-0000, paragraph 45).
That being so, the concept of -redundancy-referred to in Articles 2 to 4 of the directive must be given an autonomous and uniform interpretation within the Community legal system.
The first question
By its first question, the Arbeitsgericht is in substance seeking to ascertain whether Articles 2 to 4 of the directive are to be construed as meaning that the event constituting redundancy consists of the expression by the employer of his intention to put an end to the contract of employment or of the actual cessation of the employment relationship on the expiry of the period in the notices of redundancy.
According to the information provided by that court, the term – used in the German-language version of the directive refers, in German law, to the actual cessation of the employment relationship and not to the expression by the employer of his intention to put an end to the contract of employment.
It must be borne in mind in this regard that, according to settled case-law, the necessity for uniform application and accordingly for uniform interpretation of a Community measure makes it impossible to consider one version of the text in isolation, but requires that it be interpreted on the basis of both the real intention of its author and the aim he seeks to achieve, in the light, in particular, of the versionsin all languages (see, inter alia, Case 29/69 Stauder [1969] ECR 419, paragraph 3; Case 55/87 Moksel [1988] ECR 3845, paragraph 15; and Case C-‘268/99 Jany and Others [2001] ECR I-8615, paragraph 47).
With regard to the directive, it should be pointed out that, in its versions in languages other than German, the term used in the place of – either covers at the same time both of the events referred to by the Arbeitsgericht or refers rather to the expression by the employer of his intention to terminate the contract of employment.
Next, it must be noted that Article 2(1) of the directive imposes an obligation on the employer to begin consultations with the workers- representatives in good time in the case where he -is contemplating collective redundancies-. Article 3(1) requires the employer to notify the competent public authority of -any projected collective redundancies-.
The case in which the employer -is contemplating- collective redundancies and has drawn up a -project- to that end corresponds to a situation in which no decision has yet been taken. By contrast, the notification to a worker that his or her contract of employment has been terminated is the expression of a decision to sever the employment relationship, and the actual cessation of that relationship on the expiry of the period of notice is no more than the effect of that decision.
Thus, the terms used by the Community legislature indicate that the obligations to consult and to notify arise prior to any decision by the employer to terminate contracts of employment.
Finally, this interpretation is confirmed, in regard to the procedure for consultation of workers-representatives, by the purpose of the directive, as set out in Article 2(2), which is to avoid terminations of contracts of employment or to reduce the number of such terminations. The achievement of that purpose would be jeopardised if the consultation of workers- representatives were to be subsequent to the employer-s decision.
The answer to the first question must therefore be that Articles 2 to 4 of the directive must be construed as meaning that the event constituting redundancy consists in the declaration by an employer of his intention to terminate the contract of employment.
The second question
By its second question, the Arbeitsgericht is seeking to ascertain whether an employer is entitled to carry out collective redundancies before the end of the consultation procedure set out in Article 2 of the directive and of the notification procedure set out in Articles 3 and 4 of the directive.
It follows already from the answer to the first question that an employer cannot terminate contracts of employment before he has engaged in the two procedures in question.
With regard to the consultation procedure, this is provided for, within the terms of Article 2(1) of the directive, -with a view to reaching an agreement-. According to Article 2(2), this procedure must, -at least, cover ways and means of avoiding collective redundancies or reducing the number of workers affected, and of mitigating the consequences by recourse to accompanying social measures-
It thus appears that Article 2 of the directive imposes an obligation to negotiate.
The effectiveness of such an obligation would be compromised if an employer was entitled to terminate contracts of employment during the course of the procedure or even at the beginning thereof. It would be significantly more difficult for workers- representatives to achieve the withdrawal of a decision that has been taken than to secure the abandonment of a decision that is being contemplated.
A contract of employment may therefore be terminated only after the conclusion of the consultation procedure, that is to say, after the employer has complied with the obligations set out in Article 2 of the directive.
So far as concerns the procedure for notifying the competent public authority, it must be remembered that, in accordance with Article 3 of the directive, the employer is required to notify the competent authority of -any projected collective redundancies-.
Under Article 4(2) of the directive, notification has the purpose of allowing the competent authority to seek solutions to the problems raised by the projected collective redundancies.
Article 4(2) states that the competent authority must use the period provided for in Article 4(1) for the purpose of seeking such solutions.
The period in question is one of at least 30 days following notification. Under the conditions laid down in the second subparagraph of Article 4(1) and in Article 4(3) of the directive, Member States may grant the competent public authority the power to reduce or extend that period.
Under the first subparagraph of Article 4(1) of the directive, collective redundancies, that is to say, termination of the contracts of employment, may take effect only after expiry of the period applicable.
That period consequently corresponds to the minimum period which must be available to the competent authority for the purpose of seeking solutions.
By setting out an express proviso in regard to provisions governing individual rights with regard to notice of dismissal, the first subparagraph of Article 4(1) of the directive is necessarily contemplating a situation in which contracts of employment have already been terminated, thereby setting such a period in motion. The proviso in regard to the expiry of a period of notice differing from that provided for by the directive would make no sense if no period of notice had started to run.
In those circumstances, it must be held that Articles 3 and 4 of the directive do not preclude termination of the contracts of employment during the course of the procedure which they institute, on condition that such termination occurs after the projected collective redundancies have been notified to the competent public authority.
The answer to the second question must therefore be that an employer is entitled to carry out collective redundancies after the conclusion of the consultation procedure provided for in Article 2 of the directive and after notification of the projected collective redundancies as provided for in Articles 3 and 4 of that directive.
Athinaiiki Chartopoiia
[2007] IRLR 284
JUDGMENT OF THE COURT (First Chamber)
“By its question, the national court refers to the judgment of the Efetio Thrakis, according to which the production unit at issue in the main proceedings was not independent from the company, and asks essentially whether such a production unit comes within the concept of ‘establishment’ for the purposes of the application of Directive 98/59.
According to the Court’s case-law, the concept of ‘establishment’, which is not defined in that directive, is a term of Community law and cannot be defined by reference to the laws of the Member States (Case C-449/93 Rockfon [1995] ECR I-4291, paragraphs 23 and 25). It must, accordingly, be interpreted in an autonomous and uniform manner in the Community legal order.
The Court has also held that the terms used in the various language versions of Directive 98/59 to refer to the concept of ‘establishment’ are somewhat different and have different connotations, signifying, according to the version in question, establishment, undertaking, work centre, local unit or place of work (see Rockfon, paragraphs 26 and 27).
In the light of those considerations and the purpose of that directive which, as evidenced by the second recital in the preamble thereto, seeks inter alia to promote greater protection for workers in the event of collective redundancies, the Court has interpreted the concept of ‘establishment’ in Directive 98/59, in particular in Article 1(1)(a), as designating, depending on the circumstances, the unit to which the workers made redundant are assigned to carry out their duties (Rockfon, paragraphs 31 and 32, and case-law cited).
In so doing, the Court has defined the term ‘establishment’ very broadly, in order to limit as far as possible cases of collective redundancies which are not subject to Directive 98/59 because of the legal definition of that term at national level (see, inter alia, Joined Cases C-187/05 to C-190/05 Agorastoudis and Others [2006] ECR I-0000, paragraph 37). However, given the general nature of that definition, it cannot by itself be decisive for the appraisal of the specific circumstances of the case at issue in the main proceedings.
Thus, for the purposes of the application of Directive 98/59, an ‘establishment’, in the context of an undertaking, may consist of a distinct entity, having a certain degree of permanence and stability, which is assigned to perform one or more given tasks and which has a workforce, technical means and a certain organisational structure allowing for the accomplishment of those tasks.
Given that the objective pursued by Directive 98/59 concerns, in particular, the socio’economic effects which collective redundancies may have in a given local context and social environment, the entity in question need not have any legal autonomy, nor need it have economic, financial, administrative or technological autonomy, in order to be regarded as an ‘establishment’.
It is, moreover, in this spirit that the Court has held that it is not essential, in order for there to be an ‘establishment’, for the unit in question to be endowed with a management which can independently effect collective redundancies (Rockfon, paragraph 34, and point 2 of the operative part). Nor must there be a geographical separation from the other units and facilities of the undertaking.
In the light of those considerations, the Court finds, first of all, that the fact that Greek Law 1387/1983 uses the terms ‘establishment’ and ‘operating unit’ interchangeably is not in itself contrary to Directive 98/59, provided that the interpretation given by the Court of the concept of ‘establishment’ is followed and the use of two terms cannot lead to the exclusion of categories of workers from the protection intended by that directive.
Next, regarding the nature of the production unit at issue in the main proceedings, the information in the case-file indicates that that unit is one of three separate production units held by the company; it employs 420 workers; it has distinct equipment and a specialised workforce; its operation is not affected by that of the other units; and it has a chief production officer who ensures that the work is carried out properly, is responsible for supervision of the entire operation of the unit’s installations and ensures that technical questions are solved.
Those factors clearly give such a unit the air of an ‘establishment’ for the purposes of the application of Directive 98/59, in accordance with the considerations set out by the Court in paragraphs 27 to 29 of the present judgment, and bring the unit in question within the scope of this Community concept. The fact that decisions concerning the operating expenditure of each of those units, the purchase of materials and the costing of products are taken at the company’s headquarters, where a joint accounts office is set up, is irrelevant in this regard.
In order to give to give an answer that will be of use to the national court, the Court notes further that, as evidenced by the case-file, the Efetio Thrakis held that since the production unit at issue in the main proceedings was not independent from the company, it was not an ‘establishment’ and therefore did not come within the scope of the exception provided for in Article 5(5) of Law 1387/1983, which transposes into national law the derogation laid down in Article 4(4) of Directive 98/59.
In other words, according to that court’s view of the matter, if that production unit were autonomous and constituted an ‘establishment’, the abovementioned derogation would apply because the termination of that unit’s activities was solely of the employer’s own volition.
That position is part of the same approach in the national case-law which was behind the judgment in Agorastoudis and Others, and has no foundation in Directive 98/59. It is therefore necessary to clarify on this point, as rightly pointed out by the Commission of the European Communities, that, even if the unit in question in the main proceedings were found to be autonomous and did constitute an ‘establishment’, the abovementioned derogation would not apply.
For the same reasons as set out in paragraphs 25 to 45 of Agorastoudis and Others, the derogation in question is applicable solely when the termination of the activities of an undertaking or an operating unit follows a judicial decision. In all other cases, and particularly when the termination of the establishment’s activities is solely of the employer’s volition, the employer has the obligation to pursue consultations with the workers during a supplementary period before the competent pubic authority.
Lastly, the Court notes that, in the context of proceedings before the Court, the issue of the compatibility of the intervention by the national public authorities, namely the prefect or the Minister for Labour, as provided for in Article 5(3) of Law 1387/1983, with Directive 98/59 and Article 43 EC has been raised with some insistence. That question was not, however, the subject of the present reference for a preliminary ruling.
In the light of the foregoing considerations, the answer to the question referred must be that Directive 98/59, in particular Article 1(1)(a), is to be interpreted as meaning that a production unit such as that at issue in the main proceedings comes within the concept of ‘establishment’ for the purposes of the application of that directive.
Akavan Erityisalojen Keskusliitto AEK & Ors
[2009] IRLR 944 [2010] ICR 444, [2010] 1 CMLR 11
“The first question
By its first question, the referring court seeks clarification of the meaning of the expression ‘is contemplating collective redundancies’, in Article 2(1) of Directive 98/59, in order to determine the time at which the obligation to hold consultations, laid down in Article 2, starts. The court asks, in that regard, whether that obligation arises when it is established that strategic decisions or changes in the business of the undertaking will make collective redundancies of employees necessary, or when the adoption of such decisions or changes, as a result of which it is to be expected that such redundancies will become necessary, are contemplated.
First, it is to be noted that the present case relates to economic and commercial decisions which might have repercussions on the employment of a number of workers within an undertaking, and not to decisions which are directly concerned with terminating specific employment relationships.
In that regard, it must be recalled that, as is clear from the wording of Articles 2(1) and 3(1) of Directive 98/59, the obligations of consultation and notification imposed on the employer come into being prior to the employer’s decision to terminate employment contracts (see, to that effect, Case C-188/03 Junk [2005] ECR I-885, paragraphs 36 and 37). In such a case, there is still a possibility of avoiding or at least reducing collective redundancies, or of mitigating the consequences.
Under Article 2(1) of Directive 98/59, the employer has the obligation to start consultations with the workers’ representatives in good time if he ‘is contemplating collective redundancies’. As stated by the Advocate General in points 48 and 49 of his Opinion, it is clear from comparison of various language versions of that provision that the Community legislature envisaged that the obligation at issue to hold consultations would arise in connection with the existence of an intention on the part of the employer to make collective redundancies.
The references in Articles 3 and 4 of Directive 98/59 to ‘projected’ collective redundancies confirm that the existence of such an intention is the factor which triggers the obligations laid down by that directive, in particular by Article 2.
It follows that the obligation to hold consultations laid down in Article 2 of Directive 98/59 is deemed to arise where the employer is contemplating collective redundancies or is drawing up a plan for collective redundancies (see, to that effect, Case 284/83 Dansk Metalarbejderforbund and Specialarbejderforbundet i Danmark [1985] ECR 553, paragraph 17).
It must however be added that, as is clear from the actual wording, the obligations laid down by Directive 98/59, in particular the obligation to hold consultations laid down in Article 2, are also triggered in situations where the prospect of collective redundancies is not directly the choice of the employer.
Under Article 2(4) of that directive, the employer is responsible for compliance with the information and consultation requirements stemming from that directive, even if the decision on collective redundancies is made not by the employer, but by the undertaking controlling the employer, and even though the employer may not have been immediately and properly informed of that decision.
Against an economic background marked by the increasing presence of groups of undertakings, that provision serves to ensure, where one undertaking is controlled by another, that the purpose of Directive 98/59, which, as is stated in recital 2 of its preamble, seeks to promote greater protection for workers in the event of collective redundancies, is actually achieved (Case C-270/05 Athinaïki Chartopoiïa [2007] ECR I-1499, paragraph 25).
Moreover, as the United Kingdom Government rightly observes, a premature triggering of the obligation to hold consultations could lead to results contrary to the purpose of Directive 98/59, such as restricting the flexibility available to undertakings when restructuring, creating heavier administrative burdens and causing unnecessary uncertainty for workers about the safety of their jobs.
Lastly, the raison d’être and effectiveness of consultations with the workers’ representatives presuppose that the factors to be taken into account in the course of those consultations have been determined, given that it is impossible to undertake consultations in a manner which is appropriate and consistent with their objectives when there has been no definition of the factors which are of relevance with regard to the collective redundancies contemplated. Those objectives are, under Article 2(2) of Directive 98/59, to avoid termination of employment contracts or to reduce the number of workers affected, and to mitigate the consequences (see Junk, paragraph 38). However, where a decision deemed likely to lead to collective redundancies is merely contemplated and where, accordingly, such collective redundancies are only a probability and the relevant factors for the consultations are not known, those objectives cannot be achieved.
On the other hand, it is clear that to draw a link between the requirement to hold consultations arising under Article 2 of Directive 98/59 and the adoption of a strategic or commercial decision which makes the collective redundancies of workers necessary may deprive that requirement, in part, of its effectiveness. As is clear from the first subparagraph of that Article 2(2), the consultations must cover, inter alia, the possibility of avoiding or reducing the collective redundancies contemplated. A consultation which began when a decision making such collective redundancies necessary had already been taken could not usefully involve any examination of conceivable alternatives with the aim of avoiding them.
It must therefore be held that, in circumstances such as those of the case in the main proceedings, the consultation procedure must be started by the employer once a strategic or commercial decision compelling him to contemplate or to plan for collective redundancies has been taken.
In those circumstances, the answer to be given to the first question referred is that Article 2(1) of Directive 98/59 must be interpreted to mean that the adoption, within a group of undertakings, of strategic decisions or of changes in activities which compel the employer to contemplate or to plan for collective redundancies gives rise to an obligation on that employer to consult with workers’ representatives.
The second question
By its second question, the referring court asks, in essence, if whether the obligation has arisen for the employer to start consultations on collective redundancies contemplated depends on whether the employer is already able to supply to the workers’ representatives all the information required in Article 2(3)(b) of Directive 98/59.
The wording of that provision states clearly that the information specified must be supplied by the employer ‘in good time during the course of the consultations’, in order to ‘enable workers’ representatives to make constructive proposals’.
It follows from that provision that that information can be provided during the consultations, and not necessarily at the time when they start.
As stated by the Advocate General in points 64 and 65 of his Opinion, the logic of that provision is that the employer is to supply to the workers’ representatives the relevant information throughout the course of the consultations. Flexibility is essential, given, first, that that information may become available only at various stages in the consultation process, which implies that the employer both can and must add to the information supplied in the course of that process. Secondly, the purpose of the employer being under that obligation is to enable the workers’ representatives to participate in the consultation process as fully and effectively as possible, and, to achieve that, any new relevant information must be supplied up to the end of the process.
It follows that the time at which consultations are to start cannot be dependent on whether the employer is already able to supply to the workers’ representatives all the necessary information referred to in Article 2(3)(b) of Directive 98/59.
The answer to be given to the second question referred is that whether the obligation has arisen for the employer to start consultations on the collective redundancies contemplated does not depend on whether the employer is already able to supply to the workers’ representatives all the information required in Article 2(3)(b) of Directive 98/59.
The third and fourth questions
By its third and fourth questions, which can be answered together, the referring court seeks to know, in essence, first, whether Article 2(1) of Directive 98/59, read in conjunction with the first paragraph of Article 2(4) of that directive, should be interpreted to mean that, in the case of a group of undertakings consisting of a parent company and one or more subsidiaries, the obligation to consult with workers’ representatives arises when either the employer or the parent company which controls the employer is contemplating collective redundancies and, secondly, in order for an obligation to start consultations to arise must the subsidiary within which collective redundancies may be made be identified.
In that regard, it is clear that, under Article 2(1) and (3) and Article 3(1) and (2) of Directive 98/59, the only party on whom the obligations to inform, consult and notify are imposed is the employer, in other words a natural or legal person who stands in an employment relationship with the workers who may be made redundant.
An undertaking which controls the employer, even if it can take decisions which are binding on the latter, does not have the status of employer.
As stated by the Commission of the European Communities, first, how the management of a group of undertakings is organised is an internal matter and, secondly, it is not the purpose of Directive 98/59, any more than it was of Directive 75/129, to restrict the freedom of such a group to organise their activities in the way which they think best suits their needs (see, to that effect, as regards Directive 75/129, Case C-449/93 Rockfon [1995] ECR I-4291, paragraph 21).
Directive 98/59, like Directive 75/129, carries out only a partial harmonisation of the rules for the protection of workers in the event of collective redundancies. It is therefore not designed to bring about full harmonisation of national systems of worker representation in undertakings (see, concerning Directive 75/129, Case C-383/92 Commission v United Kingdom [1994] ECR I-2479, paragraph 25 and case-law there cited).
In the context of that partial harmonisation, as stated by the appellants in the main proceedings, the Community legislature intended, by adopting Directive 92/56 and then Directive 98/59, to fill a gap in its earlier legislation and to add clarification concerning the obligations of employers who are part of a group of undertakings. Accordingly, Article 2(4) of Directive 98/59 provides that the obligation to hold consultations applies to the employer irrespective of whether the decision regarding collective redundancies is being taken by the employer or by an undertaking controlling that employer.
Consequently, Article 2(1) and the first subparagraph of Article 2(4) of Directive 98/59 are to be interpreted to the effect that, under those provisions, irrespective of whether collective redundancies are contemplated or projected as a result of a decision of the undertaking which employs the workers concerned or a decision of its parent company, it is always the former which is obliged, as the employer, to start consultations with the representatives of its workers.
As regards the time at which that obligation arises, it is evident, as observed by the Finnish Government, that consultations with the workers’ representatives can be started only if it is known in which undertaking collective redundancies may be made. Where the parent company of a group of undertakings adopts decisions likely to have repercussions on the jobs of workers within that group, it is for the subsidiary whose employees may be affected by redundancies, in its capacity as their employer, to start consultations with the workers’ representatives. It is therefore not possible to start such consultations until such time as that subsidiary has been identified.
