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In a significant development for European Works Councils ("EWCs") in Ireland, the High Court, in Charpentier v Verizon Ireland Limited, has set aside Labour Court determinations concerning Verizon's obligations under the Transnational Information and Consultation of Employees Act 1996 (the "TICEA"). The judgment provides important clarification on the interpretation of section 17 of the TICEA and its alignment with EU Directive 2009/38/EC on the establishment of a European Works Council (the "EWC Directive").
The EWC Directive, as transposed into Irish law by the TICEA and the European Communities (Transnational Information and Consultation of Employees Act 1996) (Amendment) Regulations 2011, requires multinational employers to set up information and consultation processes, most often in the form of a EWC or European Employees' Forum, for the purpose of informing and consulting with employees on a range of issues relating to transnational developments within the organisation. EWCs are comprised of employees' representatives from each country that is a member of the EU and/or the European Economic Area (EEA), in which an organisation has employees.
The obligation to establish a EWC is triggered when a company, or group of companies, meets the following criteria:
- at least 1,000 employees within the EU or EEA member states; and
- at least 150 employees in each of at least two different member states.
Background to case
Verizon had operated its EWC under UK law until shortly before Brexit, at which point the EWC agreement expired and negotiations to replace it broke down before agreement was reached. Verizon then decided to operate its EWC under Irish law, specifically the 'subsidiary requirements' contained in the Second Schedule to the TICEA.
On foot of its obligations under section 17(6) of the TICEA, which provides that "the members of the... European Works Council... shall be provided with appropriate training by their employers without loss of wages", Verizon organised training on the operation of EWCs in Ireland by independent legal experts for the EWC members. Four members of the EWC were not satisfied that the training provided met the requirements under the TICEA and attended a further training course provided by the EWC Academy in Hamburg, despite Verizon indicating that it would not cover the cost of this training.
In addition to the training, the members retained an expert from the EWC Academy to provide expert assistance to the EWC on a number of issues on the basis of section 17(1A) of the TICEA which entitles members of a EWC to "the means required... to represent the collective interests of employees". The issues covered included: reviewing the minutes of an EWC meeting; confirmation that UK delegates were no longer entitled to participate in the EWC; advice on an ultimately aborted possible transaction that Verizon was considering; and to assist with the preparation of its own internal rules. Despite the fact that the members had not sought pre-approval from Verizon for the cost of this expert assistance, Verizon did offer to pay some, but not all, of the costs.
On the basis of these two issues, members of the EWC filed complaints with the Workplace Relations Commission.
Workplace Relations Commission decision
Training
The Workplace Relations Commission (the "WRC") found that, as the training organised by Verizon satisfied its training obligations under section 17(6) of the TICEA, the decision of the EWC members to attend the additional training course provided by the EWC Academy, in circumstances where Verizon had made it clear that it would not cover the costs involved, was not in accordance with the spirit of cooperation required of the parties. Accordingly, the WRC found that Verizon was not required to repay the costs incurred by the EWC members for this additional training.
Expert Assistance
Further, on the question of the expert assistance obtained, the WRC found that while the EWC did require expert assistance as a result of the EWC migrating from the UK to Ireland, the fact that Verizon was not notified in advance that this expert assistance was being obtained, along with the extent of the expert assistance sought, meant that it was outside the 'means required' to which an EWC is entitled in order to carry out its functions. This ruling was made on the basis that the EWC had again failed to comply with the spirit of cooperation required of all parties. In relation to the expert assistance obtained, only the assistance obtained by the EWC to prepare its own internal rules was in fact necessary. Accordingly, the WRC ruled that Verizon was required to pay 50% of the total cost incurred.
The decision was appealed to the Labour Court.
