Controversy over job retention plan at RBC Dexia

Following the announcement of job cuts at the investor services company RBC Dexia, due to the relocation of certain activities to Asia, its management requested negotiations at the end of 2009. The talks aimed to devise a ‘job retention plan’. However, negotiations remain at a standstill and questions have been raised about the recourse to such an instrument in this case – particularly in terms of the scope and suitability of the plan.

Reorganisation at RBC Dexia

In September 2009, the management of RBC Dexia – a services company for institutional investors owned by Dexia and Royal Bank of Canada (RBC) – announced the relocation of its accounts department to Malaysia. At the time of the reorganisation, 110 jobs in Luxembourg were under threat. RBC Dexia had specified that it wanted to achieve the job cuts ‘mainly through the reduction of outside personnel’. Thus, neither fixed-term nor interim employment contracts were renewed. Subsequently, negotiations with a view to establishing a ‘job retention plan’ were initiated.

Principles of job retention plan

A job retention plan seeks to find alternative solutions to economic layoffs. It is therefore a combination of various measures seeking to adapt the workforce while keeping personnel in work – possibly in another company, in another position within the company, or by introducing part-time work.

The job retention plan must enable, within the framework of social dialogue, alternative solutions to be found so that employees threatened with redundancy are not confronted with unemployment.

Details of plan

Negotiations on the job retention plan at RBC Dexia took place between trade union representatives and the company’s management. The talks centred around the measures under consideration in the plan. According to the trade unions, the parties had reached agreement on 10 measures, which included the following:

• internal and international mobility possibilities;

• two forms of working time reduction;

• three forms of career breaks with the right to return to work;

• early retirement adjustment measures;

• two forms of voluntary departure – that is, for young entrepreneurs and for reconversion training with a focus on new jobs.

The trade union representatives agreed to these various measures because of a point of common interest: job maintenance and/or a degree of employee security. The representatives believed that the measures would be sufficient to enable the management to meet its objectives in due course.

Questions raised over plan

Debate over contract cancellation clause

However, conflict arose – mainly over the 11th measure in the job retention plan. The measure had been requested by the company management and concerned the issue of ‘voluntary’ departure with immediate cancellation of the contract through common consent and with financial compensation.

For the trade unions, such a measure is contrary to the philosophy of a job retention plan, since a cancellation of this kind would give workers no security, prospects or right to any social security coverage or unemployment benefit. Therefore, the trade unions believed that this measure had no place in such a plan.

Scope and suitability of plan questioned

Furthermore, questions were raised over the viability of an instrument such as a job retention plan. According to the trade unions, the viability of such a plan relates to the possibility for the company’s entire workforce to access the measures enshrined within the plan, with the proviso that the organisational needs are met. Indeed, measures such as internal mobility or part-time work can be hard to implement without adopting an overall approach. Therefore, there was no question that the measures would only be accessible to staff members who were directly affected by the reorganisation.

A further question concerned the suitability of such a plan in this particular case. A job retention plan is mainly intended to help companies that are confronted with particular difficulties. The country’s Labour Code stipulates that the two sides of industry, at the appropriate levels, can take a common initiative to start discussions with a view to creating a job retention plan, if they anticipate financial or economic problems that could have a negative impact on company jobs. However, in this case, the reorganisation measure was clearly not the consequence of particular economic difficulties but due a strategic choice of positioning made by the company’s management.

Role of Economic Situation Committee

Moreover, it is mandatory for job retention plans to be brought before the country’s Economic Situation Committee, which examines their contents and, if appropriate, submits them to the Minister of Labour for approval. In the event of failed negotiations, a report recalling the contents and conclusions of the discussions is signed by all the parties and subsequently sent to the Chair of the Economic Situation Committee.

Odette Wlodarski, Prevent