In addition, with regard to the intended objectives of the consultations, under Article 2(2) of Directive 98/59, those consultations are, at least, to cover ways and means of avoiding collective redundancies or reducing the number of workers affected, and of mitigating the consequences by recourse to accompanying social measures aimed, inter alia, at aid for redeploying or retraining workers made redundant. If a consultation on those matters is to have any meaning, the subsidiary whose employees will be affected by the contemplated collective redundancies must be known.
In those circumstances, the answer to be given to the third and fourth questions referred is that Article 2(1) of Directive 98/59, read in conjunction with the first subparagraph of Article 2(4) of that directive, must be interpreted to mean that, in the case of a group of undertakings consisting of a parent company and one or more subsidiaries, the obligation to hold consultations with the workers’ representatives falls on the subsidiary which has the status of employer only once that subsidiary, within which collective redundancies may be made, has been identified.
The fifth and sixth questions
By its fifth and sixth questions, the referring court seeks clarification on when the consultation procedure, laid down in Article 2(1) of Directive 98/59, is to be concluded, in the case where, when there is a group of undertakings consisting of a parent company and one or more subsidiaries, the decision which either may or must lead to collective redundancies is taken within the parent company.
As explained in relation to the answer given to the third and fourth questions, the obligation to hold consultations laid down in Article 2(1) of Directive 98/59 is binding solely on the employer.
There is no provision in that directive which can be interpreted to the effect that it may impose such an obligation on the parent company.
It follows that it is always for the subsidiary, as the employer, to undertake consultations with the representatives of the workers who may be affected by the collective redundancies contemplated and, if necessary, itself to bear the consequences of failure to fulfil the obligation to hold consultations if it has not been immediately and properly informed of a decision by its parent company making such redundancies necessary.
As regards the conclusion of the consultation procedure, the Court has previously ruled that, where Directive 98/59 is applicable, an employment contract can be terminated by the employer only after that procedure is concluded, in other words after the employer has fulfilled the obligations set out in Article 2 of that directive (see Junk, paragraph 45). It follows that the consultation procedure must be completed before any decision on the termination of employees’ contracts is taken.
In the context of a group of undertakings such as that in question in the main proceedings, it follows from that case-law that a decision by the parent company which has the direct effect of compelling one of its subsidiaries to terminate the contracts of employees affected by the collective redundancies can be taken only on the conclusion of the consultation procedure within that subsidiary, failing which the subsidiary, as the employer, is liable for the consequences of failure to comply with that procedure.
In light of the foregoing, the answer to be given to the fifth and sixth questions referred is that Article 2(1) of Directive 98/59, read in conjunction with Article 2(4) of that directive, must be interpreted to mean that, in the case of a group of undertakings, the consultation procedure must be concluded by the subsidiary affected by the collective redundancies before that subsidiary, on the direct instructions of its parent company or otherwise, terminates the contracts of the employees who are to be affected by those redundancies.
Ex Parte Price
[1994] IRLR 72
Glidewell LJ
‘ and ‘Another way of putting the point more shortly is that fair consultation involves giving the body consulted a fair and proper opportunity to understand fully the matters about which it is being consulted, and to express its views on those subjects, with the consultor thereafter considering those views properly and genuinely.’
Scotch Premier Meat Ltd v Burns & Others
[2000] UKEAT 1151_99_2804
LORD JOHNSTON:
“This is an appeal at the instance of the employer in a test case arising out of the closure of the appellants’ slaughterhouse in Edinburgh, against a decision of the Employment Tribunal which held that the employees who were made redundant, both voluntarily and compulsorily, were entitled to protective awards under and in terms of section 188 and 189 of the Trade Unions and Labour Relations (Consolidation) Act 1992 (TULRA).
The Tribunal set out the factual history in some detail but the problem started with the withdrawal from the appellants of a large regular order from the supermarket chain, Asda in January 1998. The executives of the appellants reviewed a number of options and at a board meeting minuted on 15 April, an option was determined upon which involved the sale of the business as a going concern or as a development site, with potentially 155 redundancies. It was acce
The substance of the Tribunal’s decision on this point, is to be found on page 28 letter C as follows:-
“In terms of the case law, on 15 April SPM had reached a decision, though not necessarily a final one, and certainly the thought of redundancy was more than a remote possibility (NUPE v General Cleaning Contractors [1976] IRLR 362 (IT)); it was beyond diagnosis of the problem and at the later stage of a specific proposal having been formulated (Hough and APEX v Leyland DAF Ltd [1991] IRLR 194 (EAT)); its state of mind was directed to a planned or proposed course of events and it had a view as to how many were to be dismissed and approximately when it was to take place, much more than mere contemplation (Association of Patternmakers and Allied Craftsment v Kirvin Ltd [1978] IRLR 318 (EAT)), USDAW v Leancut Bacon Ltd [1981] IRLR 295 (EAT)); it was at least a potential redundancy situation, if not an actual one, SPM could identify the particular employees concerned, and consultation might have resulted in new ideas being ventilated, if not to avoid the redundancy situation altogether, to lead to lesser numbers being made redundant than was originally thought necessary, or to find alternative work during the period of consultation (Spillers French (Holdings) Ltd v USDAW [1980] ICR 31 (EAT)); this was the only opportunity for employees through representatives to be able to seek to influence the overall decision and put forward other ideas and other considerations, even if SPM might have thought that consultation was really going to achieve nothing (Sovereign Distribution Services Ltd v TGWU [1990] ICR 31 (EAT)); the information identified in Article 2.3 was available and SPM could identify the employees likely to be affected (Griffin v South West Water Services Ltd [1995] IRLR 15 (ChD)).
Although this was not the only route available to SPM, once it determined on a plan of action which had 2 alternative scenarios, 1 of which included dismissals, then that constituted a proposal within the meaning of section 188.
Taking all that evidence together, with the plain meaning of the words, even using the more restrictive definition of ‘propose’ adopted in the earlier cases on the interpretation of section 188, the Tribunal was satisfied that by Wednesday 15 April (and certainly by Friday 24, Sunday 26 or at latest Tuesday 28, April) SPM proposed to dismiss as redundant 100 or more employees at one establishment (Gorgie) within a period of 90 days or less.
In answer to the question posed in Hough, ‘When did SPM propose to dismiss the Gorgie employees as redundant?’, the Tribunal found that this occurred on 15 April, or at least 24, 26 or 28 April.
So even using the more restrictive definition of ‘propose’ adopted in those earlier cases, in this case the Tribunal found that by 15 April 1998, or at the latest 24, 26 or 28 April, SPM was proposing to dismiss 100 or more employees.”
In his submissions, Mr Truscott went through the cases that are set out in the passage of the Tribunal’s decision we have just rehearsed and submitted that the evidence properly understood, could not support the view that any time up to the date when the dismissal were effected, there was on the table or in the mind of the employer, a proposal to dismiss 20 or more employees as redundant. He based his argument principally upon the vagueness of the options being considered but more importantly so long as the sale of the business as a going concern was being considered, at its highest, redundancies were merely being contemplated and not proposed. He put it this way by reason of the fact that in terms of the European Directive the terms of which the Tribunal set out, the word “contemplate” is used rather than “propose”. Mr Truscott freely conceded that if “contemplation” was the correct approach, then he had no point on this part of the case, since that definition was plainly satisfied upon the evidence and the date of 15 April could be used as the pointer. We shall return to the European issue in due course.
Mrs Cullen, appearing for the respondents, submitted that upon the evidence, in reality there was a clear proposal to make employees redundant not later than 15 April, since in the absence of the Asda contract, it could not realistically be considered that the business was sellable as a going concern.
We accept the criticism of Mr Truscott that the Tribunal appeared to have opted for a number of dates before settling for 28 April as the triggering point but we consider they were entitled to do that in a factual context. What we have to determine, however, is whether the Tribunal was entitled to hold that by that date there was a proposal to dismiss as redundant at least 20 employees.
We consider this to be essentially a question of fact given that the word “propose” connotes an intention in the mind of the employer. Upon the evidence we consider the Tribunal was more than entitled to conclude that, realistically, by the board meeting on 15 April, the board were embarked upon a closure policy relating to redundancies which meets the general notion of a proposal. We will, accordingly, accept its reasoning and not interfere with the findings of the Tribunal in this respect.
In these circumstances it is not necessary for us to determine the question as to whether the phrase “proposing to dismiss” can or should be construed to equiperate to the word “contemplate” in the Directive to which we have already referred, the terms of which the Tribunal set out ad longum.
In this respect the decision of the Tribunal is as follows:-
“Construing section 188 under European Community law
If the Tribunal was wrong in interpreting those facts as falling within the description of ‘proposing to dismiss’ in section 188 as construed by the UK courts, it considered that (a) it was bound to construe section 188 and those words in light of the Directive and relevant EEC law; (b) that resulted in a wider meaning of ‘contemplating collective redundancies’ being given to those words, ie that workers’ representatives must be informed and consulted with regard to the details of projected collective redundancies and the possibility of reducing the numbers or effects of such redundancies, and are informed, consulted and in a position to intervene (Commission v UK [1994] IRLR 412 (ECJ)), and that consultation is to take place at the stage when it could be about ways and means of avoiding collective redundancies or reducing the number of workers affected, and mitigating the consequences (Dansk Metalarbejderforbund and Specialarbejder-forbundet i Danmark v H Neilsen & Søn, Maskinfabrick A/S (in liquidation) 284/83 [1985] ECR 553, [1986] 1 CMLR 91 (ECJ)); and (c) the evidence certainly established that by 15 April (and at least by 24 April) SPM was contemplating collective redundancies. Consultation after those dates would not have been able to achieve the objectives of avoiding collective redundancies or putting the employee representatives in a position to intervene realistically, as turned out to be the case when consultation was eventually started on 5 May 2000.
In relation to (a), while Griffin was decided before section 188 was amended by the 1995 Regulations, the Tribunal was satisfied that in accordance with the doctrine of indirect effect and Van Colson and Kamann v Land Nordrhein-Westfalen [1984] ECR 1891 (ECJ) that part of Article 2 is now unconditional and sufficiently precise so as to be capable of direct enforcement, so that the Tribunal is under a duty to give full effect to it without waiting for a higher court to rule on it (and see also Harvey E [2452-3, 2477-80]).
Within that legal framework the Tribunal was unable to accept the submission for SPM that such a construction is incompatible with the plain words of the statute.”
We recognise that a matter of general law, the national courts are obliged to construe the national legislation emanating from or arising out of the European Directive so far as possible to be consistent with and compatible with the terms of the original directive, (Webb v EMO Air Cargo (UK) Ltd [1993] ICR 175 per Lord Keith of Kinkel at page 187 letter E).
It has to however been noted, that his Lordship adds the rider that the domestic law must be capable of an interpretation consistent with the Directive, even if it is capable of more than one interpretation. What therefore the case does not determine is whether the Directive can be given effective if the domestic law cannot be construed in any way to be compatible with the terms of the Directive.
As we have already indicated, we do not have to determine this point but in case the matter goes further, it is necessary that we express a view.
We have some difficulty with the reasoning of the Tribunal in this respect since to our minds the word “contemplate” by definition, is far wider than the more precise word “propose”. It seems to us by definition that “contemplation” enjoins a large number of options or at least more than one, while “propose” enjoins a specific proposal. We therefore incline to the view that it is extremely difficult if not impossible to construe “propose” as wide enough to cover “contemplation”, although we recognise that upon one view, “proposal” indicates a state of mind and so does “contemplation”. What concerns us is whether the less can include the greater while the opposite is certainly the case.
In these circumstances we expressly reserve our position in this matter, save again to express the view that we have some difficulty in applying the Webb doctrine to the two sets of terminology. This is perhaps all the more reason for taking a fairly broad view of the facts as the Tribunal have done and which we have supported in determining that there was a proposal to dismiss.”
USDAW and Wilson
Akavan Erityisalojen Keskusliitto AEK & Ors
Tangney & anor -v- Dell Products Limerick
Brian Tangney and 27 Others v Dell Products, Limerick
2012 No. 245MCA
High Court
26 June 2013
[2014] 25 E.L.R. 61
Birmingham J.
delivered his judgment on June 26, 2013 saying:
1. This matter comes before the court by way of an appeal from a determination of the Employment Appeals Tribunal (hereinafter “EAT”) dated June 5, 2012. That decision had dismissed a complaint on behalf of the applicant and 27 others that the respondent had breached the terms of s.9 of the Protection of Employment Act 1977 as amended. The decision of the EAT was itself reached on an appeal *63 from a decision of the Rights Commissioner dated November 12, 2009 which had concluded that the respondent had breached s.9 of the Protection of Employment Act 1977. Under s.8(4)(b) of the Employment (Information) Act 1994, provision is made for an appeal from a determination of the EAT to the High Court on a point of law, but the determination of the High Court is final and conclusive.
The factual background
2. Dell Products, Limerick (Dell) is one of the largest multi-national companies active in Ireland. In 2009 it embarked on a worldwide rationalisation and re-organisation of its activities which saw the cessation of manufacturing in Ireland which had previously been carried on at its premises at Raheen Business Park in Limerick.
3. On January 8, 2009 the appellants and other employees received a written communication from their employer furnishing information as to the employer’s plan. On the same day a staff meeting was held at which employees were briefed by senior management figures. In essence the case that has been made by the applicants throughout is that what occurred on January 8, 2009 (the written communication and the briefing at the staff meeting) constituted a notice of dismissal and accordingly that any discussion that took place thereafter came too late to be effective. It is the case that following on from what occurred on January 8, 2009, Dell engaged in a consultation and discussion process with its employees and their designated representatives. Discussions took place with a representative group known as the Site Communication Team (SCT) and with an ad hoc group styled as the Dell Employees Representative Committee (DERC).
4. In the course of argument I have been told by counsel for the respondent that the fact that the redundancy package was modified at an additional cost to the employer of approximately €9 million shows that the consultation process that occurred was a meaningful, worthwhile and effective one.
5. I will return to the communications of January 8, 2009 in greater detail but at this stage it will be evident that the core issue in this appeal is whether a notice of dismissal took place on January 8, 2009, and that accordingly whatever consultations took place thereafter came too late, or whether, as contended by Dell, what occurred on January 8, 2009 and thereafter was sufficient to comply in full with all statutory obligations.
Legislation
6. It is convenient to refer at this stage to the Irish and European legislation that appears in issue. The Irish legislation with which we are concerned is the Protection of Employment Act 1977, as amended and in particular Part 2 thereof. Section 9 provides as follows:
“ Obligation on Employer to Consult Employees Representatives
*64
9–(1) Where an employer proposes to create collective redundancies he shall, with a view to reaching an agreement, initiate consultations with employees’ representatives.
(2) Consultations under this section shall include the following matters –
(a) the possibility of avoiding the proposed redundancies, reducing the number of employees affected by them or, mitigating their consequences by recourse to accompanying social measures, aimed, inter alia, at aid for redeploying or retraining employees made redundant
(b) the basis on which it will be decided which particular employees will be made redundant.
(3) Consultations under this section shall be initiated at the earliest opportunity and in any event at least 30 days before the first notice of dismissal is given.
10–(1) For the purpose of consultations under section 9, the employer concerned shall supply the employees’ representatives with all relevant information relating to the proposed redundancies.
(2) Without prejudice to the generality of subsection (1), information supplied under this section shall include the following, of which details shall be given in writing –
(a) the reasons for the proposed redundancies.
(b) the number, and description of categories, of employees whom it is proposed to make redundant,
(c) the number of employees, and description of categories, normally employed
(i) the number (if any) of agency workers to which the protection of Employees (Temporary Agency Work) Act 2012 applies engaged to work for the employer,
(ii) those parts of the employer’s business in which those agency workers are, for the time being, working, and
(iii) the type of work that those agency workers are engaged to do, and
(d) the period during which it is proposed to effect the proposed redundancies,
(e) the criteria proposed for the selection of the workers to be made redundant and,
(f) the method of calculating any redundancy payments other than those methods set out in the Redundancy Payments Act 1967 to 2007 or any other relevant enactment for the time being in force or, subject thereto, in practice.
(3) An employer shall as soon as possible supply the minister with copies of all information supplied in writing under subsection (2).”
7. It may be noted that this Act was designed to satisfy Ireland’s obligations under Council Directive 98/59 on the approximation of the laws of the Member States relating to collective redundancies consolidating earlier directives. The relevant portions of the directive are to be found at section II and section III. *65
“Section II
Information and Consultation
Article 2(1)
(1) Where an employer is contemplating collective redundancies, he shall begin consultations with the workers’ representatives in good time with a view to reaching an agreement.
(2) These consultations, shall, at least, cover ways and means of avoiding collective redundancies or reducing the number of workers affected, and of mitigating the consequences by recourse to accompanying social measures aimed, inter alia, at aid for redeploying or retraining workers made redundant.
Member States may provide that the workers’ representatives may call on the services of experts in accordance with national legislation and/or practice.
(3) To enable workers’ representations to make constructive proposals, the employers shall in good time during the course of the consultations:
(a) supply them with all relevant information and
(b) in any event notify them in writing of:
(i) The reasons for the proposed redundancies;
(ii) the number of categories of workers to be made redundant;
(iii) the number and categories of workers normally employed;
(iv) the period over which the projected redundancies are to be effected;
(v) the criteria proposed for the selection of the workers to be made redundant in so far as national legislation and/or practice confers the power therefor upon the employer;
(vi) the method for calculating any redundancy payments other than those arising out of national legislation and/or practice.
The employer shall forward to the competent public authority a copy of, at least, the elements of the written communication which are provided for in the first subparagraph, point (b), subpoints (i) to (v).
(4) The obligations laid down in paragraphs, 1, 2 and 3 shall apply irrespective of whether the decision regarding collective redundancies is being taken by the employer or by an undertaking controlling the employers
In considering alleged breaches of the information, consultation and notification requirements laid down by this Directive, account shall not be taken of any defence on the part of the employer on the ground that the necessary information has not been provided to the employer by the undertaking which took the decision leading to collective redundancies.”
8. Section III deals with the procedures for collective redundancies. It requires employers to notify competent public authorities in writing of any projected collective redundancies. Article 4 provides that projective collective redundancies shall take effect not earlier than 30 days after the notification to the competent public authority.
*66
The decision under appeal
9. The question is whether the consultation process required by the 1977 Act commenced, as it ought to on January 8, 2009 or whether a breach of s.9 of the 1977 Act occurred by reason of the fact that the respondent made a decision to terminate the employment of the applicant prior to January 8, 2009, and on that occasion merely communicated a decision already taken, a decision which had been taken in the absence of consultation.
10. The Rights Commissioner had concluded that the specific terms of the individual letters that issued on January 8, 2009, made it impossible for the employer to comply with s.9.
11. The appeal submitted to the Employment Appeals Tribunal was very specific in contending that the Rights Commissioner had misinterpreted the letters of January 8, 2009 as a notice of termination of employment, when in fact the letters were no more than an indication to employees of the terms that would apply if they were made redundant. In its determination it recited the opening remarks of counsel for the employer. Of note is that reference is made to the fact that counsel had referred to two cases Junk v Kühnel Case C-188/03 [2005] E.C.R. I-855 and also Akavan Erityisalojen Keskusliitto (AEK) ry v Fujitsu Siemens Computers Oy Case C-44/08 [2009] E.C.R. I-8163. Counsel is quoted as saying that the Fujitsu decision “is clear whether it is too early to consult” and “it is also incorrect to conflict the strategic decision and the delivery of a decision”. The comment is added:
“The point counsel makes from the authorities is that it is clear whether it is too late to consult employees or too early to consult”.
Then, reference is made in the determination in these terms to the submissions that had been made in regard to s.9:
“The submission is that regarding s. 9 the employer ticks all of the requirements of s. 9.
(1) The employer did not start the consultation too late.
(2) By reference to the Fujitsu case there was no question of the employer having to consult any earlier because of the strategic to migrate was the employer [sic] decision and
(3) There is no prohibition in the employer dismissing employees whilst the consultative process is ongoing provided …..The RC [Rights Commissioner] wrongly decided that the employer started to dismiss before consultation”.
I have set out this section of the determination in full and exactly as it appears there as in my view it serves to clarify the operative part of the determination. Thereafter, the appellant’s case (Dell), the respondents’ case and the closing arguments of counsel for the respondent employees are recited.
*67
12. The operative part of the determination, the actual decision is particularly brief. It is convenient to quote it in full.
