BEERG Perspectives - Brexit, Ireland and EWCs

The Trade and Cooperation Agreement (TCA), the “Brexit Deal”, concluded between the EU and the UK provisionally came into force at midnight, Brussels time on December 31, 2020. It will subsequently have to be approved by the European Parliament. You can access the 1,200+ page agreement HERE

This note looks at the language in the agreement on

• Labour and social standards and their implications for European Works Councils (EWCs). These provisions can be found on page 200 of the TCA, and 
• The continued use of British-based EWC experts, especially in EWC agreements that will in future be based in Ireland.

At the outset, it is worth keeping in mind that, as of midnight, Brussels time, on December 31, 2020, the UK put itself completely outside the EU’s economic, political, and legal framework, with some exceptions with regard to Northern Ireland. The EU and the UK are now two, completely separate legal systems, even if legacy EU law will continue to have an impact in the UK through its previous incorporation into domestic law.

UK law can have no binding authority outside of the UK. UK law stops at the new UK/EU border. That fundamental fact is not changed by the TCA.

Labour and social standards in the TCA

The relevant provisions read:

What is clear from the above is that it is the intention of the two parties to the agreement, the EU and the UK, that existing labour and employment laws that are in place at the end of the transition period should stay in place. 

6.1.1 suggests that what is being referred to are EU-derived laws, “that are applicable to and in, and are common to, all Member States.” So, laws unique to individual Member States are not covered, and this applies also to the UK. 

However, 6.2.2 leaves open the possibility that labour laws may be “weakened or reduced” provided that it is done in a manner that does not affect “trade and investment between the Parties”. All existing EU labour and employment laws have been transposed into UK domestic law. Clearly, the intention is that these laws will stay in place for the foreseeable future and be enforceable through UK courts and tribunals. The lower UK courts and tribunals will continue to be bound by historic CJEU case law, though the superior courts, such as the Supreme Court, will be free to reinterpret case law as it sees fit, and depart from it, if deemed appropriate.

None of this creates any sort of immediate issue, unless and until the UK government and Parliament decides to change or rescind any exiting employment or labour law. Things will continue as before. Keep in mind that The European Union (Future Relationship) Act 2020 gives ministers unprecedented powers to changes laws without parliamentary approval if deemed necessary as a result of the TCA so changes could come more quickly than anticipated. (See this Twitter thread on the powers of UK Ministers: HERE)

The exception, of course, is European Works Councils, because the completion of Brexit has consequences for these transnational, European employee information and consultation bodies. See this note from the European Commission last April on Brexit and EWCs HERE. It does not seem to us that the EU/UK agreement has changed what is said in the Commission’s note in any material way.  

Four questions present themselves.

1. Can EWCs continue to be legally based in the UK?
2. Do UK employees’ representatives have a continuing legal right to sit on EWCs?
3. If the answer to (2) is “no” then what meaning does 6.1.1 (d) – “information and consultation rights at company level – have?
4. Do UK based “experts” have a continuing right to work with EWCs?

Questions 1, 2 and 4 are relevant to SNBs as well.

The first point that must be made is that a 1,200+ page agreement negotiated over a nine-month period, with significant breaks in the time available because of Covid19, is bound to be full of inconsistencies and ambiguous language. Exact meanings will have to be worked out over time. For example, what does it mean in practice to “weaken or reduce” labour standards “in a manner affecting trade or investment”? How extensive must the effect on trade and investment be? What metrics are to be used in making such a decision?

Subject to the caveat about the interpretation of the agreement, in answer to Questions 1, 2 and 4 we think the answer is no, there are no continuing EWCs rights available to the UK. However, we are aware that other parties take a different view and believe that the labour provisions in the EU/UK agreement means that TICER continues to apply and that EWCs can still be legally based in the UK, and that UK representatives still have a legal right to participate in EWCs. Until advised otherwise, we believe that the EU Commission’s NOTE of last April still remains definitive and that arguments to the contrary are without merit.

As we see it, EWCs are transnational bodies subject to European Union law and the jurisdiction of the Court of Justice of the European Union. During the negotiations, it was the reddest of red lines for the British government that, after December 31, 2020, the UK would be completely outside the jurisdiction of the CJEU. 

So, as UK law is no longer subject to EU law and the jurisdiction of the CJEU, EWCs cannot be based in the UK. That facility automatically fell away at midnight on December 31, 2020. Simply put, EWCs cannot legally be based in a country that is not subject to the jurisdiction of the CJEU. It would make a nonsense of EU law to claim otherwise. 

Companies that may be tempted to leave their EWCs in the UK for whatever reason need to be aware that when this is judged to be legally impossibly, they could find that because they have failed to nominate a “representative agent” in the EU in the jurisdiction of their choice, their EWC has automatically defaulted to the country in which the “group undertaking which employs the greatest number of employees is situated”. That may not be a welcome development. 

For the same reasons, employees in the UK can no longer have a legal right to participate in EWCs, though they may be included by agreement between the EWC and management, just as representatives from any other non-EU/EEA country can be included. 

