EAT imposed a penalty of £20,000 for an employer’s failure to inform and consult

In Olsten (UK) Holdings Ltd v Adecco Group European Works Council [2022] EAT 183, the EAT imposed a penalty of £20,000 for an employer’s failure to convene an extraordinary meeting to inform and consult its European Works Council (EWC) about collective redundancies and a penalty of £5,000 for not providing information within the scope of its EWC Agreement.

The EWC Directive 94/45/EC, transposed into UK law by the Transnational Information and Consultation of Employees Regulations 1999 (TICE Regulations), requires all companies with 1,000 or more workers, and at least 150 employees in each of two or more EU/EEA Member States to set up an EWC. The purpose of the EWC is to bring together the union representative from the EU/EEA States the company operates and the organisation’s management to discuss current strategies that will affect the business and workforce and exchange information. Most EWCs meet annually, although extra meetings can be scheduled if required.

The Appellant (Olsten) represented the interests of the employer, who was part of the Adecco Group, based in Zürich, (the Adecco Group or Adecco). The Adecco Group was a party to an EWC agreement dated 24 May 2018 (EWC Agreement) which extended to group companies in EU/EEA States, the UK and Switzerland in which Adecco or its subsidiaries operated. The agreement was governed and interpreted per English law. Clause V.1.4 of the EWC Agreement (Clause V.1.4) provided that an extraordinary meeting would be held concerning specific transnational matters involving unique circumstances or decisions. Collective redundancies which significantly affected existing Adecco employees in each of at least two EEA countries were considered a unique decision.

In late 2019 and through 2020, various Adecco subsidiaries began making redundancies in several EU States. In late May 2020, the EWC’s steering group contacted Adecco’s central management in Zürich to call for an extraordinary meeting concerning the collective redundancies.

A meeting was held on 10 June 2020 to discuss the Coronavirus pandemic. Before this meeting, Adecco emailed information to the EWC, including worldwide workforce and financial data, broken down by regions rather than countries, papers on COVID-19, the Q1 2020 financial results, and an outlook for Q2.

On 24 June 2020, Adecco formally refused to engage in an extraordinary meeting. It argued that although the pandemic was negatively affecting the economy which resulted in lay-offs, it was up to the subsidiaries in each country to decide on the composition of its workforce based on the overall goals and strategy of the group. Therefore, it stated there was no common cause for the redundancies in Sweden, Netherlands, Hungary, and Germany and no central decision to make collective redundancies, so Clause V.1.4 did not apply.

The EWC complained to the Central Arbitration Committee (CAC) about Adecco’s refusal to recognise that making staff redundant in four EU/EEA States was a transnational issue. In addition, the financial data provided by the company to the EWC was financially already publicly available and was broken down by region. Therefore, Adecco had not informed the EWC of the most recent business sales performance data “per country” within the scope of the EWC Agreement.

The CAC ruled that there was no requirement that any collective redundancies referred to in Clause V.1.4 should be proposed, approved or co-ordinated at a central level or at any level beyond that of the individual country. Therefore, in this case, an extraordinary meeting was required. It also stated that the EWC’s complaints regarding the financial data provided before the meeting on 10 June 2020 were justified. The CAC gave Adecco 21 days to provide country by country data and the company complied.

Olsten appealed to the EAT, arguing that the CAC had misinterpreted the scope of a “transnational” matter triggering the obligation to convene a meeting to discuss proposed collective redundancies. The EWC applied to the EAT to issue penalty notices reflecting Adecco’s failure to comply with its obligations to inform and consult.

Sitting alone, the Hon. Mr Justice Kerr concluded that the multi-State redundancies proposed by undertakings in a group operating across several EEA countries gave rise to a “transnational” matter. This subsequently created an obligation on Adecco Group via the European Works Council (EWC) agreement to call an extraordinary meeting to provide information and engage in dialogue with employee representatives. The CAC had correctly upheld the EWC’s complaint. Furthermore, the CAC had correctly decided that it was not necessary for decisions on redundancies in more than one EU/EEA State to share a common justification or underlying reason. Redundancies proposed by group undertakings in more than one EU/EEA country at a similar time constituted a transnational matter, even if no common reason was present. The appeal on these grounds was therefore dismissed.