Luxembourg, 26/02/2007 (Agence Europe) - On 15 February, the Court of Justice decided in Case C-270/05 that a production unit can be considered as a separate “establishment” with regard to application of Directive 98/59/EC on mass redundancies. The Court did, however, state that the consultation exemption sought in this case does not apply.
In 2002 a Greek firm, Athinaiki Chartopoiia AE closed one of its three paper production centres and rescinded almost all employee contracts, without, however, carrying out consultations with the workers, as stipulated in regulation in force. Athinaiki drew on national legislation to argue that consultation obligations “shall not apply to collective redundancies arising from termination of an establishment's or operating unit's activities following a judicial decision”. Efeteio Thrakis (the Thrace Court of Appeal) refused to recognise this argument and argued that the production centre was only one part of the company, and there had therefore been no closure of the actual establishment. They argued that litigation consultations were compulsory.
The recent decision of the Court of Justice goes against this ruling, given the separate and distinct character of the operations of the unit in question. According to the decision, “a production unit such as that at issue in the main proceedings comes with the concept of 'establishment' for the purposes of the application of the directive”.
The decision rules, however, that even if the Court backs Athinaiki's position on interpretation of “establishment”, this does not abrogate its consultation obligations. National jurisdiction is, perhaps, used to granting such derogations when an establishment is closed by a voluntary decision of those in charge, but national legislation is clear: this should not be allowed when the end to business activity is due to a legal decision.
If the spirit of this legislation is followed by a legal referral, the interpretation of the unit as an “establishment” will not in any way benefit the employer in question. On the other had, Greek tradition in this domain would suggest a result in favour of the company, despite the warnings of the Court of Justice. (cd)