ANTICIPATING & MANAGING CHANGE A DYNAMIC … · ANTICIPATING & MANAGING CHANGE A DYNAMIC APPROACH...

ANTICIPATING & MANAGING CHANGE

A DYNAMIC APPROACH

TO THE SOCIAL ASPECTS

OF CORPORATE RESTRUCTURING

Under Alpha Consulting Direction

RAPPORT POUR LA COMMISSION - VC/2002/0153

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Contributors:

Willem M.G. ALLERZ (GITP),Michael ERHARDT (EWR),Rienk GOODIJK (GITP),Barbara JENTGENS (EWR),Jean-Jacques PARIS (ALPHA Consulting),Evelyne PICHOT et Ricardo RODRIGUEZ CONTRERAS (LABOUR)

Report coordination:Jean-Jacques PARIS


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TABLE OF CONTENTS

INTRODUCTION

EXECUTIVE SUMMARY

CHAPTER I TOP DOWN RESPONSIBILITY

ReportCollective Redundancies – AustriaCollective Redundancies – BelgiumCollective Redundancies – DenmarkCollective Redundancies – FinlandCollective Redundancies – FranceCollective Redundancies – GermanyCollective Redundancies – GreeceCollective Redundancies – HollandCollective Redundancies – IrelandCollective Redundancies – ItalyCollective Redundancies – LuxemburgCollective Redundancies – PortugalCollective Redundancies – SpainCollective Redundancies – SwedenCase Studies

CHAPTER II EMPLOYABILITY

ReportEmployability – AustriaEmployability – BelgiumEmployability – FinlandEmployability – FranceEmployability – GermanyEmployability – GreeceEmployability – ItalyEmployability – LuxemburgEmployability – NetherlandsEmployability – SpainEmployability – SwedenEmployability – United KingdomTablesSome analysis regarding employabilityCase Studies


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CHAPTER III EXTERNAL RESPONSIBILITY

ReportExternal Responsibility – AustriaExternal Responsibility – BelgiumExternal Responsibility – FranceExternal Responsibility – GermanyExternal Responsibility – GreeceExternal Responsibility – HollandExternal Responsibility – ItalyExternal Responsibility – PortugalExternal Responsibility – SpainExternal Responsibility – United KingdomQuestionnaireCase Studies

CHAPTER IV TERRITORIAL RESPONSIBILITY

ReportTerritorial Responsibility – AustriaTerritorial Responsibility – FranceTerritorial Responsibility – GermanyTerritorial Responsibility – GreeceTerritorial Responsibility – ItalyTerritorial Responsibility – SpainCase Studies

CHAPTER V COLLECTIVE DIMENSION

CHAPTER VI COMPETITION PROCEDURES

APPENDICES


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CASE STUDIES - TABLE

TOP DOWN RESPONSIBILITY – COLLECTIVES REDUNDANCIES

Alitalia – page 150 -Ericsson – page 152 -General Semiconductor – page 154 -Ateliers et Chantiers du Havre – page 158 -Pfaff Industrie Machine AG – page 160 -Siemens AG – page 161 -Whirlpool – page 162 -Lessons drawn drawn from expert economic appraisal within company group formations

– page 163 -Method Agreements (“Les accords de méthode”) in France and their development

– page 167 -

EMPLOYABILITY

Aughinish Alumina – page 262 -Fiat – Auto Group – page 265 -Announcement by Lever / Bilore – page 266 -Adapt – HRM Philips Lighting – page 267 -Pythagoras Project at Evac – Sweden – page 270 -The New Sulzer Example – page 276 -ADAPT – KTECP – page 277 -ZAB – Zentrum für Arbeit und Bildung Gmbh – page 281 -

EXTERNAL RESPONSIBILITY

START Amadeus Gmbh – page 345 -Bombardier Transportation and Computer Sciences Corporation (CSC)– page 348 -Cigogne – page 350 -Tenovis – page 351 -

TERRITORIAL RESPONSIBILITY

Agfa-Gevaert – page 418 -Azucarera Ebro – page 420 -Calseg S.A. – page 422 –Chemnitz – page 424 -Danone – page 427 -TEC – page 429 -Usinor – page 431 -


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INTRODUCTION

The contracting part, ALPHA Consulting assignment was to “carry out a comparativeanalysis of the legislatory provisions in force in the EU member states, relating tocompany restructuring, and covering the following domains1. If pertinent and justified,reference should also be made to formal provisions, as well as corporate practice”.

There was a dual objective, as this was not merely a matter of analysing the rules of lawon the subject of restructuring, but also to examine the practices employed by companieswhen faced with restructuring operations.

The results of this work should enable a more profound follow up on the EEC initiativein terms of anticipation and management of change. On the 15th January 2002, theCommission adopted a social partners consultation document on a community level (incompliance with Article 138 of the CE Treaty), entitled “Anticipating and managingchange: a dynamic approach to the social aspects of company restructuring”.

In its consultation document, the Commission considers that this initiative comes withinthe Lisbon process, which is based on a proactive and positive approach to change,making development and human resources management the key factors in companydynamics and sustainable economic development. This document aims at avoiding thesocial risks linked with restructuring operations by inviting the social partners to take onthe resources for anticipation of change management.

The analysis of resources for anticipated management of restructuring in order to avoidemergency social processing is one of the main themes of this report. Merger andAcquisition operations that unceasingly spread news of this trend are obviously the mostvisible part of restructuring operations.A recent study2 shows that the number of International merger and acquisitionoperations in the first half of the 1990’s came to over 26,000, only to rise to 50,787 inthe second half of the 90’s.

1 Downstream responsibility (collective redundancies), employability, external responsibility (especially orderplacer/sub-contractor relations), territorial responsibility, collective dimension, competitive procedures.2 Stefano Palmieri (IRES) « Mergers and Acquisitions in the European Union : Observations for Trade UnionOrganisations » 2002


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This Worldwide trend has also had an effect on Europe:“The value of International M&A (Merger and Acquisition) transactions in the secondhalf of the nineties has quintupled compared to the value during the period 1990-1995,i.e., $ 8,960 billion against 1,570 billion. The increase in M&A transactions has alsobeen important on a European level during the same period.In fact, it has risen from 6,767 transactions, equal to a value of $ 256 billion for theperiod 1990-1995, to 9696 transactions, equal to a value of $1,310 billion for the period1996-2001. »

Merger and acquisition transactions in the major industrial countries: 1990/1995-1996/2001 (1)

1990-1995 1996-2001Total Value Total Value

Countries

Number Billion $ %GDP Number Billion $ %GDP

AUS

628 29,5 1,5 1,423 91,7 4,0

B 251 7,1 0,5 354 57,8 3,9CAN

1,421

41,6 1,2 2,888 287,4 7,3

F 1,683

81,9 1,0 1563 269,6 3,2

D 1,913

37,3 0,3 3,039 437 3,5

JAP 216 56,1 0,2 2,291 234,5 0,9I 852 55 0,8 1,048 198,2 2,9NL 565 25,6 1,3 635 127,2 5,5UK 2,34

9170,9 2,7 4,484 848,6 10,3

E 510 25,6 0,8 1,042 99,3 2,8USA

8,743

811,2 2,1 14,102 5,272.3 9,7

SW 473 33,8 2,4 793 126,0 8,9CH 412 14,6 1 485 85,9 5,6TOTAL(*)

19,996

1,390.2

1,3 34,147 8,135.5 6,1

Europe

6,767

256,0 0,7 9,696 1,310.3 3,4

World

26,062

1,570.3

50,787 8,960.2

Source: Bank of Italy (2002) in Stefano Palmieri (previously quoted)Note: (1) includes mergers and acquisition of majority interests- (*) Countries of the G10, Australia andSpain


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To these merger and acquisition operations3, should be added those that come down to acompany being sold, of contracting out the production units, outsourcing, corporatepartnerships or quite simply the announced closure of sites or establishments. Thesewaves of reconstructions more often than not end up with redundancy schemes, wherethe sheer extent and sometimes the brutality with which they are announced4 regularlyproduce shockwaves in the Press. Between February 2002 and the end of September2002, we have made a census of more than 659,000 job cutbacks worldwide5, followingrestructuring operations in corporate Groups. In September 2002 alone, therestructuring operations underway in 71 Groups worldwide may have resulted,according to the International press, in the announced cutback of 89,545 jobs. The tablehereinafter gives a few examples of the staff cutbacks announced during the month ofSeptember:

Companies - Restructuring Jobscutback

Press - source

VNU NV Outsourcing of call centre inIndia

54 Newspaper « LesEchos »30/09/2002

Bombardier Restructuring of the Americanaeronautic industry

2 000 BBC News 27/09/02

Alcatel Restructuring programme 20 000 Reuters 20/09/02Bayer AG Acceleration of the movement

of restructuring in Germany4 700 Newspaper « Les

Echos »Zurick FinancialServices

Restructuring plan 4500 Lesinfos.com06/09/02

IBM Restructuring plan 4 000 Newspaper « LesEchos »

Sampo 700 Helsingin Sanomat,02/09/02

Total Fina Elf Planned redundancy 693 Capital 01/09/02Nouvellesfrontières

Planned redundancy 320 Capital 01/09/02

Northwestairlines 1020 Detroit Free PressInterbrew SA shutting down its Dutch

brewery in Breda anddownsizing its UK plant inManchester

400 lAFX Europe,09/09/2002

ConsolidatedFreightways

the third American in roadtransport-bankruptcy

14480 Newspaper « LesEchos » 03/09/2002

Imperial TobaccoGroup

Following the acquisition ofReemtsma

800 Le Revenu,18/09/2002

HP HP plans further job cuts :1800 ZDNet, 25/09/2002Mobilcom AG Restructuring of the German

enterprise (mobile phone) –announced following thewithdrawing of its mainshareholder France Télécom

1200 Reuters 25/09/2002

SBCCommunications

2000 Bloomberg,26/09/2002

3 which do not, incidentally, automatically entail a cutback in staff4 Staff cutback projects that are sometimes announced by the Press before the personnel or their representativeshave even been informed.5 See web site http://www.transnationale.org/dossiers/finance/emploi_012002.htm


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Our main assignment in the first instance was therefore to find and gather informationconcerning the means implemented in order to carry out preventive management ofchange in companies in each member state, then to put this information into perspective,in order to proceed with a comparative analysis.

The information required by the Commission includes that pertaining to the current ruleof law in the member states and that resulting from labour relations practices, especiallywithin companies: it was therefore a question of delving far deeper than the legal textsand the initiatives launched and steered by the social partners in order to accompanyrestructuring operations.

These play a fundamental role in changing management techniques in the event ofrestructuring; they are not only responsible for the effective implementation of the legalprovisions in force (the application of provisions covering collective redundancies, forexample), they also participate in the field, in developing often innovative practices todeal with restructuring upstream of the event. These practices can also be thefoundation of new rights for the employees.

The information and consultation of worker representatives without doubt constitutes akey component in controlling the set up for anticipating change. If the company’sstrategic choices are not known in time, it is not possible for these to get organised andto intervene in the process of change.

The same applies to worker representative consultation – any opportunity for the socialpartners to come up with alternatives to the management’s restructuring project, or toseriously manage the social consequences of these restructuring operations would becondemned to failure.

Since 1975, the date that the first EC directive on collective redundancies was adopted,the European Commission has developed and reinforced the information andconsultation processes in companies. Restricted from the start to specific economiccircumstances (economic redundancies in 1975, company takeovers in 1977) with anational aspect, these mechanisms have been extended to questions of worker health andsafety, equality between men and women, etc. and have been gradually integrated intothe general framework of contingency employment management (executive directive oninformation and consultation 11th March 2002), with the directive on European WorksCommittees6 they have had trans-national effects and developments.

6 More recently with the corollary labour directive to the Regulation on European Corporate Status


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The outstanding merit of the Commission’s new initiative “Anticipating and ManagingChange” is the desire to back up this idea of information and consultation with newmeans, the implementation of which is based on a more global approach to labourrelations, insofar as it comes within company action in a labour and society aspect thatdoes not aim to merely arrest the impact of restructuring in the company, particularly onhuman resources, but also on its suppliers and the surrounding areas and employmentbasins7.

It aims at making sense of the process of change within companies, and in doing someets yup with current debate on Corporate Governance and Corporate SocialResponsibility8: The anticipated management of restructuring is one of the keymechanisms in implementing this responsibility.

7 The environmental aspect that can, incidentally, itself contribute to restructuring (the degree of pollution from acompany may, in certain cases, be a decisive criterion in closing a site) ins not dealt with in this report.8 See European Commission green paper on Corporate Social Responsibility


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The European Commission has identified several domains where Corporate SocialResponsibility could well be expressed. This report carries out a comparative study ofthese various areas:

Top Down Responsibility

Collective redundancy procedures take place downstream of strategic corporatedecisions that might have effects on jobs. They nevertheless contain legislative orconventional measures or encourage the emergence of corporate practices or legal set-ups, wherein the somewhat innovative contents are designed to avoid or reduce thesocial impact of these decisions.

