Recently, the British Central Arbitration Committee (CAC) published two interesting decisions on two different complaints, one by the EWC of the UK company Vesuvius and one by the EWC of the US company Verizon (see also: The Central Arbitration Committee (CAC) outcomes in cases Verizon and Vesuvius EWC’s and 6 important lessons that can be learned from these two cases).
The decision of the CAC panel on the Vesuvius case was published 11 December 2019. The EWC had filed a complaint that during the Information & Consultation procedure (I&C) on a restructuring it had not been sufficiently informed. More specifically, the EWC had not received, even though requested, an overview of the overall redundancy costs. Company management used many arguments supporting their views not to deliver this information such as:
- An overview of the costs of the overall redundancy was not available;
- This data was not even provided to the board of Directors;
- Providing such financials would disadvantage the company because at local level the negotiators would use it the get the best possible redundancy packages;
- Asking for this data shows that the EWC wants to play a role in the local redundancy negotiations.
- Anyway the redundancy costs are only small.
The CAC panel was not too impressed with most of these arguments. It noticed that the EWC had asked for an overall figure of the likely restructuring costs, including the redundancy costs. The EWC did not ask for a breakdown of the redundancy cost per country, which might indeed have interfered with local redundancy negotiations. Even if the Employer could have legitimate concerns with regard to the sharing this information with members of the EWC who represent countries affected by the proposed restructuring, the CAC considered that the Employer could have supplied the information requested on a confidential basis to the Select Committee.
The company had denied that it had a central redundancy budget. Yet it could not deny that it had made a “provision”, as distinct from a “fixed redundancy budget” in respect of possible redundancy costs. Knowledge of these provisional costs forms, in the CAC’s view ‘an integral part of the financial costs of a restructuring without provision of which the EWC will not have the “full picture” as to the commercial rationale for, and financial costs of the restructuring exercise. That the level of such costs might only be a relatively small element of the overall costs of the restructuring does not alter this conclusion. The overall figure sought would assist in understanding the rationale and financial basis for the transnational restructuring proposal without engaging with the local or national process with which the EWC was not, and in which it did not seek to become, involved.’
The CAC argued that even in the likely event that the overall redundancy costs requested had not been collated centrally at the time of the request, the information which the EWC had requested ‘could have been collated by the Employer reasonably quickly – especially given the relatively limited number of countries involved, and the fact that the local redundancy consultation procedures were to commence concurrently with the EWC consultation process, so that likely redundancy costs would need to be calculated in those jurisdictions in any event in reasonably short order.’
Neither did the CAC accept the Employer’s argument that the EWC should not be provided with more information than that provided to the Employer’s board of directors. The issue here is compliance with the terms of the EWC Agreement and the TICE regulations. This is in no way related to the information provided to the board of directors which is a matter of corporate governance.
The argument that the costs were only small relative to other costs involved in the restructuring was also dismissed. It is ‘not a relevant consideration given that the Agreement’s purpose is ensure suitable transnational consultation with regard to issues concerning employees. There is no de minimis threshold which applies to transnational matters falling within the scope of the Agreement or indeed any other EWC agreement unless specifically negotiated and agreed in the relevant EWC agreement. Without disclosure of the information requested the EWC would not have the whole picture with regard to the likely financial costs of the restructuring or be in a position to understand whether or not the likely overall costs were indeed small in relative terms as the Employer contended.’ In other words: management might well say that a certain cost item is relatively small, but the EWC has the right to see that for themselves.
It is interesting that in this case the CAC did follow the management’s argument, that actually ‘behind’ the EWCs information request, lay another motive: to play a role in the local negotiations.’ In the ill-famous Oracle case, the CAC panel dealing with this case, had ruled that some of the information requests of the EWC ‘might imply’ that the EWC sought to reverse the management decision. Since this presumed role was not within the legal remit of the EWC, the CAC panel dealing with the Oracle case ruled that these questions need not be answered. In the Vesuvius case, the CAC panel did not accept the alleged motives that management attributed to the EWC. The management had asserted that ‘the EWC was frustrated by the limits of transnational information and consultation and that it understood that the EWC sought to play a more interventionist role at local and national level when there was a transnational event and to obtain information relevant to local redundancy consultation and negotiation.’ To do so, the EWC had – at least implicitly- asked for a breakdown per country of the redundancy costs, the company alleged. The CAC had no mercy with this argument. “Given the detail of the dialogue between the parties and the level of experience of EWC agreements on both sides, had the EWC sought redundancy costs for each of the relevant countries, it would have done so explicitly” the CAC Panel responded. This gives at least some relief for EWCs that might have feared on the basis of the Oracle decision that assuming certain ‘implicit motives’ is enough justification for management not to answer particular questions.
Nine days later followed the publication of the decision of the CAC panel that ruled on a complaint that was filed by the EWC of Verizon. This was already the second complaint this EWC filed in 2019 (see also:‘“Pay the Lawyer!” blog 5/25). This case too, dealt amongst other issues,with the right to receive information. This time, the EWC was less successful, although this was on the grounds of practical facts, not on principles. The EWC felt that it had not received sufficient financial information about a restructuring process. The management claimed that according to the EWC Agreement, the right to consultation of the EWC was only limited to the impact on employees because the Agreement stated ‘that information provided by Central management will be so that the employees’ representatives can form an opinion on the possible impact on employees’. This CAC panel commented that it was ‘not convinced’ that the EWC’s right was limited to be only about the impact on employees. However, since the EWC had not exactly specified what additional financial information was specifically lacking, the EWC’s complaint was dismissed. As to the general question of what is sufficient information, the CAC agreed that there is no “bright line” test to determine whether the information provided by an Employer is sufficient in any given context. The CAC agreed with the EWC that in order to fulfil its role it must understand a decision and the rationale for that decision. The CAC appreciated that the EWC felt that some of the questions it had raised had not been answered but since the EWC had not specified what these questions were, the Panel was unable to consider that contention further.
Likewise, another element of the complaint was dismissed on practical grounds. In an e-mail, the Employer had declared the information and consultation processes unilaterally to be closed before the EWC had given its opinion within the specified 14-day period and before any response to that opinion had been provided. After the EWC had written to management to it could not deliver its Opinion since too much information was missing, the management announced that it decided to take this statement as an Opinion and again declared the I&C to be closed. The CAC would have taken the view that the complaint on the premature closing of the I&C process was well-founded were it not that the EWC had declared during the hearing that it still understood that it could have provided an Opinion within the given timeframe, even after receiving this e-mail. Before the case hearing, the company had already apologised for using inaccurate wording in the disputed e-mail. Given all this, the CAC concluded that the e-mail declaring the information and consultation processes unilaterally to be closed, had been wrong. The company did not have the right to call the I&C process to a close in this way. However, in the end this had not disadvantaged the EWC in the view of the CAC.
Sjef Stoop, EWC trainer and advisor, March 2, 2020
