Role of employee representative in restructuring at LEGO

Senior employee representative at LEGO, Berit Flindt Petersen, has to negotiate the best possible severance package for the 900 employees recently made redundant. Writing in the weekly union newsletter, Ms Flindt Petersen reports that she feels she has been offered more support and assistance from the company than from the representative trade union to cope with this responsibility and the mental strain involved. She calls for a higher degree of readiness on the part of trade unions in relation to restructuring processes and large-scale redundancies.

Collective redundancy process

The announcement of large-scale redundancies in Denmark sets in train a major process. According to Danish legislation (in Danish) dating from 1994 – amended in 1997 in accordance with Council Directive 98/59/EC – the employer must notify employees, employee representatives and authorities in writing of the reasons for the layoffs, the number of dismissals and the date from which they are expected to take effect. Negotiations follow between the management and the employees with a view initially to preventing large-scale dismissals and then to minimising the consequences of the dismissals that are finally decided. This may take the form of severance agreements or offers of new jobs and/or continued training and upgrading of skills and qualifications. Only in very rare cases, however, are the dismissals called off.

The employee representative is central to the negotiation process and is responsible for maintaining the contact between management and the employees involved. It is a difficult task for the employee representative to negotiate a result that will mitigate the consequences for the employees and also, on an informal basis, to reassure those employees who will be dismissed. The trade union behind the employee representative does not appear to offer much assistance in the performance of these tasks. On the contrary, it is sometimes the case that the company is better prepared and ready to make every effort in coming forward with proposals to alleviate the situation. The management thus becomes more of a support structure for the employee representative than the trade union.

Personal experience at Lego

Employee representative Berit Flindt Petersen presented this view on 14 August 2006 in the weekly newsletter A4 published by her central organisation, the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO). She herself has experienced the problem of collective redundancy first hand as senior employee representative in the toy group LEGO Systems A/S, located in Billund in western Denmark. In the spring of 2006, some 900 staff were given notice of dismissal at LEGO and the parties are currently negotiating the planned relocation of production to Kladno in the northwest of the Czech Republic. Lower production costs in eastern Europe will enable the Danish toy group to compete in the global market. The time scale for the redundancies will run from 2007 to 2009.

Having been employed with LEGO for 21 years, Ms Flindt Petersen is one of the company’s longest serving staff members. She was appointed employee representative 16 years ago and for the last seven years has been working full time as employee representative for the hourly-paid workers who are usually organised within the United Federation of Danish Workers (Fagligt Fælles Forbund, 3F) or the Danish Metal Workers’ Union (Dansk Metal). As a member of the joint cooperation committee, she has a good insight into management, globalisation and relocation plans.

Together with two other employee representatives, Ms Flindt Petersen is negotiating severance agreements for the hourly-paid workers at LEGO. So far, all jobs are guaranteed until the summer of 2007, but the employees voice their insecurity and frustration every day, expressing feelings of anger, despondency, despair or bitterness towards the company. ‘Entire families work with LEGO and have done so for generations. In the past, considerations of social responsibility have meant that the company has avoided dismissing both husband and wife,’ explains Ms Flindt Petersen. She fears that this scenario will be unavoidable on this occasion.

More trade union support needed

In the A4 interview, Ms Flindt Petersen emphasises that the trade unions are not well prepared for crises and do not have, for example, an emergency team which could be deployed to companies where large-scale redundancies are under way. Nor is there any network of employee representatives where similar experiences could be shared when difficult situations arise. In effect, many employee representatives are left to their own devices. Ms Flindt Petersen calls for a frank and open discussion in the trade union movement aimed at finding the right solutions in supporting employees and their representatives.

Redundancy package at LEGO

On 17 August, LEGO management presented staff with the long-awaited severance package. All employees will receive a loyalty bonus, amounting to a maximum of €11,500 in 2009. However, no severance allowance will be paid to employees with less than five years of service.

At the same time, a ‘future centre’ is being set up for the purpose of helping employees to assess their competences and offering advice concerning severance schemes. LEGO also offers psychological assistance – a support mechanism that should be the responsibility of the trade unions, according to Ms Flindt Petersen. She considers that the redundancy package is the best possible result that could be obtained by the employee representatives, but believes that the lack of severance pay for employees with less than five years of service will mean that many of them will seek a new job before the date when the dismissals become effective in 2007.

Commentary

At present, jobs are not hard to find in Denmark. There is currently a labour shortage and people who have become unemployed due to large-scale redundancies are in high demand, partly because they have experience and partly because collective dismissals are by definition caused by the company’s financial situation and not by factors attributable to the employees themselves.

Carsten Jørgensen, FAOS

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