Employability

The notion of employability first appeared at the beginning of the century with Englisheconomists9, being used to discuss the “social danger” that certain categories of“employable individuals” represented due to their physical characteristics and theirdesire to work, and those of “unemployable individuals” who, on the contrary showedno such inclination to work.

This distinction enabled a differentiated treatment of individuals by public policies andassistance, emerging from the social control of the latter. The concept was also used inthe United States to select unemployed people to allocate to the major programmes inthe New Deal in the 30’s, and gradually, especially within the framework of the WelfareState, became the method whereby an unemployed person’s chances of findingemployment were assessed.

Today, the notion of employability, which is one of the pillars of European employmentstrategy, has a different accepted meaning, as it is mainly concerned with developingindividual skills: “A person is employable if he or she has the marketable skills,competences and features which are regarded by the labour market demand as necessaryconditions for hiring”.

Which enables the implementation of active employment policies based on theresponsible action of the individual in the development of their career path, and nolonger necessarily designed to assist physically handicapped people overcome thisobstacle to entering the employment market.

9 As with Barnett and Tonynbee in Economic review, reported by « le Monde » dated 26/11/2002


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As we see it, this notion is being approached in an innovative fashion in several memberstates. We have taken care to point out the actions pertaining to employability that enterinto the framework of restructuring management, and especially to underline those thataccompany collective redundancy projects (internal mobility, external mobility, etc.)

External Responsibility

The strategy of the industrialist (order placer), who calls upon sub-contracting, hasmiscellaneous foundations, among which feature:

- The acquisition of new contracts, necessitating equipment or know-how notpresent in the organisation. In this way an entire network of sub-contracting companiescan develop around an industry.

- The industrialist opts to centre its company’s business on its predominant skillsector, and outsources to other companies that have the equipment and know-how toundertake parallel activities (for example: industrial cleaning, catering, securityguarding, etc.) .

- The order placer can therefore call on a sub-contractor to provide it with humanresources that it does not have at its disposal – even if this situation does not answer toan equipment or know-how problem.

- In all cases the order placer’s responsibility to its sub-contractors can be broughtinto play (responsibility in terms of securing orders, wage conditions, safety, etc.)- Incidentally, major corporations often maintain informal links with othercompanies or establishments, thus building up networks of companies that come insidevariable perimeter territories (up to European or world-wide). Corporate socialresponsibility also applies in the framework of these networks.

Territorial Responsibility

Companies maintain obvious links with the territories on which they work. Theinvolvement of these companies as actors in the area in co-operation with the localbodies has become an important factor in sustainable social and economic developmentof these areas: territorial projects and economic development activities are, in the main,allied. Conscious of their involvement in the development of the territory, somecompanies commit resources to take part in the buoyancy of their area (for example, bytaking part in the development of the qualifications required in the populationconcerned) or to anticipate the social risks of a planned restructuring operation in theterritory (site closure, for example). New forms of social co-operation involving severalcategories of participants (social partners, elected representatives, associations,consultants, universities, and even the Church, as shown in Italy) are being implementedin several member states.


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Collective Dimension

The national arrangements concerning the workers’ implication as well as the ways ofpreventing and solving conflicts have been examined in this paragraph.

The competition procedure

The member states that agreed with an open market economy are generally entitled to aright to compete. Each of them set up some specific authorities and put them in chargeof analysing and regulating the market.These authorities act in collaboration with the European authorities regarding thecompetition. Therefore, no national decision can harm the application of the completeand uniform European rules, valid for the whole European Union.Hereby we will observe if the social criteria linked to the employment is included in thenational competition procedure and, in particular, the role of the workers’representatives to the national authorities.

Those different fields of the social responsibilities of the companies are all linked up.When a company decides to buy out an enterprise, the relationship between thecompany and its partners (especially the subcontractors) may be modified. It mightoutsource some functions, even relocate them in a different country, or simply lead tothe closing down of an existing site (in case of a similar output).

Such decisions do have an impact on the employment rate in the group as well as anincidence on some geographical areas where a specific production allows the growth ofa territorial employment.They do refer to the internal, external or territorial responsibilities of the companies.

MethodologyIn order to fulfil its duty, Alpha Consulting, the contracting partner, formed a group ofexperts « Management of the Change ». In addition of Alpha Consulting (Jean-JacquesParis), this team was composed by directors of several expert offices : LABOURASOCIADOS (Ricardo Rodriguez), EWR (Michel Erhardt, Barbara Jentgens), GITP(Rienk Goodijk, Willem MG Allertz) and a free-lance expert, Evelyne Pichot. Theoffices and experts are presented in the appendix.Each member of this team was in charge of collecting and dealing with the informationconcerning specific member states, especially their own, according to their choices andoperational criteria such as linguistic abilities or existing network.

To collect legal or political information, surveys were discussed, written and adopted bythe team, during each meeting. These meetings took place in Brussels, 24th June, 20th

July and 16th September 2002 and in Madrid, 31st October 2002. The surveys areattached to the appendix.


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When the team was facing some difficulties in receiving the information from a memberstate (only having part or none of it), each expert, alone or with their colleagues, had tomake a search.

Being practical cases, the information came from the experience of each expert of ourgroup who intervened in companies inside the European Union and who interceded withthe managing directors and social partners.

We led this ambitious work with an increasing interest. It allowed us to assess theattitude of the companies towards the management of change. Unfortunately, due to thetime schedule, we were unable to examine all the practical cases that would havereinforced the analysis. Also, the fact that the contract covered the months of July andAugust, prevented some of our partners from sending the answers on time. We,therefore, would like to apologise.


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EXECUTIVE SUMMARY

The background

Corporate restructuring has become a permanent process and its speed accelerates. Apublic debate grows on the way to drive that process in Europe and The EuropeanCommission has issued a document in January 2002 aimed at consulting the socialpartners on the possible direction of Community action in this field.

Following this consultation, the European Commission has asked a group of experts ledby Alpha Consulting to carry out a comparative analysis on the rules governing theanticipation and the management of corporate restructuring in the Member States. Laws,collective agreements as well as corporate practices regarding collective redundancies,employability, external and territorial responsibility, workers’ involvement andcompetition procedures have been addressed by the group of experts. The report of itswork has been issued in December 2002.

The collective redundancies and the top-down responsibility

The implementation of the directive regarding collective redundancies has contributed toimprove the management of corporate restructuring and to mitigate its worst socialconsequences all over the European Union. Nevertheless, the differences in the legalframeworks governing redundancies remain vast and the extent of anticipation is verydifferent.

In most of the member states there are more and more provisions and practicesregarding anticipation and management of change. Legal, economic and social aspectsof restructuring are then linked in a new way. Time and early warning are notablycrucial to manage change in a successful an economically sound way. In this context,the group considers that improvements should be developed regarding:• the definition of “redundancy”• the quality of information required as regards the economic background of arestructuring project.• the adequate time and expertise for the workers to analyse this information andto develop adequate suggestions and alternatives.


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The principle whereby redundancies are only a last resort (“ultima ratio”) to be used inthe absence of other, less drastic, solutions exists in most member states, eitherimplicitly or explicitly. There are two ways to bring this principle into play:• the economic way, in order to maintain the employment level,• the social way, which focuses on the mitigation of negative social consequences

In order to promote anticipation, the group considers that the link between these twoaspects is very important and that change is more successful when the different actorsare also involved in the economic way at an early stage.

The employability

The link between top down responsibility in restructuring cases and employabilitymeasures is getting stronger all over Europe. Furthermore, in restructuring processes, itappears especially important to maintain the workers’ capacity to adapt to developmentsin the techniques and knowledge required for two reasons:

- the skills’ level of the remaining employees has to be raised in relation to thequality requirements and the economic needs- the employees made redundant need to find a new job on the labour market

Generally speaking, employability is variously interpreted as meaning ‘training’,‘prevention’ of unemployment, ‘activation’ in order to strengthen the employee positionon the labour market and ‘re-integration’ of unemployed contributing to the fight againstexclusion. In practice most used employability tools are training systems (especiallywork place training), life-long learning systems, personal development plans,competence development plans, internal replacement and outplacement, job-enrichmentand –enlargement, improving mobility, plans for keeping older people in work.

A key success factor for the employability appears to be the dialogue between the actors(notably employer, employee, state). In several countries the works council has the legalright to be involved in the developing of training programmes, to influence the decisionsregarding training and employability. In restructuring cases, the role of the State and ofthe local authorities becomes more important and in some countries there exist regionalcompetence centres.

The distinction between the “normal times” and the “restructuring periods” as regardsthe duty to take care about employees’ employability is relevant in most of thecountries.


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The main question is how the company’s obligations regarding employability ofredundant and remaining workers should be formalized and enforced. Employabilitycould be incorporated (by law, collective agreements, etc.) in both the individualemployees’ rights and the company’s responsibilities in case of redundancy. Howeverthe earlier the action is taken, the better are the chances to manage change successfullyand the provisions regarding employability in “normal times” are to be considered as amajor issue.

The external responsibility

Outsourcing becomes a common corporate strategy in almost all the sectors of economyand is particularly developed in electronics. In some cases, this strategyleads to anincreased partnership between multinationals and small and medium companies and maybe perceived as creating new opportunities for them. But the “Network Company” alsobrings new risks for the employment in these SMEs, which are often in an economicdependence towards their major clients.

Regarding subcontracting and outsourcing, the legal provisions aimed to address thecompanies’ external responsibility are quite rare in the member states, except in case oftransfer of enterprises. In this situation covered by the 77’ Community directive, theworkers’ contracts and rights are maintained during the transfer and there is a duty toinform and consult the workers’ representatives.

However, one thing is to protect the employees during the transfer; the other is to protecttheir interests during the months or years following the transfer. Too often, theoutsourcing looks like a way to outsource the problems by giving to another part (thesubcontractor) the responsibility of making the employees redundant after the transfer.The national provisions dealing with the relationship between the subcontractor and themain company, even when the latter orders a restructuring, are rare but interesting toconsider.

In this context, the negotiations between the social partners play a key role in the waythe restructuring process is managed, through an active participation of the workersrepresentatives in the companies themselves, through a “social branch agreement”, orbased on new forms of collective organisation of work. These agreements may cover theworking conditions, the level of employment or the relationship between the maincompany and the subcontractors.

As shown by the cases the group has analysed, new forms of responsibility inside thecorporate networks (especially between the main companies and the subcontractors) arearising through the introduction of quality standards, ISO norms, or provisions regardingthe workers’ health and safety.


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Nevertheless, enterprises networks are in variable geometry territories, this puts forwardnew stakes in terms of enterprises territorial responsibility.

Several member states try also to find new ways to extend the company’s socialresponsibility over the borders. In particular, they intend to promote the application ofsome key ILO Conventions in the developing countries where multinationals havesubcontractors.

Generally speaking, the group proposes to include the external responsibility into theconcept of « Corporate Social Responsibility » and into further action regardingrestructuring. The anticipation and social risk management linked to subcontracting oroutsourcing are actually essential to a proper management of corporate restructuring.

The territorial responsibility

From a territorial point of view, a restructuring process can have a very negative impacton the local community. The impact is not only economical and does not only affect thelevel of employment, but it also affects symbolic capital and the cohesion of the localcommunity. Just like companies look for flexibility and employees look for security, theaspiration is for the territory to enjoy a stable equilibrium between different interests.The territory is considered to be all social, economic and environmental stakeholderswho have interests in an area. The concept of sustainability and territorial equilibrium isthe basis to demand territorial responsibility.

However, the concept of territorial responsibility is not included in the legal regulationsof Member States. Only in France does it play a significant role by means of a recentregulation (Labour Modernisation Law, July 2002), which shows innovative approachesand perspectives.

As for other aspects of a restructuring process, time plays an important role. The time inwhich a crisis and its impact can be anticipated is time that can be invested in reducingits effects and finding constructive solutions.

From the point of view of cost-benefit analysis, the more that is invested in advance toameliorate the territorial impact of a restructuring process, the smaller the economic costwill be. Usually, this cost is finally covered by public expenditure, both directly –regeneration of industrial sites – and indirectly – reduced tax revenue. Prevention isalways cheaper than tackling the crisis.

However, no signs have been found revealing mechanisms of anticipation for crisesfrom a territorial perspective. With the exception of France, no tools exist to prevent andmeasure the impact of the crisis, nor is there any obligation to conduct prior studies. Theterritorial impact of company crises and company restructuring is only considered afterthe fact.


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Certain voluntary practices relating to Corporate Social Responsibility are followed indifferent Member States, and by certain companies. In general, these practices based onCSR with respect to restructuring processes take place after the crisis and do not includepreventive measures. They are palliative, not preventive.

The group considers that progress should be made towards building a shared concept ofterritorial responsibility. Some principles, which could inspire this concept, might be:- The obligation for companies in certain circumstances – type of company, specificterritory, etc. – to behave like another “neighbour-citizen” in the local community, withrights and responsibilities.- The obligation for companies in certain situations, to repair the damage done andeconomically compensate for the alteration of the local equilibrium and economic andsocial cohesion.- Compensation must be proportional to the negative impact.

In this sense, European Commission could adopt a more proactive role within the focusof community programmes for the next Structural Policy programming period includingconcrete objectives and specific measures with respect to restructuring processes in anintegrated approach.

Prevention mechanisms and alert systems for the local community should be tried out.Under certain conditions and according to certain requisites, representatives of localauthorities could share all or part of the information that companies are obliged to giveto employee representatives and trade unions.

Even taking into account the existing diversity in terms of distribution of territorialpower in the EU Member States, community and national programmes should legallyreinforce the role played by local authorities in managing crises, overcoming the passiverole played by some states or their limitation to strictly passive measures – realisationand financing of local training.

Also local authorities might consider the possibility of incorporating in their publicprocurement “territorial clauses” while respecting the freedom of the company, themarket and competition. These clauses would oblige companies to refund the public aidreceived, both for their set up or for any other reason in the case of an unjustified closureor move. If the company modified its status or its ownership, the content of theseclauses would be transferred as an obligation to the new owners.

From a preventive point of view, it would be advisable, outside the heat of crisis,negotiate contingency protocols for cases of corporate restructuring, incorporatingprinciples, criteria and expected/desired results. It would also be advisable to establishterritorial funds to finance tools with which to solve situations of crisis and technicalinstruments for an appropriate territorial management of the restructuring process,including resources for expertise and systems to search for investors.


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These reserve/anticipation funds, similar to those agreed between company managementand employee representatives, could be built out of the proportional contributions of themain local stakeholders and be co-managed by a local partnership. These funds wouldserve to maintain the local equilibrium alert in a permanent participatory restructuringprocess.

The collective dimension

With regard collective redundancies and transfers of undertakings, the main nationalprovisions governing information and consultation of employees have been harmonizedthrough the structural Community directives.

In economic matters regarding restructuring, the workers’ representatives have alsomore or less systematic opportunities for information or consultation in the memberstates with regard to the undertaking’s economic and financial situation, staffmovements and work organisation or decisions having a significant effect on theworkforce. However, the situations are very different with regard to competition,company plans and strategy, which are essential to the anticipation. Expected changeswill occur at this level with the implementation of the 2002 framework directive oninformation and consultation (2002/14/CE)

Information and consultation are supplemented by co-determination systems in fivemember states, based on approval procedures, right of veto, joint decision-making orcompulsory negotiation with staying effect. Provision is also made for workerrepresentation within the board of directors or the supervisory board of privatecompanies, in half of the member states. This participation provides monitoring andapproval of major decisions, information and involvement in decision-making, includingin restructuring processes.

In the course of restructuring processes, employees’ interests are however sometimesseriously affected by operations and decisions taken outside of the undertaking, i.e.decisions relating to competition policy, sectoral strategies, State aid, or dealing withundertakings in difficulty, etc.


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With regard to undertakings facing difficulties, there are a number of national provisionswhich could be promoted at Community level:

- Early warning systems may be activated by employees’ representatives and a right ofinquiry exists in some countries;

- Employee’s representatives may be consulted under amiable settlement procedures oron the implementation of special measures for undertakings in difficulty;

- Safeguard clauses, exceptions to collective agreements and collective agreementsdesigned to reduce costs, may be negotiated between the social partners ;

- As part of the legal recovery or liquidation procedures, half the countries have asystem for informing the employees’ representatives, sometimes limited to the effects ofredundancy decisions and employees’ representatives may make their views known ortaking part to negotiation procedure.

In the event of operations affecting shareholders, promotion should be made of thedifferent ways in which the workers affected could be at least informed :

-Participation on the management boards within the undertaking, co-determinationsystems and, more generally speaking, workers’ involvement systems, are meanswhereby the workforce can be informed before the operations take place and economicexperts can be called in to provide assistance.

-Almost all member states make provision for informing the employees’ representatives,

-Prior consultation, co-determination or negotiation procedures, usually focusing on theconsequences for the employees, are provided for in most of the countries

As regards State aid, employee involvement systems at company level allow workers’representatives to be informed and consulted in most cases. Tripartite consultationsystems and union representation in the aid-giving organisations ensure that the workershave a say in the granting of aid, i.e. for employment and training. “Employment pacts”also provide opportunities for negotiations between the social partners and theauthorities involved in granting State aid.

More generally, the group observes that the workers’ involvement is foreseen atcompany level and will be reinforced by the 2002’ framework directive on informationand consultation but that further action should be taken at Community level regardingthe operations and decisions taken outside of the undertaking that form an important partof the corporate restructuring processes.


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The competition procedures

Corporate restructuring processes are often linked with mergers and acquisitions andtherefore faced with competition procedures. The group has brought into the debatesome national references relating to the link between the policy on competition andsocial policy in terms of mergers on three aspects:

-The employee involvement upstream of merger notifications,-The employee intervention with the regulatory authorities,-The link between the different aspects in merger control.

Upstream of a merger notification to the regulatory authorities, national employeeinvolvement systems within companies, mostly focused on the foreseeableconsequences on employment of the project, exist in the majority of member States.The implementation of the 2002’ framework directive on information and consultationwill contribute to generalize this involvement. It does however take different formsdepending on the country concerned:

-Prior (or immediate) information and consultation of the employees’ representatives,-Discussions with the unions,-Meeting of the workers’ representatives with the Supervisory Board,-Co-determination systems or prior negotiation obligations,-Participation in the Board of Directors or Supervisory Board which decide on or haveknowledge of merger projects

The employee intervention with the regulatory authorities is foreseen and takes differentforms at national level:

-The ability to have representation within a company for the defence of employeeinterests in the face of the appropriate authorities is generalised throughout themember States-Meetings held between employee representatives and the regulatory authorities offeroften the opportunity to express the employee viewpoint-Formal or informal discussions with unions are held in the most of the countries


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Regarding the basis of the competition regulation and the links between the variousaspects at stake:-The basis of decisions by the national regulatory authorities is not restricted to the fairtrading balance sheet: notion of public interest, economic balance sheet-There is a general existence of exemption schemes, based on wider economic, social orpolitical issues of the regulations covering competition-There is an all round existence of links or possibility of arbitration between thecompetition authorities and the other public authorities: definition of general directionsand the priorities by the Economy Minister, final authority of the Government,integration of other authorities into the procedure or structures, other formal andinformal systems of taking the various aspects of decisions into account (industrialpolicy, employment, regional development, etc.) by the national authorities anddiscussion between the actors.

Taking into account these national systems, the group considers that further thoughtneed to be given to the link between the competition procedures and the social policy atCommunity level.


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CHAPTER I

TOP DOWN RESPONSIBILITY

COLLECTIVE REDUNDANCIES POLICY


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Top Down Responsibility and Collective Redundancies

1. Introduction

The European Commission tasked us with collating and evaluating data, legal provisionsand sample cases on the subject of collective redundancies under the heading of ‘TopDown Responsibility’, as outlined below:

- Obligation of motivation for dismissalTypes of control: judical consequences

- Ultima ratioTypes of controlPreliminary solutions (reorganisation of work, working time, search for rescuer etc.)

- Early retirement , or similar regimes

- Compensation and notice regimes

2. Summary / Conclusions

The EU directives on mass redundancies in cases of restructuring were implemented inall member countries. In some member countries this has resulted in the introduction ofimproved methods for avoiding redundancies or managing the consequences.Nevertheless, the differences in the respective legal frameworks are vast by anystandards. Unclear definitions, in part, make it difficult to implement initiatives to avoidthe negative effects associated with restructuring measures. Some action could be taken.

The existing obligation of companies to justify layoffs indicates an enormous margin offluctuation. A comprehensive duty on the part of companies to provide information ontheir policies and all economic data in the context of planned layoffs exist only in a fewEuropean countries. In some European countries, employee representatives areauthorised to call in experts to evaluate the information. Time-related regulations forevaluating information to substantiate planned layoffs also have an enormous margin offluctuation. One main requirement for the development of a successful andeconomically sensible concept for avoiding layoffs, however, is information as well asadequate time and expertise to analyse this information and to develop independentsuggestions. Some action could also to be taken in this case.


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The ultimate ratio principle in most member countries is established either implicitly orexplicitly. However, there is an array of solutions which focus on keeping upemployment contracts as well as solutions that are to mitigate negative socialconsequences. In this case, a clear definition would be helpful. There are a number ofcountries that have clearly defined provisions and regulations which control the dialoguebetween social partners and agencies.

This has proven to be helpful in that this relates to regulations in terms of the timeavailable, resources, and the potential engagement of expert opinions.

Recently, the easing of social consequences resulting from layoffs has been supportedwith increasing frequency by tools of the labour market policy. Job centres, transfercompanies and the use of experts for the placement and qualification of employees areonly some examples for means of this type. Apart from furnishing sufficient resources, arelevant factor of performance is establishing these types of tools in the respectiveregion (compare territorial responsibility). In some cases, investors and acquirers ofassets were found successfully. Apart from developing a conclusive economic concept,support offered by government agencies is a deciding factor of success (compareexternal responsibility).

The provisions concerning redundancy payments and the formation of social schemes invarious European countries are adapted by the aforementioned developments. Clearlydefined deficits, however, are found in the amount of the respective redundancypayment regulation. In many cases, the scope of fairness of compensation for the loss ofemployment is rather limited.

In many countries, early retirement agreements are used as a tool for managingrestructuring measures. In this case, however, one can observe a clearly defined trend toestablish agreements more firmly as a sliding transition towards retirement.

Government agencies in European countries should keep each other posted concerningemerging mass layoffs. The time at which the information is passed on, however, variesconsiderably. In some countries, mass layoffs must be approved by an agency. Theagency examines whether there has been compliance with all legal procedures.

The legal provisions and conditions to be observed by the actors in the case of masslayoffs resulting from restructuring measures must always be supported by sanctions.The practical relevance to regulations without sufficient sanction tools is highlydoubtful, for example, in Austria (where an early warning system exists) and as isindicated in other examples.


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Without the sanction tools there hardly is any pressure to abide by these regulations. Interms of the various types of sanctions that exist, it must be ascertained that

- they are able to focus exactly on the objective of the corresponding regulation,

- must have sufficient latitude,

- must be in proportion to the level of damage caused by non-compliance with thisrule,

- mainly should focus on prevention.

In summary, the Commission’s directives in recent years have achieved progress inimplementing measures and tools to avoid layoffs resulting from corporate restructuring.The practical application in some countries, regions and companies, however, indicatesthat, in view of the economic development in Europe, further development is necessaryand significant. Moreover, the main objective could be the creation of a highercommitment on the part of the actors, as well as a strengthening of the social dialogue atthe preliminary stage of initiating restructuring measures. In the course of conductingthe social dialogue, there is sufficient time and information to gain access to expertiseand funds, establishing crucial factors of performance for stabilising, maintaining andcreating employment in cases of restructuring.

3. Understanding of the task / Methods

There are a number of recent and relevant studies on the subject of collectiveredundancy at both European Union and national levels. E.g.:

- Gyllenhammer Group, November 1998: report on the economic and industrialimplications of industrial change in Europe

- IRS Research, July 2002; Inclusion of employees and tariff negotiations in therestructuring of companies

- European Foundation of the Improvement of Living and Working Conditions, July2001: comparative study on the involvement of employees and collective bargaining incompany restructuring

- European Foundation of the Improvement of Living and Working Conditions,September 2001: comparative study on progressive retirement in Europe

- UET, July 2002: Corporate social responsibility and working conditions

- IUS laboris, November 2002: Collective dismissals across Europe


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In continuing the development of the a.m. studies, the following evaluation of theprovisions related to impending collective redundancy in the various European countriesfocuses on the study goals described below:

The ability of collective redundancy legal systems to prevent and/or reduce the impactof economic changes on employment constitutea veritable challenge for all memberStates.

This is not the first time the European Union finds itself confronted with such anemployment challenge. Beginning in 1975, the serious increase in unemploymentfollowing the various oil shocks led the Council of Ministers to adopt, after longnegotiations, the community directive to align member States’ collective redundancylegislation (Directive n° 75/129/EEC Council, of 17 February 1975).

This directive, which underwent minor modifications in 1992, aims primarily tostrengthen worker protection in the event of collective redundancies: collectiveredundancies, as defined by the text of the directive, may only be adopted afterconsultation between the employer and the labour representatives in accordance with arigorous procedure. The directive also provides a procedure for notifying the appropriatepublic authority of any redundancies.

Faced with corporate prerogative, whereby the employer has the power to makeeconomic judgements, regulations have gradually granted workers and theirrepresentatives the collective agreement. In addition, labour relations practices havegiven them the means to anticipate the employment risks of companies’ strategicdecisions in order to avoid or reduce redundancies and to attenuate their effects. Inseveral member States today, the right to collective redundancy is matched by theprinciple of the right to prevention.