“ Determination
Having heard all the evidence and submissions of the parties, including Mr. G.H. who was self-represented, the Tribunal makes the following Determination.
Regarding s.10 of the Act, the Tribunal upholds the Decision of the Rights Commissioner.
Regarding s.9 the employer is entitled to make a strategic decision and the Tribunal is satisfied that the meeting of January 8, 2009 was the commencement of this process. The Tribunal unanimously determines that the complaint by the respondent is not well founded and the appellant employer is not in breach of s.9 of the Act. Accordingly the Rights Commissioners [sic] decision is upset.”
13. Dell has asserted that the purported appeal to the High Court does not raise any valid point of law arising from adjudication of the EAT. Rather, it is said, that the appellants are seeking a further appeal on the facts, something that is not permissible. Dell contends that the EAT was confronted with the need for a simple factual determination as to whether the communications of January 8, 2009 constituted a notice of dismissal, and concluded that was not so. While the determination of the EAT may well involve a finding of fact, it seems to me that one cannot lose sight of the fact that the notice of appeal purports to raise issues of law. In particular it is contended by the notice of appeal that the EAT’s interpretation of the requirement for consultation as provided for under s.9 of the Protection of Employment Act 1977, the Protection of Employment Regulations 2000 and the jurisprudence of the European Court of Justice was incorrect in law. More particularly it is contended that the EAT erred in its conclusions as to when the obligation to consult arose. It seems to me that in these circumstances it would not be appropriate to dispose of the appeal in a summary fashion as suggested by Dell. Rather, it is appropriate to identify what was the threshold that the EAT was applying and consider whether that was appropriate. It may nonetheless be the case that on closer examination it will emerge that the determination was in reality a finding of fact and that an appeal does not lie.
The authorities
14. The question of when the obligation to consult arises has been the subject of a number of decisions of the European Court of Justice (hereinafter “ECJ”) and of the British courts. So far as the ECJ decisions are concerned the starting point for consideration of this issue is Junk v Kühnel Case C-188/03 [2005] E.C.R. I-855. The background to that case was that Mrs Junk had been employed as a care assistant and domestic carer by a company referred to as A.W.O. On January 31, 2002 A.W.O. lodged a request for the opening of insolvency proceedings on grounds of financial difficulties. With effect from February 1, 2002, it released all *68 its employees from the obligation to work and did not pay them any remuneration for January 2002. On February 5, 2002, insolvency proceedings were opened, followed on May 1, 2002, by liquidation proceedings. Mr Kühnel was appointed liquidator. By letter of June 19, 2002, Mr Kühnel informed the chairman of the works council in the company that because of the closure of the company he intended to terminate all remaining contracts of employment, including that of Mrs Junk, with effect from September 30, 2002 and to carry out a collective redundancy. Mrs Junk submitted before the Arbeitsgericht (or Labour Tribunal) that her redundancy was ineffective. Significantly the Arbeitsgericht pointed out that according to the view which had been dominant in German law, the provisions applicable in cases of collective redundancies do not refer to the termination of the contracts of employment but to the date on which the workers actually leave the undertaking, that is to say generally on the expiry of their periods of notice of redundancy. The ECJ at para.31 interpreted the first question submitted to it as in substance seeking to ascertain whether arts 2 and 4 of the Directive are to be construed as meaning that the event constituting redundancy consists of the expression by the employer of his intention to put an end of the contract of employment or of the actual cessation of the employment relationship on the expiry of the period in the notice of redundancy.
15. Having referred to certain technical terms that appeared in the German language version of the Directive, the ECJ at para.35 observed as follows:
“Next, it must be noted that Article 2(1) of the Directive imposes an obligation on the employer to begin consultations with the workers’ representatives in good time in the case where he ‘is contemplating collective redundancies’.Article 3 (1) requires the employer to notify the competent public authority of ‘any projected collective redundancies’.”
The ECJ in the following paragraphs went on to comment as follows:
“(36) The case in which the employer ‘is contemplating’ collective redundancies and has drawn up a ‘project’ to that end corresponds to a situation in which no decision has yet been taken. By contrast, the notification to a worker that his or her contract of employment has been terminated is the expression of a decision to sever the employment relationship, and the actual cessation of that relationship on the expiry of the period of notice is no more than the effect of that decision.
(37) Thus, the terms used by the Community legislature indicate that the obligations to consult and to notify arise prior to any decision by the employer to terminate contracts of employment.
(38) Finally, this interpretation is confirmed, in regard to the procedure for consultation of workers’ representatives, by the purpose of the Directive, as set out in Article 2(2), which is to avoid terminations of contracts of employment or to reduce the number of such terminations. The achievement of that purpose *69 would be jeopardised if the consultation of workers’ representatives were to be subsequent to the employer’s decision.
(39) The answer to the first question must therefore be that Articles 2 to 4 of the Directive must be construed as meaning that the event constituting redundancy consists in the declaration by an employer of his intention to terminate the contract of employment.”
16. The ECJ returned to the issue in case Akavan Erityisalojen Keskusliitto (AEK) ry v Fujitsu Siemens Computers Oy Case C-44/08 [2009] E.C.R. I–8163. This is the decision that the Employment Appeals Tribunal was referring to as Fujitsu Siemens. For convenience I will adopt the same abbreviation.
17. The background to the matter coming before the ECJ is that following the merger of certain information technology businesses of Fujitsu Limited and Siemens AG into a joint undertaking. The Fujitsu Siemens computer group started trading in October 1999. FSC was a subsidiary of Fujitsu Siemens Computers (Holdings) BV (the parent company), a company established in the Netherlands. At the time the group had a production plant in Espoo in Finland and a number of plants in Germany.
18. At a meeting held on December 7, 1999, the executive counsel of the parent company, which consisted of the executive members of its board of directors, decided to make a proposal to the board of directors to dispose of the Espoo facility. At a meeting held a week later, on December 14, 1999, the board of directors decided to support the proposal, but no specific decision was taken in relation to that factory. On the same day FSC proposed consultations and those took place between December 20, 1999 and January 31, 2000. On February 1, 2000, FSC’s board of directors, mainly consisting of directors of the group and chaired by the deputy chairman of the parent company’s board of directors took a decision to terminate FSC’s operations in Finland with the exception of computer sales. On February 8, 2000, FSC began making employees redundant. Some employees claimed that FSC had infringed the law on cooperation and commenced proceedings. During the course of those proceedings it was contended on behalf of the employees that a final decision to run down the activities of the Espoo factory and to separate it from the group’s activities before transferring it to Germany had in fact been taken by the parent company’s board of directors by December 14, 1999 at the latest. According to the employees, the real decisions had been taken on or before December 14, before the consultations with the workforce required by law had taken place. When the matter made its way to the Finnish Supreme Court six questions were submitted to the ECJ, the first two of which were as follows:
“(1) Is Article 2(1) of Directive 98/59 to be interpreted as meaning that the obligation under that provision to embark on consultations when ‘contemplating collective redundancies’ of employees and ‘in good time’ requires consultations *70 to be started when it is established from strategic decisions or changes that have been made relating to the activity that a need for collective redundancies of employees follows? Or is the provision in question to be interpreted as meaning that the obligation to start consultations already arises on the basis of the employer contemplating measures or changes affecting the activity, such as a change in production capacity or a concentration of production, as a consequence of which a need for collective redundancies is to be expected?
(2) Having regard to the fact that the first subparagraph of Article 2(3) of Directive 98/59 refers to the supply of information in good time during the course of the consultations, is Article 2(1) of [that] Directive to be interpreted as meaning that the obligation under that provision to start consultations when ‘contemplating’ collective redundancies and ‘in good time’ requires consultations to be started already before the employer’s intentions have reached the stage at which the employer is required to identify and supply to the employees the information specified in Article 2(3)(b) [of that Directive]?”
These questions were answered as follows:
“(1) Article 2(1) of Directive 98/59 of July 20, 1988 on the approximation of the laws of the Member States relating to collective redundancies must be interpreted to mean that the adoption, within a group of undertakings, of strategic decisions or of changes in activities which compel the employer to contemplate or to plan for collective redundancies gives rise to an obligation on that employer to hold consultations with workers’ representatives.
(2) Whether the obligation has arisen for the employer to start consultations on the collective redundancies contemplated does not depend on whether the employer is already able to supply to the workers’ representatives all the information required in Article 2(3)(b) of Directive 98/59.”
The discussion at paras 38 to 49 as to how question 1 was to be answered is of considerable interest. It is convenient to set out those paragraphs which are of particular importance at this stage.
“38. In that regard, it must be recalled that, as is clear from the wording of Articles 2(1) and 3(1) of Directive 98/59, the obligations of consultation and notification imposed on the employer come into being prior to the employer’s decision to terminate employment contracts (see, to that effect Junk v Kühnel Case C-188/03 [2005] E.C.R. I-885, paragraphs 36 and 37). In such a case there is a still a possibility of avoiding or at least reducing collective redundancies, or of mitigating the consequences.
39. Under Article 2(1) of Directive 98/59, the employer has the obligation to start consultations with the workers’ representatives in good time if he is ‘contemplating collective redundancies’. As stated by the Advocate General in points 48 and 49 of his Opinion, it is clear from comparison of various language versions of that provision that the Community legislature envisaged that the *71 obligation at issue to hold consultations would arise in connection with the existence of an intention on the part of the employer to make collective redundancies.
40. The references in Articles 3 and 4 of Directive 98/59 to ‘projected’ collected redundancies confirm that the existence of such an intention is the factor which triggers the obligations laid down by that directive, in particular by Article 2.
41. It follows that the obligation to hold consultations laid down in Article 2 of Directive 98/59 is deemed to arise where the employer is contemplating collective redundancies or is drawing up a plan for collective redundancies (see, to that effect, Dansk Metalarbejderforbund and Specialarbejderforbundet i Danmark v H. Nielsen & Son, Maskinfabrik A/S, in liquidation Case 284/83 [1985] E.C.R. 553, paragraph 17).
42. It must however be added that, as is clear from the actual wording, the obligations laid down by Directive 98/59, in particular the obligation to hold consultations laid down in Article 2, are also triggered in situations where the prospect of collective redundancies is not directly the choice of the employer.
43. Under Article 2(4) of that Directive, the employer is responsible for compliance with the information and consultation requirements stemming from that directive, even if the decision on collective redundancies is made not by the employer, but by the undertaking controlling the employer, and even though the employer may not have been immediately and properly informed of that decision.
44. Against an economic background marked by the increasing presence of groups of undertakings, that provision serves to ensure, where one undertaking is controlled by another, that the purpose of Directive 98/59, which, as is stated in recital 2 of its preamble, seeks to promote greater protection for workers in the event of collective redundancies, is actually achieved (Athinaïki Chartopoiïa AE v Panagiotidis Case C 270/05 [2007] E.C.R. I-1499, paragraph 25).
45. Moreover, as the United Kingdom Government rightly observes, a premature triggering of the obligation to hold consultations could lead to results contrary to the purpose of Directive 98/59, such as restricting the flexibility available to undertakings when restructuring, creating heavier administrative burdens and causing unnecessary uncertainty for workers about the safety of their jobs.
46. Lastly, the raison d’être and effectiveness of consultations with the workers’ representatives presuppose that the factors to be taken into account in the course of those consultations have been determined, given that it is impossible to undertake consultations in a manner which is appropriate and consistent with their objectives when there has been no definition of the factors which are of relevance with regard to the collective redundancies contemplated. Those objectives are, under Article 2(2) of Directive 98/59, to avoid termination of employment contracts or to reduce the number of workers affected, and to mitigate the consequences (see Junk , paragraph 38). However, where a decision deemed likely to lead to collective redundancies is merely contemplated and where, accordingly, such collective redundancies are only a probability and the relevant factors for the consultations are not known, those objectives cannot be achieved.
47. On the other hand, it is clear that to draw a link between the requirement to hold consultations arising under Article 2 of Directive 98/59 and the adoption *72 of a strategic or commercial decision which makes the collective redundancies of workers necessary may deprive that requirement, in part, of its effectiveness. As is clear from the first subparagraph of that Article 2(2), the consultations must cover, inter alia, the possibility of avoiding or reducing the collective redundancies contemplated. A consultation which began when a decision making such collective redundancies necessary had already been taken could not usefully involve any examination of conceivable alternatives with the aim of avoiding them.
48. It must therefore be held that, in circumstances such as those of the case in the main proceedings, the consultation procedure must be started by the employer once a strategic or commercial decision compelling him to contemplate or to plan for collective redundancies has been taken.
49. In those circumstances, the answer to be given to the first question referred is that Article 2(1) of Directive 98/59 must be interpreted to mean that the adoption, within a group of undertakings, of strategic decisions or of changes in activities which compel the employer to contemplate or to plan for collective redundancies gives rise to an obligation on that employer to consult with workers’ representatives.”
19. The reference in the judgment with apparent approval to the arguments that had been advanced on behalf of the government of the United Kingdom about the dangers of premature consultation is instructive. I have discussed the approach taken by the ECJ in the Fujitsu Siemens case at some length because it seems to me that the EAT was seeking to apply this decision when it reached the conclusion that it did. It is for this reason that I have referred to the recital of the arguments of counsel for the employer in the body of the determination.
20. Still greater clarity, if that was required, might have been provided by United States of America v Nolan [2012] I.R.L.R. 1020 but unfortunately the ECJ, faced with the very unusual situation of a dispute involving a civilian employee working at U.S. air force base in Britain, concluded that it did not have jurisdiction to reply to questions which had been submitted to it by the Court of Appeal.
21. The factual background to that case could hardly have been more unusual and indeed the notion of a sovereign government engaging in consultation before closing a military base for strategic reasons raises eyebrows. However, what is of interest is that the United States argued by reference to the Fujitsu Siemens case that the consultation obligation was not triggered by a proposed business decision to close a plant, but that the consultation obligation only arose at a later stage when the business decision had already been made and the intention to make the employer redundant had been formed. In a situation where it was clear that if the interpretation being placed on the ECJ decision in Fujitsu Siemens was correct that this meant that a decision of a divisional court in R. v British Coal Corporation and Secretary of State for Trade and Industry, ex parte Vardy [1993] I.R.L.R. 104 had been wrongly decided, the Court of Appeal decided to submit certain questions to the ECJ. By way of further background it should *73 be noted that in the Nolan case the EAT had found against the government of the United States. In doing so it was following a decision of the EAT in U.K. Coal Mining Limited v National Union of Mineworkers (Northumberland Area) [2008] I.R.L.R. 4 which had held that the consultation obligation arose when the mine closure was proposed, or at least when it was contemplated that the closure would give rise to redundancies and that the consultation should concern the reasons for the closure. That decision, it may be noted, was departing from earlier EAT decisions such as Middlesbrough Borough Council v Transport and General Workers Union [2002] I.R.L.R. 332 and Securicor Omega Express v G.M.B. [2004] I.R.L.R. 9. The Court of Appeal in Nolan ([2010] EWCA Civ 1223) felt that the interpretation of the ECJ decision in Fujitsu Siemens was not straightforward. In the course of its consideration the Court of Appeal quoted the first question that had been referred by the Finnish Supreme Court. I referred to that question earlier but it is convenient to set it out once more and to do so as the Court of Appeal did. The question was as follows:
“Is Article 2(1) of Directive 98/59 to be interpreted as meaning that the obligation under the provision to embark on consultations when ‘contemplating collective redundancies’ of employees and ‘in good time’ requires consultations to be started when it is established from the strategic decisions or changes that have been made relating to the activity that a need for collective redundancies of employees follows ? Or is the provision in question to be interpreted as meaning that the obligation to start consultations already arises on the basis of the employer contemplating measures or changes affecting the activity , such as change in production or concentration of production, as a consequence of which a need for collective redundancies is to be expected.” (Emphasis as provided by the Court of Appeal).
The Court of Appeal then put the Finnish question in the context of its domestic jurisprudence and suggested that the first sub question was asking whether the approach in Middlesbrough and Securicor was correct while the second sub-question was asking whether the UK Coal Mining line of authority was correct.
22. The Court of Appeal then went on to conduct a forensic analysis of the opinion of the Advocate General and then of the judgment of the ECJ. The Court of Appeal commented that they had to say with respect that they found the reasoning of the Advocate General quite difficult to follow and that they did not find the interpretation of the ECJ’s decision on the first question straightforward. The Court of Appeal having conducted that exercise commented that it proposed to venture no further views on the true interpretation of the judgment which it respectfully regarded as unclear. While not spelled out by the Court of Appeal it does seem to me implicit in its judgment that the court was of the view that as between the two options offered, option 1 being that the obligation arose when the employer was proposing, but had not yet made, a strategic business or operational decision that will foreseeably or inevitably lead to collective redundancies and *74 option 2 that the obligation arose only when that decision had actually been made and the employer was then proposing consequential redundancies, that option 2 was more likely the correct interpretation but that the matter was sufficiently uncertain that a reference was appropriate.
23. In a situation where the Court of Appeal has expressed the view that the decision of the ECJ is unclear, I have to give serious consideration to the question of whether a reference is necessary. In particular, I must think long and hard if the matter is not to be referred, given that by virtue of Terms of Employment (Information) Act, 1994 there is no appeal from my decision.
24. I have paid particular attention to the opinion of Advocate General Mengozzi in United States of America v Nolan given that he was also the Advocate General in the Fujitsu Siemens case his opinion is particularly influential. He felt that the European Court of Justice was being asked to determine the trigger point for the employer’s obligation of prior consultation in the case of collective redundancy and more specifically that the referring court was uncertain whether that obligation arose when the employer was planning to make a strategic or operational decision which, foreseeably or inevitably, will lead to collective redundancies or only when that decision had actually been made and the employer is planning to proceed with the consequential redundancies. As between the position argued for by Mrs Nolan which was that only the first possibility ensured the effectiveness of the directive and the position adopted by the Commission and the EFTA Surveillance Authority who argued that in light of Fujitsu Siemens and the facts of the case of the referring court that the employer’s obligation to begin consultations concerning collective redundancies arises when a strategic or commercial decision is taken which compels the employer to contemplate or to plan collective redundancies, the Advocate General indicated that he agreed with the interpretation contended for by the Commission and the EFTA Surveillance Authority. His subsequent analysis shows clearly the extent to which this was an area where facts had to be found and where he saw this as the critical exercise to be undertaken. He observed, at para.49:
“In my view, the method to be used by the referring court should be to identify which of the events mentioned in the order for reference which occurred before June 5, 2006 was in the nature of a strategic decision and exerted compelling force on the employer for the purposes of giving effect to the consultation obligation, and the date on which that decision was made.”
25. Returning then to the decision of the Employment Appeals Tribunal in the present case it does seem to me that the determination approached the controversy before it as essentially one of fact and decided as a matter of fact that the communication by Dell on January 8, 2009 did not constitute notice of dismissal and that the employer had commenced the consultation process *75 at an appropriate stage. It seems to me that the reference to the entitlement of the employer to make a strategic decision in the concluding paragraph of the determination must mean that the Employment Appeals Tribunal was taking the view that the employer had, as it was obliged to do, embarked on consultation when a strategic or commercial decision compelling it to contemplate or plan for collective redundancies had been taken. If one looks at what happened subsequent to January 8, 2009, further evidence emerges that the letters of January 8, 2009 were not simply the communication of what was a fait accompli. Many of the matters of substance contained in the letter of January 8 changed between that date and the end of the consultation period on March 27. A number of employees were redeployed and as a result their employment was never terminated, the actual leaving dates for several production lines were different from the dates suggested in the initial letters and there was a significant improvement in the severance package available to employees.
26. Further support for the view that what emerged on January 8, 2009, was not the communication of a finalised decision is to be found in the text of the letter of January 8 itself. The letter contains a specific statement that the content of the letter is for information purposes only and does not constitute contractual terms or conditions. The section on “Leaving Dates” refers to estimated ranges of leaving dates associated with individual production lines. Again, the section on severance payments refers to estimated severance payments and stresses that the calculations set out are estimates only. However, I do acknowledge that the letter contains a significant amount of detail and certainly does not suggest that the employer has an open mind, or that the employees are being provided with a blank sheet. However, it seems to me one has to recognise that a communication couched in generalities would be of little assistance to employees, and would likely be not well received.
