Monthly Archives: November 2012

USA v Nolan: When must redundancy consultation start?

The European Court of Justice has balked at a decision that is urgently needed to clarify the requirements imposed on employers to consult workers’ representatives before making staff redundant.

In the case of United States of America v Nolan (Case C-583/10 ECJ), the court decided it had no jurisdiction to rule on the matter. Christine Nolan worked for the US Army in Britain and the relevant EU Directive “does not apply to workers employed by public administrative bodies or … by equivalent bodies” – including the US Army.

Nevertheless her case (which has returned to the Court of Appeal – see note below) epitomises the issue. Redundancies are governed by the EU Directive 98/59. Article 2 of that directive provides:

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. [Emphasis added]

Furthermore to enable workers’ representatives to make constructive proposals, an employer is bound, in good time during the course of the consultations, to supply them with all relevant information and to notify them in writing of the matters specified in subparagraph 2.

But what does “contemplating” mean and hence what is “in good time”? Section188 of the Trade Union and Labour Relations (Consolidation) Act 1992, which is intended to transpose the Directive into British law, requires consultation when the employer is “proposing” redundancies. What does “proposing” mean? Is it different from “contemplating”?

The Act sets a minimum of 90 days consultation when 100 or more workers are to be made redundant or 30 days for less than 100 – but how far down the line of decision-making can management already be before it activates the statutory consultation period? “Contemplating” seems to be something you would do rather earlier in the process than “proposing”, so unions have argued that consultation must come at that earlier stage.

USA v Nolan

In USA v Nolan Christine Nolan worked at a US army base in Britain with about 200 civilian staff. By March 2006, the US had decided to close the base at the end of September 2006 (six months or so ahead). On 21 April 2006 plans for closure became public and in June staff representatives were told all employees were at risk of redundancy. The US Army considered consultation on the redundancies started on 5 June (more than 90 days before closure was planned).

On 30 June, the Army gave the employees notices of dismissal, to take effect at the end of September. Nolan, a worker representative, brought a claim on behalf of those employees on the basis that the US had failed to comply with its collective consultation obligations by not consulting before 5 June.

The USA argued that: “no employer has an obligation to consult with its employees about a proposed operational decision to close a workplace that will lead to redundancies: it is said that the consultation obligation only arises after the employer has made such decision and is then proposing to dismiss the employees as redundant”.

Nolan, however, succeeded in a claim for a protective award (a penalty paid to each worker affected if there is not proper consultation) at an Employment Tribunal and at the Employment Appeal Tribunal. The Court of Appeal, however, sought guidance from the ECJ on when consultation should start.

Continue reading

Advertisements

1 Comment

Filed under Business, Business law, EU law, Law, Legal, UK Law