In the European Union, the series of measures launched recently by the Commissionalso aim at better “anticipating and managing change (regarding restructurings andeconomic changes),” by helping companies and workers adapt to industrial changes.These measures are part of a change management and risk prevention dynamic based onactive labour/management partnerships. These partnerships are attached more than everto achieving an essential balance between interests that answer to new labour,environmental and economic logics.

In addition to the evaluation of available studies on the topic, expert interviews wereconducted in the different countries, based on the questionnaire enclosed as anattachment, and sample cases were collected. The following statements are basedprimarily on the evaluation of the questionnaires and include best practice examples.


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4. Definition of collective redundancy

The Council Directive 98/56/EEC of 24 June 1992 amending Directive 75/129/EEC onthe approximation of the laws of the Member States relating to collective redundanciesgave the following definition on the term collective redundancy:

‘Collective redundancies' means dismissals effected by an employer for one or morereasons not related to the individual concerned where in any period of 30 consecutivedays the number of such dismissals is —

1. at least 5 in an establishment normally employing more than 20and less than 50 employees,

2. at least 10 in an establishment normally employing at least 50but less than 100 employees,

3. at least ten per cent. of the number of employees in an establishmentnormally employing at least 100 but less than 300 employees, and

4. at least 30 in an establishment normally employing 300 or more employees.

For the purpose of calculating the number of redundancies where the number ofdismissals is at least 10 in an establishment normally employing more than 20 and lessthan 100 employees, terminations of a contract of employment which occur to theindividual workers concerned shall be assimilated to redundancies provided there are atleast 5 redundancies.

`Establishment' means an employer or a company or a subsidiary company or acompany within a group of companies which can independently effect redundancies.

In almost all European Union countries, the definition of collective redundancies isindependent of the employees’ personal behaviour or performance. The statutorydefinition of collective redundancies makes clear almost everywhere that economicreasons are the cause of the redundancy.

The qualitative criteria of collective redundancies are only unclear in Finland wherecause of redundancies can depend on the company’s financial situation or on theindividual. In line with the EU directive, the factors “number of redundancies”, “size ofthe enterprise” and the time period in which the redundancies are realised are named ascriteria in all countries. The numerical parameters for the redundancies and the size ofthe enterprise vary. The lowest values are in Portugal where more than 2 redundancieswithin three months in smaller enterprises with up to 50 employees are alreadyconsidered as collective redundancies.


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The numerical thresholds are significantly higher in other countries. A distinction isusually made in the three segments small, medium and large enterprises(establishments).

There are often no regulations governing collective redundancies in establishments withless than 20 employees. The time period for the redundancies also differs significantly.A 30-day rule applies in most countries (Austria, Germany, Ireland, Denmark), but theperiod is considerably longer in others. Some specify a period of 90 days (UK, Sweden,Spain, Portugal) and other countries go even further, like Italy, for example, where aperiod of 120 days is decisive for one type of collective redundancy. A second type ofcollective redundancy considers every redundancy if employees who were with the“cassa integrazione” cannot be reintegrated. France is unique in that collectiveredundancy triggers an obligation on the employer to conclude a “Job Protection Plan“.

In establishments with more than 50 employees, redundancies realised in a period of upto three months following restructuring also fall under the corresponding provisions forcollective redundancies. In addition, redundancies are then collective redundancies ifmore than 18 redundancies have been notified within one calendar year. All newredundancies for economic reasons that can be foreseen within the next following threemonths are treated as collective redundancies.

Employers in some countries attempt to carry out foreseeable redundancies in such away that the applicable provisions governing collective redundancies can be avoided. Ingeneral, this is accomplished by discharging a correspondingly smaller number ofemployees over a longer period of time for economic reasons. The shorter the period forcounting the redundancies to be reckoned as collective redundancy, the easier thisbecomes.

Some countries consider the reasons for the redundancies. If the reason for redundanciesis the same, then these are counted together as one and the same measure. This appearsperfectly plausible. In addition, the question arises as to what the term redundancymeans in the individual countries. The best approach here is probably to look at thenumber of jobs to be finally abolished. The definition is clear, for example, inLuxembourg where cases of pensioning off within the reviewed period under are alsocounted as redundancies. Labour courts in Germany also follow a similar practice in thisquestion.

In summing up, it can be said that the definition of collective redundancy is subject tosimilar systems in almost all European Union countries, albeit with significantdifferences in quantitative dimensions and borderline values. These are not harmonised.


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In addition, we find that due to partly vague definitions, and especially the relativelyshort review period in numerous countries, employers try to circumvent the specificprovisions applicable to collective redundancies. A less ambiguous description of theestablishment, the redundancies (or to be more precise – reduction of the permanentworkplaces) and the review period would be a help. The inclusion of changesforeseeable in the near future as in France, for example, shows that there are positiveexamples for an expanded definition of collective redundancies in Europe. The questionis the extent to which this experience is transferable to other countries.

In all countries, the definition of collective redundancy leads to specific rights orobligations of those involved. In view of the differing aims of the participants in termsof their roles in the restructuring process, vaguely or poorly worded definitions ofcollective redundancy aggravate contentions between the involved interest groups.Clearer definitions and terms give the participants greater latitude to jointly accomplishthe restructuring process. Mediation in the sense of greatest possible goal achievementfor all involved needs an even clearer delineation of what is meant by collectiveredundancy.

5. Obligation of motivation for dismissal

The obligation to disclose the motivation for dismissals is basically given in allEuropean countries except Greece. Apart from the public sector, there is no statutoryobligation in Greece to state economic reasons. Collective redundancies are justifiedhere solely as dismissals not connected with the person of the employee.

In Greece, as in almost all other countries, a dismissal can only be notified if there is areal and serious reason. This was, for example, explicitly so described for France,Finland, Luxembourg and Germany. In looking at the question about disclosing theeconomic reasons for dismissal, we see that also in other countries serious reasons mustbe put forward in writing in order to undertake dismissals.

There are more precise definitions in several countries specifying what reasons can bedecisive in this respect. A distinction is made in France between economic, technicaland organisational reasons. There is a similar segmentation in Spain. The organisationalreasons are joined by reasons in connection with the company’s productivity.

Germany also distinguishes between shutdowns, partial closures, relocations, mergersand split-ups, as well as organisational reasons or changed working methods. In othercountries there are no descriptions specifying more closely what a reason for intendedcollective redundancies must encompass.


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In Sweden, for example, it is only demanded that “objective reasons” must be given.Only the economic reasons need to be stated in Austria.

In view of this, it could make sense to specify in greater detail the possible contents of areason for dismissals. This all the more so because the information from the companyabout the economic situation, i.e. the reason for the intended collective redundancies, isthe starting point in the search for alternatives to secure employment.

A further problem is the question of the point in time of information about the economicreasons for collective redundancies. Laws in the Netherlands and Germany stipulate thatinformation must be provided at an early stage.

Statutes in Germany also specify that the information scope must be comprehensive. Itis usual in Germany when collective redundancies are pending that the company’s firstannouncement is followed by an information phase in which the employee councilreceives answers and data concerning all questions in connection with the economicreasons for the company’s intended measure.

In many cases, this information is the starting point for joint deliberations by employeecouncil and management to avoid collective redundancies. Timing and scope of theinformation are key success factors in exploiting the possibilities to avoid collectiveredundancies.

It has proven successful in France, the Netherlands and Germany to have the economicreasons for planned dismissals audited by experts. The results of this are in many casesthe basis for economically founded suggestions to avoid dismissals. Confidentialitymust be guaranteed in handling internal company data and information.

Sanction rights come to bear in almost all countries if the workers‘ representatives arenot informed. Dismissals can be declared null and void in many countries. But it mustbe asked whether the provision of a reason for the dismissals is merely a mandatoryexercise for the company, or whether a qualitatively closer description of the requiredscope of the reasons would help to avoid dismissals. The problem of grounds forcollective redundancies can only be meaningfully discussed in connection withrealisation of the “last resort” (ultima ratio) principle.

7. Ultima Ratio

The ILO gave a definition concerning the term restructuring: Restructuring is “theadjustment or conversion of production and services to cope with non-transitory,primarily qualitative changes in capital, goods and labour markets. It refers, in otherwords, to the adaptation of an economic unit to its environment. The term restructuringemphasizes the ‘process’ character of structural change.


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While change is more or less a continuous activity, there may be periods of bothintensified and pervasive transformation of industrial activities and this is in fact thesense which the term ‘restructuring’ has assumed over the past decade. Thus, it is widelyrecognised that we are living through an era of large-scale, if not global, comprehensiveadjustment in the system of production” (ILO: “The role of labour standards inindustrial restructuring: Participation, protection and promotion”; DP/19/1990 (rev. 91)).

The aim of applying the ultima ratio principle in a restructuring is to exploit allpossibilities of avoiding dismissals. Restructuring processes have a momentum of theirown. In certain closely defined time periods, it is quite possible to influence theeconomic decisions of the company. This is why information as early as possible aboutintended restructuring is of outstanding significance to the success chances of applyingthe ultima ratio principle. This is shown, amongst others, by all case studies in theappendix. But there comes a time in the restructuring process when corrections to thecorporate planning are either very difficult or no longer possible at all.

Once this time is passed, the ultima ratio principle can only mean attempting to findpossible measures for avoiding unemployment. It will be explained in following whichpossibilities the various involved parties have for implementing the ultima ratioprinciple in practice. The questions to be asked here are:

• what possibilities are accorded in the various countries of Europe to closelyinfluence corporate planning, and

• what possibilities can be used in the European Union countries to avoidunemployment? Key aspects in this respect are especially the redistribution ofemployment (shortening the working hours) and mediation to other employers.

It must be made clear that the economic decision over corporate planning is notrestricted for the company in any European Union country. The freedom of corporatedecision making is given everywhere without restriction. But it must also be borne inmind that in various European countries, especially the workers‘ representation has thepossibility of entering into a dialogue about corporate planning with the companymanagement.


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A series of case studies shows that there are indeed a large number of companiesprepared to obligate themselves in their corporate planning to carry out certain economicmeasures serving the joint aim of securing lasting employment. The prerequisites forsuch agreements are, however, sufficient expertise on the part of the employees’representatives (internal and external experts) and time to seek and negotiate possiblealternatives to the corporate planning. Under these conditions, resolute application of theultima ratio principle leads to significantly better results from the joint endeavoursundertaken by management and employees’ representatives in cooperation withgovernment entities to preserve employment and, in some cases, even the creation ofnew jobs.

7.1. Role of the involved parties in the ultima ratio principle

In several countries, employees’ representatives play the key role in the consultationprocess. This is not so in Italy and the UK where the trade unions exercise this functionthemselves. There are regulations or court decisions in many countries governing thetime for the consultation process.

This applies, for example, in France, Austria, Germany, Finland, Luxembourg, Greeceand Portugal. These regulations vary in precision, but are at least useful as a minimumrequirement. The case studies in the appendix give a first indication in the matter ofcontent.

These show that also then even if statutory provisions governing the contents ofconsultations are lacking in clarity, they can nevertheless be quite far-reaching. In somecase studies, consultations concerned not only the restructuring company’s strategy, butalso the avoidance of negative effects on the employment situation in a restructuring.This is particularly the case in France where the relatively new practice of an agreementon the methods applied in further planning gives the parties sufficient time andresources to search for alternatives. In many countries, the employees’ representativescan engage experts to investigate and suggest economically founded alternatives todismissals. This applies, for example, in France, Austria, Luxembourg and Germany.

The attached case studies show that particularly in France and Germany the employees’representatives contribute decisive suggestions on corporate strategy and policies in theconsultation process. In many European countries, it is usual to resort to short-timeworking for the remaining employees during the consultation process to avoiddismissals. This applies, for example, in Sweden, Italy, France and Germany.

The consultation process in some countries is restricted to finding possibilities ofbuffering the negative social effects of dismissals. An example of this is the descriptionof social plan practice in Austria.


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But it must also be said that more up-to-date instruments are now used in manycountries to improve the employment chances of employees affected by collectiveredundancies. Special foundations are implemented to this end in Austria in cooperationwith the Labour Market Service (Arbeitsmarkt-Service).

Case studies from France and Sweden show that enterprises specialised in employmentmediation and qualification lastingly improve the labour market chances of employees.A similar picture is given in Germany with the example of transfer companies. Butfunds have to be provided to finance these instruments. In many countries, these fundsare not provided by the dismissing company alone, but also by the labour administrationor another state entity.

In most European countries, the employees’ representation has an enforceable right tothe consultation process. The hardest sanction here is the determination of anemployment continuation if the company evidently does not observe the stipulatedprocedure for consultations. These kind of sanctions are lacking entirely in Spain andBelgium.

Turning now to the role played by the trade unions to enforce the ultima ratio principle,we firstly point out that direct negotiations with the trade unions are compulsory in Italy.The same applies in the UK for trade unions acknowledged as such. The participationrights of trade unions in Finland and Sweden are traditionally strong. Trade unioninfluence in negotiations about restructuring measures in the other countries is stronglydependent on the degree of the trade union’s organisation in the company. It is,however, usual in many countries for trade union representatives to play a decisive rolein negotiations concerning restructuring measures. For example, this also applies in theNetherlands, Luxembourg, Austria, Spain and Germany.

