Posted: 18/07/2023
The Court of Appeal has recently issued its judgment to clarify the jurisdiction of the Central Arbitration Committee (CAC) and the role of European works councils (EWCs), following the UK’s exit from the European Union.
European legislation requires large employers, namely those with at least 1,000 employees in the European Economic Area (EEA) and at least 150 employees in each of at least two EEA countries, to set up an EWC if a valid request to set one up is received. An EWC is effectively an employee forum, allowing an employer to share plans and decisions and consult with employees where an issue affects more than one country in which the business operates, for example, a proposed large-scale redundancy plan.
The CAC is an independent tribunal in the UK with statutory powers relating to trade unions and employers. Most commonly, it deals with statutory recognition and derecognition of trade unions in workplaces, but it also deals with disputes more generally between trade unions and employers relating to issues arising under trade union legislation.
In EasyJet PLC v EasyJet European Works Council, EasyJet had tabled a proposition in May 2020 to reduce its staff numbers by 30%, impacting at least two EEA countries in which it operated. EasyJet initially worked with its EWC, which was already in place. At some point in late 2020, however, the EWC felt that EasyJet had stopped properly engaging, so, in March 2021, it submitted a complaint to the CAC.
EasyJet disputed that the CAC had jurisdiction to hear the EWC’s complaint and, eventually, the Court of Appeal was asked to consider the issues raised.
EasyJet’s argument was that, following the UK’s departure from the EU on 31 December 2020, EWCs as a concept ceased to exist because the relevant legislation, the Transnational Information and Consultation of Employees Regulations 1999 (TICER), no longer applied to employers whose central management was situated in the UK. EasyJet argued that this meant new EWCs could not be created and that any existing EWC would effectively dissolve.
It pointed to comments from Kelly Tolhurst, a government minister responsible for the Employment Rights (Amendment) (EU Exit) Regulations 2019 (EU Exit Regulations), which served to amend relevant employment legislation following Brexit. In a meeting with the delegated legislation committee in early 2019, she suggested the UK would no longer be covered by the EWC system in the event of a no-deal Brexit.
The Court of Appeal rejected EasyJet’s appeal and confirmed that the CAC had jurisdiction to deal with the March 2021 complaint and any subsequent complaints by the EasyJet EWC. In reaching its decision, the Court of Appeal analysed the effect of TICER in detail, both pre- and post-Brexit. Noting how unclear the regulations were generally, the Court of Appeal highlighted several examples of regulations which would not have been retained, without amendment, if the government’s intention was for the EWC system to cease to exist entirely.
The Court of Appeal also referred to several examples where TICER had been revised in detail and held that it was therefore reasonable to assume that, if a regulation had been left in, it had been left in deliberately. The Court of Appeal also noted that the explanatory memorandum to the EU Exit Regulations made it clear that EWCs that already existed prior to Brexit would continue to operate following the end of the transition period.
As the Court of Appeal noted, TICER are complicated, and the interplay between the regulations and the effect of Brexit is not easy to untangle. Larger employers may welcome the clarification regarding the continuing need to engage with existing EWCs and the ongoing jurisdiction of the CAC to resolve disputes in this area. It remains to be seen if the government will seek to make further changes regarding EWCs.
For further information on this issue, please contact Binder Bansel or another member of the Penningtons Manches Cooper industrial relations team.
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