Quality framework for anticipating company change and restructuring

In December 2013, the European Commission proposed a quality framework to encourage employees, social partners and regional and national agencies to follow best practice in anticipating company change and restructuring. The framework covers issues such as the strategic long-term monitoring of market developments, continuous mapping of jobs and skills needs, and measures to help individual employees, such as retraining and assistance in finding new jobs.

Background

In January 2012, the European Commission published a Green Paper on restructuring and anticipation of change (EU1201041I). It led to the publication of a report drawn up by Spanish socialist member Alejandro Cercas, known as the Cercas Report, which was endorsed by a large majority of MEPs and led to a call from the European Parliament in January 2013 for action from the Commission (EU1301021I). On 13 December 2013, the European Commission responded by issuing a Communication on an EU Quality Framework for anticipation of change and restructuring (164KB PDF).

The new quality framework requires better identification and monitoring of certain principles and good practices in anticipating change and managing restructuring by companies and by public authorities.

Key elements of the framework

The framework sets out best practice for the anticipation and monitoring of restructuring for each of the parties involved.

Employers’ obligations

To anticipate change, employers’ strategic planning should consistently involve employee representatives, and should cover forward planning for the jobs and skills the business will need, strategic long-term monitoring of the company’s economic and financial situation, and monitoring of technological and market developments. Measures should be taken to target individual employees such as flexibility measures, training plans and career development measures. External partnerships should also be forged with different regions, education and training institutions and within the business environment.

To manage restructuring, good practice includes building internal consensus via a joint diagnosis, thereby providing comprehensive information and consulting with employees at an early stage. Personalised support should also be given to employees whose redundancy cannot be avoided. External actors should also be involved at an early stage.

Employee representatives’ obligations

Good practice for employee representatives to anticipate change involves continuous mapping of companies’ jobs and skills needs and measures to help individual employees, including the promotion of internal and external mobility.

In the management of restructuring good practice includes taking a collaborative approach to establish a joint diagnosis with management. Employee representatives should also agree on company-specific procedures for dealing with restructuring. Representatives should follow up on and contribute to the design and implementation of all measures put in place to support employees and assistance should be given to employees who are being made redundant. They should also participate in external partnerships, broader networks and other mechanisms that can support individual workers.

Individual employees’ obligations

To anticipate change, individual employees should try to collect the information needed to understand their situation, review their skills and career planning, strengthen their employability and mobility, and exercise their right to education and training.

To manage change, employees should seek information on company strategy, explore what they might do to avoid being made redundant, actively search for alternative jobs, and make use of individual support available to them.

Social partners’ and sectoral organisations’ obligations

To anticipate change, the quality framework calls on the social partners and sectoral organisations to map jobs and skills needs and participate in early-warning systems. They should draw up frameworks for worker involvement to anticipate and prepare for change, and develop measures to help individual workers to increase their skills and mobility.

To manage change, there should be shared understanding of the economic context, efforts to explore all possible options for avoiding redundancies, and to support redundant workers by means such as developing sectoral training funds.

National and regional authorities’ obligations

National and regional authorities also have a key role to play in the anticipation and management of restructuring. To anticipate change, this role includes continuous mapping of jobs and skills needs, the development of measures to help individual employees, and measures to help workers find new roles within their current companies or elsewhere (internal and external mobility), and to promote regional economic adaptation.

Measures to manage restructuring include joint diagnosis of the situation, exploring all alternatives to redundancy, supporting redundant employees including through public employment services, and facilitating partnerships between the relevant actors.

Social partner reactions

The Commission’s communication represents the latest developments in its ideas on anticipating and managing restructuring. It is based on guidelines and best practice and is not legally enforceable – a fact that has disappointed trade unions, but has satisfied employers.

The European Trade Union Confederation (ETUC) is demanding that the Commission considers the following areas in the management of restructuring:

  • education and training;
  • industrial policy;
  • information, consultation and participation;
  • the key role of collective bargaining;
  • active labour market policies, social protection and support.

ETUC Confederal Secretary Claudia Menne commented:

These were the demands put forward in 2012 that have still not been acted upon. However, the Commission continues to ignore these demands. Instead, it proposes a ‘quality framework’, which is no more than general guidelines; in other words: wishful thinking to establish best practices.

The ETUC is sceptical about the practical effects of the guidelines and reiterates its call for legal action.

BusinessEurope is concerned that businesses should remain competitive and robust, and able to adapt to change. Before the framework was published Markus J. Beyrer, Director General of BusinessEurope, commented:

In today’s dynamic, global business environment, European firms must be able to compete with their counterparts in other regions of the world. Adaptability is a key characteristic of robust and competitive firms. Therefore, the Commission must be extremely careful not to undermine the ability of businesses to react to new market conditions in order to sustain themselves in the long term.

BusinessEurope called on the Commission to ensure that restructuring, although needing to be carefully managed, is not made more costly and protracted.

Commentary

While any binding action on restructuring now looks unlikely, the Commission has left the door open to possible legislation in the future by stating that the revision of the quality framework in 2016 will establish whether further action is necessary.

Andrea Broughton, Institute for Employment Studies

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