There are hardly any possibilities at all in Portugal for trade union representatives tocompel participation in restructuring negotiations. This is possible in Spain, France,Germany and Austria. In some countries, the company must acknowledge trade unionofficials as negotiation partners. In Greece, for example, an organisation degree of 70percent must first be evidenced. Trade unions in Italy, Finland, France and Sweden havetheir own sanction possibilities regarding the prescribed procedures for the informationand consultation process.

The trade unions play a special role in some countries. In Italy, the employer isobligated to inform the responsible trade unions in the case of restructuring measures.The trade unions are given time and the possibility to consult experts. The informationand consultation process also encompasses possible initiatives to convert businessesand/or workplaces. The aim is to achieve voluntary agreements. The example of the FiatGroup in December 2002 illustrates the difficulties that can arise in reaching suchagreements. The labour administration can impose a mediator. Trade union participationin the consultation process is governed in two differing concepts.


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In the UK, talks must be held with the trade union acknowledged in the enterprise.These talks must also investigate possibilities of avoiding dismissals. The socialconsequences of dismissals must also be reduced. But although the employer mustdemonstrate “goodwill” to achieve an agreement, concluding an agreement on therestructuring measures is not mandatory.

It is customary in Sweden and Austria to establish so-called consulting groups with theprincipal parties involved in larger restructuring measures. These groups have the taskof co-ordinating the parties’ various activities and negotiation options in restructuringmeasures. In many cases, trade unions play a key role in such institutions. But thesituation in Germany and France is also similar, even without a statutory basis.

In all European countries, the companies must inform the responsible state labourinstitutions before notifying dismissals. These entities are the labour administrations inmost cases. Precise time regulations are stipulated for this in most countries. But therights of state entities to be included in the consultation process are weak everywhere.By their very nature, the state entities have the task of monitoring compliance with therules for restructuring processes in the respective country and also the subsequentpertaining sanction rights. Spain and Greece are examples of this.

Special sanction rights are also often deduced from insufficient information to the stateentity concerning planned collective dismissals. We refer to Austria and Denmark asexamples of this. The enforcement powers of state entities to implement alternatives tothe planned dismissals are, however, very low in all countries. But it must neverthelessbe pointed out that state authorities in some countries assume an important role asmediator in the restructuring process.

This is underlined by numerous examples in France, Austria, Germany, Italy andSweden. Another consideration here is whether the companies undergoing arestructuring process previously received state subsidies within the context of economicpromotion. In Luxembourg and eastern Germany, for example, this is highly significantin consultations concerning planned collective redundancies.

State entities play a fundamental role in numerous countries in realising measures toenhance the employability of employees who are to be or already have been dismissed.Explicit reference must be made here to France, Austria, Germany, Finland and Ireland(see also chapter: Employability). Premature retirement and agreements to reduce theindividual’s working hours before reaching retirement age are used in many Europeancountries to cushion the negative effects of collective redundancies (see below). Theseprogrammes are partly state-financed. In addition, temporary short-time working andsubstitute wage benefits are instruments used in Germany, Luxembourg and Italy toreduce the number of necessary dismissals. The solidarity contract in Italy should bementioned here as an instrument to avoid dismissals.


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The responsibility of companies in realising the ultima ratio principle are detaileddifferently in the individual countries in Europe. France, Germany, Spain and Greecehave the clearest jurisprudence in this respect. The search for alternatives by a companyundergoing restructuring is usually implicitly interpreted as a realisation of the ultimaratio principle. There are numerous positive examples of agreements that came about byapplying this principle. This is true of Spain, Finland, Luxembourg, France and Greece,as well as Germany. Some countries describe the contents of such agreements in that theparties involved reached a consensus on a change in corporate policy.

This applies, for example, to Italy, France and Germany. The results in this contextcame about voluntarily. There is solely a right to the consulting procedure in theindividual countries, but not an enforceable result from it. Temporary short-timeworking is also used in many countries as a means of avoiding dismissals, such as inGreece, France, Germany and Italy, for example. In general, the agreements reached aredocumented in writing. This is explicitly mentioned for Spain, Luxembourg, France andGermany. Arrangements similar to social plans are created in almost all countries tomanage and cushion the consequences of collective redundancies.

Besides severance payments and premature retirement agreements, these agreements inrecent times also increasingly contain elements to improve the employability of theworkers. These measures seek firstly to train employees for other jobs in therestructuring company. If this is impossible, then training measures in combination withmediation to other employers are agreed. We refer in this context to the enclosed casestudies. The best practice example is probably the experience with the Frenchemployment protection plan in which agreements are made on the future corporatepolicy, as well as concerning support in attracting new companies to the location,enhancing employability, as well as the usual social plan arrangements.

This instrument has the best chances of proving itself successful. A so-called balance ofinterests and similar supplementary agreements are used in some cases in Germany. Butit ought to be emphasised that a description of enforcing the ultima ratio principle isutterly lacking in some countries. One peculiarity is that in Italy the ultima ratioprinciple applies for individual dismissals, but not for collective redundancies. Thisshows that the individual dismissal law and collective dismissal law in restructuringmeasures ought to match. In some countries, there is a legal situation for the individualemployee in connection with the application of the ultima ratio principle by which itmust be evidenced that even with a longer qualification measure for the employee, nojob can be provided.

This applies in Finland, France and Germany. The dismissal reasons that must be givenunder employment protection law for the individual employee under application of theultima ratio principle are often more precise than is the case in collective labourlegislation.


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The employees are given written notice of the intended dismissals in all countries.Dismissal reasons are also stated in the overwhelming majority of cases. The respectivenotice periods differ in length and are mostly oriented to the employee’s seniority in theenterprise. It is usual in some countries to elucidate the dismissal verbally in adiscussion (France, Germany). Specific individual dismissal protection exists in manycountries. Particularly protected are, for example, pregnant women (France, Finland,Luxembourg, ...), severely handicapped persons (Germany, Luxembourg, ...), womenwith children less than 1 year old (Greece), security specialists (Denmark) and tradeunion delegates (Belgium, Portugal, ...). The employees’ representatives have a specialstatus in many countries. This is explicitly the case in Finland, Germany and Spain.

It is also worth mentioning that under individual dismissal protection in Ireland, similarto that in Germany, the application of the ultima ratio principle must be de factoevidenced. So when asking how the ultima ratio principle is put into practice in theindividual European countries, the possibilities of action of all possible parties involvedmust be examined.

A preferential re-hiring of employees who have lost their job in the course of collectiveredundancies exists in the form of collective agreements in Spain, the Netherlands andGermany. Statutes provide for this in Finland and Sweden (9 months followingdismissal), as well as in Luxembourg and France (12 months following dismissal).There are no statutory re-hiring provisions in Austria, Greece, Ireland and Portugal.


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7.2. Quality of information in the consultation procedures

EIRO gave a good overview regarding the subject areas, that can be discussed betweenthe social partners in negotiation concerning collective redundancies.(www.eiro.eurofound.eu.int/2001/07/study/TN0107201S.html):

Main employee participation rights incompany restructuring,as provided for by law and general collective agreements

Basis Representatives involved

Nature Issues

Law Works council Information, consultation,negotiation (changescausing considerabledisadvantages foremployees only).

Business situation/prospects,cutbacks/closures, outsourcing,mergers, work organisation changes,new working methods, new technology,change of purpose, changes causingconsiderable disadvantages foremployees, collective redundancies,transfers of undertakings.

Law andintersectoralagreement (onnewtechnology)

Works council(where none,otherrepresentativesin some cases)

Information andconsultation

Business situation/prospects,employment situation/prospects,events/decisions with importantconsequences for enterprise,restructuring plans, new technology(with consequences for employment,work organisation or workingconditions), collective redundancies,transfers of undertakings.

Intersectoralagreementsand law (oncollectiveredundanciesand transfersofundertakings).

Works council(cooperationcommittee)


Changes affecting organisation of work- including production methods,technology, employment levels andcompany structure - collectiveredundancies, transfers of undertakings.

Law andintersectoralagreements

Local unionrepresentativesand employees

Information, consultationand negotiations (whereany changes affectemployees)

Business situation/prospects andchanges affecting employees inareas of working methods, workorganisation, new machinery,workplace, products/services,closures, major expansion/cutbacks,collective redundancies, transfers of

http://www.eiro.eurofound.eu.int/2001/07/study/TN0107201S.html


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Nature Issues

undertakings.

Law Works council Informationand consultation

Business situation/prospects, employmentsituation/prospects, mergers, acquisitions,sell-offs, changes in production facilities,closures, new operations, subcontracting,new technology (with consequences foremployment levels, qualifications, pay,training and working conditions),collective redundancies, transfers ofundertakings.

Law Works council Information, consultationand co-determination (onvarious structural andproduction issues)

Business situation/prospects, alteration ofproduction facilities, new machinery, newproduction processes, new workorganisation, alteration of workplaces,new work methods/production systems,changes in equipment, closures/cutbacks,mergers, structural changes, collectiveredundancies, transfers of undertakings.

Law Works council Information, consultationand co-decision (only onawareness-raising on neworganisation methods anduse of new technology,and training/retainingplans)

Expansion/contraction of operations, newtechnology, change in employmentstructure and levels, awareness-raising onthe organisation methods and use of newtechnology, training/retaining plans,collective redundancies (and short-timework), transfers of undertakings.

Law Trade unionrepresentatives(or electedemployeerepresentativeswhere unionsnot recognised)

Informationand consultation

Collective redundancies, transfers ofundertakings.

Intersectoral andsectoralagreements andlaw

Unitary unionworkplacestructure (Rsu)


Employment situation/prospects,technological, organisational andproductive changes, redeployment,collective redundancies, transfers ofundertakings.

Law Company jointcommittee andemployeecommittee/works council


Business situation/prospects, employmentsituation/prospects, new or changed sitesor machinery, new or changed workingand production methods, all economic andfinancial decisions with decisive impacton structure of enterprise or employmentlevels (notably on production, mergers,acquisitions, decrease/increase in activity,


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Nature Issues

organisational change), collectiveredundancies, transfers of undertakings.

Law Works council Information, consultationand veto ("social"decisions - eg changes tooccupational profiles, skillrequirements etc - only)

Important strategic decisions, includingproduction levels and methods, workorganisation, new technology, newinvestments, company structure,employment levels, changes tooccupational profiles, skill requirements,working conditions and organisation ofworking time, collective redundancies,transfers of undertakings.

Intersectoralagreements andlaw (on changesof materialsignificance forworkenvironment)

Works council,trade unionrepresentativesand workingenvironmentcommittee(changes ofmaterialsignificance forworkenvironmentonly)


Activities of enterprise, substantialinvestments, changes in productionsystems and methods, productdevelopment, expansions/reductions orrestructuring, training, reorganisation ofimportance for employees and workingconditions, employment matters(including plans for expansion orreduction), plans of material significancefor working environment (planning andorganisation of work), acquisitions,collective redundancies, transfers ofundertakings.

Law Workerscommission


Business situation/prospects, organisationof production units and implications foremployment, equipment, plans forcompany restructuring, closures/cutbacks,measures resulting in reductions ofemployment or working conditions,changes in work schedules andclassification systems, changes incompany location, training/retraining,skills, collective redundancies, transfersof undertakings.

Law Workerscommittee


Business situation/prospects, employmentsituation/prospects, production,subcontracting, reorganisation ofproduction affecting workers (substantialmodification of working conditions,redeployment, functional mobility etc),changes in the legal status of company (egmergers and acquisitions), employmentrestructuring/changes, reductions in


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Nature Issues

working hours, transfer of facilities,training plans, new or changed workorganisation, collective redundancies,transfers of undertakings.

Law andintersectoralagreements

Trade unionrepresentatives

Information, consultationand negotiation (onimportant alterations toactivity, work oremployment conditionsand collectiveredundancies)

Business situation/prospects, employmentpolicy, changes to organisation andworking conditions, important alterationsto activity, work or employmentconditions, collective redundancies,transfers of undertakings.

Law Trade unionrepresentatives(or electedemployeerepresentativeswhere unionsnot recognised)


Collective redundancies, transfers ofundertakings.

Source: EIRO July 2001


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7.3. Prevention and newer developments concerning ultima ratio

Some special aspects of implementing the ultima ratio principle in the individualEuropean countries will be dealt with in following. We begin by describing theextremely different national approaches to early-warning systems and systems toprevent collective dismissals. The possibility of recognising crisis developments at anearly stage is in all countries such that especially the information rights of theemployees’ representatives can be used with respect to the company’s current andforeseeable future economic developments. This applies particularly to Greece, theNetherlands, France, Spain and Germany.

