Collective Consultation Obligations – Corporate

February 26th 2020

We were instructed by a US company in relation to its UK subsidiary on a recommendation from that company’s accountant, as they were unhappy with the service of their previous lawyers, one of the top London firms.  The issues were available and accessibility of the lawyers and also that the assistance given was not on a practical “hands on” basis, which this particular client required.  The client faced a choice between selling its UK business to a competitor or closing the operation down entirely.  From the employment perspective, this raised a number of issues and as more than 20 employees were affected collective consultation obligations came into play with regard to any potential redundancies, as well as the obligations to consult regarding the potential transfer.  The matter was further complicated by the fact that the potential transferee was located in another EU country.

There was no dedicated HR resource and those in the US were unfamiliar with English employment law so it was important to explain matters in a clear practical way and to draft all the documentation required.

There were a number of conference calls with the head office in the US and the proposed transferee, who had instructed their own legal representation in the UK.  Unfortunately, upon enquiry from the proposed transferee, we had to tell them that she could not act for them as well!  Although for commercial reasons the transfer did not take place, we were able to ensure that the client protected itself by undertaking the required collective consultation with its employees at the earliest opportunity both with respect to the proposals to transfer and with respect to the shutdown.  Individual consultation also took place in respect of the redundancies, and there was an ordered shutdown, without any legal problems.