After Brexit, amended regulations were introduced to deal with the issue of European Works Councils (EWCs) of companies whose central management was situated in the UK. The Court of Appeal has held in EasyJet plc v EasyJet European Works Council and anor that the regulations allowed existing EWCs to continue to operate.
Basic facts
Under the Transnational Information and Consultation of Employees Regulations 1999 (TICER), EasyJet was required to operate a European Works Council (EWC), giving employees the right to be consulted about transnational matters affecting them. In 2019, the Employment Rights (Amendment) (EU Exit) Regulations amended regulations 4 and 5 of TICER to take account of the UK’s exit from the EU.
In May 2020, the company announced plans to reduce staff numbers by up to 30 per cent, triggering a consultation process. In March 2021, the EWC submitted a complaint to the Central Arbitration Committee (CAC) about the way the company was engaging in the process.
The company argued that as the amendment regulations meant that TICER no longer applied in situations where the company’s central management was based in the UK (such as EasyJet), it no longer had to operate an EWC. As such, the CAC had no jurisdiction to hear the complaint. The EWC disagreed, arguing that although no new EWCs could be set up after the Brexit transition period, parliament had made clear that existing ones were to remain operational.
Relevant law
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”.
Regulation 5(1)(a) which had referred to situations in which central management was “situated” in the UK was removed. That left regulations 5(1)(b) and 5(1)(c) which referred only to situations in which central management was “deemed” to be situated in the UK.
CAC and EAT decisions
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.
The EAT (LELR 809) dismissed the argument, saying that it had to give the “natural and ordinary” meaning to the words in the regulations.
Court of Appeal decision
Whilst the Court of Appeal acknowledged that some aspects of the regulations could have been drafted better, the government’s intention was clear. That is, that existing EWCs could continue to operate, post Brexit. This conclusion was consistent with other provisions which were retained in the amended regulations as well as the Explanatory Memorandum that accompanied them.
With regard to regulation 4(1) specifically, the Court noted that TICER now applied where "the central management is situated in the UK". In other words, where it is “in fact” situated in the UK. As for regulation 5(1) of the original regulations which referred to a duty on undertakings to establish EWCs, the Court noted that it had had to be deleted. This change did not, however, remove existing EWCs from the ambit of TICER.
The Court also rejected the company’s argument that it would be “burdensome” to operate two EWCs – one in the UK and one in Germany. Although the arrangement might produce some practical difficulties, it was not “wholly unworkable”.
As the EWC had continued to exist in the UK, the CAC had jurisdiction to hear its complaint.
Comment
The idea that something Brexit-related was not thought through very well will shock many, but it lies at the heart of this decision. Everyone agreed that, subject to any transitional provisions, no new EWC could be created after 31 December 2020. The question was how to deal with the ones that already existed.
EasyJet argued that only those EWCs in companies where central management was ‘deemed’ to be in the UK could continue. If central management was actually in the UK then, like Cinderella’s coach, those EWCs would disappear in a puff of smoke at midnight.
The Court of Appeal acknowledged how some misleading words had led EasyJet into this magical thinking. However, they said, that belief flew in the face of common sense and somehow had to be rendered workable in the real world, even if that was not what EasyJet hoped for. The outcome of course was that the CAC did have jurisdiction and took back control of the case. Fancy that.