The information duties of companies in some countries go clearly beyond informing theemployees’ representatives. In the public sector in Greece, for example, the state andlocal authorities must be informed. An early warning system is anchored in the statutesin Ireland by which the companies can voluntarily inform the state economic promotionauthorities in order to receive help in overcoming the crisis. Austria is acknowledged asthe best practice example in terms of legislation where statutory provisions establish anearly warning system with defined criteria. These are founded on the company’s equityratio and ability to service its debt.

Besides the workforce representatives, state institutions and banks are also tied into theearly warning system in Austria. However, it is reported that too little use is made of thetheoretical possibilities available under law to prevent collective dismissals through therecognition of threatening collective dismissals at a very early stage. But it is thoughtthat these deficits can be remedied. It would be especially relevant to strengthen theobligation on companies to inform and negotiate alternatives.

Mention should be made of the French example with regard to the obligation ofcompanies to pass on information. The droit d’alerte not only clearly regulates thesupply of information, but also the provision of expertise for the employees’representatives. There are similar possibilities in Germany.

In many European countries, it is reported that the mere information right foremployees’ representatives or public entities is insufficient to avoid dismissals at anearly stage. Only the provision of sufficient expertise to evaluate information anddevelop economically viable alternatives expands the chances in this respect.

With regard to action-taking possibilities in the case of threatening crisis developments,there are in several countries employment pacts at local level in which public authoritiesalso co-operate with companies and employees’ representatives. This is reported, forexample, for Germany, Greece and France (cf. Territorial responsibility). Somecountries also have these pacts at sector level, as in Luxembourg and Germany.


44

There is also a series of agreements for Germany at corporate level which areunderstood as basic agreements for restructuring to avoid collective dismissals beforethey become a necessity.

There are especially several approaches to facilitate the conversion of enterprises. Therewere even statutes to regulate this in Spain in the 1980’s. The situation is similar in theRhineland-Palatinate region for Germany and the military sector after the end of theCold War (armaments conversion).

Shortening working hours, sometimes in combination with simultaneous partial wagecosts subsidies, is used in some countries as an instrument in temporary economicdifficulties. There is a statutory obligation to do this in France. This instrument , as ourcase studies show, is widely used in cases of large corporations. The problem in thiscontext is that only temporary excess capacities can be resolved with this instrument.

The systems set out in the case studies which use a combination of different instrumentsin threatening collective redundancies are of key importance. The essential instrumentshere are short-time working, temporary wage costs subsidies, qualification of theemployees, enhancement of their employability, employment mediation and, in somecases, also the use of non-profit making or profit making employee lending enterprises(temporary work). It must be evidenced that a combination of these instruments bringssustainable successes in avoiding unemployment.

Diminished protection rights for the employees apply in almost all European countries.In France and Spain, for example, the social plan obligation begins at 50 employees.The balance of interests procedure is compulsory in Germany as from more than 20employees. New companies in Germany are released from the social plan obligation forthe first years. Employees in Finland have reduced rights if they work in smallenterprises. The situation is similar in Luxembourg and other countries.

Finally, with regard to the tendency to develop means for avoiding collective dismissals,it should be said that there is a trend in some countries to strengthen the ultima ratioprinciple. This explicitly reported from Greece, for example.

The instruments that have been developed in recent times in the member states of theEuropean Union to manage collective dismissals show that the ultima ratio principle isincreasingly cemented through the use of corresponding instruments. A task force iscurrently being realised in France in which all participants have access to all relevantinformation in a case of restructuring. There are similar examples at regional level inGermany. The question of information as early as possible, access to expertise andsufficient funds to finance measures to ward off unemployment are generally consideredto be the key factors for realising the ultima ratio principle.


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8. Early retirement and similar regimes

EIRO gave a good overview regarding the main features of the progressive retirementschemes in the 10 countries(www.eiro.eurofound.eu.int/2001/09/study/TN0109184S.html).

Main features of progressive retirement schemes

Scheme andhours reduction

Minimumage

Careerrequirements

End of thescheme

Income and incentives(besides part-time pay)

Compensatoryrecruitments

Part-time workfor olderworkers. Full-timers can workup to 28 hoursper week andpart-timers upto 70% ofprevious hours.

55 formen, 50forwomen.

Unemploy- mentinsurancecontributions for atleast 15 years in thelast 25 years.

Earlyretirementage (61.5 formen and56.5 forwomen).

Worker: at least 50% ofthe pay reduction.Employer: the LabourMarket Service pays25% of gross pay andcovers socialcontributions exceedingactual working hours.

Repealed in2000. Nolongerrequired.

Partial pension.Hours reductionof 40%-60%.

61.5 formen, 56.5for women(newlimits to beprogressivelyimplemented up toOctober2002).

Pensioncontributions for atleast 450 months.

Retirementage (65).

Worker: proportionate`partial pension´ .

None.

Early retirementon half workinghours. Hoursreduction of50%.

55

a) Full-timeemployment insame enterprise forat least 12 monthsprior to reduction ofworking hours; b)entitled tounemploy- mentbenefits.

Retirementage.

Worker: unemploymentbenefit andsupplementarycompensation.

Obligation toreplaceemployeewithunemployedworker(someexceptions).

Career break.Hours reductionof 20% or 50%.

Any, butrules forover-50sto be

For over-50s, 20years' employmentand five years'service with current

For over-50s,the careerbreak will bere-examined

Worker: career breakbenefit.

Employermust hire anunemployedworker


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Minimumage

Careerrequirements

End of thescheme



introducedfromJanuary2002.

employer. every sixmonths.

(someexceptions).

Flexible earlyretirement.Variable hoursreduction.

60.

Eligibility for earlyretirement, iemembership ofunemploy- mentfund for 25 years.

Retirementage (65), orearlyretirement.

Worker: a)proportionate partialearly retirement pay; b)a tax-free payment ifworker postpones fullearly retirement.

None.

Partial pension.Hours reductionof at least sevenhours or 25%,part-time hoursof 12-30 hoursper week.

60.

Full pensioncontributions for 10years during last 20years.

Retirementage (65).

Worker: partial pension.None.

.

Working hoursreduction andpart-time work(as part of olderworkerspolicies).Variable hoursreduction.

Usually60, 55 inthe publicsector.

Varies by sectorand firm.

Retirementage (65).

Varies according tocollective agreementsand usually includesprovision of a partialpension.

None.

Progressiveretirement.Weeklyworking timemust be reducedto 16-28 hours.

58 (56 onanexperimental basisuntil2002).

Private sector: a)full-timeemployment for 12months during last18 months; b) fiveyears ofpensionableemployment duringthe last 15 years.Public sector: full-time employmentfor three yearsduring previous

Retirementage (65).

Worker: a) part-timepension of 50% ofdifference between full-time and part-timeearnings; b) nosignificant reduction inold-age pensionentitlement.

None.


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Minimumage

Careerrequirements

End of thescheme



five, of which sixmonths just beforestarting part-timework.

Progressiveearly retirement.Average hoursreduction of50%.

55.

a) Service infirm for atleast one year;b) affiliationto a socialsecurityscheme for 10years; c) infull-timework. Workersover 60 musthave fewerpensioncontributionsthan needed toqualify for fullpension.

Retirement age(60).Schemecontinues after60 onlyifworkercannotqualifyfor fullpension.

Worker: a) benefitof c.30% ofprevious basicwage; b) socialcontributionreductions; c)companyagreements maygrant specialbonus. Employer:contribution tofinancial costs ofscheme -contribution leveldepends oncompensatoryrecruitment.

Employers'financialcontributiondependson levelofcompensatoryhiringandproportion ofrecruitsfromprioritygroups:contributionlowerformorecompensatoryrecruitment.

Phased-inretirement (forpublic sectoremployeesonly). Hoursreduction of50%.

55.

a) Full-timejob; b) 25years' serviceas stateemployee.

Retirement age(60).Schemecontinues after60 onlyifworkercannotqualifyfor fullpension

Worker: 30% ofbasic wage.

None.


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Minimumage

Careerrequirements

End of thescheme



.

Gradualretirement.Variable hoursreduction.

60.

a) Enoughpensioncontributionsto qualify forfull pension;b) only onepart-timeactivity.

`Late´retirementafterthe ageof 60(orreturnto full-timejob orsecondpart-timejob).

Worker: partialpensionproportionate to %of full-time hoursworked..

None.

Progressiveretirement.Hours reductionof 50%.

55 (possibleto enterprogrammeuntil 2009).

a) Unemploy-mentcontributionsfor 36 monthsduring lastfive years; b)not entitled tofull pension.

Retirement age(65)

Worker: at least70% of former netfull-time income.Employer: ifemployers hirenew workers, theyreceive paymentsto compensate thedifference betweenactual workinghours (50%) andwage (at least70%) and 90% offull-time worker'spensioncontributions;incentives may lastup to six years.

Neededin orderforemployers tobenefitfromeconomicincentives.

Progressiveretirement (partof pre-pensionschemes).Variable hoursreduction.

60.

Variesaccording tocollectiveagreements

Retirement age(65).

Varies accordingto collectiveagreements.

None.


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Minimumage

Careerrequirements

End of thescheme



Partialpension.Variablehoursreduction.

62.

a) Employed incompany for threeyears, or coveredby agreement onearly retirement forfive years; b) 10years of pensioncontributions sinceage of 50.

Retirementage (67).

Worker: partial pension. None.

Deferredretirement(stillawaitingimplement-ation).Variablehoursreduction.

61.

35 years' pensioncontributions inorder to benefitfrom incentives.

`Late´retirementafter age of65.

Worker: a) a higherpension on retirement;b) reduction of socialcontributions.Employer: socialcontribution reductions.

None.

Earlyretirementthroughhand-overcontracts.Hoursreductionof 50%.

60.

Eligibility for earlyretirement, ie 30years of pensioncontributions.

Retirementage (65).

Worker: partial pensionproportionate toworking hoursreduction.

Obligation torecruitreplacement.

Reducedhours.Hoursreductionof 25%,50% or75%.

61Eligibility for apension.

Retirementage (67).

Worker: partial pension. None.

Source: EIRO September 2001


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In the context of the current survey, the above table and the corresponding EIRO studyindicate that early retirement agreements are key tools in handling job reduction whenimplementing restructuring measures. Companies, however, are faced with the problemof losing know-how as a result of early retirement agreements. Early retirementagreements are a problem for employees, above all, if they are related to reducing theirold-age pensions. Consequently, this tool is much less readily accepted. Generally, it hasbeen established that employees clearly prefer normal retirement without a reduction intheir old-age pension.

However, numerous countries offer government aid if employees are forced into earlyretirement, according to which the loss through early retirement will be limited. This, forexample, applies to Germany and Belgium. In those countries, the regulations of asliding transition to retirement promise government assistance in cases where theunemployed replace retirees.

Please note that, with respect to the early retirement agreement, one must distinguishbetween two basic models:

- First of all, there is early retirement before employees reach the statutory pensionableage. This often is connected with noticeable pension reduction. Furthermore, forexample, in Germany companies have a legal obligation pay back unemploymentbenefits to the labour administration. That is why this type of agreement has becomemuch less attractive in recent years.

- Secondly, a large number of countries now offer a sliding transition to retirement. Inmany countries, these are voluntary agreements entered between companies andemployees. In some countries, these sliding early retirement agreements come withfinancial government assistance. The attractiveness of these regulations is gainingmomentum.

We have found that the larger the company the more important the early retirementagreements. Employees, too, are very interested in going into early retirement as a resultof such agreements. For example, Finland reports that there was a significant increase inthe number of this type of agreement when reducing the pensionable age from 58 yearsto 56 years.

9. Compensation and Notification

The regulations regarding compensation in the case of loss of employment as a result ofrestructuring measures and mass layoffs vary quite considerably in the countries of theEuropean Union. In part, they are based on legal obligations or minimum regulationswhich often are amended, implemented by agreements between the social partners andsupplemented by higher redundancy payments. It should be noted that redundancypayments quite inadequately soften the effect layoffs have on employees in social terms.In part, the ultimate goal of agreements between social partners, while integratinggovernment agencies, is offering support in regaining output capacity after redundancies


51

have been implemented resulting from restructuring measures. In addition toredundancy payments, the new regulations also include support payments, in order toincrease the employability of the workforce and to place employees with newemployers. In individual cases, assistance is offered persons out of work to copementally with having been laid off (outplacement).Furthermore, there are individual examples of how companies, that make part of theirworkforce redundant, support the settlement of new companies or the generation of newjobs.