27. In these circumstances I do not believe that a point of law has been identified which would provide a basis for overturning the decision of the Employment Appeals Tribunal and accordingly I dismiss the appeal.
Jessica Porras Guisado v Bankia SA and Others.
JUDGMENT OF THE COURT (Third Chamber)
22 February 2018 ( *1 )
(Reference for a preliminary ruling — Social policy — Directive 92/85/EEC — Measures to encourage improvements in the safety and health of pregnant workers and workers who have recently given birth or are breastfeeding — Article 2(a) — Article 10(1) to (3) — Prohibition of dismissal of a worker during the period from the beginning of her pregnancy to the end of her maternity leave — Scope — Exceptional cases not connected with the pregnant worker’s condition — Directive 98/59/EC — Collective redundancies — Article 1(1)(a) — Reasons not related to the individual workers concerned — Pregnant worker dismissed in the context of a collective redundancy procedure — Reasons for the dismissal — Priority for retention of the post of the pregnant worker — Priority for redeployment)
In Case C‑103/16,
REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal Superior de Justicia de Cataluña (High Court of Justice of Catalonia, Spain), made by decision of 20 January 2016, received at the Court on 19 February 2016, in the proceedings
Jessica Porras Guisado
v
Bankia SA,
Sección Sindical de Bankia de CCOO,
Sección Sindical de Bankia de UGT,
Sección Sindical de Bankia de ACCAM,
Sección Sindical de Bankia de SATE,
Sección Sindical de Bankia de CSICA,
Fondo de Garantía Salarial (Fogasa),
joined party:
Ministerio Fiscal,
THE COURT (Third Chamber),
composed of L. Bay Larsen, President of the Chamber, J. Malenovský, M. Safjan (Rapporteur), D. Šváby and M. Vilaras, Judges,
Advocate General: E. Sharpston,
Registrar: M. Ferreira, Principal Administrator,
having regard to the written procedure and further to the hearing on 26 January 2017,
after considering the observations submitted on behalf of:
–
Bankia SA, by C. Rodríguez Elias and V. García González, abogados,
–
the Spanish Government, by M.J. García-Valdecasas Dorrego and A. Gavela Llopis, acting as Agents,
–
the European Commission, by C. Valero, A. Szmytkowska and S. Pardo Quintillán, acting as Agents,
after hearing the Opinion of the Advocate General at the sitting on 14 September 2017,
gives the following
Judgment
1
This request for a preliminary ruling concerns the interpretation of Article 10(1) and (2) of Council Directive 92/85/EEC of 19 October 1992 on the introduction of measures to encourage improvements in the safety and health at work of pregnant workers and workers who have recently given birth or are breastfeeding (tenth individual Directive within the meaning of Article 16(1) of Directive 89/391/EEC) (OJ 1992 L 348 p. 1), as well as Article 1(1)(a) of Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies (OJ 1998 L 225, p. 16).
2
The request has been made in proceedings between, on the one hand, Ms Jessica Porras Guisado and, on the other hand, Bankia SA, various trade union branches and the Fondo de Garantía Salarial (Fogasa) (Wages Guarantee Fund, Spain) concerning the legality of Ms Porras Guisado’s dismissal, in the context of a collective redundancy, while she was pregnant.
Legal context
EU law
Directive 92/85
3
According to the first, seventh, eighth and 15th recitals of Directive 92/85:
‘Whereas Article 118a of the [EEC] Treaty provides that the Council shall adopt, by means of directives, minimum requirements for encouraging improvements, especially in the working environment, to protect the safety and health of workers;
…
Whereas Article 15 of Council Directive 89/391/EEC of 12 June 1989 on the introduction of measures to encourage improvements in the safety and health of workers at work [(OJ 1989 L 183, p. 1)] provides that particularly sensitive risk groups must be protected against the dangers which specifically affect them;
Whereas pregnant workers, workers who have recently given birth or who are breastfeeding must be considered a specific risk group in many respects, and measures must be taken with regard to their safety and health;
…
Whereas the risk of dismissal for reasons associated with their condition may have harmful effects on the physical and mental state of pregnant workers, workers who have recently given birth or who are breastfeeding; whereas provision should be made for such dismissal to be prohibited’.
4
Article 1 of Directive 92/85, entitled ‘Purpose’, provides in paragraph 1:
‘The purpose of this Directive, which is the tenth individual Directive within the meaning of Article 16(1) of Directive 89/391/EEC, is to implement measures to encourage improvements in the safety and health at work of pregnant workers and workers who have recently given birth or who are breastfeeding.’
5
Article 2 of Directive 92/85, entitled ‘Definitions’, states:
‘For the purposes of this Directive:
(a)
pregnant worker shall mean a pregnant worker who informs her employer of her condition, in accordance with national legislation and/or national practice;
(b)
worker who has recently given birth shall mean a worker who has recently given birth within the meaning of national legislation and/or national practice and who informs her employer of her condition, in accordance with that legislation and/or practice;
(c)
worker who is breastfeeding shall mean a worker who is breastfeeding within the meaning of national legislation and/or national practice and who informs her employer of her condition, in accordance with that legislation and/or practice.’
6
Article 10 of that directive, entitled ‘Prohibition of dismissal’, provides that:
‘In order to guarantee workers, within the meaning of Article 2, the exercise of their health and safety protection rights as recognized under this Article, it shall be provided that:
1.
Member States shall take the necessary measures to prohibit the dismissal of workers, within the meaning of Article 2, during the period from the beginning of their pregnancy to the end of the maternity leave referred to in Article 8(1), save in exceptional cases not connected with their condition which are permitted under national legislation and/or practice and, where applicable, provided that the competent authority has given its consent;
2.
if a worker, within the meaning of Article 2, is dismissed during the period referred to in point 1, the employer must cite duly substantiated grounds for her dismissal in writing;
3.
Member States shall take the necessary measures to protect workers, within the meaning of Article 2, from consequences of dismissal which is unlawful by virtue of point 1.’
Directive 98/59
7
According to recitals 2 to 4 and 7 of Directive 98/59:
‘(2)
Whereas it is important that greater protection should be afforded to workers in the event of collective redundancies while taking into account the need for balanced economic and social development within the Community;
(3)
Whereas, despite increasing convergence, differences still remain between the provisions in force in the Member States concerning the practical arrangements and procedures for such redundancies and the measures designed to alleviate the consequences of redundancy for workers;
(4)
Whereas these differences can have a direct effect on the functioning of the internal market;
…
(7)
Whereas this approximation must therefore be promoted while the improvement is being maintained within the meaning of Article 117 of the [EEC] Treaty’.
8
Article 1 of that directive, entitled ‘Definitions and scope’, provides, in paragraph 1(a):
‘For the purposes of this Directive:
(a)
“collective redundancies” means dismissals effected by an employer for one or more reasons not related to the individual workers concerned where, according to the choice of the Member States, the number of redundancies is:
(i)
either, over a period of 30 days:
–
at least 10 in establishments normally employing more than 20 and less than 100 workers,
–
at least 10% of the number of workers in establishments normally employing at least 100 but less than 300 workers,
–
at least 30 in establishments normally employing 300 workers or more,
(ii)
or, over a period of 90 days, at least 20, whatever the number of workers normally employed in the establishments in question’.
9
Article 2 of that directive, entitled ‘Information and consultation’, provides, in paragraphs 1 to 3:
‘1. Where an employer is contemplating collective redundancies, he shall begin consultations with the workers’ representatives in good time with a view to reaching an agreement.
2. These consultations shall, at least, cover ways and means of avoiding collective redundancies or reducing the number of workers affected, and of mitigating the consequences by recourse to accompanying social measures aimed, inter alia, at aid for redeploying or retraining workers made redundant.
Member States may provide that the workers’ representatives may call on the services of experts in accordance with national legislation and/or practice.
3. To enable workers’ representatives to make constructive proposals, the employers shall in good time during the course of the consultations:
(a)
supply them with all relevant information and
(b)
in any event notify them in writing of:
(i)
the reasons for the projected redundancies;
(ii)
the number and categories of workers to be made redundant;
(iii)
the number and categories of workers normally employed;
(iv)
the period over which the projected redundancies are to be effected;
(v)
the criteria proposed for the selection of the workers to be made redundant in so far as national legislation and/or practice confers the power therefor upon the employer;
(vi)
the method for calculating any redundancy payments other than those arising out of national legislation and/or practice.
The employer shall forward to the competent public authority a copy of, at least, the elements of the written communication which are provided for in the first subparagraph, point (b), subpoints (i) to (v).’
The relevant provisions of Spanish law
10
Article 51 of the texto refundido de la Ley del Estatuto de los Trabajadores, aprobado por el Real Decreto Legislativo 1/1995 (consolidated text of the Workers’ Statute, adopted by Royal Legislative Decree No 1/1995) of 24 March 1995 (BOE No 75 of 29 March 1995, p. 9654) in its version applicable at the material time (‘the Workers’ Statute’), which concerns collective redundancies, provides:
‘1. For the purposes [of the Workers’ Statute], “collective redundancy” shall mean the termination of contracts of employment for economic, technical or organisational reasons or reasons related to production, where, over a period of 90 days, the termination affects at least:
(a)
10 workers in undertakings employing fewer than 100 workers;
(b)
10% of the number of workers in undertakings employing between 100 and 300 workers;
(c)
30 workers in undertakings employing more than 300 workers.
Economic grounds shall be deemed to have been established where a negative economic situation is apparent from the financial performance of the undertaking, in cases where losses are actually sustained or forecast or where there is a persistent reduction in the level of ordinary revenue or sales. In any event, a reduction shall be deemed to be persistent if, for three consecutive quarters, the level of ordinary revenue or sales in each quarter is lower than that recorded in the same quarter of the preceding year.
…
2. Collective redundancy must be preceded by a period of consultation with the workers’ legal representatives for a maximum period of 30 calendar days or 15 days in the case of undertakings with fewer than 50 workers. Consultation with workers’ legal representatives must include, as a minimum, consideration of the possibilities of avoiding or reducing collective redundancy and of mitigating the consequences thereof by recourse to social support measures, such as outplacement or vocational training or retraining to improve employability. The consultation shall be conducted in a special negotiating group on the understanding that where there are several places of work, this group is restricted to areas affected by the collective redundancy procedure. …
…
Notification of the commencement of the consultation period shall be given by letter sent by the employer to the workers’ legal representatives, and a copy of the letter shall be forwarded to the employment authority. That document shall set out the following particulars:
(a)
an indication of the reasons for the collective redundancies in accordance with paragraph 1;
(b)
the number of workers affected by the redundancies and the professional categories to which they belong;
(c)
the number of workers normally employed during the last year and professional categories to which they belong;
(d)
when the redundancies are expected to take place;
(e)
the criteria for selecting the workers to be made redundant;
(f)
a copy of the notice of intention to initiate a collective redundancy procedure sent by the company management to the workers or their representatives;
(g)
the identity of the workers’ representatives forming part of the special negotiating body or, if appropriate, indication that the special negotiating body was not formed within the legal deadlines;
…
5. In cases to which this Article refers, the workers’ legal representatives enjoy priority status in relation to being retained by the undertaking concerned. Priority status in relation to being retained may be afforded to other groups, such as workers with dependants, older workers and people with disabilities, through collective agreement or an agreement reached during the consultation period.
…’
11
Article 52 of the Workers’ Statute, concerning termination of the contract on objective grounds provides:
‘An employment contract may be terminated:
…
(c)
when one of the causes set out in Article 51(1) [of the Workers’ Statute] occurs and the termination affects fewer workers than the threshold laid down by this provision.
…’
12
Article 53 of the Workers’ Statute, concerning the form and effects of the termination of an employment contract on objective grounds, is worded as follows:
‘1. The adoption of a decision terminating the employment contract under the provisions of the preceding article is subject to the following conditions:
(a)
The employee must be notified in writing of the reason for termination;
(b)
At the same time as it gives written notification of termination, the employer must pay the worker a severance payment equal to 20 days’ remuneration per year of service, periods shorter than a year being calculated pro rata on a monthly basis, up to a maximum of 12 monthly payments.
If the dismissal decision based on Article 52(c) [of the Workers’ Statute] is based on economic reasons and that economic situation prevents the employer paying the employee the severance payment provided for in the preceding paragraph, the employer may refrain from making that payment, indicating in the written communication that it is unable to, without prejudice to the worker’s right to claim the payment when the dismissal takes effect.
(c)
The employer must give a period of notice of 15 days, from delivery of the personal notification to the worker until termination of the employment contract. In the situation referred to in Article 52(c), a copy of the written notice must be sent to the workers’ legal representatives.
…
3. The dismissal decision may be appealed as if it were a dismissal for disciplinary reasons.
4. When the employer’s decision to terminate the employment contract is motivated by any of the grounds of discrimination prohibited by the Constitution or by law, or was adopted in breach of the worker’s fundamental rights and public freedoms, the dismissal decision shall be invalid, in which event it shall be for the judicial authority to make a declaration to that effect, ex officio.
Decisions to dismiss shall also be void in the following cases:
(a)
when they are taken during the period of suspension of a contract of employment on grounds of maternity, risk during pregnancy, risk during breastfeeding, illness caused by pregnancy, childbirth or breastfeeding, adoption, fostering or paternity referred to in Article 45(1)(d) [of the Workers’ Statute], or when it is notified on a date such that the notice period will end within that period of suspension;
(b)
when a pregnant worker is dismissed between the date of commencement of the pregnancy and the date of commencement of the period of suspension referred to in the previous subparagraph, or when a worker who has applied for or is benefiting from leave of a kind referred to in Article 37(4), (4a) and (5) [of the Workers’ Statute] or who has applied for or is benefiting from unpaid leave under Article 46(3) of this law is dismissed; when a worker who is a victim of domestic violence is dismissed for exercising her rights to a reduction or reorganisation of her working time, to geographical mobility, to a change of place of work or a suspension of the employment contract, in the terms and conditions recognised by [the Workers’ Statute];
(c)
when a worker is dismissed after returning to work following periods of suspension of the employment contract for reasons of maternity, adoption or fostering or paternity when less than nine months have elapsed since the birth, adoption or fostering of the child.
The provisions of the foregoing paragraphs shall apply except where, in those cases, the decision terminating the employment relationship is declared valid for reasons unconnected with the pregnancy or with the exercise of the right to the leave, paid or unpaid, referred to above.
The dismissal decision shall be considered justified if the reason on which it is based is evidenced and the conditions set out in paragraph 1 of the present article have been met. If that is not the case, it shall be declared unfounded.
Failure to give notice or excusable miscalculation of the compensation does not, however, result in a dismissal being unfounded, without prejudice to the obligation of the employer to pay the wages corresponding to that period or the correct amount of compensation, irrespective of the other consequences thereof.
5. A decision of the court declaring the dismissal decision to be invalid, valid or lacking foundation has the same effects as those set out for disciplinary dismissals, subject to the following modifications:
(a)
When the dismissal decision is declared to be valid, the worker shall be entitled to the severance payment provided for in paragraph 1 of the present Article, which retains its validity if already received, and shall be considered unemployed for reasons beyond his control.
(b)
When the dismissal decision is declared invalid and the employer reinstates the worker, the worker shall be required to reimburse the severance payment received. If financial compensation is substituted for reinstatement, that compensation shall be reduced by the amount of the severance payment received.’
13
Article 55 of the Workers’ Statute, concerning the form and effects of termination for disciplinary reasons states, in paragraphs 5 and 6:
‘5. Dismissal motivated by any of the grounds of discrimination prohibited by the Constitution or by law, or which has been carried out in breach of the worker’s fundamental rights and public freedoms, shall be void.
Dismissals shall also be void in the following cases:
(a)
where they occur during the period of suspension of a contract of employment on grounds of maternity, risk during pregnancy, risk during breastfeeding, illness caused by pregnancy, childbirth or breastfeeding, adoption, fostering or paternity referred to in Article 45(1)(d) [of the Workers’ Statute], or when it is notified on a date such that the notice period will end within that period of suspension;
(b)
when a pregnant worker is dismissed between the date of commencement of the pregnancy and the date of commencement of the period of suspension referred to in the previous subparagraph, or when a worker who has applied for or is benefiting from leave of a kind referred to in Article 37(4), (4a) and (5) [of the Workers’ Statute] or who has applied for or is benefiting from unpaid leave under Article 46(3) of this law is dismissed; when a worker who is a victim of domestic violence is dismissed for exercising her rights to a reduction or reorganisation of her working time, to geographical mobility, to a change of place of work or a suspension of the employment contract, in the terms and conditions recognised by [the Workers’ Statute];
(c)
when a worker is dismissed after returning to work following periods of suspension of the employment contract owing to maternity, adoption or fostering or paternity when less than nine months have elapsed since the birth, adoption or fostering of the child.
The provisions of the foregoing paragraphs shall apply except where, in those cases, the termination of the employment relationship is declared valid for reasons unconnected with the pregnancy or with the exercise of the right to the leave, paid or unpaid, referred to above.
6. Dismissals declared void shall entail the immediate reinstatement of the worker and the payment of earnings not received.’
14
Article 13 of the Real Decreto 1483/2012, por el que se aprueba el Reglamento de los procedimientos de despido colectivo y de suspensión de contratos y reducción de jornada (Royal Decree 1483/2012 approving the regulations for collective redundancy procedures and for suspension of contracts and reduction of daily working time) of 29 October 2012 (BOE No 261 of 30 October 2012, p. 76292) provides:
‘1. In accordance with the provisions of Article 51(5) and Article 68(b) of the [Workers’ Statute] as well as Article 10(3) of the Ley Orgánica 11/1985 de Libertad Sindical [(Organic Law 11/1985 on the freedom of association)], of 2 August 1985, the workers’ legal representatives shall enjoy priority status in relation to being retained over other workers affected by the collective redundancy procedure.
2. Priority status in relation to being retained shall also be enjoyed by workers belonging to other groups, for example workers with dependants, older workers and people with disabilities, where this has been agreed by collective agreement or in the agreement or in the agreement reached during the consultation period.
3. The undertaking must give reasons in the final collective redundancy decision referred to in Article 12 for the assignment of workers enjoying priority for retention in the undertaking.’
15
Article 122(2) of the Ley 36/2011, reguladora de la jurisdicción social (Law 36/2011 governing the social courts) of 10 October 2011 (BOE No 245 of 11 October 2011, p. 106584), in its version applicable at the time of the facts in the main proceedings, provides:
‘A decision to dismiss shall be void:
…
(b)
when it was taken in circumvention of the law, without regard to the provisions laid down for collective redundancies, in the cases referred to in the last line of Article 51(1) [of the Workers’ Statute];
(c)
where it occurs during the period of suspension of a contract of employment on grounds of maternity, risk during pregnancy, risk during breastfeeding, illness caused by pregnancy, childbirth or natural breastfeeding, adoption, fostering or paternity referred to in Article 45(1)(d) [of the Workers’ Statute], or when it is notified on a date such that the notice period will end within that period of suspension;
(d)
when a pregnant worker is dismissed between the date of commencement of the pregnancy and the date of commencement of the period of suspension referred to in subparagraph (c) above, or when a worker who has applied for or is benefiting from leave of a kind referred to in Article 37(4), (4a) and (5) [of the Workers’ Statute] or who has applied for or is benefiting from unpaid leave under Article 46(3) of this law is dismissed; when a worker who is a victim of domestic violence is dismissed for exercising her rights to a reduction or reorganisation of her working time, to geographical mobility, to a change of place of work or a suspension of the employment contract, in the terms and conditions recognised by [the Workers’ Statute];
(e)
when a worker is dismissed after returning to work following periods of suspension of the employment contract for reasons of maternity, adoption or fostering or paternity when less than nine months have elapsed since the birth, adoption or fostering of the child.
The provisions set out above in subparagraphs (c), (d), and (e) shall apply except where, in those cases, the decision terminating the employment relationship is declared valid for reasons unconnected with the pregnancy or with the exercise of the right to the leave, paid or unpaid, referred to above.
…’
The dispute in the main proceedings and the questions referred for a preliminary ruling
16
On 18 April 2006, Ms Porras Guisado was engaged by Bankia.
17
On the 9th January 2013, Bankia opened a period of consultation with the workers’ representatives, namely the CCOO, UGT, ACCAM, SATE and CSICA trade unions, with a view to effecting a collective redundancy.
