Collective Redundancies and the Dell High Court Case

The judgement in the case of Tagney & anor v Dell Products Limerick was delivered by Justice Birmingham on 26th day of June 2013. A full copy of the decision available on the courts website and we have referred extensively to extracts from the judgement below.BackgroundThe case arose by way of an appeal from a determination of the Employment Appeals Tribunal dated 5th June, 2012. Th EAT had dismissed a complaint on behalf of the applicant and twenty-seven others that the respondent had breached the terms of section 9 of the Protection of Employment Act, 1977 (as amended). The Rights Commissioner had previously concluded that the respondent had breached section 9 of the Protection of Employment Act 1977. Under section 8(4)(b) of the Employment (Information) Act 1994, provision is made for an appeal from a determination of the EAT to the High Court on a point of law, but the determination of the High Court is final and conclusive.On 8th January, 2009 the appellants and other employees received a written communication from their employer furnishing information as to the employer’s plan concerning rationalisation and restructuring within the plant. On the same day a staff meeting was held at which employees were briefed by senior management figures. After 8th January 2009 Dell engaged in a consultation and discussion process with the employees and their representatives known as the Site Communication Team. The applicants argued that what occurred on 8th January, 2009 (the written communication and the briefing at the staff meeting) constituted a notice of dismissal and accordingly that any discussion that took place thereafter came too late to be effective. In essence the appellants argued that any consultations post 8th January 2009 were too late whilst the respondent argued that what occurred on 8th January 2009 was sufficient to comply with their statutory obligations.LegislationJustice Bermingham referred to the Protection of Employment Act 1977 (as amended) and a number of sections thereunder:Obligation on Employer to Consult Employees Representatives.9 – (1) Where an employer proposes to create collective redundancies he shall, with a view to reaching an agreement, initiate consultations with employees’ representatives(2) Consultations under this section shall include the following matters –(a) the possibility of avoiding the proposed redundancies, reducing the number of employees affected by them or, mitigating their consequences by recourse to accompanying social measures, aimed, inter alia, at aid for redeploying or retraining employees made redundant(b) the basis on which it will be decided which particular employees will be made redundant.(3) Consultations under this section shall be initiated at the earliest opportunity and in any event at least 30 days before the first notice of dismissal is given10 – (1) For the purpose of consultations under section 9, the employer concerned shall supply the employees’ representatives with all relevant information relating to the proposed redundancies.(2) Without prejudice to the generality of subsection (1), information supplied under this section shall include the following, of which details shall be given in writing –(a) the reasons for the proposed redundancies.(b) the number, and description of categories, of employees whom it is proposed to make redundant,(c) the number of employees, and description of categories, normally employed(cc)(i) the number (if any) of agency workers to which the protection of Employees (Temporary Agency Work) Act 2012 applies engaged to work for the employer,(ii) those parts of the employer’s business in which those agency workers are, for the time being, working, and(iii) the type of work that those agency workers are engaged to do and(d) the period during which it is proposed to effect the proposed redundancies,(e) the criteria proposed for the selection of the workers to be made redundant and,(f) the method of calculating any redundancy payments other than those methods set out in the Redundancy Payments Act 1967 to 2007 or any other relevant enactment for the time being in force or, subject thereto, in practice.(3) An employer shall as soon as possible supply the minister with copies of all information supplied in writing under subsection (2).Justice Bermingham noted that the Act was designed to satisfy Ireland’s obligations under Council Directive 98/59/EC on the approximation of the laws of the Member States relating to collective redundancies consolidating earlier directives.Key IssueJustice Bermingham observed that the question was “whether the consultation process required by the 1977 Act commenced, as it ought to on 8th January, 2009 or whether a breach of section 9 of the 1977 Act occurred by reason of the fact that the respondent made a decision to terminate the employment of the applicant prior to 8th January, 2009, and on that occasion merely communicated a decision already taken, a decision which had been taken in the absence of consultation“.The court observed that the Rights Commissioner had concluded that the specific terms of the individual letters that issued on 8th January, 2009, made it impossible for the employer to comply with section 9. The appeal submitted to the Employment Appeals Tribunal was very specific in contending that the Rights Commissioner had misinterpreted the letters of 8th January, 2009 as a notice of termination of employment, when in fact the letters were no more than an indication to employees of the terms that would apply if they were made redundant. The EAT had referred to the opening remarks of counsel for the employer and the two cases Junk v. Kühnel (Case C-188/03) [2005] E.C.R. I-855 and Akavan Erityisalojen Keskusliitto AEK ry v. Fujitsu Siemens Computers Oy (Case C-44/08) [2009] E.C.R. I-8163.The EAT determination made reference to the submissions that had been made in regard to section 9 namely that:-The submission is that regarding s. 9 the employer ticks all of the requirements of s. 9.