From Renault to In Bev: the role of social dialogue in collective redundancy
After the Renault-Vilvorde restructuring case in 1997, the Belgian public authorities set about strengthening the law on business restructuring and closure, establishing a regulatory framework on information and social dialogue. The so-called ‘Renault law’ came into existence in 1998, but recent social and economic events have prompted new debates about the law. The recent Anheuser-Busch InBev case points to the role of social dialogue in reaching a compromise.
On 27 February 1997, the French car manufacturer Renault announced the closure of its site in Vilvorde in Flanders involving the loss of 3,097 jobs. The decision was very sudden and workers were taken by surprise. Renault management announced the decision to the press from the lounge of a hotel in Brussels and no information had been provided previously to the staff or to the workers’ representatives at works council meetings. At the same time, Renault shares rose by 20% on the stock exchange.
The labour movement in Belgium and Europe reacted with shock. Many strikes and collective actions were organised at Belgian and European levels to support the workers affected. One year later, this event led to the creation of the ‘Renault law’ (Law of 13 February 1998 on employment measures, M.B. 19 February 1998). This law establishes procedures for informing workers and for social dialogue in the event of mass redundancy or the closure of a company (BE0004309F).
In fact, the regulation on the preliminary phase of a mass redundancy plan, including the procedures of information and consultation of workers and a procedure of notification to the public authorities, already existed but with frequent changes since the beginning of the 1960s. Over the years, the regulation has developed to allow for a better harmonisation between existing measures and the transposition of European directives into national legislation.
The first national regulatory framework on information and consultation of workers was established by the Law of 28 June 1966 but focused only on cases of company closure. This law also forced employers to report a notification to the joint committees concerned and to the public authorities. In the case of collective redundancy provoked by a restructuring plan, the procedure was covered by another regulatory framework resulting from a collective agreement (No. 10, 8 May 1973) at the National Labour Council (Conseil National du Travail/ Nationale Arbeidsraad, CNT/NAR). The existence of two types of provision, one resulting from a law and the second from a collective agreement, had led to a split in the Belgian labour legislation.
In 1975, Council Directive 75/129/EEC was introduced on the approximation of the laws of the EU Member States relating to collective redundancies, which aimed to converge the national laws among the Member States. The directive established a restrictive framework relative to the definition of a ‘collective redundancy’, a preliminary procedure of consultation of workers and the notification of the redundancy plan to the public authorities (see Bingen et al, ‘L’accompagnement des travailleurs licenciés collectivement’, Courrier hebdomadaire du CRISP, No. 1943–1944, 2006). Collective agreement No. 10 was then replaced by collective agreement No. 24 (2 October 1975).
Later, in 1992, Council Directive 92/56/EEC brought some changes, in particular by adding a new article related to the implementation of administrative and/or judicial procedures to enforce employers’ obligations. The Law of 13 February 1998 on employment – or the ‘Renault law’ – constitutes the transposition of the European directive confirming the application of the existing provisions by raising them to a higher level in the Belgian labour legislation. Indeed, this resulted in a harmonisation between the procedure in the case of company restructuring and in the event of company closure (except bankruptcy, which is the subject of another regulatory framework).
The Law of 13 February 1998, or the ‘Renault law’, aims to establish a regulatory framework that guarantees the information and consultation of workers and social dialogue in the case of collective redundancy provoked by restructuring or by the decision to close a site (except in the case of bankruptcies). To be considered a collective redundancy, various criteria related to the size of the company and the number of redundancies have to be met (see table below).
|Number of workers within company||Minimal number of job cuts|
>20 and <100 workers
10 job cuts
≥100 and <300 workers
10% of workforce
30 job cuts
Source: Law of 13 February 1998
Information and consultation
The procedure of information and consultation has to be applied step by step. When the management of a company foresees implementing collective redundancies, it must first inform the workers’ representatives. Specifically, the management must communicate – both verbally and in writing – key information such as the reasons justifying the collective redundancy, the number and categories of workers concerned as well as the criteria to be taken into account for the selection, the period of time during which the management will proceed with redundancy, and the form in which possible extra redundancy payment (that is, payment that is not compulsory in accordance with the law or collective agreements) will be granted to redundant workers. At the same time, the employer has to inform, by mail, the Ministry of Employment, Labour and Social Dialogue (Federale Overheidsdienst Werkgelegenheid, Arbeid en Sociaal Overleg/Service public fédéral Emploi, Travail et Concertation sociale) and the following regional employment and training services:
- the Flemish Public Employment and Vocational Training Service (Vlaamse Dienst voor Arbeidsbemiddeling en Beroepsopleiding, VDAB);
- the Walloon Community and Regional Vocational Training and Employment Office (Office communautaire et régional de la formation professionnelle et de lemploi, Forem);
- the Brussels Region Employment Office (Office Régional Bruxellois de l’Emploi/Brusselse Gewestelijke Dienst voor Arbeidsbemiddeling, Actiris).
