The Appellant, the HSBC European Works Council (“the EWC”), and the Respondent Employer (“HSBC”) were party to a European Works Council Agreement (“the Agreement”) under which the central management was located in the United Kingdom. The UK was, at the time of the Agreement – October 2015 - a member state within the European Economic Area (“EEA”). This appeal concerns the effect of Brexit on the Agreement after the UK ceased to be a member state of the EEA. HSBC took the view that for the purposes of the EU Council Directive 2009/38 EC (“the Directive”) the UK could no longer be the location of the central management under the Agreement and, on 4 December 2020, gave notice that as from 1 January 2021, it would (amongst other matters) designate a representative agent in Ireland to assume the role of central management, exclude HSBC’s UK business from the scope of the Agreement and exclude UK Representatives as members of the EWC. The EWC objected and brought a complaint before the Central Arbitration Committee (“CAC”). By a decision dated 22 June 2021 (“the First Decision”) the CAC concluded that the complaint was not well-founded. By a further decision dated 11 August 2021 (“the Second Decision”), the CAC concluded that further complaints as to HSBC’s failure to comply with certain terms of the Agreement were also not well-founded. The Appellant appealed against both decisions of the CAC by way of two separate appeals.

The EAT dismissed the appeal. the CAC had not erred in its interpretation of the Agreement. The parties had expressly contemplated that there could be changes to the scope of the Agreement dependent on whether the Employer’s operations expanded or contracted so as to include or exclude a Member State, and it could not be said to be outside the contemplation of the parties that the scope could also be affected by changes in EU membership status. In other words, the Agreement was intended to include operations in Member States as they are from time to time. After exit-day, the UK could no longer be where central management was located for the purposes of the Directive. This had the effect of changing the scope of the Agreement by operation of law. The other changes as to the applicable regulations and choice of law followed from that change and were consistent with the terms of the Agreement.