In this article...

Following on from the Advocate General's Opinion back in April, the ECJ has now handed down its decision in the case of Akavan Erityisalojen Keskusliitto AEK ry and Others v Fujitsu Siemens Computers Oy, clarifying a number of issues concerning the obligation to inform and consult employees about collective redundancies under the Collective Redundancies Directive (No.98/59) . Julian Hoskins reports. 

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Article 2(1) of the Collective Redundancies Directive (98/59/EC) states:

"Where an employer is contemplating collective redundancies, he shall begin consultation with the workers' representatives in good time with a view to reaching agreement".

Article 2(3) lists certain information which the employer must provide "in good time during the course of the consultations". This includes reasons for the projected redundancies and the numbers and categories of those employees who are at risk.

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The Facts

Fujitsu Siemens Computers Oy (FSC) were a subsidiary of Fujitsu Siemens Computers (Holding) BV.  On 7 December 1999, the executive council of the parent company proposed the divestiture of one of FSC's factories in Finland.  At a meeting on 14 December 1999 the parent company board supported this proposal, although no specific decision about the factory was made.  Following this FSC undertook consultations with staff representatives between 20 December 1999 and 31 January 2000.

On 1 February 2000 FSC's own board of directors decided to terminate FSC's operations in Finland and began making employees redundant from 8 February. In total, 450 of the 490 employees of the company were made redundant.

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The Court of First Instance and the Court of Appeal

The appellants brought an action before the District Court in Espoo, claiming that FSC had infringed the collective consultation legislation. They claimed that the decision to make the redundancies was taken by the parent company's board of directors by 14 December 1999 at the latest, prior to the consultations with the workforce.

FSC denied this, asserting that the decision was taken on 1 February 2000 (following the conclusion of consultations) and that up until that point, alternatives to closure were still being considered.

The Court upheld FSC's argument, holding that there had been a genuine and appropriate consultation. This decision was then subsequently upheld by the Helsinki Court of Appeal.

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 The Supreme Court

An appeal was then brought to the Supreme Court, who in turn referred the matter to the ECJ for clarification.  In the main this was requested to clarify at what point the obligation to consult arises when decisions likely to give rise to collective redundancies are taken within a group of undertakings.

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European Court of Justice

The obligation under Article 2(1) of Directive 98/59, (for the employer to start consultations with the workers' representatives in good time if he 'is contemplating collective redundancies') was clarified as referring to the moment where there exists an intention to make these redundancies.

The Court also gave the following guidance:

  • This intention will be deemed to form when the employer adopts 'strategic decisions'; or there are any 'changes in activity' which compel the employer to contemplate, or plan for, redundancies.
  • In the case of a group of undertakings, it was held that the duty to consult arises when either an employer or its parent company plans or foresees collective redundancies.  However the obligation to consult shall only come into existence once the parent company has fully identified which subsidiary is to be affected by the redundancies. Following that, the subsidiary which has the status of employer must have fully completed the consultation procedure before the parent company can take a decision on redundancies.
  • The obligations are always binding solely on the employer, even if the decision on collective redundancies is made by the undertaking controlling the employer, and even in the event that the employer may not have been directly informed of that decision straight away.   An undertaking that controls the employer does not have the status of an employer and therefore does not have an obligation to inform, consult or notify.
  • The obligation to consult, 'in good time', was not dependant upon an employer being able to supply the employee's (and/or their representative) with all the information as required under Article 2 (3)(b) of the Directive.  Instead it was held that all information must be provided as and when it becomes available during the process and not necessarily at the start of it.  Therefore it is not possible to argue that the obligation to consult has not arisen simply because the employer does not have all the information available.

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