Redundant employees sue Fujitsu Siemens

Download article in original language : FI0102177FFI.DOC

The redundant employees of the Fujitsu Siemens plant located in Kilo, Finland, which was closed in 2000, brought legal proceedings against the company in February 2001. The employees are demanding compensation totalling some FIM 50 million for possible violation of the Finnish Cooperation Act's rules on negotiations over measures affecting personnel.

In February 2001, nine Finnish trade unions, on behalf of 219 members, initiated joint compensation proceedings in the courts against Fujitsu Siemens Computers for allegedly violating the Cooperation Act in connection with the closure of a computer plant located at Kilo, Finland. The company is being sued for compensation of 20 months' pay for each claimant, which is the highest possible compensation prescribed in the Cooperation Act. Altogether, the claims for compensation amount to over FIM 50 million. For individual employees, the claims vary from less than FIM 200,000 to over FIM 600,000.

The majority of the compensation claimants are members of the Metalworkers' Union (Metalliliitto) affiliated to the Central Organisation of Finnish Trade Unions (Suomen Ammattiliittojen Keskusjärjestö, SAK). Other claimants are members of the following affiliates of the Finnish Confederation of Salaried Employees (Toimihenkilökeskusjärjestö, STTK): the Union of Technical Employees (Teknisten Liitto, TL); the Union of Salaried Employees in Industry (Teollisuustoimihenkilöiden Liitto, STL); and the Federation of Special Service and Clerical Employees (Erityisalojen Toimihenkilöliitto, ERTO). The remainder are members of the following affiliates of the Confederation of Unions for Academic Professionals (Akateemisten Toimihenkilöiden Keskusjärjestö,AKAVA): the Finnish Association of Graduates in Economics and Business Administration (Suomen Ekonomiliitto, SEFE); the Union of Professional Engineers in Finland (Insinööriliitto, IL); the Finnish Association of Graduate Engineers (Tekniikan Akateemiset, TEK); the Central Union of Special Branches within AKAVA (Akavan Erityisalojen Keskusliitto, AEK); and the Association of Finnish Political Scientists (Valtiotieteilijöiden Liitto, SVAL).

Background

In June 1999, the Japanese-owned Fujitsu and German-owned Siemens announced their intention to incorporate the greater part of their computer functions in Europe in Fujitsu Siemens Computers. The incorporation concerned the Finnish Fujitsu unit at Kilo, and two German units among others. After the new joint company started its activity, the employees of the Finnish unit were informed in December 1999, after a long period of uncertainty, of the commencement of a cooperation procedure with employee representatives on the subject of closing the plant. Even though the unit was profitable, the negotiations ended without result and all 450 employees were made redundant in April 2000 (FI0002136F).

According to the employees, the negotiations conducted were a pure formality and were commenced far too late, in contravention of the Cooperation Act. The employees of the German Siemens plants had already been informed the previous summer that the Kilo plant was about to be closed down. However, the management in charge at Kilo at the time has claimed that it did not have de facto knowledge of the decision before December 1999. After the redundancies took effect, the Ministry of Labour- and later also the employees - asked the police to undertake an investigation as to whether the Cooperation Act had been violated. Investigation of a possible crime is still under way.

Some redundant employees still unemployed

The redundancies concerned altogether 450 employees. The majority of these have succeeded in finding work at other electronics companies. In many cases, however, unemployment has persisted - especially for older employees whose chances of getting work have been poor. For these people, the economic significance of the redundancies has been dramatic. For the first 500 days of the period of unemployment, the Finnish unemployment insurance system provides incomes-related benefit, which is about 40%-60% of the previous wage. After that, the benefit received drops to the basic daily allowance, which is FIM 127 a day.

Importance of Cooperation Act

This case is important in that the Cooperation Act is now being tested in relation to redundancies. According to the Act, the obligation to negotiate means that measures affecting personnel should be subjected to negotiation in good time, when there still exist factual alternatives to the proposed "personnel arrangements" or redundancies. The trade union movement now wishes to test the real content of the Cooperation Act. The objective of the proceedings is to remind multinational companies operating in Finland that the Finnish legislation concerns them, too. The wide united front of the employees and unions in the compensation proceedings is significant. Alongside former assembly workers, administrative employees and middle management are also seeking to enforce their employment rights .

The Finnish national contact point overseeing application of the Organisation for Economic Cooperation and Development (OECD) guidelines for multinational enterprises board has also been asked to take a stand on whether the guidelines have been violated. The final standpoint of the contact point will be issued after the criminal investigation has been completed.

Commentary

The Finnish courts must now take a stand on an important issue concerning the obligation of employers to inform their personnel of any threat that a plant will be closed. The decision-making process implemented by Fujitsu Siemens in closing the Kilo plant was open to question from the employees' point of view. In the new legal proceedings, the evidence will be being weighed as to whether this multinational company took sufficient account of the national legislation on negotiations in such circumstances. The case is comparable to the closure of Renault Vilvoorde in 1997, where the decision to close a plant in Belgium was made in France without informing and consulting the personnel (BE9703202F). As globalisation proceeds, there arises a greater need for clearer "rules of the game" concerning company restructuring.

In the Finnish case, there is clearly also money at stake. The employees have a significant financial interest, seeking compensation to the tune of 20 months' pay - no minor sum. The legal action will form a significant precedent which also has wider European importance. (Juha Hietanen, Ministry of Labour)

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

Eurofound welcomes feedback and updates on this regulation

Add new comment