Should the phrase "undertaking controlling the employer" in the Collective Redundancies Directive mean only legal control, or does it include factual control?
Factual control is enough, says Advocate General Sharpston in the ECJ in her opinion in Bichat v Aviation Passage Service Berlin('APSB').
APSB made a number of employees redundant who claimed that another company ('GGB') had taken the decision to dismiss them. GGB were not strictly a group company within the terms of German Law, but they were the only company or person who had a vote at the meeting where the action leading to redundancies was started.
Directive 98/59 EC (incorporated into UK law by the Trade Union and Labour Relations (Consolidation) Act 1992) obliges employers to consult with those who are due to be dismissed as redundant in certain circumstances. Recital (11) refers to decisions to dismiss which "arise from the employer or the undertaking which controls that employer".
The issue of control was referred to the ECJ for a preliminary reference. AG Sharpston's opinion was that factual control satisfies the directive. She said:
"...it is necessary for the controlling undertaking to have an influence on the employer as regards the manner in which the collective redundancies...are to be carried out...[They] must share the same commercial interests in the form either of a corporate structure...or of a contractual or factual connection, represented by a common patrimonial interest...Whether or not that interest is sufficient to amount to control...in a given case will be a matter to be determined by the national court..."
The Advocate General's opinion is not binding on the court, but is more often followed than not.
Thanks to Matthew Jackson of 10 KBW for preparing this case summary.