18
On 8 February 2013, the special negotiating body, as referred to in Article 51(2) of the Workers’ Statute, reached an agreement covering, inter alia, the collective redundancy to be carried out, changes to working conditions and functional and geographical mobility (‘the agreement of 8 February 2013’).
19
It is clear from the order for reference that, according to the minutes relating to that agreement, the criteria to be taken into account by the undertaking in determining the persons affected by the dismissal were the following:
‘(1)
The area of application will be the province or the groups or functional units of the central services where workers are employed.
(2)
In that connection, once a decision has been made regarding the work posts to be eliminated as a result of the procedure for acceptance [into the compensated redundancy scheme], and without account being taken of those persons who are affected by geographic mobility and redeployment procedures in order to cover the needs arising from the voluntary departures …, the undertaking shall designate the persons affected by the collective redundancy in the corresponding area of application having regard to the scores resulting from the skills assessment and evaluation of potential carried out by the undertaking.’
20
In the same document, the following are also laid down as criteria for priority status in relation to being retained:
‘(1)
Where two persons are married or cohabiting as a couple, only one of the two may be affected, as per their choice, in accordance with functional needs and required profiles, with the possibility of a geographical change being necessary in order for this condition to be fulfilled.
(2)
Regarding workers with a degree of disability higher than 33%, as recognised and certified by the relevant bodies of each autonomous community, if their post is eliminated the undertaking will consider redeploying them, subject to the new post corresponding to their profile.’
21
On 13 November 2013, Bankia notified Ms Porras Guisado of her dismissal by letter, in which it is stated as follows:
‘In the specific case of the Province of Barcelona[, Spain,] where you work, following completion of the procedure for acceptance of the programme of dismissals attracting compensation, disregarding persons affected by geographic mobility procedures and changes of work post, a more extensive adjustment to the workforce has become necessary, requiring the termination of the employment contracts of persons designated directly by the undertaking, in accordance with the provisions of [the agreement of 8 February 2013].
In that regard, as a result of the assessment process carried out in the undertaking during the consultation period, this being a relevant factor in the adoption of the agreement of 8 February 2013, of which it formed an integral part, your score is 6 points, placing you among the lower scores of the Province of Barcelona, where you work.
Therefore, in application of the assessment criteria set out and for the reasons stated, I inform you that it has been decided to terminate your contract of employment with effect from 10 December 2013.’
22
On the day of notification of that letter of dismissal, Ms Porras Guisado received from Bankia a sum of money by way of compensation.
23
At the time of her dismissal, Ms Porras Guisado was pregnant.
24
On 9 January 2014 Ms Porras Guisado requested a conciliation procedure, but this was unsuccessful.
25
On 3 February 2014, Ms Porras Guisado challenged her dismissal before the Juzgado de lo Social No 1 de Mataró (Social Court No 1, Mataró, Spain), which dismissed her action by judgment of 25 February 2015.
26
Ms Porras Guisado appealed against that judgment to the referring court, namely the Tribunal Superior de Justicia de Cataluña (High Court of Justice of Catalonia, Spain).
27
That court notes that the request for a preliminary ruling does not concern the protection from discrimination established by Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (OJ 2006 L 204, p. 23). Rather, it seeks to determine whether the Spanish legislation constitutes a correct transposition of Article 10 of Directive 92/85 which prohibits, except in exceptional cases, the dismissal of pregnant workers.
28
It is in that context that the Tribunal Superior de Justicia de Cataluña (High Court of Justice of Catalonia) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘(1)
Should the expression “exceptional cases not connected with their condition which are permitted under national legislation and/or practice …” in Article 10(1) of Directive [92/85], which constitutes an exception to the prohibition against dismissing pregnant workers and workers who have recently given birth or are breastfeeding, be interpreted as not corresponding to the expression “… one or more reasons not related to the individual workers concerned …” referred to in Article 1(1)(a) of Directive 98/59, but rather as being more restricted than the latter?
(2)
In the event of collective redundancy, in order to decide whether there are exceptional cases which justify the dismissal of pregnant workers and workers who have recently given birth or are breastfeeding, pursuant to Article 10(1) of Directive 92/85, is there a requirement that the worker concerned cannot be reassigned to another work post or is it sufficient for her dismissal to be based on proof of economic or technical reasons or reasons relating to production that affect her work post?
(3)
Is national legislation, such as that in force in Spain, which, in order to transpose the prohibition laid down in Article 10(1) of Directive 92/85 on dismissing pregnant workers and workers who have recently given birth or are breastfeeding, does not prohibit such a dismissal (preventative protection), but provides that the dismissal is to be declared void (reparative protection), where the undertaking concerned fails to provide reasons which justify the worker’s dismissal, compatible with Article 10(1) of that directive?
(4)
Is national legislation, such as that in force in Spain, which makes no provision in cases of collective redundancy for pregnant workers and workers who have recently given birth or are breastfeeding to be afforded priority retention in the undertaking concerned compatible with Article 10(1) of Directive 92/85?
(5)
Is national legislation compatible with Article 10(2) of Directive 92/85 if it treats as sufficient a letter such as that in the main proceedings dismissing a pregnant worker in the context of a collective redundancy procedure without making reference to the existence of any exceptional grounds for her dismissal over and above those on which the collective redundancy is based?’
Consideration of the questions referred
Admissibility of the request for a preliminary ruling
Compliance with national procedural rules
29
Bankia submits that the reference for a preliminary ruling is inadmissible on the ground that the referring court failed to comply with the national procedural rules. In the context of the dispute in the main proceedings, Ms Porras Guisado claimed breach of Directive 92/85 only on appeal. However, according to national procedural rules, a new cause of action, separate from those set out in the document instituting the proceedings, cannot be accepted.
30
It is Bankia’s view that, in any case, in accordance with the case-law of the Spanish courts, Ms Porras Guisado, as an individual bringing an action against her dismissal, has no standing to challenge the criteria for establishing priority status in relation to being retained, as agreed between Bankia and the workers’ representatives and set out in the agreement of 8 February 2013.
31
In that regard, it should be borne in mind, first, that in the context of Article 267 TFEU the Court has no jurisdiction to rule either on the interpretation of provisions of national laws or national regulations or on their conformity with EU law and, second, that it is not for the Court to determine whether the decision whereby a matter is brought before it was taken in accordance with the rules of national law governing the organisation of the courts and their procedure (judgment of 7 July 2016, Genentech, C‑567/14, EU:C:2016:526, paragraph 22 and the case-law cited).
32
Therefore, the argument alleging failure to comply with national procedural rules cannot, in the present case, cause the request for a preliminary ruling to be dismissed as inadmissible.
The hypothetical nature of the questions referred
33
Bankia submits that, at the time of her dismissal, Ms Porras Guisado had not informed it of her pregnancy. In those circumstances, in the light of the definition of ‘pregnant worker’ set out in Article 2(a) of Directive 92/85, that directive is not applicable to the dispute in the main proceedings. Accordingly, the questions referred by the national court are hypothetical.
34
In that regard, it must be borne in mind that, in the context of the instrument of cooperation between the Court of Justice and national courts that is established by Article 267 TFEU, questions concerning EU law enjoy a presumption of relevance. The Court may refuse to give a ruling on a question referred by a national court for a preliminary ruling, under Article 267 TFEU, only where, for instance, the requirements concerning the content of a request for a preliminary ruling, set out in Article 94 of the Rules of Procedure of the Court of Justice, are not satisfied or where it is quite obvious that the interpretation of a provision of EU law, or the assessment of its validity, which is sought by the national court, bears no relation to the actual facts of the main action or to its purpose or where the problem is hypothetical (judgment of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 50 and the case-law cited).
35
In the present case, as stated in paragraph 27 of the present judgment, the referring court has specifically stated that the request for a preliminary ruling seeks to ascertain whether the Spanish regulation constitutes a correct transposition of Article 10 of Directive 92/85, which prohibits, except in exceptional cases, the dismissal of pregnant workers.
36
It is not disputed that Ms Porras Guisado was pregnant at the time of her dismissal. Furthermore, it is clear from the file before the Court that she submitted, in the context of the national proceedings, that she had informed her colleagues and superiors of her pregnancy at that time.
37
In those circumstances and in the absence of any information to the contrary from the referring court, it must be held that the referring court assumes that Article 10 of Directive 92/85 applies to Ms Porras Guisado.
38
As a result, the questions asked do not appear to be manifestly hypothetical or devoid of any connection with the facts or purpose of the dispute in the main proceedings.
39
In those circumstances, the request for a preliminary ruling must be declared admissible.
The first question
40
By its first question, the referring court asks whether Article 10(1) of Directive 92/85 must be interpreted to the effect that the ‘exceptional cases not connected with their condition which are permitted under national legislation and/or practice …’, as an exception to the prohibition against dismissing pregnant workers and workers who have recently given birth or are breastfeeding, do not correspond to the ‘… one or more reasons not related to the individual workers concerned …’ referred to in Article 1(1)(a) of Directive 98/59, but are more restricted than the latter.
41
According to Article 10(1) of Directive 92/85, Member States are to take the necessary measures to prohibit the dismissal of workers during the period from the beginning of their pregnancy to the end of the maternity leave, save in exceptional cases not connected with their condition which are permitted under national legislation and/or practice and, where applicable, provided that the competent authority has given its consent.
42
Article 1(1)(a) of Directive 98/59 states that ‘collective redundancies’ refers to dismissals effected by an employer for one or more reasons not related to the individual workers concerned, provided that certain conditions concerning numbers and periods of time are satisfied (see judgment of 10 December 2009, Rodríguez Mayor and Others, C‑323/08, EU:C:2009:770, paragraph 35).
43
When a pregnant worker, or a worker who has recently given birth or is breastfeeding is dismissed within the context of a collective redundancy procedure, she belongs both to the group of workers protected under Directive 92/85 and to the group of workers protected under Directive 98/59. On that basis, she should benefit, at the same time, from the rights provided for by both of those directives, which are complementary, as the Advocate General noted in point 53 of her Opinion.
44
As regards the combined application of those directives, the referring court wishes to know, in essence, whether Article 10(1) of Directive 92/85 precludes national legislation which allows the dismissal of a pregnant worker on account of a collective redundancy, within the meaning of Article 1(1) of Directive 98/59.
45
In that regard, it must be noted that the prohibition of dismissal laid down in Article 10(1) of Directive 92/85 aims, as is clear from the 15th recital in the preamble to that directive, to prevent the harmful effects on the physical and mental state of pregnant workers and workers who have recently given birth or who are breastfeeding which the risk of dismissal for reasons associated with their condition may cause.
46
It is precisely in view of the harmful effects which the risk of dismissal may have on the physical and mental state of workers who are pregnant, have recently given birth or are breastfeeding, including the particularly serious risk that pregnant women may be prompted voluntarily to terminate their pregnancy, that, pursuant to Article 10 of Directive 92/85, the EU legislature provided for special protection for women, by prohibiting dismissal during the period from the beginning of pregnancy to the end of maternity leave, save in exceptional cases not connected with their condition, provided that the employer gives substantiated grounds for the dismissal in writing (see, to that effect, judgment of 11 November 2010, Danosa, C‑232/09, EU:C:2010:674, paragraphs 60 and 61).
47
Thus, when the dismissal decision is taken for reasons essentially connected with the worker’s pregnancy, it is incompatible with the prohibition on dismissal laid down in Article 10 of that directive (see, to that effect, judgment of 11 November 2010, Danosa, C‑232/09, EU:C:2010:674, paragraph 62).
48
By contrast, a dismissal decision taken during the period from the beginning of pregnancy to the end of the maternity leave for reasons unconnected with the worker’s pregnancy would not be contrary to Article 10 of Directive 92/85, provided, however, that the employer gives substantiated grounds for dismissal in writing and that the dismissal of the person concerned is permitted under the relevant national legislation and/or practice, in accordance with Article 10(1) and (2) of Directive 92/85 (see, to that effect, judgment of 11 November 2010, Danosa, C‑232/09, EU:C:2010:674, paragraph 63).
49
It follows that a reason or reasons, not related to the individual workers concerned, for making the collective redundancies within the meaning of Article 1(1) of Directive 98/59 fall within the exceptional cases not related to the condition of pregnant workers within the meaning of Article 10(1) of Directive 92/85.
50
In the light of the foregoing considerations, the answer to the first question is that Article 10(1) of Directive 92/85 must be interpreted as not precluding national legislation which permits the dismissal of a pregnant worker because of a collective redundancy within the meaning of Article 1(1)(a) of Directive 98/59.
The fifth question
51
By its fifth question, which should be examined next, the referring court asks whether Article 10(2) of Directive 92/85 must be interpreted as precluding national legislation which allows an employer to dismiss a pregnant worker in the context of a collective redundancy without giving her any grounds other than those justifying the collective redundancy and without informing her of exceptional circumstances.
52
According to Article 10(2) of Directive 92/85, when a worker is dismissed during the period from the beginning of her pregnancy to the end of her maternity leave, the employer must cite duly substantiated grounds for her dismissal in writing.
53
Thus the employer must inform a pregnant worker, whom he is preparing to dismiss or has already dismissed, in writing, of the reasons not related to that worker for making collective redundancies within the meaning of Article 1(1)(a) of Directive 98/59. Those reasons can be, inter alia, economic, technical or relating to the undertaking’s organisation or production.
54
The employer must, in addition, inform the pregnant worker of the objective criteria chosen to identify the workers to be made redundant.
55
In those circumstances, the answer to the fifth question is that Article 10(2) of Directive 92/85 must be interpreted as not precluding national legislation which allows an employer to dismiss a pregnant worker in the context of a collective redundancy without giving her any grounds other than those justifying the collective redundancy, provided that the objective criteria chosen to identify the workers to be made redundant are cited.
The third question
56
By its third question, the referring court asks, in essence, whether Article 10(1) of Directive 92/85 must be interpreted as precluding national legislation which does not, in principle, prohibit the dismissal of a worker who is pregnant, has recently given birth or is breastfeeding, as a preventative measure, but which provides, by way of reparation, only for that dismissal to be declared void when it is unlawful.
57
As a preliminary remark, it should be noted that it follows from Article 288 TFEU that Member States are required, when transposing a directive, to ensure that it is fully effective, but they retain a broad discretion as to the choice of ways and means of ensuring that the directive is implemented. That freedom of choice does not affect the obligation imposed on all Member States to which the directive is addressed to adopt all the measures necessary to ensure that the directive concerned is fully effective in accordance with the objective which it seeks to attain (judgments of 6 October 2010, Base and Others, C‑389/08, EU:C:2010:584, paragraphs 24 and 25, and of 19 October 2016, Ormaetxea Garai and Lorenzo Almendros, C‑424/15, EU:C:2016:780, paragraph 29).
58
As regards the wording of Article 10 of Directive 92/85, first, according to paragraph 1 of that article, Member States must take the necessary measures to prohibit, in principle, the dismissal of those workers. Second, paragraph 3 of that article states that Member States must take the necessary measures to protect such workers from consequences of dismissal which is unlawful by virtue of paragraph 1 of that article.
59
Article 10 of Directive 92/85 thus makes an express distinction between protection against dismissal itself, as a preventative measure, and protection, by way of compensation, from the consequences of dismissal. Therefore, proper implementation of that article requires Member States to establish such double protection.
60
As regards the preventive protection of pregnant workers and workers who have recently given birth or are breastfeeding, it must be noted that this is of particular importance in the context of Directive 92/85.
61
According to the 15th recital of that directive, the risk of dismissal for reasons associated with their condition may have harmful effects on the physical and mental state of pregnant workers and workers who have recently given birth or who are breastfeeding and provision should be made for such dismissal to be prohibited.
62
It is in view of the harmful effects which the risk of dismissal may have on the physical and mental state of workers who are pregnant, have recently given birth or are breastfeeding, including the particularly serious risk that pregnant women may be prompted voluntarily to terminate their pregnancy, that, pursuant to Article 10 of Directive 92/85, the EU legislature provided for special protection for women, by prohibiting dismissal during the period from the beginning of pregnancy to the end of maternity leave (see judgments of 14 July 1994, Webb, C‑32/93, EU:C:1994:300, paragraph 21, and of 11 November 2010, Danosa, C‑232/09, EU:C:2010:674, paragraph 60).
63
Having regard to the objectives pursued by Directive 92/85 and, more specifically, to those pursued by Article 10 of that directive, the protection granted by that provision to workers who are pregnant and who have recently given birth or who are breastfeeding precludes both the taking of a decision to dismiss as well as the steps of preparing for the dismissal, such as searching for and finding a permanent replacement for the relevant employee on the grounds of the pregnancy and/or the birth of a child (see, to that effect, judgment of 11 October 2007, Paquay, C‑460/06, EU:C:2007:601, paragraph 33).
64
In view of the risk to the physical and mental state of pregnant workers, workers who have recently given birth or who are breastfeeding, protection by way of reparation, even if it leads to the reintegration of the worker dismissed and the payment of wages not received because of dismissal, cannot replace protection by way of prevention.
65
As a result, in order to ensure the faithful transposition Article 10 of Directive 92/85, and the protection of pregnant workers and workers who have recently given birth or are breastfeeding from the risk of dismissal, Member States cannot confine themselves to providing, by way of reparation, only for that dismissal to be declared void when it is not justified.
66
Having regard to the above considerations, the answer to the third question is that Article 10(1) of Directive 92/85 must be interpreted as precluding national legislation which does not prohibit, in principle, the dismissal of a worker who is pregnant, has recently given birth or is breastfeeding, as a preventative measure, but which provides, by way of reparation, only for such a dismissal to be declared void when it is unlawful.
The second and fourth questions
67
By its second and fourth questions, which it is appropriate to examine together and last, the referring court asks, in essence, whether Article 10(1) of Directive 92/85 must be interpreted as precluding national legislation which, in the context of a collective redundancy within the meaning of Directive 98/59, makes no provision for pregnant workers and workers who have recently given birth or are breastfeeding to be afforded, prior to that dismissal, priority status in relation to being either retained or reassigned to another post.
68
According to Article 10(1) of Directive 92/85, Member States ‘shall take the necessary measures’ to prohibit, in principle, the dismissal of workers during the period from the beginning of their pregnancy to the end of the maternity leave.
69
As regards whether pregnant workers and workers who have recently given birth or are breastfeeding are to have priority for retention, in its decision the referring court notes that, according to Spanish legislation, workers’ legal representatives are to have priority as regards being retained in the undertaking over other workers affected by the collective redundancy procedure, and workers belonging to other groups, such as workers with dependants, older workers or workers with disabilities, may also enjoy priority status in relation to being retained when that has been agreed through negotiation.
70
The referring court infers from that regulation that pregnant workers enjoy priority status in relation to being retained in the undertaking only when such a status is agreed through collective bargaining. The referring court adds that workers with priority status for being retained may be dismissed, but that, in such a case, the employer must justify exceptional grounds different to those on which the collective redundancy is based.
71
In the present case, in accordance with the answer given to the first question, Article 10(1) of Directive 92/85 must be interpreted as not precluding national legislation which permits the dismissal of a pregnant worker because of a collective redundancy within the meaning of Article 1(1)(a) of Directive 98/59.
72
In that regard it is true, as noted by the European Commission, that Directive 92/85 — in particular Article 10(1) — does not require Member States to grant pregnant workers and workers who have recently given birth or are breastfeeding priority status for retention and redeployment, applicable prior to the collective redundancy.
73
Nevertheless, that directive, which only contains minimum requirements, in no way prevents Member States from providing higher protection for pregnant workers, workers who have recently given birth and workers who are breastfeeding (see, to that effect, judgment of 4 October 2001, Jiménez Melgar, C‑438/99, EU:C:2001:509, paragraph 37).
74
Accordingly, the answer to the second and fourth questions is that Article 10(1) of Directive 92/85 must be interpreted as not precluding national legislation which, in the context of a collective redundancy within the meaning of Directive 98/59, makes no provision for pregnant workers and workers who have recently given birth or who are breastfeeding to be afforded, prior to that dismissal, priority status in relation to either being retained or redeployed, but as not excluding the right of Member States to provide for a higher level of protection for such workers.
Costs
75
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Third Chamber) hereby rules:
1.
