According to the CJEU, administrative authorization for collective redundancy is only in line with EU law when it does not deprive employers of any possibility to make workers redundant
Greek law states that in the absence of an agreement on a ‘social plan’ with the workers’ representatives employers can only undertake any collective redundancy procedures if the labor administration does not oppose such a procedure. The Luxembourg courts do not in principle see authorization by the administration as running counter to EU law and in particular to Directive 98/59 on collective redundancies. Nonetheless in a decision handed down on 21 December, the judges did admit that such authorization could run counter to EU law if the administration’s authorization could encourage workers’ representatives not to engage in social dialogue in so far as they could rely on the backstop of the administration’s refusal to authorize and thus deprive the employer of the possibility of making workers redundant. The case considered had a cross-border element as it considered a Greek subsidiary of a French business group (Lafarge). The CJEU added that the administration authorization system intended by the legislation actually runs counter to freedom of establishment as enshrined in the EC Treaty.
Directive 98/59 and administrative authorization. From the outset of the dispute on Greek soil, AGET Iraklis, a Lafarge subsidiary, invoked that Greece’s legislation ran counter to EU Directive 98/59 on collective redundancy, which requires worker involvement in the negotiations over and procedure for any social plans. In fact Greek national law says that in the absence of any agreement with the workers’ representatives over a social plan, employers can only proceed towards redundancies if the labor administration does not oppose such a move. The administration’s decision must result from ‘examining the documents in the file and assessing the conditions in the labour market, the situation of the undertaking and the interests of the national economy’.Yet AGET Iraklis held that the competent public authority in question systematically opposed every one of the redundancy projects the company had sent to it for review, which resulted in the workers’ representatives frequently refraining from participation in consultations over potential solutions to both avoid or reduce the number of forecast layoffs and soften the consequences of the redundancies.
In a decision handed down on 21 December the CJEU recalled that ‘the substantive conditions to which the ability of the employer to effect or refrain from effecting collective redundancies might be subject are not covered, in principle by the provisions of Directive 98/59 and consequently remain a matter for the Member States’. In other words Directive 98/59 does not influence the causes of redundancy decisions, and when authorization is already intended for by national legislation nor does it influence the criteria upon which an administrative authority can base its authorization decision.
However, the Directive does guarantee the rights to information, consultation, and negotiation with worker representatives. It also requires that the competent public authority is notified and that redundancies can only take effect after a certain notice period within which the relevant public authority should seek solutions to the problems posed by the intended redundancies. Against this backdrop, the CJEU holds that if in principle the administration’s authorization is compatible with the Directive then it cannot also be so if an authorization system ‘taking into account its detailed arrangements and the manner in which the relevant competent public authority actually implements it’ in fact deprives the employer of all effective possibilities to make workers redundant.
This is because in the judges’ interpretation, the Directive is useful since it requires that ‘collective redundancies, once all procedures as instituted by these provisions, including the case where consultations did not secure any agreement, nonetheless remain a possibility.’ It is for the national courts to verify if this is the case.
Administrative authorization and freedom of establishment. The plaintiff company also invoked that the freedom of establishment was being constrained (article 49 of the TFEU) by the administration’s authorization. This argument stemmed from the fact the case has a cross border element in so far as the plaintiff is a Greek subsidiary of a French business group. For the judges, the cross-border freedom of establishment ‘implies the freedom to determine the nature and size of the business activity which will be deployed in the hosting Member state and especially freedom over the size of the permanent installations and the number of workers required for this, as well as (…) subsequently the freedom to reduce the volume of the business activity or abandon it and if appropriate terminate the establishment.’ As part of this freedom a multinational business must thus be able to make workers redundant and since the Greek body’s authorization did not allow this multinational to alter its business in line with the circumstances this was a violation of a fundamental freedom. For the judges the authorization in question cannot be salvaged: its ‘assessment criteria are formulated in very general and imprecise terms’, ‘without any indication of the specific objective circumstances in which those powers are to be exercised’, and ‘the employers concerned do not know in what specific objective circumstances that power may be applied, as the situations allowing its exercise are potentially numerous, undetermined and indeterminable and leave the authority concerned a broad discretion that is difficult to review’. The Greek legislation thus runs contrary to the freedom of establishment for the subsidiary of a foreign business group.