Collective rights

Akavan Erityisalojen Keskusliitto AEK ry and ors v Fujitsu Siemens Computers Oy

Under European law, employers are required to inform and consult workers (or their representatives) in the event of making collective redundancies. In Akavan Erityisalojen Keskusliitto AEK ry and ors v Fujitsu Siemens Computers Oy the European Court of Justice (ECJ) held that employers must start the process of consultation as soon as they have taken “ a strategic or commercial decision compelling them to contemplate or to plan for collective redundancies”.

Basic facts

The Fujitsu Siemens Computers Group (FSC), a subsidiary of Fujitsu Siemens Computers (Holding) BV (the parent company) operated a production plant at a site in Kilo, Finland.

At a meeting on 14 December 1999 the board of directors supported a proposal to sell off the Kilo factory and consultations then took place with the workforce from 20 December until the end of January 2000. On 1 February the board of directors made the decision to terminate operations in Finland and on 8 February 2000, FSC began to make most of the workforce redundant.

The employees then claimed that the decision to close the Kilo factory had, in fact, been taken on 14 December before consultation with the workforce began, contrary to the 1975 Collective Redundancies Directive.

FSC argued that the decision had not been made until 1 February 2000, after the consultations had ended. It said that up to that point, possible alternatives were still being considered, such as scaling down production, or going into partnership with another undertaking.

Decisions of Finnish courts

And the Finnish court of first instance agreed. It said that the decision to close the plant had been taken at the meeting of FSC’s board on 1 February 2000, after it had proved impossible to find another solution, and that the consultations had been genuine and appropriate. The Helsinki Court of Appeal upheld the decision.

But on a further appeal, the matter was referred to the ECJ to ascertain (among other things) at what point employers have to start consultations in situations when decisions about collective redundancies are being taken within a group of undertakings.

Decision of ECJ

The ECJ said that the general obligation to hold consultations under article 2 of the directive arose when an employer was contemplating or drawing up a plan for collective redundancies.

The reference in articles 3 and 4 to “projected collective redundancies” meant that the actual factor triggering the obligation was an “intention” to make collective redundancies. That intention arose as soon as the employer took a strategic or commercial decision compelling them to contemplate or to plan for collective redundancies.

The obligation to consult was not, however, dependent on the employer being able to supply all the information required under the directive to the workers’ representatives at the start of the process. In other words, employers could (and indeed must) add to any information supplied in the course of the consultation process. This would also allow the workers’ representatives to participate as fully and effectively as possible.

Under Article 2(4), the ECJ said that the subsidiary company was responsible for complying with the regulations, even if it was the parent company that took the decision to make the redundancies, and even if the subsidiary “may not have been immediately and properly informed of that decision” by the parent company. However, the obligation to hold consultations only fell on the subsidiary once it been identified by the parent company.

The ECJ also said that where there is a group of undertakings, the consultation procedure must be concluded by the subsidiary before it terminates the contracts of employees who are to be made redundant.