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Consultation Issue Referred to ECJ

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[Thanks to Anna Thomas of Devereux Chambers for preparing this case summary]

The Court of Appeal in USA v Nolan has unanimously referred a point of general importance in industrial practice to the Court of Justice of European Union: when exactly does the employer's obligation to consult arise when carrying out collective redundancies? Is the point at which the obligation to consult arises before or after a strategic or commercial decision that will lead to collective redundancies?

In Nolan, the striking facts were:

  • a decision to close an army base was taken in March 2006 by the Secretary of the US Army;
  • the workforce were informed of the closure on 24 April; and consultation started on 5 June.

The Employment Tribunal found USA failed to engage in any meaningful consultation and made a protective award. The EAT upheld the protective award on this point.

S188 TULRA 1992 requires consultation when the employer is "proposing" to dismiss an employee. The Directive pursuant to which the 1992 Act was made requires consultation when the employer is "contemplating" redundancies. The EAT in UK Coal v NUM found that a duty arises to consult about reasons where closure and dismissals are inextricably linked. The ECJ case of Akavan v Fujitsi suggests a narrower interpretation - that the duty may only arise once the crucial operational decision has been taken. As things stand, the timing and scope of the obligation is not clear. Watch this space!