Article 10(1) of Council Directive 92/85/EEC of 19 October 1992 on the introduction of measures to encourage improvements in the safety and health at work of pregnant workers and workers who have recently given birth or are breastfeeding (tenth individual Directive within the meaning of Article 16(1) of Directive 89/391/EEC) must be interpreted as not precluding national legislation which permits the dismissal of a pregnant worker because of a collective redundancy within the meaning of Article 1(1)(a) of Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies.
2.
Article 10(2) of Directive 92/85 must be interpreted as not precluding national legislation which allows an employer to dismiss a pregnant worker in the context of a collective redundancy without giving any grounds other than those justifying the collective dismissal, provided that the objective criteria chosen to identify the workers to be made redundant are cited.
3.
Article 10(1) of Directive 92/85 must be interpreted as precluding national legislation which does not prohibit, in principle, the dismissal of a worker who is pregnant, has recently given birth or is breastfeeding as a preventative measure, but which provides, by way of reparation, only for that dismissal to be declared void when it is unlawful.
4.
Article 10(1) of Directive 92/85 must be interpreted as not precluding national legislation which, in the context of a collective redundancy within the meaning of Directive 98/59, makes no provision for pregnant workers and workers who have recently given birth or who are breastfeeding to be afforded, prior to that dismissal, priority status in relation to being either retained or redeployed, but as not excluding the right of Member States to provide for a higher level of protection for such workers.
[Signatures]
( *1 ) Language of the case: Spanish.
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Seahorse Maritime Ltd v Nautilus International
[2018] EWCA Civ 2789
Lord Justice Underhill :
INTRODUCTION
This appeal concerns the obligation of an employer under Chapter II of Part IV of the Trade Union and Labour Relations (Consolidation) Act 1992 to consult representatives of its employees about proposed redundancies. The operative provision is section 188. For present purposes I need only set out sub-section (1), which reads:
“Where an employer is proposing to dismiss as redundant 20 or more employees at one establishment within a period of 90 days or less, the employer shall consult about the dismissals all the persons who are appropriate representatives of any of the employees who may be affected by the proposed dismissals or may be affected by measures taken in connection with those dismissals.”
It will be seen that the trigger for the employer’s obligations is a proposal to make redundant twenty or more employees at one “establishment”. By section 189 claims that an employer has breached its obligations under section 188 may be brought in the employment tribunal by the “appropriate representative”, typically a trade union. If such a finding is made the tribunal will under section 189 (3) make a “protective award” requiring the employer to make payments to the employees in respect of whose dismissals it should have consulted, and the employees in question can bring proceedings if the payments in question are not made: see section 192.
The present case concerns employees of the Appellant company, Seahorse Maritime Ltd (“Seahorse”), who work on a fleet of support ships (“the TOISA fleet”) mostly operating abroad, and in respect of whom the Respondent (“Nautilus”) is the recognised trade union for collective bargaining purposes. In 2015 the decision was taken to lay up some of the ships in the fleet, which was liable to lead to redundancies in the workforce. Nautilus has brought proceedings under section 189 of the 1992 Act claiming that Seahorse was in breach of its obligations under section 188.
A preliminary hearing took place in the ET in June 2015 to decide two issues of principle raised by Nautilus’s claim, formulated as follows:
(1) whether, by virtue of a connection with Great Britain, which is at least partly a connection with England, the employment tribunals of England and Wales have jurisdiction to determine a claim presented by the claimant (“the territorial jurisdiction issue”); and
(2) whether the ships of the fleet on which employees of the respondent were employed are one establishment or whether each ship is a separate establishment (“the establishment issue”).
The importance of the establishment issue is that if each ship is a separate establishment it is very unlikely, though the facts have not yet been found, that at least twenty Seahorse employees would be liable to be made redundant on any one ship.
By a judgment sent to the parties on 19 August 2016 Employment Judge Allen held that the tribunal did have jurisdiction to entertain the claim and that each ship did not constitute a separate establishment. By a judgment handed down on 30 June 2017 the Employment Appeal Tribunal (Slade J sitting alone) upheld the ET’s decision on both points. This is Seahorse’s appeal, with the permission of Slade J, against that decision.
Seahorse was represented before us by Mr John Cavanagh QC and Mr Marcus Pilgerstorfer; in the ET and the EAT it was represented by Mr Pilgerstorfer on his own. Nautilus was represented before us by Mr Christopher Stone, who appeared in both the ET and the EAT.
Although it might seem logical to take the territorial jurisdiction issue first, Mr Cavanagh submitted that if he succeeded on the establishment issue he would in practice succeed on jurisdiction also and he structured his submissions accordingly. While not accepting Mr Cavanagh’s submission, Mr Stone likewise took the establishment issue first; and in those circumstances I will do the same. But I will first summarise the relevant facts.
THE FACTS
The ET made clear and economical findings of fact. The Judge confined himself to matters which were relevant to the preliminary issues, and it is common ground that if the proceedings are to continue further factual findings will be needed.
A Bermuda company called Sealion Shipping Ltd (“Sealion”) operates a fleet of support vessels (owned by another Bermuda company called TOISA Ltd) which are chartered to clients in the energy and telecoms businesses all over the world. Sealion has an office in Farnham in Surrey. At the material time it operated 25 such ships, registered under the flags of a number of different nations. The fleet included many different kinds of vessel and they were chartered under a variety of different arrangements, some of them involving charters for periods of many months or more. Typically, for the currency of a charter a ship would be stationed in a particular location or limited area outside Great Britain: the tribunal found that in the previous eighteen months TOISA ships had been stationed in eleven different countries, all but two of them outside Europe – in South-East Asia, the Caribbean, Latin America and and Africa. They were largely static while on duty, being moored at or near the installations which they served[1], though it seems that, as one would expect, they visited nearby ports from time to time. Six vessels were involved in the “spot market cargo run” from Aberdeen to the North Sea oil rigs, but it was common ground that those vessels are not relevant for the purpose of the appeal.
Sealion does not employ the crews for the ships in the TOISA fleet. Instead they are supplied by other companies, including (but not limited to) Seahorse and a sister company called Seahorse Maritime (Auckland) Ltd (“Auckland”). Seahorse is incorporated in Guernsey and has a small office there from which some functions, including payroll administration, are performed. But it has a UK agent called Farnham Marine Agency Ltd (“FMA”), based at the same address in Farnham as Sealion itself, which performs other functions in relation to Seahorse’s employees: it was, for example, FMA which handled the redundancies which give rise to the present claim. Seahorse does not supply crew for anyone else besides Sealion. We were told that they are not associated companies for any statutory purposes, though Mr Stephen Marshall, who gave evidence for Seahorse in his capacity as a director of FMA, is also a director of Sealion.
The standard-form Employment Agreements for the relevant employees identify the individual employee, the “Ship Name (if known)”, the employer (being Seahorse), the agent (being FMA), and the “Client (‘Shipowner’)” (being Sealion). The box marked “Place of Work” states: “may be on any vessel owned, managed or chartered by the Shipowner [i.e. Sealion]”. The Employment Judge helpfully summarised the other relevant terms at para. 12 of his Reasons as follows:
“Each day worked earns one day of leave. Clause 7.1 states that service counting towards leave ‘will commence on the day of leaving home to join the vessel and will finish on the date of signing of the Ships Articles of Agreement or arrival in your country of residence, whichever is the later’. In oral evidence, Steve Marshall agreed that the Respondent either reimburses the employees for travel or FMA organises travel for the employees itself and he agreed that part of the duties of the crew included getting to the ship. At clause 29 of the Conditions of Employment, employees are directed to FMA … with any queries about administrative matters such as leave, pay, documentation or travel arrangements. Clause 34 states ‘The Terms and Conditions of Employment set out in this document will be governed by and construed in accordance with English Law and the parties submit to the jurisdiction of the English Courts’. Paragraph 40 of the Code of Conduct at Appendix 3 to the Conditions of Employment states ‘Nothing in this Code shall affect any seafarer’s right to bring a claim to an Employment Tribunal’.”
The working arrangements for the Sealion crew employed by Seahorse are described by the Employment Judge as follows:
“11. Aside from the spot market vessels, the crew join and leave the ships stationed offshore by helicopter or crew boat (unless the ship happened to be berthed in port) and then they live on board. A rotation typically lasts for 4 to 6 weeks.
12 …
13. In reality most employees tend to return to the same ship for periods of time – although transfers between ships can and do take place and at least during the period leading up to the redundancies, employees were transferred between ships and a ‘riding squad’ of a small number of mobile workers was established who worked on different ships as and when needed.
14. The crews are of a variety of nationalities. The Respondent’s evidence was that the total number of employees fell from about 800 to under 500 between 2014 and 2016 and that the number of UK employees fell from 213 to 118 over the same period.”
The reference in para. 14 of the Reasons to “UK employees” may not, despite the opening sentence, be to the nationality of the employees in question but to whether they were “UK based”, which is a term used elsewhere in the Reasons to refer to employees living in Great Britain, who accordingly travel between this country and the vessel on which they are serving at the beginning and end of a rotation[2]. In any event, in whichever sense the term was being used here, it was common ground that many or most Seahorse employees were not UK-based in that sense; the precise numbers do not matter for present purposes.
Nautilus is, as I have said, recognised by Seahorse for the purposes of collective bargaining and it is referred to in that connection in the Employment Agreement. The Tribunal gives no details of the relevant collective agreement.
(A) THE ESTABLISHMENT ISSUE
THE BACKGROUND LAW
The EU Authorities
The term “establishment” in section 188 of the 1992 Act derives from the EU Collective Redundancies Directive (98/59/EC) (or, strictly, its predecessor (75/129/EEC)). It is also used in other EU employment protection legislation and the UK legislation implementing it. Its meaning has proved problematic and has been considered in a number of domestic and EU authorities. I should start with the EU case-law since this must be authoritative as far as it goes.
An important part of the background is that the relevant provision of the Directive, article 1 (1) (a), gives member states a choice of two methods for determining the minimum number of proposed redundancies that will generate consultation obligations: both methods employ the term “establishment”. The methods are:
(i) where the numbers of workers affected over a period of 30 days will be:
at least 10 in establishments normally employing more than 20 and less than 100 workers,
at least 10% of the number of workers in establishments normally employing at least 100 but less than 300 workers,
at least 30 in establishments normally employing 300 workers or more;
(ii) where the numbers of workers affected over a period of 90 days will be at least 20, whatever the number of workers normally employed in the establishments in question.
The first decision of the CJEU to consider the meaning of the term “establishment” was Rockfon A/S v Specialarbejderforbundet i Danmark (C-449/93), [1996] ICR 673. The relevant Danish legislation employed method (i). Four distinct production units were operated by subsidiaries of the same group. The employees at each unit were employed by the relevant subsidiary, but decisions about hiring and firing were taken by the group personnel department. Redundancies were carried out in one of the units only: the numbers affected did not fall within the first or third bullets but would fall within the second if each unit was a separate establishment. The employer argued that that was not the case, and that the entire organisation constituted a single establishment. The relevant passage from the Court’s judgment is at paras. 23-33, which read (pp. 688-9):
“23. As regards the second part of the question, it must be noted first of all that the term ‘establishment’ is not defined in Directive (75/129/E.E.C.).
24. Rockfon maintains that it is not an ‘establishment’ for the purposes of the Directive since it has no management which can independently effect large-scale dismissals and it does not therefore fulfil the condition, laid down by [the relevant legislation], for constituting an ‘establishment’. In its view, in counting the number of workers for the purposes of article 1(1)(a) of the Directive, all the workers of the four companies must be taken into account, not only the number of its own workers.
25. The court observes in this regard that the term ‘establishment’, as used in Directive (75/129/E.E.C.), is a term of Community law and cannot be defined by reference to the laws of the member states.
26. The various language versions of the Directive use somewhat different terms to convey the concept in question: the Danish version has ‘virksomhed,’ the Dutch version ‘plaatselijke eenheid,’ the English version ‘establishment,’ the Finnish version ‘yritys,’ the French version ‘etablissement,’ the German version ‘Betrieb,’ the Greek version ‘ep??e???s?’ the Italian version ‘stabilimento,’ the Portuguese version ‘estabelecimento,’ the Spanish version ‘centro de trabajo’ and the Swedish version ‘arbetsplats.’
27. A comparison of the terms used shows that they have different connotations signifying, according to the version in question, establishment, undertaking, work centre, local unit or place of work.
28. As was held in Reg v Bouchereau [1978] Q.B. 732, 758, para. 14, the different language versions of a Community text must be given a uniform interpretation and in the case of divergence between the versions the provision in question must therefore be interpreted by reference to the purpose and general scheme of the rules of which it forms part.
29. Directive (75/129/E.E.C.) was adopted on the basis of articles 100 and 117 of the E.E.C. Treaty, the latter provision concerning the need for the member states to promote improved working conditions and an improved standard of living for workers, so as to make possible their harmonisation while the improvement is being maintained. It is apparent from the first recital in its preamble that the Directive is indeed intended to afford greater protection to workers in the event of collective redundancies.
30. Two observations may be made in that respect. First, an interpretation of the term ‘establishment’ like that proposed by Rockfon would allow companies belonging to the same group to try to make it more difficult for Directive (75/129/E.E.C.) to apply to them by conferring on a separate decision-making body the power to take decisions concerning redundancies. By that means, they would be able to escape the obligation to follow certain procedures for the protection of workers and large groups of workers could be denied the right to be informed and consulted which they have as a matter of course under the Directive. Such an interpretation therefore appears to be incompatible with the aim of the Directive.
31. Secondly, the court has held that an employment relationship is essentially characterised by the link existing between the employee and the part of the undertaking or business to which he is assigned to carry out his duties: see Botzen v. Rotterdamsche Droogdok Maatschappij B.V. (Case 186/83) [1985] E.C.R. 519, 528, para. 15.
32. The term ‘establishment’ appearing in article 1(1)(a) of Directive (75/129/E.E.C.) must therefore be interpreted as designating, depending on the circumstances, the unit to which the workers made redundant are assigned to carry out their duties. It is not essential, in order for there to be an ‘establishment’, for the unit in question to be endowed with a management which can independently effect collective redundancies.
33. That interpretation is supported by the fact that the Commission’s initial proposal for a Directive used the term ‘undertaking’ and that that term was defined in the last sub-paragraph of article 1(1) of the proposal as ‘local employment unit’. It appears, however, that the Council decided to replace the term ‘undertaking’ by the term ‘establishment’, which meant that the definition originally contained in the proposal and considered to be superfluous was deleted.”
(The case of Botzen referred to in para. 31 concerns the transfer of undertakings, where the relevant Directive also refers to “establishment”.)
Although I have set out the whole of the passage because of its importance to the argument, the essential point is that the Court defined “establishment” as “the unit to which the workers made redundant are assigned to carry out their duties”, even if the authority to make redundancies lay at some higher level: see para. 32.
That approach was confirmed but amplified in Athinaïki Chartopoïïa AE v Panagiotidis (C-270/05), [2007] IRLR 284. The employer had three production units manufacturing different kinds of paper product, but the main business decisions were taken by its head office. The relevant Greek legislation likewise employed method (i), and, as in Rockfon, the application of the second bullet meant that it was in the employer’s interests to argue that the entire organisation was a single establishment. The Court rejected that argument. Having summarised some of the points made in Rockfon, it continued, at paras. 27-32 (pp. 286-7):
“27. Thus, for the purposes of the application of Directive 98/59, an ‘establishment’, in the context of an undertaking, may consist of a distinct entity, having a certain degree of permanence and stability, which is assigned to perform one or more given tasks and which has a workforce, technical means and a certain organisational structure allowing for the accomplishment of those tasks.
28. Given that the objective pursued by Directive 98/59 concerns, in particular, the socio-economic effects which collective redundancies may have in a given local context and social environment, the entity in question need not have any legal autonomy, nor need it have economic, financial, administrative or technological autonomy, in order to be regarded as an ‘establishment’.
29. It is, moreover, in this spirit that the Court has held that it is not essential, in order for there to be an ‘establishment’, for the unit in question to be endowed with a management which can independently effect collective redundancies (Rockfon, paragraph 34, and point 2 of the operative part). Nor must there be a geographical separation from the other units and facilities of the undertaking.
30. In the light of those considerations, the Court finds, first of all, that the fact that Greek Law 1387/1983 uses the terms ‘establishment’ and ‘operating unit’ interchangeably is not in itself contrary to Directive 98/59, provided that the interpretation given by the Court of the concept of ‘establishment’ is followed and the use of two terms cannot lead to the exclusion of categories of workers from the protection intended by that Directive.
31. Next, regarding the nature of the production unit at issue in the main proceedings, the information in the case-file indicates that that unit is one of three separate production units held by the company; it employs 420 workers; it has distinct equipment and a specialised workforce; its operation is not affected by that of the other units; and it has a chief production officer who ensures that the work is carried out properly, is responsible for supervision of the entire operation of the unit’s installations and ensures that technical questions are solved.
32. Those factors clearly give such a unit the air of an ‘establishment’ for the purposes of the application of Directive 98/59, in accordance with the considerations set out by the Court in paragraphs 27 to 29 of the present judgment, and bring the unit in question within the scope of this Community concept. The fact that decisions concerning the operating expenditure of each of those units, the purchase of materials and the costing of products are taken at the company’s headquarters, where a joint accounts office is set up, is irrelevant in this regard.”
Unlike Denmark and Greece, the UK has adopted method (ii). It will be apparent that under that method the choice made in Rockfon in favour of – in shorthand – the work unit rather than the entire organisation will necessarily result in consultation obligations arising in fewer cases, since even where the employer is making over twenty redundancies in its organisation as a whole the numbers affected at any one unit may be below the threshold. In two more recent cases in the CJEU – Lyttle v Bluebird UK Bidco 2 Ltd (C-182/13), [2015] 3 CMLR 33, (to which I will refer as “Bluebird”) and USDAW v Ethel Austin Ltd (C80/14), [2015] ICR 675, (“USDAW”)[3] – the employers operated chains of retail stores, with the employees in question each working exclusively in a particular store and thus “assigned” to it. (In Bluebird the stores were the Bonmarché chain of stores. USDAW comprised two separate references, both in proceedings brought by USDAW, arising out of the closures of, respectively, the Ethel Austin and the Woolworths chains.) The employers argued, on the basis of the Rockfon definition, that they would not be obliged to consult about proposed redundancies in any case where the store employed under twenty employees. The employees’ representatives argued that in cases where method (ii) applied a different definition should be adopted.
The Court did not accept that argument. At paras. 47-51 of its judgment in USDAW (pp. 703-4) it recited the effect of its decisions in Rockfon and Athinaïki Chartopoïïa. Despite an element of repetition it is worth setting out most of that passage here:
“47. In para 31 of the judgment in Rockfon, the court observed, referring to para 15 of the judgment in Botzen v Rotterdamsche Droogdok Maatschappij BV (Case 186/83) [1985] ECR 519, that an employment relationship is essentially characterised by the link existing between the worker and the part of the undertaking or business to which he is assigned to carry out his duties. The court therefore decided in Rockfon, para 32, that the term ‘establishment’ in article 1(1)(a) of Directive 98/59 must be interpreted as designating, depending on the circumstances, the unit to which the workers made redundant are assigned to carry out their duties. It is not essential in order for there to be an ‘establishment’ that the unit in question is endowed with a management that can independently effect collective redundancies.
48. ….
49. In Athinaïki Chartopoiïa the court further clarified the term ‘establishment’, inter alia, by holding, in para 27, that, for the purposes of the application of Directive 98/59, an ‘establishment’, in the context of an undertaking, may consist of a distinct entity, having a certain degree of permanence and stability, which is assigned to perform one or more given tasks and which has a workforce, technical means and a certain organisational structure allowing for the accomplishment of those tasks.
50. By the use of the words ‘distinct entity’ and ‘in the context of an undertaking’, the court clarified that the terms ‘undertaking’ and ‘establishment’ are different and that an establishment normally constitutes a part of an undertaking. That does not, however, preclude the establishment being the same as the undertaking where the undertaking does not have several distinct units.
51. In Athinaïki Chartopoiïa, para 28, the court held that, since Directive 98/59 concerns the socio-economic effects that collective redundancies may have in a given local context and social environment, the entity in question need not have any legal autonomy, nor need it have economic, financial, administrative or technological autonomy, in order to be regarded as an ‘establishment’.”
