Legal battle in Belgium over company relocation

Download article in original language : BE9712126FFR.DOC

Dismissed trade union delegates and the management of Boston Scientific, a medical equipment company which relocated operations from Belgium to Ireland in 1997, are still fighting it out in the Belgian courts at the end of the year. This legal battle is part of a union strategy to fight closures and relocations carried out by multinationals.

At the end of February 1997, the closure of the Boston Scientific plant, a medical equipment factory which had been located at Petit-Rechain near Verviers (Belgium) for more than 20 years, led to the loss of 273 jobs. The firm decided to develop its unit in Galway (Ireland) where 2,050 jobs would be created. The USA-based multinational Boston Scientific Corporation, which is enjoying success at present, has just taken over or bought six other companies specialising in a range of high value-added medical equipment products. The Petit-Rechain unit itself made BEF 18 million profit in 1996.

The closure came as a surprise for everyone, as the firm was recognised for its good performance and the workers had accepted a very flexible working hours arrangement, with 12-hour shifts on Fridays, Saturdays and Sundays, an increased number of temporary workers and night shifts for part of the workforce. Following the dismissals, a social plan comprising legal and additional redundancy payments was accepted by three-quarters of the workers at the end of February 1997.

Meanwhile the Galway factory is having a difficult start: the unit ran out of stock right away and the factory in Petit-Rechain was requested to carry on production for the time, being even though it was closing down. It was even necessary to send workers (among them trade union delegates) to Ireland to train the Galway workers in the manufacturing processes.

Four sets of legal proceedings have been opened against the company, regarding the annulment of the redundancies, the protection of worker representatives, damages and the sale of company property.

Annulment of the redundancies

The fact that training staff were sent to Ireland prompted a former union delegate to sue the company, claiming that the economic grounds advanced for the closure of the factory were false and demanding the annulment of the redundancies. The case was heard in an emergency interim procedure, but in May 1997 it was dismissed by the Verviers Labour Court on grounds of not constituting an emergency. However, the Court criticised Boston Scientific's behaviour, reproaching it for "use of force".

Protection of worker representatives

The chemical industry joint committee refused Boston Scientific's request for removal of the protection applying to eight protected employees (one of them being the plaintiff). The expression "protected employee" refers to the protected status of employees who are members of works council s and workplace health and safety committee s, and members of the union delegation who are entitled to very substantial compensation in lieu of notice for dismissals, except in case of economic redundancy, in order to protect them against unfair dismissal.

In June 1997, the company asked the Verviers Labour Court to lift the protection, arguing that this was a case of economic redundancy. On 4 July, Boston Scientific's case was dismissed by the Court, which said that the closure of the Petit-Rechain unit was not based on economic grounds and that redundancy payments were therefore payable.

The company appealed to the Liège Labour Court. The employees' and the unions' lawyers claimed that the company had no grounds for appeal, but on 23 September the Court ruled otherwise and the hearing took place on 28 October.

The unions' argument was as follows: removal of the protection of protected workers cannot be requested in the event of the transfer of activities. Contrary to what Boston Scientific had declared, it was making a profit. It decided to close the Petit-Rechain plant because of financial assistance offered by the Industrial Development Agency of Ireland. The subsidies amounted to IEP 18.5 million. Therefore it was not a closure but a transfer of activities, as was demonstrated by the relocation of the plant machinery and management and production staff from Petit-Rechain to Galway. The workers' lawyers stressed that "it was the first time that a case concerning the closure of a perfectly healthy undertaking was heard before our courts".

Boston Scientific's lawyers referred to the smooth negotiations with the unions and the signing of a social plan.

In the Court's ruling of 5 November, the Liège Labour Court dismissed the protected employees' case and accepted the request that their protection be removed. It said that: "nothing supports the view that the closure of the Petit-Rechain unit could lead to the workers employed there being placed in a discriminatory situation (...) with respect to that of the firm's non-protected workers"

The protected workers are now considering the possibility of going to the Court of Appeal.

Damages

In addition, on 13 November, about 30 employees started proceedings in the Verviers Labour Court to claim damages for unfair and early dismissal without preliminary consultation.

Sale of property

Finally, further proceedings have been started by workers requesting the precautionary seizure of Boston Scientific buildings in Petit-Rechain. The seizure was granted by the magistrates' court in a ruling dated 17 June 1997. The company appealed, but a ruling dated 3 October confirmed the seizure. The company cannot therefore sell the buildings.

Commentary

The closure of the Boston Scientific Belgian factory can be regarded as relocation because of the simultaneous opening of activity in Ireland. Several recent European cases illustrate multinationals' non-compliance with national legislation or collective bargaining procedures covering collective dismissals and the protection of union delegates. The legal proceedings that followed the closure of Boston Scientific are a test of the legal tools that labour can use to oppose the relocation strategies of multinationals.

However, these tools are not well suited to guaranteeing the protection of union delegates against the new open conditions of the European labour market. The Belgian law of 19 March 1991 on the dismissal of worker representatives, and of candidates in company elections for joint committees, in the event of closures provides for application to the appropriate sectoral joint committee for the removal of protection and for the specification of the criteria. If the joint committee refuses, the employer may appeal to the Labour Court, and to grant the employer's request the Court must verify only whether the firm's technical headquarters have actually closed and whether the entire workforce or an entire category has actually been dismissed. The law is based on the assumption that if an undertaking ceases its activities or dismisses all its workforce, it is because economic factors obliges it to do so. It does not take into account the recent phenomenon of the closure of flourishing undertakings.

We can also note that this case is an illustration, as if one were needed, of the role played by the diversion of European assistance to less developed regions. (Philippe Dryon and Estelle Krzeslo, Point d'Appui Travail Emploi Formation - ULB)

Sources

"Délocalisation", Bureau fédéral du Plan, Brussels (1994).

"Délocalisation, mondialisation", Bureau fédéral du Plan, Brussels (1997).

"Les délocalisations d'entreprises: fausse fatalité ou vrai défi", Institut Wallon d'Etudes, de Recherches et de Formation (IWERF), Namur (1994).

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment