Belgian labour court rules against French company over redundancy procedures

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In March 1998, the French-owned textiles group, Pennel et Flipo, was required by a Belgian Labour Court to pay BEF 20 million to the workers it had dismissed in 1994 when it closed down its production unit in Belgium. The Court found that the closure had amounted to a transfer of production to its parent company in France, and that redundancy procedures had not been followed.

On 29 June 1994, the management of the French-owned company Pennel et Flipo, which produces coated fabrics for the car industry, told the works council at its plant at Warcoing near Tournai in Belgium that it intended to close the factory. The actual closure was decided by the board of directors on 16 August 1994. Three-quarters of the 94 workers were dismissed whilst 23 were moved to the parent company in Roubaix, France to do the same job as they had done in the unit that was closed down.

For the Tournai Labour Court, ruling in March 1998 in a case brought by the 48 dismissed workers, the latter fact belied the argument of economic grounds advanced by the management to justify the closure. Accordingly the Court, accepting the argument of the dismissed workers, found that there had been a transfer of production to the parent company and another company, a former subsidiary of the group that was still performing subcontracted work on its behalf.

The Court also found that the decision to close down the firm, taken in fact immediately after the works council meeting on 29 June 1994, had not complied with the legal procedure for the information and consultation of workers' representatives. Consequently the textiles company was sentenced to pay BEF 20 million to the dismissed workers by the Labour Court.

This ruling has refined Belgian case law in matters of workers' rights in the event of a firm's transfer. It came several months after the Liege Labour Court's dismissal of the Boston Scientific workers' case. After the closure of the group's Belgian factory, those workers had taken the case to court, claiming that the economic grounds given had in fact concealed a transfer of activities to the Irish parent company (BE9712126F). In addition, on 20 March 1998, Louis Schweitzer, managing director and chair of Renault, was sentenced to pay BEF 10 million for failing to comply with Belgian laws and collective agreements at the time of the 1997 closure of Renault's Belgian headquarters at Vilvoorde (BE9704208N).