BEERG Analysis - EWCs: Major CAC decision on...

On October 9 last, the UK’s Central Arbitration Committee (CAC) issued a decision which touched, inter alia, on the issue of legal costs incurred by EWCs in the course of taking complaints before it. The decision came in Case Number EWC/22/2019 9 October 2019 concerning the US company Verizon.

The first part of the decision covers the alleged failure of management to properly inform the EWC in “exceptional circumstances”. The facts of the matter in this case are unique to Verizon. As they are not core to the legal costs issue, we will come back to this issue in a future newsletter rather than cover them here.

Of more relevance and interest to BEERG members is that part of the decision which touches on a dispute about “legal costs” incurred by the EWC. You can read the full facts of the matter in the CAC decision here.

In summary, the EWC complained to the CAC that management had refused to allow it the expert of its choice, a Mr Buckle, a lawyer who at the time was with Cubism Law, and also complained that the company was refusing to pay Mr Buckle’s costs to represent it before the CAC. While Mr Buckle prepared the case he engaged another lawyer, Mr Harding, to present it on the day as he, Mr Buckle, said he lacked advocacy skills.

The CAC found that management had not denied the right of the EWC to have an expert of its choice and dismissed that complaint. It also found that just because Mr Buckle did not consider himself to be a good court advocate did not justify him in retaining Mr Harding and dismissed the claim for payment by management of Mr Harding’s fees.

However, the CAC did find that Mr Buckle was entitled to be paid as the “expert” to the EWC for appearing before the CAC on the day and for preparation time. At Point 58, the decision notes:

Mr Buckle informed the hearing that his own fees in relation to these proceedings totalled £10,000 plus VAT, consisting of 25 hours' work charged at £300 per hour prior to the hearing and £2,500 for the hearing itself…. The Panel considers these fees to be reasonable in the circumstances and has made orders accordingly …

A different panel of the CAC had previously considered the issue of legal costs for EWCs in Emerson. In its decision on that case the CAC panel noted: 

The Panel was asked to decide whether the EEEWC Agreement and TICER [the Transnational Information and Consultation Regulations] provide a right to legal representation to pursue a complaint before the CAC. The CAC is not a body where lawyers are required, and the CAC takes steps to ensure that an unrepresented party is not disadvantaged. The Panel does not consider that failure to pay legal costs as such constitutes a breach of this Agreement or of Regulation 19A of TICER.

In Emerson, management agreed on the day of the hearing that the lawyer who was acting as the EWC’s “expert”, the same Mr Buckle as it happens, would be paid for the day as management regarded the hearing as a “meeting”. Nothing was said about payment for preparation time in that case and because management agreed to pay for the day of the hearing the CAC made no further comment on the matter in its decision.

BEERG Comment : 

It seems to us that in Verizon the CAC panel has effectively ruled that EWCs may engage lawyers to file complaints on their behalf with the CAC and that management has an obligation to pay for the time involved in the preparation of such complaints as well as for representation on the day of the hearing. The “end run” around the Emerson language that “The Panel does not consider failure to pay legal costs as such constitutes a breach of this Agreement or of Regulation 19A of TICER” is that management is obliged to pay the costs of “expert” and experts may be lawyers. And if the “experts” act in a lawyerly fashion, well, so be it.

Experts

The Subsidiary Requirements say that:

5. The European Works Council or the select committee may be assisted by experts of its choice, in so far as this is necessary for it to carry out its tasks. 

6. … In compliance with these principles, the Member States may lay down budgetary rules regarding the operation of the European Works Council. They may in particular limit funding to cover one expert only.

Many agreements provide that the EWC may be assisted by an “expert of its choice”. 

However, there is nothing in the Subsidiary Requirements, (SRs), nor in most agreements, about what defines an “expert”, what an expert does, nor is there anything about the nature of their appointment. In particular, there is nothing in the SRs about how long an expert is appointed for. The Irish legislation says that an SR EWC may be assisted by one expert per meeting. But whether a meeting includes preparation time is left unstated.

