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£40,000 in penalties for failure to inform and consult

The Employment Appeal Tribunal decision in Verizon European Works Council v Verizon Group highlights the risk of bypassing established statutory mechanisms for informing and consulting with the workforce. Where these arrangements are national works councils or European Works Councils (EWCs), this can lead to penalties of up to £75,000.

Under the arrangements in place at Verizon, the employer had to inform and consult with the EWC in advance of redundancy decisions being made. However, instead of doing this, on 21 December 2018 Verizon invited the EWC select committee to a meeting it described as confidential. At the meeting, the employer informed the EWC members them that it intended to make 216 redundancies in eight European countries (out of a total European workforce of 5,599) and that the redundancy process would start two weeks later.

Although the EWC select committee raised an internal complaint, the employer went ahead regardless. The parties attempted arbitration but the arbitrators did not come to any conclusions. The EWC made a complaint to the Central Arbitration Committee, which was upheld.

The EAT has now imposed a £35,000 penalty on Verizon for failure to inform and consult. It decided that:

  • The proposed reorganisation must have been in the employer’s mind well before 21 December 2018.
  • The employer had supplied the required information to the appropriate members of the EWC too late for a proper consultation before a final decision was made.
  • The employer had made a final decision without giving the EWC proper opportunity to have any meaningful input

Where these arrangements are national works councils or European Works Councils (EWCs), this can lead to penalties of up to £75,000.

The EAT also issued a £5,000 penalty for Verizon’s refusal to pay the reasonable expenses relating to the negotiations that were necessary to enable the EWC to carry out its functions appropriately.

In any proposed restructure or redundancy, it is always vital to be aware of obligations to inform and consult before the decision to go ahead has been taken. For advice on this and related matters, contact our specialist team.

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