European social partners discuss the social impact of restructuring

In the aftermath of the Renault Vilvoorde crisis, and despite efforts over May-June 1997, the European social partners have so far failed to arrive at a common declaration on the social impact of restructuring, as a result of differences of emphasis. Over the same period, several other EU-level proposals on employee participation (covering national-level information and consultation and worker involvement in the European Company) have appeared.

The decision by French car maker Renault to close down its Vilvoorde plant in Belgium (EU9703108F) without prior consultation, and the ensuing discussions concerning the perceived overcapacity in the European car industry, raised many questions regarding the social impact of large-scale company restructuring. Despite the condemnation of Renault's decision by courts in France (FR9704142N) and Belgium (BE9704208N) - both in the first instance and on appeal - question marks remain in the minds of European trade unions over the effectiveness of European legislation in dealing with management decisions which are likely to have far-reaching consequences for the workforce and the social and economic fabric of a whole region

At an informal meeting of the Labour and Social Affairs Council of Ministers on 15 April 1997 (EU9704118F), which was mainly dedicated to discussing the implications of the Renault crisis, the Dutch Minister for Social Affairs and Employment,Ad Melkert asked the social partners to issue a joint response highlighting their concern about the social impact of company restructuring, within the remit of the social dialogue. Mr Melkert was keen to see a signal from the social partners that they were tackling these issues, in the light of widespread public condemnation of the actions of the French car maker and accusations of the perceived failings of the European social dimension.

Differences in emphasis lead to slow progress

At a social dialogue committee meeting on 6 May, the Union of Industrial and Employers' Confederations of Europe (UNICE) and the European Trade Union Confederation (ETUC) decided to attempt to formulate a common declaration on social aspects of industrial restructuring. The intention was to submit this declaration on 5 June. However, discussions proved difficult because of differences in emphasis between the employer and employee sides. While ETUC was keen to focus discussions on the Renault case, UNICE preferred a more general focus for the debate. In the employer organisation's view, the actions of Renault's management had already been condemned four times by the courts in Belgium and France. UNICE argued that European Union legislation had been shown to be effective and there was therefore no need to change legislation because of the "misbehaviour" of an employer in one specific case. According to UNICE, this case was to be viewed in isolation as a simple breach of the rules, which should be punished according to national legislation.

ETUC, on the other hand, argued that a review and strengthening of existing legislation on information and consultation requirements in the event of collective redundancies or transfers of undertakings was needed. It also called for a strengthening of sanctions against employers breaching existing national or European Union legislation. It issued a set of demands for the amendment of the Directives on collective redundancies (75/129/EEC as amended by 92/56/EEC), transfers of undertakings (77/187/EEC) and European Works Councils (EWC s) (94/45/EC) to take account of events at Renault. In the event of collective redundancies, ETUC's proposals aim to:

  • ensure that information is forwarded to the workers' representatives at least six weeks prior to the start of consultations;
  • fix a minimum period of consultation of three months - the process should cover issues such as how collective redundancies can be avoided and, if necessary, the definition of accompanying social measures and possibilities for redeployment;
  • ensure that in the event that an EWC has to be established in the enterprise, this EWC is informed and consulted; and
  • provide deterrent and effective sanctions and the ability to declare the announcement of an employer's decision null and void if found in breach of the rules on information and consultation. Employers found in breach of such rules should also be excluded from obtaining aid from European, national or regional sources and should be liable to pay back any prepayments already obtained

ETUC also wants to see studies carried out looking at the interpretation of the collective redundancies Directive by the European Court of Justice and national courts in relation to information and consultation obligations and procedures, sanctions and rights to appeal.

With regard to the transfers of undertakings Directive, while welcoming recent proposals for the amendment of this legislation (EU9703115N), ETUC argues that further amendment is now required in the light of recent events, in order to establish minimum periods of consultation and effective sanctions along the lines of those outlined above.

UNICE rejects ETUC's desire for anticipated management of restructuring, arguing that this must be done in accordance with the laws of the market while taking social impact into consideration. It equally refutes ETUC's desire to institute consultation prior to taking the final decision on restructuring. UNICE emphasises the autonomy of the board of any undertaking to make this decision, with consultation merely being the best way to implement the decision. It recognises the right of employees to make suggestions for alternative scenarios and argues that management should consider these, but cannot be compelled to act upon them.

UNICE also rejects ETUC's demands on rendering a decision by management null and void if found in breach of information and consultation rules, as different rules apply in different countries. Similarly, sanctions should be defined at the national level

Ministers debate information and consultation measures

As a result of these divergences of opinion, the social partners have failed to reach a common declaration on the impact of restructuring. When they met Mr Melkert again on 5 June they were keen to convince him that this failure was not the result of a lack of interest or dialogue on this issue. The social partners declared their willingness to continue in their attempt to find an accord on a joint declaration by 27 June, in time for the rescheduled Labour and Social Affairs Council meeting. However, this proved impossible and it now remains for the Luxembourg Presidency (starting in July 1997) to decide whether to issue its own instrument. The failure to reach a common declaration is partly the result of the confluence of different proposals with a bearing on information and consultation rights which appears to be complicating discussions.

