Commencement of Collective Consultation

24th September 2009

The ECJ has helpfully clarified a number of points relating to an employers obligation to inform and collective consult with employees in redundancy exercises.

In the recent case of Akavan Erityisalojen Keskusliitto AEK ry and ors v Fujitsu Siemens Computers Oy the ECJ held that:

  • the duty to consult is triggered when where is a “decision or change of activity which compels the employer to plan for redundancies”.

  • even if the decision is made at parent company level, the obligation is the responsibility of the subsidiary in which the redundancies may be made. This obligation is not altered by any failure on the part of the parent company to promptly and properly inform the subsidiary of its decision.

  • the obligation arises even if the employer is unable to supply all necessary information to employee representatives at that time.

The facts of the case provide a useful illustration of quite how early on the obligation to consult with employees arises. Fujitsu Siemens Computers Oy (the Subsidiary), based in Finland, is a subsidiary of Fujitsu Siemens Computers (Holding) BV (the Parent).

  • On 7th December 1999 the executive council of the Parent proposed selling one of the Subsidiary’s factories.

  • On 14th December 1999 the Parent’s board of directors decided to support the proposal.

  • The Subsidiary’s board proposed that redundancy consultation would take place between 20th December 1999 and 31st January 2000.

  • On 1 February 2000 the Subsidiary began making employees redundant.

The employees alleged that the Subsidiary had failed to undertake appropriate collective consultation on the grounds that the decision to make redundancies was taken on or before the 14th December 1999 but consultation with the workforce did not commence until 6 days later.

Whilst the Subsidiary’s argument that the ‘decision’ had not been made until the 1st February (because alternatives were still under consideration until that time) and appropriate consultation had been undertaken, was accepted by the Finnish courts of first instance and appeal, on further appeal the matter was referred to the ECJ.

In giving its judgment the ECJ confirmed that the obligation to consult collectively is triggered as soon as there is an intention to make collective redundancies – ie once the employer adopts ‘strategic decisions’ or ‘changes in activity’ which compel it to either contemplate or plan for redundancies.