Compensation in case of collective redundancies in Europe 2002

AustriaIn all cases of dismissal by the employer (i.e. not only in case of collectiveredundancy) every employee employed at least three years is entitled toseverance pay which amounts to two to 12 months' wages (includingproportional special payments, which usually means a 13th and 14th month'swage in Austria).In cases of collective redundancies in companies employing at least 20employees on a regular basis a Sozialplan can be negotiated by works counciland employer. This internal agreement can be enforced in court if anagreement between both parties cannot be achieved. Its objective is thealleviation of employees' disadvantages, including financial benefits providedby the employer, e.g. additional severance pay. Criteria usually includeduration of employment, age and social aspects (e.g. alimony obligations).Frequently age and alimony obligations concerning children are included in thecalculations as well (e.g. additional 25% of legal severance pay for each child).Hence, these payments are based on internal agreements.Works council starts negotiations with the employer as soon as it is aware offorthcoming collective redundancies, e.g. due to information rights based onlaw. If a voluntary agreement cannot be achieved, a lawsuit will be filed. Thecourt installs a board of conciliation, the chairman being a professional judge.The board establishes a Sozialplan which is compulsory as far as the employeris concerned.100% of legal severance pay as additional compensation represents the lowerlimit in terms of adequate "voluntary" severance pay. The actual amount,however, differs according to branches of industry and is in the end dependanton the economic situation of the enterprise. Apart from severance pay,qualification measures, e.g. the labour foundations mentioned above, havebecome components of Sozialplan since several years.

Belgium In case of collective redundancy the dismissed employees have the right ofcompensation, which will be calculated based on the number of yearsemployed and on the personal age (only the number of years above the age of45 years are included) Employees are entitled to a special allowance equal to50% of the difference between unemployment benefits (or new net salary if theemployee has found alternative work) and the old net salary (Gross salary inthe previous job is capped at€ 2.528,51 as at 2002). Elderly employees (aged50-55 depending on the circumstances of the employer) are also entitled to amonthly “prepension” allowance, intended to complement unemploymentbenefits.

Denmark If an employer does not consult with the employees or the representatives, orfails to notify the RLMC, compensation will be payable to the employees. Thecompensation is the equivalent of 30 days´pay. In the case of a company withat least 100 employees where at least half of them are to be dismissed, thecompensation will be the equivalent of 8 weeks´ wages. Any payment in lieuof notice will be deducted from this compensation. The amount ofcompensation may be varied by a term in a collective agreement. It is acriminal offence for an employer not to follow the procedures in relation to


52

consultation and notification and a fine may be imposed. There is no upperlimit on the amount of the fine.

Finland -Severance payments are required by law only in the case of workers aged over45 years made redundant for economic reasons when it has not proved possibleto offer them a new job or training during the period of notice or within onemonth of the termination of the contract. Severance payment is a compensationfor loss of earnings, depending on the length of service and earnings, paidthrough a fund financed by employer's contributions. In other cases,negotiation on severance payment case by case as there is no obligationbased on law or collective agreement Period of notice from 14 days (for oneyear's service) to 6 months (for 12 year's service)may include non-worked periods.The recent Confederal Bargaining Round has added some new elements: anincreased incomes related unemployment benefit period will be extended from130 to 150 days for employees with 20 years’ working career and 5 years’membership in an unemployment fund. That would mean in practice to raisetheir unemployment benefit in average by some 5€ per day. Last year it wasagreed to skip the old retraining scheme in the social security, one part of thatdeal being introduction of this increased unemployment benefit for 130 days.The new bargaining round, closed on 18 November 2002 then meant to replace130 by 150 days. See that the increased benefit is as a whole in a bill stillsubject to a decision of the Parliament but it will certainly be adopted still inDecember and will enter into force by 1 January 2003. – So, this was all theconfederations got in the bargaining round while a severance payment schemewas demanded, thus paid the ‘own’ employer, not by the social security whichis financed on a tripartite basis. The result is, hence, more or less cosmetic. Butgetting a real severance payment scheme would have meant resorting to ageneral strike, and the unions were not ready for that. However, Trade unionsconsidere that the severance pay issue will be a severe target in the future

France Decree No.2002-785 of the 3rd May 2002 relating to the rate of legalcompensation, incorporates, in order to take into account Article 113 of the lawon social modernisation, a doubling of the rate of legal compensation due to allemployees made redundant for economic reasons (in cases were the collectiveagreement has not already set a higher amount). Incidentally, the Decreeincorporates the 1977 agreement provisions (national inter-professionalagreement) relating to a monthly basis calculation (increased redundancycompensation for employees having over 10 year seniority) into the LabourLaws.This is to say, from now on, the legal rate is 2/10 of a months salary per year ofseniority up to ten years of seniority and two tenths of a months salary plus twofifteenths of a months salary (1/3 of a months salary in total) per year ofseniority over ten years. For redundancies other than for economic reasons, thescale remains unchanged (one tenth of a months salary per year of seniorityduring the first ten years, with an increase for the years over that).The salary to be taken into account for calculating redundancy compensation isone twelfth of the remuneration for the last 12 months or (if moreadvantageous for the employee) 1/3 of the last months (taking into accountprorata temporis bonuses or annual payments paid during this period). TheDecree came into force on the 1st May 2002.

Germany In cases of changes in the object of an enterprise according to § 111Employees' Representation Act (defined in § 112 Employees' RepresentationAct ) the employer has to agree on a Sozialplan with the works council, i.e. anagreement on compensation or alleviation of employees' financialdisadvantages caused by the forthcoming change in the object of an enterprise.In some cases the Law on Protection Against Unfair Dismissal presents thelegal base to calculate the amount of severance pay.Case law gives an approximation to the severence pays in case of unfairdismissal (court normally not adjucates severence pays, but settles the case),


53

e.g.:Frankfurt (Hessen):

Employees under 40 Years of age: severence about 0,5 monthlysalaries per year of service

Employees between 40 and 50 Years of age: severence about 0,75monthly salaries per year of service

Employees elder than 50 Years of age: severence about 1 monthlysalaries per year of serviceMunich (Bavaria):

severence between 0,3 and 0,5 monthly salaries per year of serviceTendency to higher severances because of recent economic development(Handelsblatt 2002-12-12)

Greece One sole amount including severance pay and notice, differences betweenmanual and non-manual workers but no distinction between the different casesof termination of contract.Salaried employees: if notice is served, then the indemnity is halved ; Amount :1 month's notice or salary for 2 months to 1 year's service; 2 months for 1 to 4years; 3 months for 4 to 6 years; 4 months for 6 to 8 years; 5 months for 8 to 10years; 5 months plus an extra month for each additional year up to a maximumof 24 months for 10 to 28 yearsBlue-collar workers: no notice but equivalent pay when unemployment benefit("extraordinary redundancy"); Amount : 5 days notice for 2 months to 1 year'sservice; 10 days for 1 to 2 years; 15 days for 2 to 5 years; 30 days for 5 to 10years; 60 days over 10 years; Pay up to 91 days over 20 years until 2002;National General Collective agreement for 2002-2003 foresees a bettercompensation for blue-collar workers on termination of contract.

Ireland Compensation arrangements do exist on the basis of legislation.30 days prior to a collective redundancy, the employer is obliged by law tonotify the Minister for Enterprise, Trade and Employment of the upcomingevent. The employer must also supply a copy of that notification to anemployees’ representative.If matters are in order, the employer can expect to receive a 60% rebate fromthe Department of Enterprise, Trade and Employment, provided that theemployer has paid the employee his/her full statutory redundancy lump sum.Age is the relevant coefficient here ( allowing, of course, for earning power).All calculations are subject to a ceiling of euro 50.790.There is only a small amount of relevant case law

Luxembourg The law provides for a right to severance payment in compensation of thelosses (minimum 1 month after a length of service of 5 years, 3 monthsbetween 15 and 20 years, up to 12 months for clerks over 30 years) and forminimum notice periods (from 2 to 6 months).However, these procedures are not to start before 75 days. The Ministry ofLabour can prolong this period to 90 days. Everything else is subject tonegotiations.

Netherlands Severence pays negotiated by unions or laid down by the cantonal court.Relevant law / procedures / relevant categories and coefficients:Amount is a # monthly payments based on the number of years employed *age* factor. Factor is part of the negotiation process. Factor = 1 is commonpractice in case of redundancies (if there is enough money).

Portugal If no regulation exist in collective agreement, Law states the right tocompensation; which corresponds to one-month base salary by each antiquityyear or fraction, not being less than three months. To these effects, time mustbe considered from the date of the sentence. Calculation is based on employeebase-salary

Spain Right to “ a compensation of 20 days salary per year of service, shared out inmonths periods less than one year, with a maximum of 12 months payments”.These minimum amounts can be increased in the consultation agreement or by


54

decision of the management, expressed in the request authorization ofredundancies.Employees that loose their jobs due to collective redundancies, are legallyunemployed, with the right to obtain unemployment benefits, as well as insome cases, assistance benefits.

Sweden Neither the law nor collective agreements make any provision forcompensation in the case of collective redundancies. Very often, companiesmake offers of higher compensation in exchange for greater flexibility inmanaging the proposed redundancies in order that they can keep selectedemployees.“In March 1999 the US-owned car seat manufacturer suddenly announced theimmediate closure of a factory in Bengtfors. While the SwedishCodetermination Act was obviously infringed, the government also took part inthe negotiations between the unions concerned and the company. No legalaction ensued, while the company agreed to pay wages for approximately sixmonths, plus the statuary periods of notice of between one and six months. Thewage cost amounted to some EUR 5 million. The company also agreed to paythe rent on the abandoned factory for two years”

United Kingdom The right to redundancy payments is subject to a condition of seniority in thecompany: the employee must have been employed without interruption for atleast two years under an open-ended contract (unless otherwise provided for inlabour conventions).Statutory redundancy payment: The amount of the payment is:

One and a half week’s salary per employee per year in the companyafter 41 years

One weeks salary per year in the company between 22 and 40 yearsOne half weeks salary per year in the company between 18 and 22

yearsThe total number of years used in calculating the payment is restricted to 20.The maximum amount therefore varies between 18 weeks and 30 weeks ofsalary (the company’s labour conventions can improve these thresholds). Themaximum figure for a week´s wages is currently 250 Pounds per week. Themaximum statutory redundancy payment for a long serving employee iscurrently 7500 Pounds. (Source: Questionnaire)Contractual redundancy pay: some employers have concluded contractualredundancy schemes either with individual employees or as part of a collectiveagreement. (Source: Collective dismissals across Europe, November 2002, iuslaboris)

Source : Questionnaires


55

In almost all countries, government agencies are bound by statutory duty to report ifthere are large-scale layoffs. The following table provides an overview of relevantprovisions and regulations:

Notification of state authorities in case of collective redundancies in EuropeAustria Labour Market Service: receives the notice and is obliged to consider all

circumstances, to assess possible labour market policy-related measures and toadvise both employees and employer in order to possibly prevent dismissals after allor at least be able to realize qualification and job placement measures in a well-organized way and as early as possible, via outplacement measures e.g.implementation of a "labour foundation".(Although the Labour Market Service underwent outsourcing from publicadministration, it remains an institution under public law exerting sovereign rights.)

Belgium The employer is obliged to send an announcement to the Employment Office. Theemployer subsequently will inform the area director of the National Agency ofEmployment (de Rijksdienst voor Arbeidsvoorziening, RVA) about the plannedcollective redundancy and will provide information by registered mail (notificationmust contain the following informations: name and address company, number ofemployees, reasons for dismissal, age, gender, professional qualifications, andpositions within the company). No dismissal can take effect within one month of thisnotification. This period may be extended by a further month.

Denmark The employer must notify the Regional Labour Market Council (RLMC) of theintention to start consultation and send a copy of the information provided toemployees. If the employer, after having negotiated with the appropriaterepresentatives, still wants to proceed with the dismissals, it must inform the RLMC.This notification must contain the following informations:

The reason for the collective dismissalsThe total number of employees employed, andThe period during which the dismissals will take place.

The earliest that the dismissals can take effect is 30 days after notice of thedismissals has been given to the RLMC and the staff. In the case of a company withat least 100 employees, where at least 50 per cent of the workforce is to bedismissed, the dismissals cannot take effect until 8 weeks after notification. Acollective agreement may provide for a longer period.

Finland -In case of co-determination procedure: The manpower authorities have to beinformed in writing, at the beginning of the negotiations, of the proposals beingsubmitted to the negotiation, provided for that corresponding information has notbeen provided previously in some other context. If the relevant informationaccumulated during the negotiation differ essentially from that delivered earlier, theemployer shall deliver these informations also to the manpower authorities-In other cases, when more than 10 employees are to be dismissed, prior informationof staff representatives and of the work administration [department] with 6 weeks’minimum advance notice

France The Manager of the Regional Department of Labour should be notified (theinformation coming after the issue of redundancy notices for redundancies involvingless than 10 people, more detailed information coming at various stages in theprocedure for redundancies involving at least 10 people, and most especially beforethe redundancy notices are issued) The earliest this can happen is the day followingthe first phase of consultation meeting. The Administration must notify the employerwithin 8 days if it considers the Social Plan inadequate. It must assess whether the


56

measures aimed at avoiding or reducing the impact of redundancies are sufficient. Ithas approximately 3 to 6 weeks (depending on the number of dismissals) to notifythe employer of its observations on the procedure and its suggestions forimprovements to the Social Plan, a copy of which must also be sent to theconsultation committee. The employer must reply in writing to the Administrationbefore notifying staff of their dismissals under the procedure. In addition, the finalversion of the Social Plan must be communicated to the labor adminstration. If itnotifies the employer that it considers the Social Plan is inadequate, the Committeemay require a further meeting to be held. Notification of dismissals to staff cannottake place until the day after this meeting.

