The U.S. Army is used to giving orders and having them obeyed. But after it closed a base in England six years ago, one of the laid-off civilian employees questioned the action—and then dragged the Army into court. Now the European Union’s top court is posed to issue a ruling in the case that is poised to set a precedent on when employers have to inform workers about layoffs.
In March an advocate general of the European Court of Justice issued an opinion in the case, writing that employees must be consulted when there’s still a possibility of avoiding or reducing job terminations, or at least minimizing the consequences. According to the advocate general, the consultation would come too late if the employer had already made a final decision about layoffs, and too early if it happened before the employer had made any strategic or operational decision that might lead to layoffs. (The advocates general are officials of the Court of Justice who issue preliminary opinions in cases that appear to raise new points of law.)
While the Court of Justice doesn’t have to uphold the advocate general’s opinion when it rules on the U.S. Army case later this year, Hogan Lovells employment partner Elizabeth Slattery thinks there’s a good chance that it will, since the opinion is built on earlier precedent. “It is a reasonably significant decision,” she says. And while Slattery says the advocate general’s rather vague guideline for consulting employees isn’t very helpful, it could encourage companies to focus less on the timing and more on the substance of the consultation: “What is the strategic commercial decision that will set the discussion in motion?”
The Army’s troubles began in March 2006, when it decided to close a base in the village of Hythe near Southampton, England. The 200 civilian employees learned about the planned closure in April through a news leak to local media. The Army began consultations with local trade union representatives on June 5, and three weeks later every employee was notified that the layoffs would take place at the end of September.
The problem was that U.K. and E.U. laws requires employers to consult with employees at least 90 days before a collective layoff involving at least 20 workers. The consultations must cover not only ways to avoid a mass layoff or reduce the number of workers affected, but also ways to soften the blow through measures such as redeployment or retraining of affected workers. U.K. law states that the consultation must begin “in good time” and when the employer “is proposing” the layoffs. Christine Nolan, a civilian employee at the base, hauled the U.S. government before an employment tribunal, contending that the Army had not consulted with employees early enough to comply with the law.
After losing in the U.K. employment tribunal and on appeal, the United States turned to the U.K. Court of Appeal. The U.S. proceeded to argue that the obligation to consult does not apply to a proposed decision to close a plant, but only after the employer has made the decision. Because the question of when the consultation must take place is so important to employers in general, the U.K. Court of Appeal opted to refer the matter to the E.U.’s Court of Justice for a ruling.
The Army was represented at the tribunal stage by Lyndon James, a solicitor employed at the U.S. Air Force’s headquarters in the United Kingdom. The solicitors firm of Nabarro has been acting for the U.S. since the case went to the U.K. Court of Appeal. The firm declined to comment because the case is ongoing. After the European Court of Justice rules, the case will return to the U.K. Court of Appeals for a fact-finding determination of when the Army made a strategic decision that required consultation.