International agreement on restructuring at Danone biscuits

A new international agreement was concluded in October 2001 by the French-headquartered food multinational Danone and the international trade union organisation for foodworkers, IUF. The accord sets out the social provisions to be applied in the context of the company's restructuring plans for its European biscuits division, announced in March 2001. It contains a number of commitments, including a pledge not to make any compulsory redundancies, to try to find new owners for sites due to close, to provide appropriate training and to guarantee salary levels for a year.

On 25 October 2001, the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers' Associations (IUF) and the management of Danone, the French-based food multinational, signed an accord on the social provisions which are to be applied in the group's biscuits division factories in Europe which are affected by restructuring. Danone's plan to restructure its biscuits division was announced on 29 March 2001 (FR0104147F).

Consultations

The new accord extended until 31 October 2001 the consultation period for discussion of the restructuring plans. This consultation period opened on 29 March, with the announcement of the restructuring plans. This extension was put in place 'in order to allow for the completion of necessary discussions'. The agreement states that during the consultation period, unions had an opportunity to submit alternatives to the group's restructuring plans. Danone's March announcement set out the group's intention to close six plants and reorganise other plants in Belgium, France, Hungary, Ireland, the Netherlands and the UK, involving a total of 1,780 job losses

However, the agreement also stresses that this will not affect agreements on redundancies which are being negotiated by unions representing employees in the group's affected entities.

IUF states that unions have indeed had the opportunity during this extended consultation period to negotiate and conclude accords on social plans in Belgium, Italy and the Netherlands. Further, an IUF-appointed expert conducted a study on the situation in Hungary and was then able to submit a proposal for a 'credible' alternative to the company's proposed plan in that country. This alternative plan would keep the Györ plant open and save between 200 and 300 jobs at that site.

Continued operations

Danone is keen to ensure that the operations that it intends to close are continued in some form. In the agreement, it makes a commitment to 'do whatever is necessary to ensure that alternative operations – preferably of a manufacturing nature – are started, or existing ones expanded'. Ideally, these would be at or near all the facilities which are scheduled to be closed. This is in keeping with the employment measures contained in the company's industrial restructuring plan. If facilities are transferred to new owners, the group pledges to try to ensure that all or part of the workforce is kept on.

Danone gives a commitment to guarantee future employment to all workers affected by the restructuring and to 'give due consideration to the occupational or personal situation of each'. However, the accord also states that this can be achieved only if employees participate actively in their redeployment through the adoption of individual action plans.

The group therefore makes a commitment not to make any compulsory redundancies expect where employees have refused all proposals for future employment or where they have 'persistently demonstrated passive behaviour' regarding any future employment opportunities.

Closure of facilities

In the event of the closure of a facility, Danone states that if a new operation is started up at or near the facility, it will arrange for the new employer to hire as many of the facility's former employees as possible. If employees are hired by a new employer at or near the location of the facility or by a local employer which is not part of the Danone group, Danone makes the following commitments:

• to pay for or provide training in order to allow its former employees to attain the necessary competences to qualify for jobs with the new employer;

• to put into place a trial period for employees in their new jobs. During this period, the employees would remain on the payroll of their former employer. The length of this period should be negotiated locally, although it should not be less than four weeks and may be extended once;

• to provide that employees who decide not to take on a job may have the option of another position with a different employer under the same terms and conditions;

• to ensure that if employees are transferred to another Danone facility, they will be entitled to the same benefits, with the exception of the trial period;

• to provide for exceptions in specific cases, such as if the trial period is unsuccessful for reasons beyond the employees' control. The text of the accord does not make it clear what would happen in this case, although a press release issued by IUF has interpreted it as meaning that the employee could return to employment with Danone under certain circumstances;

• to ensure that employers hiring employees of closed Danone facilities offer permanent employment contracts. However, a temporary contract may be offered if this is common practice at the company concerned and provided that it is reasonable to anticipate that the job will become permanent within a given period;

• to seek to find jobs for its employees at 'generally comparable pay rates'. If this is not possible, Danone will make up all or part of any shortfall in earnings, for the same working hours, for a period of at least one year; and

• to allow employees who are transferred to other firms and are then laid off once more to use all of Danone's placement services.

Where employees are transferred to another Danone facility, the group makes a commitment to offer permanent employment contracts, uninterrupted seniority and all necessary training. Further, basic pay will remain unchanged and the new job should, wherever possible, be in the same category as the previous job. Additionally, the group makes a commitment that these employees shall not be laid off for at least two years after their transfer. These employees shall also be subject to the trial period provisions which cover the transfer of employees to facilities outside the group.

All negotiations on the implementation of redundancies shall be conducted at local level. If employees wish to start up their own business, the group will make available to them company resources such as access to training, counseling and assistance services and financial and practical aid.

Monitoring

In order to ensure that agreements negotiated at national or company level, within the framework of this accord, are properly implemented, joint union-management bodies will be set up at all of the group's entities affected (or will be given this role, if such bodies already exist). Employee representatives on these bodies will be given regular lists of employees and an update of proposals made by Danone in response to employee demands. These bodies will monitor developments while the restructuring plan is being carried out and for up to 24 months after the departure of an employee (or longer if necessary, by local agreement).

At European level, a 'joint extended steering group' will be created. This body will be provided with a consolidated situation of each undertaking. It will be charged with the examination and conciliation of any conflicts arising at local level, at the request of IUF on behalf of the IUF-affiliated local union concerned.

Roles of the parties

The agreement also sets out the roles and obligations of its signatory parties. For its part, IUF undertakes to communicate and explain the provisions of the accord to its affiliates. It will also ask its affiliates to cooperate with local management, in accordance with the principles contained in the accord, with a view to favouring talks and negotiated settlements.

For its part, Danone undertakes to communicate and explain the accord to its local managers and to ensure that its individual enterprises implement the accord 'properly and in full'.

In the event of a dispute between an IUF-affiliated organisation and local company management, IUF and Danone undertake to support joint local efforts to reach a negotiated solution. If the dispute cannot be settled at local level, IUF and Danone undertake to arrive at a negotiated settlement.

Commentary

This accord is the latest in a growing number of international accords in multinational companies. Recent such accords include a joint declaration on subcontracting signed in June 2001 at the French-based leisure group Club Méditerranée (EU0108231N), which was a joint text agreed between company management and its European Works Council (EWC), and global agreements signed during the first few months of 2001 by international trade union organisations at the French commerce group Carrefour, the Swedish construction group Skanska and the Spanish telecommunications group Telefónica (EU0105213F). What marks this Danone accord out from the rest (and from a number of previous IUF-Danone agreements) is that it is a direct response to restructuring plans announced, somewhat controversially, six months previously (it is thus similar to agreements recently reached with EWCs at Ford[DE0004254N] and General Motors[BE0109301F]). The text contains a number of important commitments on the part of the company, including a pledge to seek new owners for plant marked for closure, and a commitment not to make any compulsory redundancies and to provide resources such as training. One of the most significant provisions is the promise to guarantee salary levels for a period of one year.

This, then, represents an important achievement for IUF and a good example of best practice in a restructuring situation on the part of Danone. There is also a will to ensure that the accord is properly implemented, as it will be overseen by a joint body. The parties are also concerned to ensure that restructuring will be anticipated in future – IUF and Danone have also agreed to organise regular sector-specific international meetings every three years in the group's biscuits, beverages and fresh dairy products divisions in order to exchange information and provide a detailed analysis of each product line. (Andrea Broughton, IRS)