The European Works Council – no paper tiger after all?

A supplier to the automobile industry, “Tenneco”, wanted to shut down its site in Gijon, a town in Northern Spain. The company group’s headquarters are situated in the U.S..

 The European directive 2009/38/EG stipulates that a company is required to instruct and listen to the European Works Council about a planned operational change before implementing certain measures. The directive requires the information and consultation to be “efficient”. According to Art. 1 para 2 of the directive the rights of the European Works Council should be applied in a fashion that ensures their effectiveness. The aim is to achieve an agreement between the European Works Council and the company.

 The Higher Court of the Province of Asturia has now decided, that – in order to ensure the effectiveness of the aforementioned rights – Tenneco is not allowed to close a site as long as the European Works Council has not been properly consulted. The Court stated that Tenneco’s decision to close the site in Gijon had apparently already been made in the company group’s headquarters in the U.S. long before the European Works Council got involved. Therefore, an agreement and compromise was in fact no longer possible. In the event that the consultation is entirely in vain because the European Works Council no longer has a possibility to influence the process, the consultation is not properly executed. The court consequently deemed all terminations invalid resulting in the employer’s obligation to continue paying all of the employees.

 Therefore, an early consultation and documentation of the consultation process are crucial to the successful implementation of business measures.