However, we think it is safe to say that, until now, the general understanding of the role of any expert has been that he or she assists the EWC in preparing for the annual meeting, or exceptional meetings, with management. Back in the early 1990s, “expert” was understood as code for “union official”, there to coordinate the employee side in this strange new, multi-national, multi-lingual representative body.

The role of the expert has generally been seen as “internal” to the EWC process, as an advisor, rather than as an external representative. The expert brought knowledge of management/employee social dialogue processes, someone who could assist the conversation between management and the employees’ representatives. The role was that of a facilitator, not an adversary.  Of course, there have been exceptions to this with some experts pushing their own agendas and understanding of what EWCs should be about.

Support for this view of the expert as an internal advisor can be found in the Directive itself. Article 5.4 of the Directive reads;

For the purpose of the negotiations, the special negotiating body may request assistance from experts of its choice which can include representatives of competent recognised Community-level trade union organisations. Such experts and such trade union representatives may be present at negotiation meetings in an advisory capacity at the request of the special negotiating body.

Article 5.4 references trade unions officials. Such officials are well used to working as representatives or negotiators. Nevertheless, the Directive limits their involvement, like that of other experts, to an “advisory” role. There is no suggestion in the language in 5.4 that the expert can act as an internal representative, much less an external one. 

While the role of an expert to an SNB and an EWC are different, one to assist with a negotiations process, the other to help the EWC understand issues about which they may be informed and consulted, in neither process is the expert there to lead the EWC, much less to represent it externally.

Following the CAC decision in Verizon what is to stop any EWC, whether working under the Subsidiary Requirements or an agreement, deciding it is dissatisfied with some management proposal and announcing that it intends to lodge a complaint with the CAC and that it further intends to appoint a lawyer to act as its expert for the purposes of framing this complaint and subsequently presenting it to the tribunal? With no apparent limit on the number of times it can do this?

Where else in UK law is a defendant expected to incur and meet the legal costs of a complainant? Yet that is what the CAC decision to view legal costs as ‘expert’ costs under the TICE Regulations threatens to trigger. 

What happens if management refuses to agree beforehand that it will meet the costs of a legal expert running a CAC complaint on behalf of an EWC? Will the CAC be able to decide that such costs are justified and decide what they should be?  Does the CAC actually have the power to award costs, because that is what this would amount to?

In a document published in April 2010, Government Response to the Public Consultation: Implementation of the Recast European Works Council Directive: Draft Regulations, BIS, the then Labour government noted:

The Government takes the view that it is very far from certain whether the 2009 Directive requires the legal costs of EWC members to be covered by central management. The Government agrees with the EEF's comments regarding the unwelcome legal precedent that such an interpretation would create.

It seems to us that the panel decision on Verizon points in the wrong direction and probably runs counter to public policy as it currently stands.

Of course, no-one would wish to deny the EWC its right to file a complaint with the CAC when it believes that management has failed to honour its transnational information and consultation obligations. And it may well be proper that EWCs are entitled to be represented by lawyers before the CAC. But this is not something that should be done “through the back door” by allowing EWCs to make use of the right to appoint experts, originally conceived of for internal purposes, as external representatives. 

Nor should it be for a CAC panel to make such a decision. It should be a public policy decision, decided after debate by all relevant stakeholders. An appropriate framework on the use and funding of lawyers by EWC needs to be put in place, if they are to have a role in the process.   

In debating this issue the opportunity should also be taken to build a mediation step into the dispute process. There should be an obligation on the parties to make use of government-provided mediation and advice services where they exist, such as ACAS in the UK or the Workplace Relations Commission in Ireland. It is rare in the world of labour relations for a dispute to go directly from discussions between the parties to a court without the intermediary step of mediation.

BEERG member companies might usefully raise these issues with their industry and trade bodies in the UK.