When the information phase has been carried out, social dialogue can start. Workers’ representatives have to be consulted by management about possible ways to avoid redundancy or reduce its impact by social measures of accompaniment aiming, for example, to help affected workers to find another job. The law allows trade unions to ask questions and make propositions, obliging the employer to answer these questions. Time is not limited during the consultation phase.
Afterwards, the employer has to report once again the final decision and the redundancy plan to the regional employment office (VDAB, Forem or Actiris). In this document, the employer should outline that the procedures for the information and consultation of employees have been respected.
During a period of 30 to 60 days after the final decision, the employee representatives are allowed to raise objections regarding potential non-compliance with the law. During this period, the employer may not dismiss workers affected by the mass redundancy. Furthermore, if companies do not comply with the procedures outlined above, workers may keep their job while their wages continue to be paid. However, it should be noted that the Renault law established the possibility for an individual worker to submit a complaint and to potentially receive damages if it is established that the information and consultation procedure set out in the law was not respected by an employer.
Law in practice
Formally, the purpose of the Renault law is not to prevent restructuring measures, but to apply a regulatory framework for social dialogue that involves the consultation of workers’ representatives. Indeed, according to the legislation, social partners are not forced to reach an agreement on a social plan. However, in many cases, the management accepts to negotiate and reconsider a new redundancy plan. Indeed, it is often observed that the number of job cuts is lower in the final decision plan than in the company’s first redundancy announcement. Nevertheless, in practice, there now appears to be a certain cynicism on the part of employers because the majority of management boards will not start the ‘Renault procedure’ – providing for prior information to be given to workers – without having a clear idea of the eventual outcome.
It can be considered that the main progress made by the law relates more to the length of the procedure of dismissals: before, it was possible for a company’s management to announce a dismissal decision on a particular morning and shut the company down in the afternoon. Trade unions took advantage of this longer period of time set out by the law. The 30 to 60 days anticipated for possible objections by workers (see above) usually gives trade unions a chance to try to put pressure on the management through industrial action and having to find a social agreement.
The recent Anheuser-Busch InBev (AB InBev) case showed that this longer period for dismissal procedures can be very useful in terms of trade unions’ strategies.
Recent AB InBev case
On 5 January 2010, AB InBev, a Belgian-Brazilian multinational brewing group, announced a large restructuring plan that involved cutting 304 jobs at its sites in Leuven in Flanders, Jupille in Wallonia and at other sites in Wallonia, Flanders and Brussels. This decision by AB InBev took place within the context of a global plan that foresees 800 job losses in west European countries, with sites in Germany, Luxembourg and the UK also affected by restructuring measures. In Belgium, the Renault procedure started immediately after the announcement. The AB InBev management justified its decision by the fall in alcoholic consumption in Belgium by 20% between 2000 and 2008. Nevertheless, trade unions and workers rejected this explanation since the group seemed to have escaped the economic crisis given the large profits achieved in 2009.
Throughout January, the situation became increasingly critical after many days of strike activity by AB InBev workers, the confinement of management and a two-day lockout. However, tripartite negotiations finally led to the conclusion of a pre-agreement between the social partners, in order to ‘restore confidence and organise a constructive social dialogue’. Contrary to all expectations, the restructuring plan was suspended and a new negotiation framework was decided. In particular, the framework includes the following agreements:
- a new period of information and consultation regarding the restructuring plan and the future of AB InBev Belgium within the multinational group, after which negotiations will take place;
- a meeting of the European Works Council (EWC) will be organised with the participation of AB InBev Europe’s representative.
AB InBev constitutes a particular case in which the application of the Renault procedure is uncertain – this was also true in the case of the mobile telephony company Base in 2004 (see European Restructuring Monitor (ERM) factsheet). Although outcomes may still be uncertain at the present time, the AB InBev case illustrates, however, that the Renault regulations provide a better chance of reaching compromises through social dialogue.
Marie Van Den Broeck, Institute for Labour Studies (IST), Catholic University of Louvain (UCL)