BEERG Note - CAC accepts HBSC’s EWC move to Ireland

We updated BEERG members in early July on two recent cases considering the idea of “UK law EWCs”: easyJet and HSBC. The Central Arbitration Committee has now made a second decision in HSBC.

Recap of the CAC’s first decision

In its first decision in HSBC, the CAC was asked to decide whether HSBC had unlawfully excluded UK employees from HSBC’s EWC. This was despite the EWC agreement referring to only EEA employees being entitled to representation and the UK having ceased to be treated as if it is a member state of the EEA on 31 December 2020. 

In summary, the HSBC EWC’s position was that HSBC had breached the EWC agreement as, following the EU Exit Regulations introducing a concept into UK law of a “Relevant State” meaning either a member state of the EEA or the UK, references in the EWC agreement to a member state of the EEA should be construed as references to a “Relevant State”. In turn, this would mean that HSBC should not have excluded its UK employees from its EWC.

HSBC’s position before the CAC was that, whilst the CAC should of course not rewrite its EWC agreement in this way, the CAC should not even consider whether it could do that. This was because it didn’t have jurisdiction for the same reasons raised by easyJet’s UK parent company and it should pause its considerations pending the Employment Appeal Tribunal addressing this issue. 

In response, the CAC recognised that HSBC had properly raised an issue of whether it had jurisdiction to hear the complaint. However, undeterred by that, the CAC chose to proceed with determining the complaint in HSBC’s favour without worrying itself with the question of whether it actually had any power to do that.

Importantly and as a direct result, the CAC also sidestepped the question of whether, as HSBC argued, the EWC agreement is now governed Irish law. However, the CAC did leave it open for the HSBC EWC to ask it to provide an answer to this and the question of jurisdiction if it requested that by 13 July 2021.

The CAC’s second decision

On 12 July 2021, the HSBC EWC requested the CAC to proceed to determine the question of whether, as HSBC argued, the EWC agreement is now governed by Irish law.

The question of jurisdiction

The CAC decided against staying this complaint pending the EAT hearing easyJet on its jurisdiction since the end of the UK’s Brexit transition period. Instead, it invited HSBS’s simultaneous comments on the questions of the CAC’s jurisdiction and the EWC agreement’s governing law.

Despite having expressly asked for HSBC’s position on its jurisdiction, the CAC then sidestepped that question once again and determined the question of governing law without first establishing whether it had any power to do so. In particular, the CAC was clear that it had “not given any consideration to the question of jurisdiction under amended TICER for the purpose of this decision and nothing in this decision should be taken as expressing the Panel’s view on any of the submissions relating to that question”.

It is nevertheless notable that HSBC’s position on jurisdiction and why the same CAC Panel Chair had previously incorrectly decided easyJet was based on decisions from the UK’s highest appeal court on why courts must interpret legislation by giving it its natural and ordinary meaning. Whilst BEERG members may therefore not rely on what is in the CAC’s decision, they may nevertheless take comfort from its glaring omission of even any attempt by the CAC Panel Chair to defend her rewriting of UK law in easyJet and her conclusion in that case that what Parliament had enacted is “irrelevant”.

Governing law

The main part of the CAC’s decision concerned HSBC’s designation of HSBC Ireland as its new representative agent with effect from 1 January 2021 and its position that there had been a resulting change in the law governing the EWC agreement to Irish law despite the absence of an agreement between HSBC and the HSBC EWC to amend the EWC agreement in this way.

In a very welcome decision for BEERG members, the CAC categorically dismissed the HSBC EWC’s complaint and position that the EWC agreement remained governed by English law. In particular, the CAC concluded that on HSBC’s position of updating references in the EWC agreement from:

• HSBC in the UK to HSBC in Ireland:

“once HSBC Ireland had been designated as the representative agent for the purposes of the Directive.. it would have been anomalous for the Agreement to continue to state… that for the purposes of the Directive the central management was situated in the United Kingdom. The Panel has therefore concluded that it was a necessary consequence of the change of representative agent to HSBC Ireland that the Agreement should be amended to reflect that change and rejects the submission that the amendments… were made in breach of the Agreement because the amendments were not agreed by the EWC…  it would be anomalous for the text of the Agreement not to reflect the new reality regardless of whether the EWC had explicitly consented”; and

• English law to Irish law:

“once the Employer’s central management ceased to be situated in the UK for the purposes of the Directive… the Agreement ceased… to be subject to TICER. The Panel does not consider that the Employer was unilaterally and illegitimately removing itself from TICER’s scope as the Complainant contended; rather it was a consequence of the link (and severance of the link) between the situation of central management for the purposes of the Directive and the governing law laid down in unamended Article 2.3, itself a product of agreement between the parties… the Panel regards [HSBC’s amendments] as a necessary consequence of the application of Irish law to the Agreement following the designation of HSBC Ireland as the representative agent. The removal of any reference to English law in those articles… does not, in the Panel’s view, constitute a breach of the Agreement”.

Finally and in response to the HSBC EWC’s position that the CAC might somehow retain jurisdiction to hear disputes even if the EWC agreement were governed by Irish law, the CAC dismissed any notion that it would act as an arbiter of Irish law disputes:

“The CAC is a creature of statute whose jurisdiction does not extend to TICEA or other provisions of Irish law. The Panel does not consider, therefore, that Article 19.4 can be relied upon to retain the CAC’s jurisdiction under the Agreement over disputes or claims arising out of the Agreement”.

Conclusion

It is important to note that this decision was based on the wording of HSBC’s particular EWC agreement. BEERG members should therefore carefully consider the particular wording of their own agreements if they face challenges on having moved their EWCs from the UK in light of Brexit.

Every aspect of this decision is nevertheless favourable for businesses seeking to put Brexit uncertainty behind them as the CAC has:

• refrained from even attempting to defend its flawed decision in easyJet that UK law provides for the existence of duplicate UK EWCs alongside EWCs based in the EU/EEA;
• finally recognised the reality that the UK has left the EU and that businesses are free to conduct themselves in line with EU law irrespective of Brexit’s consequences in the UK; and
• confirmed that its remit does not extend to deciding questions of Irish law.

Of course, these conclusions should always have been inevitable. But having them actually confirmed by the same CAC Panel Chair behind easyJet gives hope that there might now finally be light at the end of the tunnel after a series of recent dubious CAC decisions.