Junk v Kuhnel
The European Court of Justice (ECJ) has clarified the position on an employer’s duty to inform and consult with employees in a collective redundancy situation. In this case, the ECJ held that a redundancy takes place when the employer communicates his intention to dismiss the employees and not when employment relations have come to an end (when the actual employment contract is terminated). Notice therefore has to be given after collective consultation has taken place. This process must include consultation with a genuine view to reaching an agreement and must at least, include ways and means of avoiding collective redundancies or reducing the number of workers affected.
Mrs Junk was employed by AWO Gemeinnûtzige Pflegegesellschaft Sûdwest mbH (AWO) as a care assistant and domestic carer. AWO became insolvent and Mrs Junk was given notice by the liquidator (Mr Kûhnel) on 27 June 2002 that he intended to terminate the contracts of employment and carry out a collective redundancy as a consequence of the closure of the company, effective from 30 September 2002. Mrs Junk brought her claim against the liquidator on the grounds that he had not given her correct notice under the Collective Redundancies Directive 98/59 (“the Directive”) before making her redundant.
Mrs Junk argued that, relying on a particular interpretation of the Directive, her redundancy was ineffective since Mr Kûhnel had failed to properly consult her works council prior to her being given notice of dismissal.
The German Labour Court referred the question on interpretation of the Directive to the ECJ, seeking clarification and guidance on when the information and notification procedures laid down in Article 2 and 3 of the Directive should take place. The Directive stipulates that employers are obliged to comply with the information and notification procedures before the redundancies are effected, but left the term “redundancy” undefined.
The ECJ, agreeing with the German Labour Court’s assessment, held that the key issue regarding redundancy in this case referred to the expression of the employer of his intention to bring the employment relationship to an end. The UK Government submitted its observations to the ECJ on this matter, arguing that “redundancy” must refer to the point at which employment relations come to an end. The ECJ however declined to accept this reasoning, since it would mean that an employer could dismiss employees for redundancy during the consultation period so long as the consultation was complete before the notice period expired.
The ECJ was in agreement with the German Court that the line of reasoning put forward by the UK Government would be incompatible with the spirit and letter of the law and decided that redundancy takes place where notice of the potential redundancy is announced by the employer and not when the actual employment contract is terminated.
The main point to draw from this case is that an employer should not declare his intention to terminate individual contracts of employment until after the conclusion of the collective consultation process. It is clear from the ECJ judgment that it expects employers to embark upon genuine consultation with employees or their representatives, aimed at reaching agreement, rather that simply going through the motions where the employer’s mind is already set on making the redundancies.
Additionally, the ECJ considered the timing of provisions in the Directive relating to the notification to public authorities of the collective redundancy. It decided that contracts could not be terminated, in the sense of the giving of notice rather than the actual termination of employment, until after the appropriate national authority had been notified.
Employers therefore risk protective awards being made against them if they issue employees’ termination notices early, even if they are purportedly undertaking the collective consultation process. Clearly this has significant cost implications for employers, who should ignore this clear message from the ECJ at their peril.