In this case, the Advocate General provided an opinion on the application of the Collective Redundancies Directive to a German case where the strategic decision in question was taken by an entity other than the employer.


The Advocate General provided an opinion on whether having de facto control of the employer was enough to qualify as a "controlling undertaking".  The Advocate General also considered when the consultation is triggered in such circumstances and whether the employee representatives are entitled to information about the underlying decision taken by the controlling undertaking (Bichat v Aviation Passage Service Berlin).

Background law

Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) requires employers who are "proposing" to dismiss as redundant 20 or more employees within a 90-day period to undertake collective redundancy consultation.  TULRCA give effect to the obligations in the EU Collective Redundancies Directive (CRD).  The CRD provides that the obligation to collectively consult is triggered when the employer is "contemplating" collective redundancies.  This led commentators to question whether there was a tension between the wording of the CRD and TULRCA since merely "contemplating" redundancies would occur at an earlier stage than actually "proposing" them.

However, in the case of Akavan Erityisdojen AEK v Fujitsu Siemens Computers, the ECJ held that the obligation under the CRD is triggered once strategic decisions have been taken, or changes in activities have occurred which compel the employer to contemplate or plan for redundancies, even if the employer is not in possession of all the relevant information.  Therefore, the difference in wording between the CRD and TULRCA is not significant: in both cases the obligation is triggered when a strategic decision had been taken which compels the employer to contemplate or plan for redundancies.

As far as the strategic decision itself is concerned, the CRD provides that obligations are triggered even where the decision is taken by a "controlling undertaking" of the employer.  However, TULRCA does not replicate this approach.  Instead, it limits the obligations to the employer only and defines "employer" as the individual employer of the employees. In this case, the Advocate General provided an opinion on the application of the CRD to a German case where the strategic decision in question was taken by an entity which may have qualified as a controlling undertaking.

Facts

In this case the employees worked for Aviation Passage Service Berlin (APSB) and were based at Berlin Tegal Airport in Germany.  APSB was controlled by Global Ground Berlin (GGB).  In September 2014, GGB told APSB that it would be reducing its operations and there would be a transfer of part of its business, although no staff would move with it.  Five months later, in January 2015, APSB told its works council that it was planning to make collective redundancies.   The affected employees were eventually dismissed a year later.

The employees claimed that their dismissals were unlawful.  The employees argued that that the APSB was controlled by GGB which, in turn, was controlled by the WISAG group of companies.  They submitted that the decision to terminate APSB's contracts (which necessitated the redundancies) was, taken at a senior level within the WISAG group, meaning that the collective consultation should have been triggered at a much earlier stage when that decision was taken.  The employees lost at first instance.  On appeal, the Court referred a number of questions to the ECJ for a preliminary ruling:

  1. Does a "controlling undertaking" only mean undertakings who have influence by way of shareholdings and voting rights?  Or is "de facto" influence sufficient?
  2. If "de facto" influence is enough, will collective consultation be triggered where the controlling undertaking impose changes on the employer which in turn, make it necessary for the employer to make collective redundancies?
  3. Should employee representatives be informed of the grounds on which the controlling undertaking has taken the decision that led the employer to contemplate collective redundancies?

The Advocate General's (AG) Opinion

AG Sharpston (the UK AG) gave the following opinion:

Question 1 - Does a "controlling undertaking" only mean undertakings who have influence by way of shareholdings and voting rights?  Or is "de facto" influence sufficient?

In the AG's opinion, a controlling undertaking:

  • may have de facto influence over the employer.  There is no requirement for it to have control by virtue of shareholdings or voting rights or by being in a higher position in the structural hierarchy of the group than the employer entity;
  • must share the same commercial interests as the employer in the form of the corporate structure or by way a contractual or factual connection.   However, it does not include arm's length businesses (e.g. customers or suppliers), even though their conduct may have consequences for the employer, potentially causing collective redundancies; and
  • must be able to provide the necessary information to enable consultations to take place in a meaningful way.
Question 2 - If "de facto" influence is enough, will collective consultation be triggered where the controlling undertaking imposes changes on the employer which in turn, make it necessary for the employer to make collective redundancies?

In the AG's opinion, the simple answer was "yes".  Where a controlling undertaking imposes changes which will ultimately result in the employer making collective redundancies the collective consultation process will be triggered.  This is because an employer is under a duty to start the consultation process when it becomes aware of a strategic decision or change in activities which compels it to contemplate, or to plan for, collective redundancies.  

This is important because the controlling undertaking must provide the necessary information to the employer to enable it to comply with its obligations to collectively consult and this must be done at the point in time when the employer's obligation arises. Therefore, even the controlling undertaking has no obligation to consult itself, it must provide information to the employer in a timely fashion to enable the employer to comply with its obligations.

Question 3 - Should employee representatives be informed of the grounds on which the controlling undertaking has taken the decision that, in turn, led the employer to contemplate collective redundancies?

The AG's opinion was that in most cases the employer will have to disclose the economic or other grounds on which the controlling undertaking has taken its decisions that have, in turn, led to the collective redundancies.  Without this information the employees' representatives may find it impossible to make constructive proposals in the consultation process.  However, there is no obligation to disclose information that simply does not assist the representatives make constructive proposals.

Comment 

As noted above, TULRCA does not mirror the CRD since it contains no reference to a "controlling undertaking".  However, if the ECJ follows the AG's opinion, then UK Courts and Tribunals will have to grapple with the issue of whether to construe TULRCA to comply with the CRD or to find that it is incompatible.  Assuming that a purposive approach were adopted and TULRCA was construed to comply with the CRD, this would mean that UK employers would need ensure that collective redundancy consultation was initiated when a strategic decision was taken by a controlling undertaking, which could include an entity with de facto control.  

This places additional burdens on employers.  Firstly, the employer will need to have an awareness of the entities that could be considered to have de facto control over them.  Secondly, it requires the employer to be prepared to trigger collective consultation at the point at which the controlling undertaking conveys its decision to them.  And, thirdly, it requires the employer to obtain the appropriate information from the controlling undertaking to enable meaningful consultation to take place.

Bichat v Aviation Passage Service Berlin 

Key contact

Amanda Steadman

Amanda Steadman

Principal Knowledge Lawyer, Employment
London

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