National-level information and consultation

The June Labour and Social Affairs Council was told of the progress of talks on the social impact of restructuring between the social partners and took note of the launching of the first stage of consultation of the social partners on "worker information and consultation at the national level" on 4 June. This instrument, under consideration for several years, was promised by Padraig Flynn, the commissioner responsible for social affairs, employment and industrial relations, in the follow-up to the Renault affair. While the European Commission acknowledges that most member states have extensive legal regulation of worker information and consultation, it argues that in many cases the "fundamental right to information and consultation" is not sufficiently guaranteed. In this respect, it refers to the timing of consultation, the availability of sanctions and the scope of matters for consultation. The Commission pronounces itself in favour of a provision in any new instrument giving companies a period within which to conclude voluntary agreements on national-level information and consultation, similar to Article 13 of the EWC Directive.

The Commission consultation document argues that a Community measure on information and consultation of workers at the national level should include the following key components:

  • recognition of the principle of information and consultation of worker representatives on the economic situation of the company and any decisions which might affect them as a social right;
  • defining objectives and highlighting the importance of forward employment planning;
  • defining the scope of consultations (similar to the list in the EWC Directive) and in particular the threshold for the number of workers employed in the company;
  • entitling member states to grant priority to agreements between the social partners;
  • laying down principles governing the efficiency of procedures;
  • defining the level at which procedures are to be applied;
  • referring to national legislation and/or practices for selecting worker representatives;
  • implementation of sanctions to cancel the legal effect of decisions arrived at which are in breach of information and consultation regulations;
  • setting conditions for the contractual implementation of the obligations on question;
  • the principle of retaining the most favourable national system; and
  • interaction between the new provision and collective redundancies and transfer of undertakings legislation to ensure consistency.

The deadline for responses from the social partners to this consultation document is the end of July 1997. However, it appears likely that there will be some delay in the submission of detailed responses as the social partners are seeking to consult as widely as possible with their membership on these wide-ranging proposals.

Worker involvement in the European Company

The other proposal currently under debate, on the setting up of a European Company, and the information and consultation requirements within this new structure, was the subject on the recently published "Davignon report" on "European systems of worker involvement"(EU9705128N). Meeting on 21 May, the Internal Market Council of Ministers broadly welcomed the proposals submitted by the Davignon group. However, differences in opinion prevailed over the minimum requirements for worker involvement to be instituted if negotiations between company management and labour should fail. The United Kingdom delegation highlighted the problems posed for countries like itself, where there is no formal legislation on involvement, and a number of countries, such as Denmark, with strong involvement arrangements, were keen to seen such provisions strengthened.

The Davignon report was also debated at the Labour and Social Affairs Council on 27 June. Ministers expressed their general satisfaction with the recommendations of the Davignon report and argued that this should now form the basis of a full debate to be held in the Council on the problem of arrangements for worker involvement in the European Company in general, taking into account the diversity of national systems. The findings of the Davignon group are now to be passed on to the Committee of Permanent Representatives (COREPER) for further discussions.


The Renault affair has focused the minds of European decision-makers and social partners on the issue of worker information and consultation. This has, whether by design or inadvertently, led to a confluence of proposals and actions in different areas all dealing, in different ways, with employee information and consultation. One might imagine that this would lead to the build up of a "critical mass", precipitating the progress of legislative proposals, at least one of which (the European Company Statute) has been on the Commission's agenda for over 20 years. It appears, however, particularly in the case of worker information and consultation at the national level, that this has had an adverse effect.

While employers argue that they may feasibly have reached an agreement with ETUC on the broader issue of the social impact of restructuring, they now feel that this issue and the subject of worker involvement in the European Company, as well as information and consultation at the national level have been so inextricably intermingled as to prevent them from tackling these separately. The consultation document from the Commission is considered in some quarters to be unfortunate in its timing and/or confusing in its content, as it is seen to contain elements of the first and second stages of the social partner consultation process as laid down by the Maastricht social policy Agreement.

While both the consultation document and the Davignon report proposals accord primacy to voluntary agreements between the social partners, a number of concerns remain on the practical implications of European regulation in this area, particularly among those countries with very high standards of information and consultation legislation and those with little or no national legislation. The consultation document seeks to address some of the areas where the EWC Directive is seen to fall short, but it appears, on the face of it, unlikely that agreement can be reached easily on issues such as, for example, the sanctions to be applied in the case of a breach of information and consultation regulations. While coordination of different pieces of European legislation dealing with employee information and consultation is necessary and desirable, it appears that a prioritising of such legislative initiatives is called for in order to make progress. (Tina Weber, ECOTEC)

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