There may be language in particular EWC agreements that could appear to contradict this, but such language would have been written before Brexit and could now be deemed to be invalid in light of the EU/UK agreement. 

Of course, there is nothing to stop both management and the EWC mutually agreeing to invite UK representatives to attend the EWC as guests or observers, just as they can invite guests or observers from any non-EU country. 

However, if it is agreed to invite UK representatives to attend as guests or observers then it is important to be clear that “circumstances or decisions” that may arise in the UK should fall outside the scope of “exceptional circumstance”. How could they be within scope if the UK is outside the framework of EU law and the jurisdiction of the CJEU? 

If, as we believe, UK representatives have no legal right to sit on EWCs, what meaning can be attributed to 6.1 (d) “information and consultation rights at company level”? Clearly, an EWC is not concerned with ‘information and consultation rights at company level’. Rather they operate as a forum for the provision of information and consultation at a transnational, European level. 

Further, “Community-scale undertakings (as transnational corporations are referred to in the EWC Directive) are often made up of multiple, legally separate companies, further underscoring the point that “company” can only mean “company” within a national context.    

Therefore, we think that the only valid meaning that can be ascribed to this is existing UK legislation on “national-level information and consultation” as set out in The Information and Consultation of Employees Regulations 2004 (Statutory Instrument 2004 No. 3426) and as subsequently amended (for details see HERE). 

We do not believe that it implies some form of “UK EWC” as UK law stops at the UK border and can have no force beyond that and cannot impose obligations on other countries to cooperation in the establishment of “UK EWCs”. 

Which is not to say that Unite the Union may not try to push the point and refer a test complaint to the Central Arbitration Committee. However, given the political and policy orientation of the current UK government it is unlikely to be sympathetic to anything that could be seen as involving “Europe” in UK employee relations and would be likely to register such views with the CAC, and/or with other UK courts. It is a reasonable assumption that the UK business community would not welcome the development of “parallel UK EWCs” and would quickly make such views known to relevant government departments.

Attempts to suggest that, somehow or other, UK law provides for a continuing right to legally base EWCs in the UK and that UK representatives have a legal right to remain EWC members are rearguard actions which attempt to deny that Brexit has consequences.  

UK-based experts

An issue of importance that may immediately present itself is whether EWCs can continue to be advised by UK-based “experts”.

We believe the answer to be “no”, particularly with regard to EWCs that will in future work under Irish law. We believe this to be the case for the following reasons:

1. An article in the Financial Times 30/12/2020 reads:

The draft agreement states that UK lawyers can only provide legal advice on UK or international public law in a member state where they have been permitted to practise, but also that they must not advise on “Union law” as well as the laws of individual member states. (See Pages 553 and 759 of the EU/UK agreement)

2. Now, if qualified lawyers cannot advise on “Union law”, then neither can “unqualified consultants” or even union officials, especially in the case of EWC working under the Subsidiary Requirements, where, essentially, what is being offered is advice as how the Subsidiary Requirements are to be interpreted, which would appear to be legal advice.
3. Further, in  Ireland the Legal Services Regulation Act 2015  (especially this section) makes it a criminal offence to provide legal advice on any matter without being registered with the Legal Services Regulatory Authority. Registration is confined to Irish qualified barristers and solicitors. The Act came into force in 2018 and a non-legal consultant cannot now provide legal advice in Ireland. Irish law clearly blocks such services being provided by anyone who is not an Irish registered barrister or solicitor. 

Section 2 of the Act defines “legal advice” to mean any oral or written advice:

1. on the application of the law (whether the law of the State, another state or the European Union, international law, or a combination of these) to any particular circumstances that have arisen or may arise in relation to a person, and
2. as to any actions that might appropriately be taken by or on behalf of a person (whether the person referred to in paragraph (a) or another person) having regard to the application of the law to those circumstances,
3. but does not include an opinion on the application of the law provided by a person to another person in the course of—
   1. lecturing in or teaching an area of the law, as part of a course of education or training,
   2. writing or editing a book, report or article, or
   3. carrying out research in an area of the law, for the purpose of enhancing the other person’s knowledge of the area concerned;

“Practising barrister” means a person who—

1. is a qualified barrister, and
2. provides, or holds himself or herself out as providing, legal services as a barrister—
3. whether or not for a fee,
4. whether or not under a contract of service or a contract for services, and
5. whether or not, in so doing, he or she describes himself or herself as a, or otherwise uses the title of, “barrister”, “barrister-at-law” or “counsel”;

To be clear. As it stands, it would appear that Irish law would prevent anyone who is not registered with the Legal Services Regulatory Authority in Ireland from providing advice which could be construed as legal advice to an SNB or an EWC. This would include legal experts from other EU countries.