The Court then went on to hold, at paras. 53-67 (pp. 704-6), that that approach applied equally where the member state in question had opted for method (ii). I need not set out the reasoning in full, but I should note that it confronted expressly an argument that such a result would limit worker protection, contrary to the purposive approach adopted at paras. 29-30 of the judgment in Rockfon. As to that, it observed at para. 62 (p. 705D) that
“the objective of [the] Directive is not only to afford greater protection to workers in the event of collective redundancies, but also to ensure comparable protection for workers’ rights in the different member states and to harmonise the costs which such protective rules entail for EU undertakings”.
That reflects rather fuller observations to essentially the same effect in the Opinion of Advocate-General Wahl. At paras. 46- 47 (p. 667 D-F), he said:
“46. … [O]ne of the lessons learnt from Rockfon and Athinaïki Chartopoiïa is that the court does not pay any heed to the way in which the employer-entity is structured internally, focusing instead on the local employment unit: see, in particular, Rockfon at para 30, and Athinaïki Chartopoiïa at para 28. To change stance now because an employer has several local employment units with fewer than 20 employees would, unlike before, pave the way for a malleable construction of that concept dependent on the employer’s internal structure, and that in turn would be at odds with recital (11) in the Preamble to Directive 98/59.
47. Indeed, the approach argued for by the applicants in Cases C-182/13 and C-80/14 is to extend the protective procedure to all workers dismissed in the course of the same restructuring exercise, irrespective of the size of the establishment at which they worked. Conferring the maximum level of protection by downplaying the method of implementation would obviously be to the advantage of those workers who, under the current understanding of the concept at issue, are not entitled to any protective award. However, such an approach would not be consonant with the minimum harmonisation aim envisaged by Directive 98/59, which, as the Commission rightly stated at the hearing, does not contemplate as a starting point full protection for all—even where the number of dismissals exceeds the thresholds—as the temporal requirement must also be met.”
The Court, as is its way, did not draw a definitive conclusion that the stores in question were distinct establishments, respecting the formal position that that was a matter for the national court. But the references were plainly made on the basis that if the Rockfon definition applied that would be the case, and in Bluebird the Court did go so far as to say, at paras. 51-52 of its judgment:
“51. In the present case, on the basis of the information available to the Court …, it appears that each of the stores at issue in the main proceedings is a distinct entity that is ordinarily permanent, entrusted with performing specified tasks, namely primarily the sale of goods, and which has, to that end, several workers, technical means and an organisational structure in that the store is an individual cost centre managed by a manager.
52. Accordingly, such a store is capable of satisfying the criteria set out in the case-law cited … above relating to the term ‘establishment’ in Article 1(1)(a) of Directive 98/59 … .”
The Domestic Authorities
We were referred by counsel to two domestic authorities, though both pre-date Bluebird/USDAW. I take them in turn.
In City of Edinburgh Council v Wilkinson [2011] CSIH 70, [2012] IRLR 202, the claimants were female employees of the council who had brought an equal pay claim. The issue was whether they were employed “at the same establishment”, within the meaning of section 1 (6) of the Equal Pay Act 1970, as their male comparators. In deciding what constituted an “establishment” the Inner House had regard to the CJEU authorities on the meaning of that term in the context of the transfer of undertakings and collective redundancies – specifically to Botzen, Rockfon and Athinaïki Chartopoïïa. At paras. 21-22 of his opinion (p. 207) Lord Essie, with whom Lady Paton and Lord Hardie agreed, observed that, while organisational questions might be relevant, “the term ‘establishment’ is largely directed to the place of work”. Also at para. 22 Lord Essie addressed the fact that the claimants’ contracts included a mobility clause, which Lady Smith in the EAT had held to be relevant to the question of whether they were assigned to the particular schools at which each worked. He disagreed. He said:
“… [A]n employer which has a plurality of establishments may include in its contracts of employment a mobility clause; but the power to move an employee from one place or establishment to another is not inconsistent with the existence of a plurality of establishments – indeed it may often be a reflection of the existence of such separate establishments within the employer’s undertaking.”
In Renfrewshire Council v Educational Institute of Scotland [2012] UKEAT 0018/12, [2013] ICR 172, the Council had made redundant over twenty teachers across the schools for which it was responsible but the numbers at any one school were below the threshold. It contended that each school was a separate establishment, to which individual teachers were assigned. The ET did not accept that argument but held that the relevant establishment was “the Education and Leisure Service”, which was (it seems) an arm of the Council. The EAT (Langstaff P sitting alone) overturned that decision, applying Rockfon and Athinaïki Chartopoïïa, and remitted the case to the ET. Much of the reasoning focuses on particular errors made by the ET, but I should note four points.
First, USDAW and Bluebird not having at that point been decided, Langstaff P was troubled by whether the definition of “establishment” adopted in Rockfon and Athinaïki Chartopoïïa should be extended to method (ii) cases. He was influenced in particular by the adoption in Rockfon of an approach avowedly designed to advance the Directive’s purpose of worker protection, which the Rockfon reading would not do in method (ii) cases. In the end he decided – in line with what the CJEU itself eventually held – that the language used could not mean different things in different parts of the same article of the Directive. But in the context of that discussion he said, at para. 26 (p. 182 C-E):
“… [W]here a choice has to be made on the facts between holding that either a greater or lesser unit is the relevant ‘establishment’, in circumstances where it would be permissible logically to conclude that either or both were the unit to which the relevant number of workers were assigned to carry out their duties, it is a relevant consideration in choosing between them that one choice will afford early consultation rights to those workers, whilst the other will not. [Counsel for the employer] in argument conceded as much, though he had at first been disinclined to do so … .”
Secondly, the ET had attached weight, as counting against “assignment”, to the fact that although all or most of the teachers worked at particular schools their contracts had mobility clauses under which they could be required to work elsewhere. Langstaff P, referring to Wilkinson, held that that had been a misdirection, since “‘assignment’ does not refer to the contractual, but rather to the factual, position” – see para. 42 (p. 185 G-H).
Thirdly, the ET had also attached weight to the fact that control of HR functions was exercised by the Council, not individual schools. That was of course directly contrary to the reasoning in Rockfon, and Langstaff P again held that it was a misdirection. He said, at para. 45 (p. 187B):
“Contrary to [Lady Smith’s] view, actual assignment, rather than power to control it, is the relevant criterion …; and it is to be expected, rather than being of signal note, that an undertaking will centrally control much of recruitment and possibly dismissal.”
Fourthly, Langstaff P was initially inclined to the view that it was unnecessary to remit the case because the only possible answer was that the relevant establishment in each case was the school. Though in the end he did remit, it was only because of three very particular features of the way in which the ET had set about its fact-finding: see paras. 65-66 (p. 191 B-G). Among other things, it had not focused on how many of the employees whose redundancy was proposed were in fact assigned to the schools in question: this could be important because it was arguable that there was a class of peripatetic teachers who were not assigned to any particular school, and their inclusion might affect whether the relevant threshold was met. In describing the task of the ET on remittal he said, at para. 66 (p. 191 E-F):
“The central question ought to be capable of relatively simple resolution … and ought to focus on the individual employees rather than council powers: the question is employee, not employer, focused. It is as to which unit the worker is assigned to perform his duties. That involves two central questions—is the postulated unit capable of being an establishment; and, if so, is the employee assigned to it?”
It will be convenient to say here, though it anticipates one of the disputed points in the appeal, that the ET and the EAT may have treated the passage which I have set out in the previous paragraph as of wider import than Langstaff P intended. He was addressing a particular error which the ET had made and which he wished to make clear should be avoided on the remittal. The two questions which he identifies, and his references to the focus being on the individual employees, must be read in that context. At the risk of spelling things out unnecessarily, where there is an issue about whether the threshold in section 188 (1) has been satisfied, the following questions may arise:
(1) The first question is whether the establishment relied on by the claimant is an establishment within the meaning of the Act, as expounded in the case-law. If that is in issue one important factor is indeed whether it is a unit to which employees are assigned (see para. 27 of the judgment in Athinaïki Chartopoïïa); but the identification of which particular individuals are assigned to it is immaterial at that stage, and it does not add anything of value to describe the exercise as “employee-focused”.
(2) Once the establishment is identified, the next question is whether all, or in any event a sufficient number, of the employees who the claimant says that the employer is proposing to make redundant are in fact employed at – that is, are assigned to – that establishment. If this is contentious it may indeed be necessary, as it was in the particular circumstances of the Renfrewshire case, to examine the “assignment status” of a number of individuals. It is in that context that Langstaff P said that the focus is on the individual employees, but he spelt it out because of the particular error into which the ET had fallen.
(3) There may then be an issue as to whether the employer does in fact propose to dismiss all, or in any event a sufficient number, of the employees in question; but there is no need to say anything about that question here.
Even if there was no issue – i.e. at step (2) – that the threshold of twenty was met, so as to generate the consultation obligation, there may be an issue, if a protective award is in due course made, about whether one or more individual employees were among those employed at the establishment and thus entitled to a payment. That will, again, require an enquiry as to the assignment status of the individuals in question.
THE REASONING OF THE ET
The ET’s direction on the law as regards the establishment issue is at paras. 37-38 of the Reasons. It essentially consists of references to the case-law, and I need not set it out here.
The ET’s dispositive reasoning is at paras. 44-48 of the Reasons, which read as follows:
“44. The Respondent contends that each of ships operated by its client (Sealion) is the establishment to which the Respondent’s employees were assigned to carry out their duties. This is not what the wording of the contracts of employment suggests, nor does it appear to be reflected in the way in which the redundancy exercise was carried out by FMA on the Respondent’s behalf.
45. Each ship may be an individual business unit within Sealion’s business (as opposed to the Respondent’s business) – that is not irrelevant – but it does not necessarily follow that each ship is the establishment at which the Respondent proposed to dismiss a number of employees. The Respondent does not control where the ships work, what work they do or whether they are working or not. Generically individual ships are capable of being establishments, but in this case it cannot really be said that each one of the ships operated by Sealion are distinct parts of the Respondent’s undertaking.
46. The authorities suggest a focus on the employee rather than the employer. Most employees went to and from the same ship on their 4 or 6 week roster for periods of time but, in accordance with their contracts, which did not state any particular ship as their place of work, some employees were transferred to other ships (such as those who had been on the Conqueror and the Envoy) – and others (the riding crew), were not considered to be attached to any particular ship. The employees’ duties commenced when they left their homes, and included the period of travel to the ships. Aside from payroll, which was dealt with in Guernsey, the employees turned to FMA in Farnham in relation to any administrative queries. In some of the correspondence from FMA on behalf of the Respondent, relating to the run up to the redundancies, the employees appeared to be treated as a group rather than only in relation to each individual ship (in particular the correspondence of 27 July 2015).
47. The classic collective redundancy situation will involve an employer making redundancies at the employer’s establishment (e.g. a Woolworths store). That is certainly at least suggested by the wording of s188(4)(c) TULR(C)A 1992 ’employed by the employer at the establishment’. The Tribunal agrees with the Respondent that it does not necessarily follow that the legislation excludes the possibility of the ‘establishment’ being outside the control of the employer and the Claimant puts its cases too highly in that respect. Section 188 does not have the words ‘of the employer’ after the word ‘establishment’ – however the fact that the ships are not establishments of the Respondent is one factor weighing against the Respondent’s arguments. I also bear in mind the comment of Mr Justice Langstaff in Renfrewshire at paragraph 26 as set out above.
48. Both sides have good points to make but on balance, the Tribunal considered that the Respondent’s arguments concentrated on demonstrating that the individual ships operated by Sealion were distinct from each other rather than examining how and where the employees were assigned to. The Tribunal preferred the Claimant’s argument that the reality reflected the contractual situation that the employees were assigned to any of the vessels operated by Sealion.[4] That part of the Respondent’s workforce on each ship – forming some but not all of the crew of each ship – did not on the facts before the Tribunal, fulfil the USDAW/Rockfon/Athinaiki definition of ‘establishment’.”
I need to elucidate the references in para. 44 to “the way in which the redundancy exercise was carried out by FMA on the Respondent’s behalf” and in para. 46 to “the correspondence of 27 July 2015”. On that date FMA wrote to “all ships”, copied to “all Seahorse crew” at their personal addresses, attaching a three-page “general information update to all Seahorse employees”. The document describes the general background to the redundancy situation and how redundancy selection is to be made. The particular passage which the ET evidently had in mind reads:
“There is apparently some confusion as to exactly who is at risk at present. The redundancy consultation affects all Seahorse employees – Guernsey and Auckland. … Crew may well be transferred where their abilities and experience can best be used. Just because ‘their’ ship is laid up does not put them more at risk than others. Alternative ships, positions, etc, will be considered wherever possible … .”
THE APPEAL TO THE EAT
Seahorse’s grounds of appeal as advanced by Mr Pilgerstorfer to the EAT were essentially twofold (though this is not quite how they were pleaded):
(1) It was not open to the ET, on the basis of its own findings of primary fact, to conclude that crew were not typically “assigned” to a single ship.
(2) Even if that finding was open to it, it had wrongly treated it as determinative of the question whether each ship was a separate establishment, which was a separate question.
Slade J addressed those grounds at paras. 37-53 of her judgment. Given that we are ultimately concerned with the reasoning of the ET I can, without disrespect to her, summarise her reasoning quite shortly. She identifies, in reliance on the passage from Langstaff P’s judgment in the Renfrewshire case quoted at para. 29 above, two distinct questions – (1) “whether the postulated unit is capable of being an establishment”, which she describes as “the establishment question”; and (2) “if so, whether the employee is assigned to it” (“the assignment question”). She says at para. 50 that the ET had to some extent conflated the two questions, but she holds that that did not vitiate its conclusion on the establishment question. As I read it, though this is not quite explicit, she took the view that the only possible conclusion on the facts found, and the evidence, was that the individual ships were not establishments, because the facts did not “show that the Respondent organised their business into individual ship based units” (para. 49). She says at para. 46 that a relevant factor in reaching that conclusion was that the ships themselves were not operated by Seahorse. She appears to acknowledge that, as Mr Pilgerstorfer had emphasised, the evidence tended to show that crews were in fact typically assigned to single ships, contrary to the finding at para. 48 of the Reasons, which indeed she described at para. 53 of her judgment as an “error”. But on her analysis that point, being relevant only to the assignment question, went nowhere in the light of her conclusion on the establishment question.
THE APPEAL TO THIS COURT
Mr Cavanagh subjected paras. 44-48 of the ET’s Reasons to a searching analysis and submitted that they contained a number of errors of law. In summary:
(1) The ET wrongly attached significance at paras. 44 and 46 to the fact that the employees’ contracts of employment did not assign them to a particular ship. That was not in fact an accurate statement, since although the standard-form contract does indeed state that they may be employed on any Sealion vessel it also provides for identification of the name of a particular ship (if known): see para. 10 above. But even if the ET’s statement is essentially correct, what matters is not the contractual position but the practical reality: see the way in which the Inner House and the EAT dealt with mobility clauses in Wilkinson and Renfrewshire.
(2) The ET wrongly also at paras. 44 and 46 attached significance to the fact that FMA treated the Seahorse workforce collectively, particularly in the handling of the redundancy exercise, which was – as the “General Information” document showed – approached on a fleet-wide basis. Mr Cavanagh submitted that that was contrary to the repeated message of both the CJEU and the domestic authorities that a work unit could constitute an establishment notwithstanding that many functions, including the HR function, were performed centrally: see Rockfon, Athinaïki Chartopoïïa, Wilkinson and Bluebird/USDAW. In both Bluebird and USDAW the redundancy decisions had been taken, and administered, centrally.
(3) The statement at the start of para. 46 that there should be “a focus on the employee rather than the employer” was a misapplication of what Langstaff P said at para. 66 of his judgment in Renfrewshire (see para. 29 above). Mr Cavanagh submitted that what he said there was concerned with the distinct question of whether a particular worker was assigned to the establishment in question. But what had to be decided in this case was whether each ship constituted a separate establishment. The question whether it had a workforce (and, here, specifically a workforce including Seahorse employees) was no doubt part of that exercise, but it did not require a “focus on the employee” in Langstaff P’s sense. That submission of course reflects what I have said at para. 30 above.
(4) The adoption in para. 47 of the Reasons of Langstaff P’s observations at para. 26 of his judgment in Renfrewshire (see para. 26 above) was wrong in principle. The reasoning of the Advocate-General in USDAW quoted at para. 21 above showed that it was not right to approach the legislation on the basis that wherever possible it should be applied in a way which favoured the employee.
(5) The ET was wrong at para. 47 to treat it as relevant, albeit not decisive, that Seahorse was not the operator.
(6) The decisive final para. 48 failed directly to address the test required by the authorities: it states conclusions rather than giving reasons. In so far as it is intended to be based on the previous paragraphs, they too do not directly address the relevant question, but they are in any event flawed, for the reasons already given.
It was Mr Cavanagh’s case that if the ET had addressed the correct question the only possible answer on its findings of primary fact was that each ship constituted a separate establishment of Seahorse, just as the individual stores did in Bluebird and USDAW. Typically most Seahorse employees were, and remained, assigned to particular ships for long periods. It was irrelevant that there was the contractual right to assign them to different ships, or that that might occur from time to time: the ship was still, in the language of the CJEU, “the unit to which … workers … are assigned to carry out their duties”. He relied on what Lord Essie said about mobility clauses in Wilkinson and on Langstaff P’s adoption of it in Renfrewshire: see paras. 24 and 27 above. A ship was clearly a distinct place of work, which Lord Essie identified as the central concept: see para. 24. It is of its nature, in the language of the Court in Athinaïki Chartopoïïa (see para. 27 of its judgment, quoted at para. 18 above),
“an entity, having a certain degree of permanence and stability, which is assigned to perform one or more given tasks and which has a workforce, technical means and a certain organisational structure allowing for the accomplishment of those tasks”.
Mr Stone in response contended that the essential flaw in Mr Cavanagh’s criticisms was that they conflated the question whether each ship was an establishment of Sealion’s with the question whether it was an establishment of Seahorse’s. In the case of all the authorities on which Mr Cavanagh relied the putative establishment was operated by the employer of the workforce. If that had been so in this case it might indeed be said that a ship was a distinct entity satisfying the Athinaïki Chartopoïïa criteria. But it was not. We were here concerned with an employer who was a labour-only supplier, which was a fundamentally different situation. Although such an employer might in principle organise its workforce in a way that mirrored its client’s organisation, it did not follow that it had to do so, and there was no evidence that that had occurred in the present case. Although individual employees might typically be supplied to work on specific ships for long periods, there was no evidence that Seahorse itself had discrete “employment units” for each ship. On the contrary, the apparent model was of a single undifferentiated workforce: he referred to para. 51 of the judgment in USDAW, where the Court made clear that the employer’s entire organisation might constitute an establishment “where the undertaking does not have several distinct units”. There was no Seahorse management or organisation on each ship: the entire management was the responsibility of Sealion.
Mr Stone pointed out that the Judge was plainly alive to this point. He referred to it expressly in para. 47 of the Reasons, where he described it as “one factor weighing against the Respondent’s arguments” (while rejecting the submission that it was a knock-out blow). It also lay behind the statement in the final sentence of para. 45 that while individual ships were capable of being establishments Sealion’s ships could not be said to be “distinct parts of [Seahorse’s] undertaking” (my emphases); and behind the final sentence of para. 48. Likewise it was what Slade J meant by saying that Seahorse had not shown “that [it] organised their business into individual ship based units”. This was of course the supposed error of law challenged by Mr Cavanagh as his point (5), but it was not an error and the ET and the EAT were entirely right to regard it as important.
In that context, Mr Stone submitted, most of the points to which Mr Cavanagh said that the ET was wrong to have regard were in fact legitimate. The “non-ship-specific” terms of the contract reflected the reality; and it was indeed relevant that the redundancy arrangements were regarded as applying across the fleet, since it confirmed that Seahorse’s own business was not organised ship-by-ship.
Mr Stone submitted that there was accordingly no error of law in the ET’s approach. He endorsed Slade J’s conclusion that on the evidence the only possible finding was that the ships did not constitute separate establishments to which Seahorse’s employees were assigned. But he submitted that in any event the question was one of fact and the ET had reached a conclusion which was undoubtedly open to it.
