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European Works Council breaches led to financial penalties

Gateley Legal

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Issue

Whilst Brexit may eventually lead to growing differences between UK and EU employment law the legislation relating to European Works Councils is still effective in the UK and multinationals will still have obligations to inform and consult prior to making large scale redundancies. In (1) Verizon European Works Council (2) Jean-Philippe Charpentier v The Central Management of the Verizon Group the EAT had to decide appropriate penalties for breach of the statutory obligations.

Facts

Five members of the EWC Select Committee attended a meeting at which they were informed in strictest confidence that there was a proposed re-organisation that may lead to the termination of employment of a total of 216 employees throughout Europe. They complained that representatives from all countries affected should have been consulted and applied to the CAC in respect of the employer’s failure. Their request the employer fund the legal fees for their application was refused.

Decision

The CAC found that there had been a breach of the information and consultation requirements and that the employer had breached the requirements to fund the need for legal representation reasonably required by the EWC. The EWC then applied to the EAT for penalty notices to be issued against the central management board. The EAT considered that the appropriate penalty for failure to inform and consult was £35,000 and in respect of failing to pay the EWC’s legal representative’s fees £5,000.

Key point

There have been very few decisions in relation to penalties in respect of breaching EWC rules. The case highlights the potential costs for the employer. When arriving at the amounts it was taken into account that the maximum penalty for failing to properly inform and consult is £100,000 so the efforts made by the company did reduce this. In relation to the £5,000 penalty it was taken into account that the employer had paid the £10,000 fees incurred by the EWC immediately following the CAC decision. 

More information

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