The expression “providing legal services as a barrister” is to be interpreted in accordance with section 2(4)(b) of the 2015 Act which provides: -

A person provides legal services as a barrister where he or she does one or more than one of the following:

(i) in relation to proceedings before a court, tribunal or forum for arbitration, whether in the State or in another jurisdiction, or the Personal Injuries Assessment Board—

(I) represents another person before that court, tribunal, forum or Board in those proceedings,

(II) prosecutes or defends such proceedings on behalf of another person,

(III) advises another person in relation to the conduct of the proceedings,

(IV) represents and advises another person for the purposes of arriving at or giving effect to any settlement in the proceedings, or

(V) draws or drafts documents for another person in contemplation of, ancillary to or in connection with, those proceedings;

(ii) provides legal advice to another person;

(iii) draws or drafts legal documents for another person that have the purpose of securing or transferring for a person a legal right or entitlement;

(iv) represents or acts for another person in a situation where legal rights or obligations of a person are being, or are likely to be, created or such rights or obligations are, or are likely to be, in dispute.

The full reach of the Legal Services Regulation Act 2015 has never been tested in the courts and it could be argued that denying an EWC the right to an expert of their choice is in breach of the terms of EWC Directive, Irish legislation on the provision of legal services notwithstanding. But unless and until such a ruling is handed down by the appropriate courts, we believe that management is entitled to take a view on the matter and to refuse to pay experts offering legal advice to EWCs unless those experts are registered with the Legal Services Regulatory Authority. 

4. There is a third barrier to UK-based EWC advisors. The EU/UK agreement simply makes no provisions for such services. Annex Servin 4 of the EU/UK agreement deals with the services that may be provided by a service provider or independent professionals. See Page 755/59 ANNEX SERVIN-4: CONTRACTUAL SERVICE SUPPLIERS AND INDEPENDENT PROFESSIONALS 
5. There is an exclusive list of services that can be provided by British independent professionals within the EU. If something is not on the list, then it is out of scope. Among the services that can be provided are “Management consulting services” and “Services related to management consulting”. 

We are of the view that advising an EWC cannot be squeezed under either of these headings. It is either legal advice, which is excluded (see above) or it is industrial relations/employee relations advice which is not included on the list. So, if management agreed to the use of British-based experts they could possibly be deemed to be acting illegally and in breach of the EU/UK agreement and national laws in EU Member States. 

6. SNBs and EWCs can, of course, be advised by non-legal experts of their choice from any EU/EEA country. The EU/UK TCA, in our view, does not facilitate the provision of such services from experts based in the UK. 

Disputes

Like any complex agreement various provisions in the EU/UK agreement may be open to different interpretations. So, if UK “experts” are excluded – union officials or consultants – that interpretation could be disputed. But the only procedure for the resolution of disputes over interpretation of the EU/UK agreement is for one party – either the UK government or the EU – to write to the other and begin a procedure that could run for well over a year. Somehow or other, we do not believe that the first order of business for either the EU Commission or the UK government will be to trigger the disputes procedures over “UK-based EWC experts”.

Could an EWC/SNB complain to the Irish Labour Court (or courts in another county) over the exclusion of a UK-based expert? Possibly, but, as the Irish Labour Court has itself consistently pointed out, it is a creature of statute and cannot exercise a jurisdiction that is not expressly conferred on it by an Irish statute or an EU Directive. 

If the exclusion is based on the above EU/UK treaty grounds the Labour Court would likely take the view that it has no jurisdiction to interpret an international treaty between the EU and the UK. Further, the treaty falls outside the jurisdiction of the European Court which rules out the Labour Court referring the matter to it. The same consideration would arise in other countries.

Conclusion                                                              

In summary, it seems to us, based on the text of the EU/UK agreement:

1. UK employees’ representatives will have no legal right to sit on EWCs as and from January 1, 2020.
2. However, they can be invited to participate as guests or observers. We would advise that such participation should be on the proviso that they do so on terms and conditions that exclude events in the UK from the scope of “exceptional circumstances”.
3. The words “information and consultation at company level” are to be understood as referring to national-level information and consultation and not to any type of “UK EWCs”
4. It appears that the EU/UK agreement precludes UK-based lawyers from advising EWCs as they are specifically prevented from advising on “Union law”. The same applies to non-legal experts from the UK
5. The EU/UK agreement makes no mention of employee relations or labour relations advice as coming within the range of issues that “independent professionals” can offer within the EU. Advising EWC cannot be regarded as “management consulting”.
6. There are additional barriers in Ireland to offering legal advice. It is a criminal offence to do unless you are an Irish-registered solicitor or barrister. 

EWC experts present management with a unique challenge. In all other circumstances, when management agrees to pay for outside experts or advisors, they do so after a due diligence process to ensure that such advisors are legally compliant. It is a management decision. With EWC experts, management is expected to fund the costs but have no say in whom the EWC appoints as its expert. 

The consequences of Brexit and the TCA have created unforeseen complications in respect of UK-based EWC experts.

• Does the TCA allow such services to be offered to EWCs within the EEA territorial area; or
• Is such advice outside the scope of what is permitted by the TCA; and
• What constitutes legal advice and what does not?

If such advice is deemed to be outside the scope of the TCA what risks does management run if it agrees to fund such advice despite having no say in the matter when it comes to picking the expert or advisor? 

When in doubt, it’s always wisest to say no.