Well though Mr Stone developed that case, I cannot accept it. In none of the cases discussed above do the workers in question appear to have been employed by a different legal person than the operator of the establishment[5], but in my view it is sufficiently clear from the approach taken in the authorities, and in particular the CJEU authorities, that the identity of the employer is not in itself a relevant factor. The starting-point is that section 188 (1) does not say “at one establishment of his” or anything to the same effect. More substantially, the reasoning in all three of the judgments from which I have quoted focuses on functional and organisational characteristics – essentially whether the putative establishment constitutes a unit – and also, which is related, whether it is single “place”. As regards the latter point, I note not only Lord Essie’s observation in Wilkinson quoted at para. 24 above but also para. 28 of the judgment in Athinaïki Chartopoïïa (para. 18). In that context I cannot see that it is material whether the owner or operator of the unit is the same legal person as the employer of some or all of the workforce. It is not uncommon in groups of companies for the staff to be employed by a specific subsidiary which makes their services available to the different operating subsidiaries in the group; likewise, employees of different subsidiaries may constitute an integrated workforce at a particular unit. There is no reason why idiosyncratic complications of that kind should govern whether a particular unit constitutes an establishment. It is enough in my view that the establishment should have a workforce assigned to it (together with the other elements in the definition), irrespective of the identity of the employer or employers.
I should make it clear that that reasoning is specific to the present issue and the circumstances of the present case. In some cases the fact that a group of workers working at a particular unit are employed by a different person than the owner or operator of that unit may reflect the fact that they constitute a workforce not assigned to it. They might, for example, be a self-contained team moving from location to location on a short-term basis. If that were so, the unit in question might not fall to be regarded as an establishment at all, but even if it was the fact that the employees in question were not assigned to it would require the threshold to be applied by reference to their employer’s own organisation. But this is not such a case.[6]
On that basis, I believe that the correct conclusion on the Tribunal’s findings of primary fact is that each ship was indeed an establishment. It is clearly a self-contained operating unit of the kind described in the case-law. The only possible question is whether it can be said to have a workforce assigned to it. As to that, the only evidence was that relating to the crew members supplied by Seahorse. The Tribunal concludes at para. 48 of its Reasons that Seahorse crew were not assigned to particular ships. That finding is, however, vitiated by the error discussed above, and also by the further errors identified, I believe correctly, by Mr Cavanagh which I have listed as points (1)-(4) at para. 36 above. I do not believe that it is (even ignoring the “territorial jurisdiction” issue) necessary to remit the issue to the Tribunal. It is in my view adequately clear from its findings of primary fact that, at least in the typical case, Seahorse crew were assigned to particular ships. The finding at para. 13 of the Reasons, repeated at para. 46, is that most employees returned, rota after rota, to the same ship for “periods of time”, and the Tribunal at para. 46 expressly contrasts that with the case of the “riding squad/crew”, who are not “considered to be attached to any particular ship”. A view that crew are generally attached to a particular ship is reflected also in the reference in the letter of 27 July 2015 to “‘their’ ship”: see para. 33 above. I also think that the appearance on the standard-form contract of the box “Ship Name (if known)” suggests an expectation that in principle an employee will be attached to a particular ship, even if that has not been identified at the moment of contracting.
That conclusion does not address the position of any non-assigned employees, such as the riding squad/crew, and there are insufficient findings for me to express any conclusion about to what establishment they might be regarded as assigned and thus as to whether an obligation to consult might arise in relation to them.
My present understanding is that it is very likely that the effect of my conclusion as regards crew assigned to particular ships is that no obligation to consult arose. But that has not been definitively established, and for that reason it is necessary to consider the territorial jurisdiction issue also. I would in any event wish to do so since the point is of some importance.
(B) “TERRITORIAL JURISDICTION”
THE ISSUES
As appears from the facts summarised at para. 8 above, the ships relevant to this appeal on which the Seahorse employees represented by Nautilus work – and which I have held to constitute the establishments to which they were (typically) assigned – were stationed outside Great Britain. The question accordingly arises of whether the rights conferred by Chapter II of Part IV of the 1992 Act extend to Nautilus and/or to the employees themselves. Strictly speaking, this is not so much – as it is expressed in the preliminary issue – a question of “jurisdiction” as of the territorial scope of the substantive rights[7]; but nothing turns on that.
The 1992 Act contains no provision defining the territorial reach of the rights conferred by Chapter II of Part IV. There is the same lacuna in the Employment Rights Act 1996 and the Equality Act 2010, which confer a range of individual rights on workers against their employers. There were originally such provisions in both statutes – for that applying to the 1992 Act see para. 56 below – but they were repealed by section 32 (1) of the Employment Act 1999. There are no decided cases about the territorial reach of the rights conferred by the 1992 Act, but there is now a substantial case-law about the circumstances in which the rights conferred by the 1996 and 2010 Acts are enjoyed by employees working outside Great Britain. The main authorities start with the decision of the House of Lords in Lawson v Serco Ltd [2006] UKHL 3, [2006] ICR 250, but the principles there established were further expounded in the subsequent decisions of the Supreme Court in Duncombe v Secretary of State for Children, Schools and Families (no. 2) [2011] UKSC 36, [2011] ICR 1312, and Ravat v Halliburton Manufacturing & Services Ltd [2012] UKSC 1, [2012] ICR 389. For present purposes it is enough to say that the governing principle is that Parliament must be taken to have intended that in the generality of cases the rights conferred by the 1996 and 2010 Acts should not be enjoyed by employees (or workers) working outside Great Britain, but that in exceptional cases there may be factors connecting the employment to Great Britain, and British employment law, which pull sufficiently strongly in the opposite direction to overcome the territorial pull of the place of work: see the summary at para. 2 of my judgment in British Council v Jeffery [2018] EWCA Civ 2253.
It was common ground in the ET and the EAT, as also before us, that some form of the “sufficient connection” test must also be applied in the case of the rights under the 1992 Act with which we are concerned here. But the parties differ as to what the connection should be with. Mr Cavanagh submits that the question should be answered by reference to the establishment; and that in that case the only answer can be that there is no sufficient connection between the relevant ships and Great Britain. Mr Stone submits that the question should, rather, focus on the individual employees assigned to the establishment; and that a sufficient connection exists in the case of those Seahorse employees who live in Great Britain (whose numbers remain to be established – see para. 12 above)[8]. Mr Stone accepts that there is no such connection in the case of those who live outside Great Britain.
The ET accepted Nautilus’s submission that the focus of the relevant enquiry should be on the employee. That being its approach, it found that the UK-based employees could properly be regarded as falling into the so-called “peripatetic employee exception” recognised by Lord Hoffmann in Lawson v Serco.
In the EAT Slade J upheld the ET’s decision that the focus of the sufficient connection test should be on the connection with the employee rather than with the establishment: I will come back to her reasons later. She too accordingly performed a conventional Lawson/Ravat analysis. At para. 93 of her judgment she held that on the primary facts found the ET’s decision that the UK-based Seahorse employees were peripatetic was perverse. However she went on in paras. 94-99 to accept an alternative submission by Mr Stone that they were “international commuters” of the kind identified in Ravat, and so had a sufficient connection with Great Britain to overcome the fact that they worked abroad.
The issues accordingly are:
(1) Is the “sufficient connection” test to be answered by reference to the establishment or the individual employee(s) ?
(2) Is there such a connection in the present case ?
(1) ESTABLISHMENT OR INDIVIDUAL EMPLOYEES ?
The ET’s reasoning on this aspect is not easy to analyse, and since the issue is one of law I need not undertake the task. I should note, however, that the Judge appears to have relied, at least to some extent, on the decision of Supperstone J in Netjets Management Ltd v Central Arbitration Committee [2012] EWHC 2685 (Admin), [2012] IRLR 986, in which he upheld a decision of the CAC that a group of pilots employed by a UK company which operated a fleet of business jets operating within Europe constituted a “bargaining unit” for the purpose of the compulsory recognition procedure provided by Schedule A1 to the 1992 Act, notwithstanding that most of the pilots were not UK-based. Slade J held that he was wrong to do so, because the statutory context was different; and Mr Stone accepted that Netjets was of no assistance on this point.
As for the reasoning of the EAT, Slade J acknowledged at para. 79 of her judgment that the issue was not straightforward. Her reasons for taking an approach that focused on the connection with the individual, which Mr Stone adopted, fall under essentially two heads.
First, she attached importance to the fact that, although the right conferred by section 188 (1) itself is collective in character – that is, it is a right conferred on the employees’ representatives – the ultimate beneficiaries of the right are the employees themselves. If the duty to consult under section 188 is breached, the tribunal, as noted above, makes a protective award, by which a payment is required to be made to each of the employees affected: see section 189 (3). And if the employer fails to pay any sum due under a protective award the employees in question may bring proceedings in their own name: see section 192. Slade J says, at para. 87:
“Whilst it may be said that the obligations and entitlements provided by TULR(C)A ss 188 to 192 are hybrid rather than all collective or all individual, in my judgment [the] territorial jurisdictional reach of all such provisions is to be determined by the rights and means of enforcement which are given to the individual employees.”
Secondly, she referred to the legislative history. Section 285 of the 1992 Act, as originally enacted, reads (so far as material) as follows:
“Employment outside Great Britain
(1) The following provisions of this Act do not apply to employment where under his contract of employment an employee works, or in the case of a prospective employee would ordinarily work, outside Great Britain—
In Part III …;
In Part IV, Chapter II (procedure for handling redundancies).
(2) For the purposes of subsection (1) employment on board a ship registered in the United Kingdom shall be treated as employment where under his contract a person ordinarily works in Great Britain unless —
(a) the ship is registered at a port outside Great Britain, or
(b) the employment is wholly outside Great Britain, or
(c) the employee or, as the case may be, the person seeking employment or seeking to avail himself of a service of an employment agency, is not ordinarily resident in Great Britain.”
Section 32 (1) of the 1999 Act amended section 285 (1), as regards Part IV, so that it applied only to two particular sections under Chapter II, namely sections 193 and 194 (which impose an obligation on an employer to notify the Secretary of State of proposed redundancies and provided for non-compliance to constitute an offence). It is that amendment which gives rise to the lacuna referred to above: section 285 (1) no longer has any application (and for that reason nor does sub-section (2)). At para. 86 of her judgment Slade J says:
“The legislative history of the exclusionary provisions of s 285 as they affect ss 188 to 192 demonstrated a focus on whether under his contract of employment an employee worked outside Great Britain rather than where the ‘establishment’ to which he is assigned is located. That express exclusion did not depend upon assignment to an establishment located outside Great Britain.”
Although I agree with Slade J that the issue is not easy, I have respectfully come to the opposite conclusion from her. My reasons, which largely follow Mr Cavanagh’s submissions, are as follows.
The starting-point is that the primary obligation created by section 188 is purely at the collective level. That is, the obligation is to consult with the employees’ representatives, normally a trade union, and not with individual employees[9] – albeit that if it is breached the remedy is by way of an obligation to make payments to individuals, enforceable by those individuals. That is not in any way decisive, but it means that the case is not straightforwardly comparable to those considered in the case-law referred to above, which concern rights conferred directly on individuals.
Given the collective character of the right, I think that, in asking whether it has a sufficient connection with Great Britain, and British employment law, the most natural focus is on the common feature which defines the group for whose benefit the right is created, namely that they are employed at the same establishment. Such a focus also has obvious practical advantages. Most establishments have a specific location. If the location is in Great Britain no problem arises. If it is outside Great Britain, by analogy with the approach in Lawson and Ravat, the inference would normally be that Parliament intended that collective obligations relating to such an establishment would be governed by the law of the place where they were located; but no doubt there might be exceptional cases where there was some special connection with Great Britain sufficient to overcome the “territorial pull” of the location[10]. By contrast, if the focus were on the individuals employed at the establishment, the enquiry would be liable to be more difficult. The difficulties can be grouped under two broad heads.
First, different employees might have different degrees of connection with Great Britain. It is inherently unsatisfactory that, in order to decide whether consultation obligations are owed – and, if they are owed but are not complied with, which employees should be the beneficiaries of a protective award –individual assessments of the Lawson/Ravat kind should have to be carried out, initially by the employer but in the event of dispute by the tribunal, in every case. The assessment of whether there is a sufficient connection requires a careful balancing of the factors pulling in either direction and can be very fact-sensitive (see, for a recent example, the two cases considered in Jeffery[11]). To take one particular factor, it is now established that the presence of an English choice of law clause in the contract of employment and/or any equivalent assurances given to the employee are relevant considerations (see Jeffery paras. 50-66).
Mr Stone did not dispute that that could be so in some cases, but he contended that in the present case all the Seahorse crew had identical contracts; and in any event it was his submission that in this case a sufficient connection would be established if the employee in question lives in Great Britain, which is on the face of it not difficult to establish. I am not persuaded that even on his case the exercise would be straightforward: in the case of a group of employees who, ex hypothesi, work abroad, there are likely to be a number where the question of whether they live in the UK is debatable. But the real point is that we are concerned with the question of the right general approach to the reach of the rights under section 188 (1), and the fact that in some cases an individual-focused enquiry would be straightforward is no answer to the fact that in other cases it would not be.
Secondly, if Nautilus’s approach is adopted the sufficient connection test may be satisfied in the case of some of the employer’s employees at the establishment in question and not others. Indeed that is its case here, since, as already noted, Mr Stone accepts that Seahorse employees who do not live in Great Britain do not fall within the territorial reach of section 188. If that meant only that non-UK-based employees were not entitled to a protective award that might be, so far as it goes, unobjectionable. But the logic of the Nautilus approach would appear also to be that only the UK-based part of the workforce can be taken into account in deciding whether the numerical threshold is reached, and also that, if it is reached, the employer would only be obliged to consult as regards the impact of the proposed redundancy on that part. In the context of a unitary workforce, in which residence is otherwise irrelevant, this would be an artificial and arbitrary state of affairs. It would also cause serious practical problems. One of the things that consultation has to cover is redundancy selection procedures: it would be very odd, and would put a union in an impossible position if it represented both UK-based and non-UK-based employees, if it could consult only about the procedures for part of the workforce. The position would be still more difficult if the non-UK-based employees benefited from consultation obligations under the law of a different jurisdiction.
Mr Stone says that there are equal practical difficulties with Mr Cavanagh’s approach. In particular, he raises the question of how the connection of an establishment with Great Britain, or British employment law, is to be assessed if it is “mobile” (as many ships are, though not those with which we are concerned here) or if it has no physical presence. Those questions do not arise in the present case, and it is unnecessary to volunteer definitive answers. But they are no more difficult than analogous questions that have had to be answered in relation to individual employees, and I have no reason to doubt that they can be sensibly answered if and when they arise.
As for Slade J’s point based on section 285 (1) in its original form, I do not think that the legislative history supports her conclusion. Although the original exclusion for “employment where under his contract of employment an employee works … outside Great Britain” is indeed “individual-focused”, it would in practice have meant that no consultation obligations would be imposed as regards redundancies at establishments located abroad, and the kinds of difficulty that I consider in the previous paragraphs would not have arisen. In those circumstances it affords no guidance as to whether an individual-focused approach is appropriate in the fundamentally different situation created by the 1999 Act. Mr Cavanagh reminded us Lord Hoffmann’s observations in Lawson about the very limited extent to which the formulation of the predecessor provisions could shed any light on the position post-1999: see paras. 9-14 (pp. 255-7).
Mr Stone made a different point about section 285, namely that the “working outside Great Britain” exclusion remains applicable to sections 193 and 194. But essentially the same point arises. The fact that this “individual-focused” formulation is used in the context of the obligation to notify the Secretary of State about proposed redundancies casts no light on how to approach the obligation under section 188 (1).
(2) IS THERE A SUFFICIENT CONNECTION IN THE PRESENT CASE ?
It follows from my answer to (1) that this question falls to be answered by reference to the establishment – that is, as I have held above, the individual ships – and not to the individual Seahorse employees assigned to them. Because they answered question (1) differently, neither the ET nor the EAT addressed this question. It was Mr Cavanagh’s submission that the answer was clear. It cannot have been the intention of Parliament, or the makers of the Directive, that employers should be obliged by British, or EU, law to consult about the making of redundancies at establishments on the other side of the world, even if some of the workforce are UK nationals and/or live in Great Britain.
Mr Stone’s case did not make any submissions on this variant of the issue: his case on “territorial jurisdiction” was directed to question (1). In those circumstances I need only say that there is nothing in the circumstances of the present case that would overcome the territorial pull of the location of the establishment. The only connections with Great Britain are that some (though not all) of Seahorse’s functions are performed through its agent, FMA, which is based in Farnham. But in the case of the 1996 and 2010 Acts the fact that the employer is based in Great Britain is not by itself enough to overcome the territorial pull of the place of work, and the present case seems to me analogous, if not indeed a fortiori.
We heard argument on whether, if the right approach was “individual-focused”, the EAT’s conclusion on the sufficient connection question – and specifically that the employees were “international commuters” of the kind recognised in Ravat – was correct. In that connection we were referred to the decisions of the EAT in Diggins v Condor Marine Crewing Services Ltd [2009] EWCA Civ 1133, [2010] ICR 213, and Windstar Management Services Ltd v Harris [2016] UKEAT 0001/16, [2016] ICR 847, which are both unfair dismissal cases. But it is unnecessary for us to consider that question. The issue on this appeal is about the rights under Chapter II of Part IV of the 1992 Act and it has no bearing on claims under the 1996 and 2010 Acts.
DISPOSAL
For those reasons I would allow Seahorse’s appeal and dismiss Nautilus’s claim as regards the proposed redundancies of any Seahorse crew assigned to any ships in the TOISA fleet stationed outside Great Britain.
Lord Justice Lindblom:
I agree.
Sir Andrew McFarlane, PFD:
I also agree.
Note 1 It is not clear whether they were stationed inside or outside territorial waters; but it was not suggested that that matters for present purposes. [Back]
Note 2 The reference to the UK rather than Great Britain is not strictly accurate, but I will stick with the ET’s phrase for convenience. [Back]
Note 3 The cases were heard together, alongside a third reference, from Spain –Cañas v Nexea Gestión Documental SA (C392/13), [2015] 3 CMLR 34. The Advocate-General delivered a single Opinion in all three, though the Court gave individual judgments. [Back]
Note 4 Mr Cavanagh suggested in his skeleton argument that a “not” must have been omitted before “assigned”. Mr Stone did not accept that that was so. I am inclined to agree with him, but the point is not of central importance. Even if the text is correct, it is clear from the context that by its reference to “any of the vessels” the ET meant that the assignment was to the fleet as a whole rather than to an individual ship, even if in practice the employee worked on such a ship over a long period. [Back]
Note 5 I should record that neither party sought a reference to the CJEU. I do not think it necessary for us to take that course on our own initiative. [Back]
Note 6 I should also make it clear that the fact that the identity of the employer of the workforce is immaterial to the question whether a particular unit constitutes an establishment does not mean that it is immaterial to the question whether the relevant numerical threshold is reached. As regards that, it has been held, at least at EAT level, that the tribunal can on the face of it only take into account workers employed by the same employer – see E Green & Son (Castings) Ltd v Association of Scientific Technical and Managerial Staffs [1984] ICR 352. [Back]
Note 7 See the illuminating analysis at paras. 1.11-16 in Merrett Employment Contracts in Private International Law. [Back]
Note 8 The Tribunal refers to the claim being limited to employees “domiciled” in Great Britain. But it was common ground that the criterion advanced by Nautilus was whether they were resident here. [Back]
Note 9 This is not quite the whole story, because where there is no trade union recognised or other appropriate representatives the affected employees may bring proceedings for a protective award in their own names (see section 189 (1) (d)). But that is a default provision, designed to cover the situation where the employer is unwilling to participate in any collective consultation, and does not in my view affect the character of the primary right. (There was in fact no such provision under Chapter II as originally enacted, which gave consultation rights only to recognised trade unions; but it was introduced when the legislation had to be amended, following the decision of the ECJ in EC Commission v United Kingdom (C-383/92) [1994] ICR 664, to cover cases where no trade union was recognised.) [Back]
Note 10 Mr Cavanagh suggested as an example the case of an establishment located in a British enclave abroad, as inBotham v Ministry of Defence, one of the cases considered withLawson. [Back]
Note 11 Jeffery was decided subsequent to the argument in this case, but I refer to it only as a convenient reference-point. The points made in it are based on earlier authorities. [Back]