UK: Court of Appeal rulings on pre-Brexit EWCs and on scope of 'transnational' matters requiring EWC consultation

The last month has seen two important Court of Appeal decisions for multinational employers with European Works Councils.  The first is relevant to employers with European Works Councils established in the UK pre-Brexit, due to the central management being situated in the UK.  The Court of Appeal ruling in easyJet plc v easyJet European Works Council means that these employers must continue to run their UK EWC post-Brexit (and the EWC will continue to be able to make complaints to the Central Arbitration Committee).  The Court rejected technical arguments based on the poor drafting of the Brexit legislative amendments and ruled that the amended regulations should be construed to ensure all existing EWCs continue to operate following Brexit, notwithstanding that an employer may also have had to establish a separate EWC in an EU jurisdiction post-Brexit.   The Court accepted that running two EWCs might cause practical difficulties, but did not consider these insuperable.

The second ruling of the Court of Appeal concerns the meaning of a "transnational matter" on which EWC consultation is required, defined (by the EWC Directive, the implementing UK regulations and aligned EWC agreements) as a matter which concerns at least two undertakings in each of two different countries.  In Olsten (UK) Holdings Limited v Adecco Group European Works Council the Court of Appeal ruled that, where there are collective redundancy proposals affecting undertakings in more than one state, this will only be a  "transnational matter" if there is a common link or nexus of some kind, or a way in which each proposal affects or had potential effects on undertakings in each of two different countries.

It is not necessary for there to have been a central management decision proposing both sets of redundancies, but a mere coincidence of timing of proposals for collective redundancies or business restructuring happening in undertakings in two countries is not enough where there is no common rationale or nexus.  If there are two separate, unrelated proposals, each of which only concerns the undertaking in one country and neither has any potential effects on or relates to the undertaking in the other country, no transnational issue arises.  The EAT was wrong to hold that EWC consultation was required on the basis that it thought collective redundancies in one country would be inherently likely to have indirect or knock-on effects on employees in another member state - it was a question of fact to be determined as to whether the proposal relating to one country in fact had direct or indirect effects on workers in another country.

The EAT's wide approach in effect meant that EWC consultation might be required where two undertakings coincidentally happen to propose entirely separate and purely national redundancy programmes at the same time.  The Court of Appeal's rejection of this approach will be welcomed by employers.