(1) The employer did not start the consultation too late.(2) By reference to the Fujitsu case there was no question of the employer having to consult any earlier because of the strategic to migrate was the employer [sic] decision and(3) There is no prohibition in the employer dismissing employees whilst the consultative process is ongoing provided …..The RC [Rights Commissioner] wrongly decided that the employer started to dismiss before consultation.Justice Bermingham quoted from the relevant extracts of the determination of the EAT:DeterminationHaving heard all the evidence and submissions of the parties, including Mr. G.H. who was self-represented, the Tribunal makes the following Determination.Regarding S.10 of the Act, the Tribunal upholds the Decision of the Rights Commissioner.Regarding S. 9 the employer is entitled to make a strategic decision and the Tribunal is satisfied that the meeting of 08th January 2009 was the commencement of this process. The Tribunal unanimously determines that the complaint by the Respondent is not well founded and the appellant employer is not in breach of S. 9 of the Act. Accordingly the Rights Commissioners [sic] decision is upset.Decision of the European Court of JusticeThe court observed that the question of when the obligation to consult arises has been the subject of a number of decisions of the European Court of Justice and of the British Courts. The court referred to he case of Junk v. Kühnel (Case C-188/03) [2005] E.C.R. I-855 which concluded inter alia tha the event constituting redundancy consists in the declaration by an employer of his intention to terminate the contract of employment. It is worth reading this decision in full. The court also referred to the case of Akavan v. Fujitsu Siemens Computers Oy (Case C-44/08) [2009] E.C.R. I–8163 which concluded inter alia that the obligations of consultation and notification imposed on the employer come into being prior to the employer’s decision to terminate employment contracts and that the employer has the obligation to start consultations with the workers’ representatives in good time if he is “contemplating collective redundancies. In referring to the case of United States of America v. Christine Nolan (Case C-583/10) (Judgment of the Court, Third Chamber, of 18th October, 2012) Justice Bermingham noted:”I have paid particular attention to the opinion of Advocate General Mengozzi in United States of America v. Nolan given that he was also the Advocate General in the Fujitsu Siemens case his opinion is particularly influential. He felt that the European Court of Justice was being asked to determine the trigger point for the employer’s obligation of prior consultation in the case of collective redundancy and more specifically that the referring court was uncertain whether that obligation arose when the employer was planning to make a strategic or operational decision which, foreseeably or inevitably, will lead to collective redundancies or only when that decision had actually been made and the employer is planning to proceed with the consequential redundancies….“. He also referred to the Advocate General Opinion at paragraph 49 which provided,:-“In my view, the method to be used by the referring court should be to identify which of the events mentioned in the order for reference which occurred before 5th June 2006 was in the nature of a strategic decision and exerted compelling force on the employer for the purposes of giving effect to the consultation obligation, and the date on which that decision was made.”ConclusionJustice Bermingham observed”Returning then to the decision of the Employment Appeals Tribunal in the present case it does seem to me that the determination approached the controversy before it as essentially one of fact and decided as a matter of fact that the communication by Dell on 8th January, 2009 did not constitute notice of dismissal and that the employer had commenced the consultation process at an appropriate stage. It seems to me that the reference to the entitlement of the employer to make a strategic decision in the concluding paragraph of the determination must mean that the Employment Appeals Tribunal was taking the view that the employer had, as it was obliged to do, embarked on consultation when a strategic or commercial decision compelling it to contemplate or plan for collective redundancies had been taken. If one looks at what happened subsequent to 8th January, 2009, further evidence emerges that the letters of 8th January, 2009 were not simply the communication of what was a fait accompli. Many of the matters of substance contained in the letter of 8th January changed between that date and the end of the consultation period on 27th March. A number of employees were redeployed and as a result their employment was never terminated, the actual leaving dates for several production lines were different from the dates suggested in the initial letters and there was a significant improvement in the severance package available to employees“.Justice Bermingham observed that the letter dated 8th January 2009 contained a specific statement that the content of the letter was for information purposes only and did not constitute contractual terms or conditions. In addition the section on “Leaving Dates” refers to estimated ranges of leaving dates and the section on severance payments referred to estimated severance payments and stressed that the calculations set out were estimates only.The court concluded”In these circumstances I do not believe that a point of law has been identified which would provide a basis for overturning the decision of the Employment Appeals Tribunal and accordingly I dismiss the appeal“.