Commission issues package of measures to reduce social impact of redundancies

A new package of measures designed to reduce the social impact of large-scale job cuts was issued by the European Commission in May 2001. The package contains: commitments from the Commission concerning various areas of Community legislation; advice to companies on their obligations under the existing Community legislative framework; promises of funding assistance from the European Social Fund; and an overview of best practice.

On 10 May 2001, the European Commission announced a package of Community initiatives to "help companies and workers to adapt successfully to business change", focusing especially on "advance preparation and management of corporate restructuring operations". The package had been prepared before the recent controversial restructuring announcements at the UK-based retailer Marks & Spencer and the French-headquartered food group Danone (FR0104147F). However, there is little doubt that these recent announcements and the subsequent industrial unrest have added momentum to the Commission's plans.

In the package, the Commission makes a number of commitments regarding legislative measures. First, it states that it will "in the coming weeks" finalise an amended version of its proposal for a Directive concerning national-level information and consultation of workers, last discussed by the Council of Ministers in November 2000 (EU0012285F). Second, it will press for an early adoption of the proposed Directive on worker involvement in the European Company Statute, on which political agreement was reached on 20 December 2000 (EU0101290N), but which has yet to be formally adopted by the Council of Ministers, pending the opinion of the European Parliament. The Commission also states that it will launch a review of the European Works Councils (EWCs) Directive (94/45/EC)"in the near future". Pressure for a review of the EWCs Directive from employee representative groups, including the European Trade Union Confederation (ETUC), has been building for some time (EU0001221N) and the Commission issued a report on the implementation of the Directive in April 2000 (EU0005248F).

Further Commission activities outlined in the package include a promise to examine the interaction between Community competition law relating to mergers and acquisitions and their social consequences. In addition, the Commission states that it will consult with the social partners on how to develop "corporate social responsibility" in the context of corporate restructuring. It would also like to accelerate the creation of the proposed observatory on industrial change. This initiative was suggested in Managing change, the November 1998 final report of the high-level group on the economic and social implications of industrial change (the "Gyllenhammar group") set up by the Commission (EU9805106N). The proposal, supported by the social partners, was taken up in the Commission's June 2000 five-year social policy agenda (EU0007266F) and confirmed in the December 2000 Nice European Council conclusions (EU0012288F). The observatory, also named the European Monitoring Centre on Change has been entrusted to the European Foundation for the Improvement of Living and Working Conditions in Dublin

In terms of practical help in the context of restructuring, the Commission states that it will promote the use of all active labour market measures, including those financed by the European Social Fund. It maintains that this could mean that funds may be earmarked for particular depressed regions and sectors.

The Commission also mentions establishing conciliation, mediation and arbitration mechanisms at Community level, stating that it will examine this issue. It adds that work at expert level is already underway on this issue and that the social partners are "soon" to be consulted (this initiative was included in the Commission's current social policy agenda).

An annex to the Commission's package contains a list of companies' legal obligations under the EU Directives on: transfers of undertakings(77/187/EEC) (revised in 1998 by Directive 98/50/EC); collective redundancies (98/59/EC, consolidating a 1975 Directive); and EWCs. It also includes a checklist for corporate "best practice" when undertaking restructuring, as follows:

• inform and consult employees at the earliest opportunity on the anticipated business environment and business prospects;

• involve all stakeholders in the design of restructuring plans;

• keep redundancies to a minimum through redeployment within the company or alternative employment;

• promote the employability of the workforce and life-long learning at all times;

• provide additional specific training for those likely to be adversely affected by restructuring;

• be prepared to help fund the creation of alternative employment through supporting specific projects or establishing a special development fund; and

• be willing to use outside mediation to achieve solutions acceptable to all parties.

Launching this package of measures, the Employment and Social Policy Commissioner, Anna Diamantopoulou, stated that: "Businesses now operate in a global environment which demands dynamic and adaptable companies. If adaptation to change is part of a company's mental make-up and involves the workforce throughout, the company will reap the economic benefits of loyalty from workforce and customers. Smart businesses know this and are already doing it right. Failure to get it right can be costly."