Job retention plan to ease access to employment for redundant workers

Given the differing views of trade unions and employer organisations concerning the new job retention plan, the Minister of Labour and Employment, François Biltgen, decided to explain the philosophy behind such an approach. Minister Biltgen outlines that the job retention plan aims to proactively promote the retention of workers in employment during company restructuring exercises and to avoid, as far as possible, the need to negotiate a redundancy scheme.

Provisions of job retention plan

Legislation of 22 December 2006, which came into force on 1 January 2007, introduces a legal obligation on employers to notify the Committee for the Economy (Comité de Conjoncture) of any lay-offs for reasons that do not relate specifically to the individual in question. The committee can then invite the social partners to negotiate a job retention plan (LU0701049I). Instead of carrying out redundancies, the job retention plan introduces the idea of temporarily reorganising working hours by means of partial unemployment, part-time work and reduced working hours, provided that the workers concerned attend training sessions.

Other compulsory elements of the job retention plan concern the temporary lending of human resources to other companies and individual support with career changes. Once the retention plan has been approved by the Minister of Labour and Employment, the measures concerned are entitled to receive the support of state funding.

Employment security versus job security

As the trade unions and employer organisations had varying views with regard to the new plan, the Minister of Labour and Employment, François Biltgen, explained that the philosophy behind this policy involves organising the smoother labour market transfer of employees in companies that are experiencing difficulties. This approach implies taking action and introducing alternative measures before resorting to a redundancy scheme. For example, the minister contends that keeping workers in their job over a period of six months will allow sufficient time for retraining, thus enabling employees to move into a new employment context.

Anticipatory management and social dialogue

While the aforementioned new legislation does not oblige companies to draw up a job retention plan, it does require such a plan to be discussed. In practical terms, to ensure that this approach works, companies are required to engage in anticipatory discussions regarding the management of their personnel long before they resort to measures responding to economic difficulties. To encourage employers to adopt such an approach, the job retention plan is entitled to receive state funding, in particular for the training of workers who are liable to lose their jobs as part of a restructuring plan.

Minister Biltgen emphasises that the advantage of such a process for employers is that it enables them to avoid a redundancy scheme, which invariably has a negative impact in that it puts customers off and undermines suppliers’ confidence. Moreover, a job retention plan is less costly than a redundancy scheme both for the company and for the community, given that employees are facilitated in changing jobs without having to engage in an intervening phase of unemployment benefit.

Individual restructuring cases

Although the recent legislation concerning job retention plans had only reached the draft phase at the time, certain aspects of this approach – particularly those concerning support and training – were already being applied in 2006 in the restructuring programmes of Villeroy & Boch, TDK and Monopol.

Although the final impact of the measures adopted is not yet known, and the three cases are not necessarily comparable, Minister Biltgen outlined the actions taken during these three restructuring programmes. In the case of the ceramics manufacturer Villeroy & Boch, the state provided €85,000 in funding for the company’s training fund, from which 13% of the employees who were made redundant benefited. An internal outplacement programme was also set up.

At the recording media business TDK, 56% of the employees who were made redundant found new jobs before the end of their notice period, while 70% of employees were monitored by an internal outplacement programme. Funding amounting to €350,000 was allocated for the training of the employees involved in the restructuring at TDK, 47% of whom benefited from the scheme.

In the case of the retail chain Monopol, the minister described the initiative implemented by the Luxembourg Trade Confederation (Confédération Luxembourgeoise du Commerce, CLC), which sought to ensure that the company’s personnel were taken on by other companies belonging to the employer federation before any redundancy plan was drawn up.

Odette Wlodarski, Prevent