Appeal to Labour and High Courts
The Labour Court dismissed the appeal which was further appealed to the High Court on a point of law. For detailed consideration of the Labour Court decision, see our briefing here: Labour Court rules on Verizon European Works Council cases
The following three issues fell to be determined by the High Court:
- whether the Labour Court's upholding of the employer's refusal to fund the members' attendance at the Hamburg Conference was an appealable point of law and, if so, whether the respondent's refusal was lawful;
- whether the Labour Court was correct in its interpretation of section 17 of the TICEA that the section does not cover a collective dispute; and
- whether the Labour Court erred in determining that Mr Charpentier's application for costs was moot where his appeals were not upheld.
Whether findings of fact regarding training were appealable
On the first point, the High Court dismissed the appeal, holding that the Labour Court's findings in relation to the nature and adequacy of the May training and the reasonableness of the employer's refusal to pay for the members' attendance at the Hambourg Conference constituted reasoned and rational findings of fact from which no appeal lay.
Interpretation of section 17 of the TICEA as regard collective disputes
On the other two points of appeal, the High Court ultimately found that the Labour Court made a number of errors of law in its decisions. Significantly, the Court held that the Labour Court erred in law by interpreting section 17 of the TICEA narrowly to exclude collective complaints. It also erred in law by finding that section 17 only protected individual members of the EWC in their individual capacity and in disallowing Mr Charpentier's in his capacity as chair of the EWC. The Court said that section 17(1A), which refers to representing "the collective interests of employees", must be read in light of Article 10 of the EWC Directive. The Court confirmed that the "means required" under Article 10.1 is not confined to legal capacity but may include financial and material resources necessary for members to exercise their rights. As the Court noted:
"Simply conferring legal capacity... would not be sufficient to enable them to represent collectively the interests of the employees. This is particularly so in Irish law, where an EWC does not have separate legal personality. The members of the EWC could not properly or effectively apply the rights arising from the Directive to collectively represent the interests of the employees without being given the means to do so."
Further, the Court did not accept that the imposition of criminal liability under the TICEA was a sufficient or adequate judicial process to comply with the effective judicial process requirements of the Directive and the principle of the effectiveness of EU law. The Court found that the Labour Court failed to examine whether the expert's advice obtained by the EWC was necessary and appropriate as expert costs properly incurred by the EWC for the purpose of applying the rights arising from the Directive which were to be provided by central management.
Treatment of application for costs
In addition, the Court criticised the Labour Court's cursory treatment of Mr Charpentier's application for costs simply because the appeals were not upheld. The Court said that, while the Labour Court may not normally have jurisdiction to award costs under national rules, it should have considered the application for costs and/or compensation even where the appeal was not upheld in order to comply with section 17(1A) of the TICEA and the principle of effectiveness under EU law. The Labour Court: "should have considered whether it could, or should, permit an EWC or an employee to seek agreement from central management to reimburse all or some of the legal expenses associated with the claim on the basis that those expenses were necessary to satisfy the requirement of section 17(1A) that an EWC member or employee representative had the means required to apply the rights conferred by the Directive."
The Court set aside these parts of the Labour Court's determinations and remitted the matter to a different division of the Labour Court. It also awarded Mr Charpentier 90% of his costs. However, the orders are stayed, pending the outcome of Verizon Ireland's application to appeal to the Supreme Court.
Implications
The judgment creates several practical considerations for employers; the most significant being that collective disputes and claims for expert assistance may now fall within section 17 of the TICEA. The High Court ruling also makes clear that employers will need to assess whether reimbursement for expert advice, including legal expenses, is necessary to ensure effective enforcement of rights. The judgment reinforces the importance of strict compliance with obligations under the TICEA and the Directive, particularly in relation to funding arrangements and the level of support provided to members. In addition, it signals that legislative changes to clarify these issues may be required sooner than the standard two-year transposition period for the updated Directive recently agreed in Brussels. For more information on the reviewed EWC Directive recently agreed, see our briefing here: Revised European Works Councils Directive adopted by the EU
The authors would like to thank Emma Mullahy for her contribution to this briefing.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
