After Brexit, amended regulations were introduced to deal with the issue of European Works Councils of companies which had their central management situated in the UK. The Employment Appeal Tribunal (EAT) has held in easyJet plc v easyJet European Works Council that the regulations must be interpreted to include companies whose central management is “deemed” to be situated in the UK, as well as those actually situated here.
EasyJet controls an airline group with operations across the EU and the European Economic Area. Because of its size, it was required by law to operate a European Works Council (EWC) to ensure that its employees received information and were consulted about transnational matters affecting them.
In 2019, the Employment Rights (Amendment) (EU Exit) Regulations amended regulations 4 and 5 of the Transnational Information and Consultation of Employees Regulations 1999 (TICER) to take account of the UK’s exit from the EU. The company argued that, as a result of the amendments, the regulations no longer applied in situations where the company’s central management was based in the UK. As easyJet fell under that provision, it no longer had to operate an EWC.
The EWC disagreed and brought a claim to the Central Arbitration Committee (CAC), arguing that although no new EWCs had to be set up after the Brexit transition period, parliament had made clear that existing ones were to remain operational.
Amended regulation 4(1) of TICER states that the EU regime would continue to apply “only where, in accordance with regulation 5, the central management is situated in the United Kingdom”.
Rather confusingly, the first limb of regulation 5 which referred to situations in which central management was “situated in the United Kingdom”, was removed during the drafting process and only the second limb under the amended regulation was retained which referred to situations in which central management was “deemed” to be situated in the UK.
The CAC decided that it had jurisdiction to hear the case brought by the EWC.
EasyJet appealed, arguing that the phrase “in accordance with” in amended regulation 4 meant “as defined by” and that the term “situated in the United Kingdom” only included circumstances that fell within regulation 5. In other words, it did not include circumstances in which central management was, in fact, situated in the UK but only where it was “deemed” to be.
Dismissing the appeal, the EAT held that it had to give the “natural and ordinary” meaning to the words in the regulations. Where they had more than one meaning, it would be guided by common sense.
On that basis, it concluded that the words “in accordance with regulation 5” could not sensibly be interpreted to allow a situation whereby the words “situated in the United Kingdom” excluded “central management that is situated in the United Kingdom” as that would run counter to common sense.
In addition, it held that it was clear from the explanatory memorandum to the Employment Rights (Amendment) (EU Exit) Regulations 2019 that parliament intended the amended TICER would continue to apply to EWCs that had been established before the end of the Brexit transition period.
The EAT accepted that this interpretation would cause difficulties for employers like easyJet who would have to maintain an EWC in the UK at the same time as having to create a new EWC within the EU. However, it could not accept the “irrationality of an interpretation that retains the relevant provisions of amended TICER in force for deemed UK central management, but not for actual UK central management”.
A consequence of the UK “taking back control” after Brexit was that whilst UK employers still had to comply with TICER in EU and EEA member states, there was a reduction in protections for UK-based employees. This case clarifies what is left. Although it may result in some practical headaches on the ground, it is consistent with the government’s stated intention of allowing pre-existing UK-based EWCs to continue operating normally.