Court rules against 40-hour week at Smead

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In August 2004, a court ruled against a plan by Smead Europe, the Dutch subsidiary of a US-owned office supplies group, to increase weekly working hours from 36 or 38 to 40 at two plants, with no increase in pay. According to the court, such an extension would contravene the applicable sectoral collective agreement.

Smead Europe, the Dutch subsidiary of a US-owned office supplies group, was due to introduce a 40-hour working week at two plants in August 2004 in order to tackle rising costs (NL0408103N). Employees at the sites currently work 36 or 38 hours a week and would have received no pay increases for the extension of their working time. Trade unions took legal action against Smead Europe, claiming that the planned extension of working time would breach the collective agreement for the graphical, arts, information and media sector. In summary proceedings on 6 August 2004, a court in Groningen ruled against the introduction of a 40-hour week at Smead, supporting the unions' argument and rejecting the company’s argument that the collective agreement in question did not cover Smead because it had cancelled its membership of the graphical industry employers’ organisation at the end of 2002.

According to the court, Smead European has always considered itself a graphical company and the applicable sectoral collective agreement - having been extended to become generally binding on the entire graphical industry (NL0403102F) - does indeed apply to the company. The court also attributed no significance of the fact that the great majority of the 140 employees involved had voluntarily agreed to the proposed extension of their working week. Furthermore, according to the court, all agreements reached between an employer and employee(s) that contravene the provisions of an extended collective agreement are null and void. It was also found to be of no relevance that Smead pays its employees wages that are an average of 16.2% higher than specified in the sectoral collective agreement, or that the company works council agreed to the extension of the working week.

The court ruled that Smead should pay damages totalling EUR 10,000 to the trade unions concerned, in compensation for the loss of prestige they have suffered among their members and third parties because, despite their efforts, they had failed to ensure that Smead comply with the sectoral collective agreement.

Smead’s chief executive, Simon Feenstra, stated that he was disappointed with the outcome of the case but will accept the court’s ruling. The Confederation of Netherlands Industry and Employers (Vereniging van Nederlandse Ondernemingen-Nederlands Christelijk Werkgeversverbond, VNO-NCW) and the Dutch Federation of Small and Medium-sized Enterprises (Midden- en Kleinbedrijf Nederland, MKB-Nederland) also expressed disappointment, stating that while this may represent a legal victory, it is also an 'economic defeat'. They argue that collective agreements should provide companies with more opportunities for flexibility, certainly those that are experiencing difficulties. VNO-NCW recommends that its members introduce provisions to this effect in their collective agreements.

The trade unions appeared satisfied with the court's ruling. While they state that they do not oppose flexible collective agreements, they want to maintain sector-wide agreements on wage costs so as to avoid 'flat wage competition'. According to union spokesperson, Smead Europe’s employees were pressurised to accept an extension of the working week and 'this is exactly what unions were established to combat in the first place'.

The Smead Europe works council asserts that the trade unions failed to take sufficient account of the deal on this issue that had been reached between itself and the company.

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