Germany In order to obtain validity, dismissals in the context of collective redundancies haveto follow a predetermined procedure. If collective redundancies are on the agenda,according to § 17 Law on Protection Against Unfair Dismissal the employer isobliged to give notice of his intention to the employment office (obligation tonotify). A copy of the employer's notice to the works council has to be enclosed tohis letter to the employment office. The notice to the employment office has to beput in writing; the works council's comment concerning the dismissals has to beenclosed.For a period of one month from the date of receipt of this notice, dismissals whichare subject to the obligation to notify according to § 17 Law on Protection AgainstUnfair Dismissal are becoming effective only in case of the employment office'sconsent. Consent can be granted retrospectively until the date of application. Thisrepresents an actual ban on dismissals for this period. (§ 18 Law on ProtectionAgainst Unfair Dismissal)Redundancies cannot take effect until one month after notification by the employerto the Labour Office, unless the Labour Office consents to an earlier date (the blockperiod). Alternatively the Labour Office may determine that the redundancies shouldnot take effect until at least 2 months after notification. If the redundancies are notcarried out within 90 days after the block period, notification will have to be madeagain to the Labour Office.

Greece The employer shall forward to the local office of the Ministry of labour a copy of thewritten communication given to the employee representatives within 8 days of thebeginning of the consultation procedure. If there are establishments in differentregions, the documents are to be sent to the Ministry of Labour and to the relevantEmployment organisation (OAED) of the most affected establishment. Theauthorities are also to receive the minutes of the concertation procedure.

Ireland The Minister for Enterprise, Trade and Employment needs to be informed at least 30days before the first redundancy takes place. These statements to the Ministerregarding a collective redundancy are written in a standard way and conform to whatis stipulated in a checklist supplied by the Department of Enterprise, Trade andEmployment

Italy The role of the authorities is supplementary; they can only intervene in the event ofnegotiations breaking down. If, after 45 days of negotiation, the parties have notreached agreement, a second notification of the authorities should take place,showing the points of disagreement with the syndicates. This second notificationtriggers the action of the authorities, which play the role of an arbiter. They have 30days to propose solutions to the employer and to the unions with a view towardsreaching an agreement. At the end of the negotiation period (45 days if agreement,45+30 days if arbitration is required), the employer can go ahead with theredundancies.At this point he must inform the company’s trade unions and the UPLMO, and in thenotification specify: the list of names of redundant workers; where they live; theirqualification; their management level; age; family responsibilities; occasionalinformation on the use of the criteria for order of redundancies.

Luxembourg Employment authorities and trade supervisory office have to be informed in advancein writing.The employer must provide a copy of the information provided to the staff


57

representatives to the Employment Administration by the beginning of theconsultation period at the latest. The Administration, a department of theLuxembourg Ministry of Employment Relations, is responsible for the re-integrationof unemployed persons in the labour market. The Administration then forwards thisinformation to the Labour Inspectorate. The Inspectorate, which is also a departmentof the Luxembourg Ministry of Employment Relations, supervises the compliance ofLuxembourg based organizations with national employment law. The staffrepresentatives may inform the Administration of any observations they have inrelation to the information. Those observation will then be forwarded to the LabourInspectorate. A copy of the Social Plan, or the document recording the failure toproduce a Social Plan, must be sent to the Employment Administration which willthen inform the Inspectorate of the outcome of consultation.

Netherlands Centrum voor Werk en Inkomen (CWI) has to be informed in writing, at such a timethat it is possible to take measures to prevent dismissals or soften the consequences.The employer must state the projected dates of termination and the date on which theworks council was consulted. The CWI may not consider the employer´s terminationrequest (and the issuing of a permission) until one month after the date ofnotification to the CWI and the trade unions representatives, unless the trade unionrepresentatives state that the waiting period need not be applied. If an employer doesnot give the required advance notification to the CWI and the trade unionrepresentatives, the waiting period is increased to two months.After advice has been received from the works council, the employer can take a finaldecision on the redundancies. Official notification of the proposals should be sent toCWI, if not already done. The CWI will not provide with a permission until at leastone month after notification. If the works council opposes the employer´s proposals,all further steps (such as the application for the CWI permission) must be suspendedfor at least one month. During this period the works council may commencelitigation in the Commercial Chamber of the Amsterdam Court of Appeal or thetrade union representatives may start inquiry proceeding (although in practice, this isunlikely). The District Court has the power to extend the period of suspension untilthe Commercial Court has promulgated its decision.

Portugal A copy of the communication must be sent in the same date, to Ministry of Labour’Services (Serviços do Ministério do Trabalho da área das Relações de Trabalho).

Spain The presence of Administration in regulating employment moves beyond a report,because it is requested its authorization. Labour Authority which intervenes in theseprocedures corresponds to each Comunidades Autónomas (Autonomous Regions), incases where employment regulation affects to employees that perform their activitiesin only one of them. If the proceeding affects several Comunidades Autónomas, theMinistry of Labour and Social Affairs intervenes, requesting the report of theAutonomous Administrations.At the end of the consultation period, the employer must notify the labour authorityin writing of the outcome of the consultation. If an agreement has been reached, acopy should send to the labour authority. The labour authority must be satisfied thatthe agreement has not been reached by illegitmate means and that the agreement isvalid. If the labour authority has concerns, it will send the agreement to theappropriate court to determine whether it is null and void. The deadline for the issueof authorisation by the labour authority will be suspended.If the agreement is considered to be legitimate it will be authorised by the labourauthority and can be put into effect by the employer. The labour authority mustdecide within 15 calendar days whether to authorise the termination of theemployment contracts. If this period elapses without the authority making a decision,the measure will be deemed to be authorised under the terms of the agreement. Theauthorisation takes effect on the date that it is issued, unless it provides otherwise.If the consultation period ends without an agreement, all the relevant documentationmust be sent to the labour authority. Within a period of 15 days, the authority mustdecide whether to accept, in whole or in part, the plan proposed by the employer.This decision should be announced within 15 days of notification that theconsultation period has ended. If the authority fails to issue an authorisation within


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the specified time, the employer´s petition will be deemed to be authorised.

Sweden The employer is bound to inform the Regional Employment Office of anyredundancy scheme, within deadlines that vary in accordance with the number ofpeople to be made redundant:

At least 2 months before the effective date of redundancy if more that 25employeesare to be made redundant

At least 4 months before if between 25 and 100 people are concernedAt least 6 months before if more than 100 people are concerned

In the event that it is impossible to keep to these deadlines, it must be at least onemonth before the projected redundancies.

UnitedKingdom

The Department of Trade and Industry (DTI) must be informed by the employerabout the proposals for redundancies. If it is proposed to make 100 or moreemployees redundant at one establishement within a period of 90 days or less, theemployer must give at least 90 days´notice to the DTI before the first of thosedismissals is due to take effect; in the case of 20 or more redundancies within a 90day period, 30 days notice to the DTI must be given. The notice must be in aprescribed form, which is available from the DTI, and must be sent ot the specifiedoffice.If consultation is required, the form must specify the representatives involved andthe date on which consultation commenced. A copy of that notice must also be givento the representatives. Failure to notify the DTI is a criminal offence (although therehave been no reported prosecutions by the DTI). If there are special circumstancesthat make it impossible for the employer to comply with any of the requirements ofnotification to the DTI and/or the representatives, steps must be taken to comply assoon as it is reasonably practicable.

Sources: Questionnaires and iuslaboris, November 2002: “Collective Dismissals AcrossEurope“


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Collective Redundancies

Austria

Questions Answers Ref.1. Definition In Austria collective redundancies are based legally on

§ 45a Labour Market Promotion Act. Accordingly theemployer is obliged to achieve an agreement with theLabour Market Service (the Austrian employmentoffice) in cases of forthcoming dismissals of

- at least 5 employees in companies employing more than20 but less than 100 employees,

- at least 5% of the employees in companies employing100 to 600 employees,

- at least 30 employees in companies employing more than600 employees

- or at least 5 employees at the age of 50 or olderwithin a period of 30 days.Hence, the definition of a "collective redundancies",which causes an obligation to give an early warning tothe Labour Market Service, is generally dependent onthe size of the enterprise. The special case regardingelderly employees, which sets a particularly lowthreshold for this age group, was introduced someyears ago due to increasing problems to re-integrateelderly employees into the labour market after a periodof unemployment.

§ 45aLabourMarketPromotion Act.

2. Substantiation As mentioned above, there is a legal basis, whichregulates the details of collective redundancies. TheLabour Market Promotion Act authorizes both partiesto a collective agreement regarding an extension of the30 days time limit. (However, I have no knowledgewhatsoever of an agreement which actually includesthis authorization).Employers have the obligation to notify the LabourMarket Service at least 30 days before the first noticeof dismissal takes place. Number, age, gender,occupational groups and duration of employment haveto be specified as well as the significant eligibilitycriteria. Furthermore, consultation of the works councilhas to be established and accompanying socialmeasures have to be described. The works council has

§ 45aLabourMarketPromotion Act


60

to obtain a copy of this notice; in absence of a workscouncil, the employees affected have to receive a copyof the notice.Economic reasons have to be mentioned only; there isno compulsory substantiation if the notice is submittedwithin the 30 days period. If the employer intends toobtain an exceptional permission (which is feasiblegiven specific circumstances) he has both to deliverand substantiate economic reasons (e.g. legal permit toclose down the company due to insolvency, existenceof a Sozialplan negotiated with employees'representatives). The granting of exceptionalpermissions is handled rather restrictively, at least inVienna.

Employees'representatives3. Participation

Works council: has to be informed and has the right toestablish a Sozialplan which can include severance payexceeding the legally proscribed amount oroutplacement measures e.g. implementation of a"labour foundation": A structure is created whichprovides assistance regarding job orientation,qualification and job seeking. Costs are covered by theenterprise and the Labour Market Service, in manycases supplemented by the respective regionalgovernment. High efficiency and effectiveness areamong the benefits of this systematic and group-oriented work compared with the Labour MarketService's case-by-case management. Therefore, insome regions permanent labour foundation structuresare in place for a long time, which could be addressedby both employers and employees if necessary. Insome branches of industry, these foundation and theirfunding is regulated temporarily by collectiveagreements. In the context of Austria's EU membershipparticular problems concerning forwarding trade andfood manufacturing were anticipated. In both casesfoundations were created via collective agreement. Inthese agreements, a compulsory membership fee foremployers was implemented to provide funding.Simultaneously the opportunity for dismissedemployees to join the foundation under certainconditions was introduced. Rates of success of thiskind of foundation are considerably high.

§ 109Arbeitsver-fassungsgesetz(LabourConstitutionAct)

4. Rights Employees' representatives' right of information (basedon law)Employees' representatives' right of consultation (basedon law)Employees' representatives' right of veto (based onlaw) In specific cases of dismissals, not necessarilycollective redundancies but including these, the right ofveto can be exerted by the works council, e.g. despisedmotive of dismissal or unsocial conduct. In these cases,dismissals can be challenged in court.

§ 109Arbeitsver-fassungsgesetz(LabourConstitutionAct)


61

Further rights of employees' representatives:- time period granted to evaluate informationconsultation of experts, etc. (based on law)

Collective redundancies (or parts thereof) are subject toan Interessenausgleich (settlement of conflictinginterests), which both management and employees'representatives must agree upon. The notion ofcollective redundancies in Austria being realized onlyas a result of negotiations is not quite correct. In mostcases, however, and in the really big ones in particular,these negotiations do take place. Naturally, reducingthe extent of collective redundancies as far as possibleis invariably the objective of the employees'representatives. If this cannot be achieved,accompanying social measures have to be implemented- see above.

5.Sanctions/Rights of action

Yes. Disregard for some (not all) regulations canrender the dismissals legally ineffective according tothe Labour Market Promotion Act, in some cases theLabour Constitution Act as well. Employers can file alawsuit to this effect, being represented by theunion/Workers' Chamber.

§ 45aLabourMarketPromotion Act

Unions6. Participation

Yes, based on law

According to the law, the works council has toparticipate (Labour Market Promotion Act and LabourConstitution Act). Normally, the works councilconsults the unions as experts/representatives.

Furthermore, according to Labour Market PromotionAct the Labour Market Service has to confer with allrelevant protagonists, particularly mentioningrepresentatives on an inter-company level including theunions, within the 30 days period.

If a shortening of the 30 days period is requested (i.e. ifan employer wants to give notice of dismissals beforethe 30 days period is up) the Labour Market Service isto decide, after consulting (which is compulsory)representatives of both employer and employees on aninter-company level (union/Workers' Chamber andBusiness Chamber)Failure to comply with this obligation to hear allparties would render the decision null and void. A newhearing followed by a new decision would be required.

LabourMarketPromotion ActandLabourConstitutionAct

LabourMarketPromotion Act

7. Influence Union/Workers' Chamber: act as the employees'consultants and assistants and provide legal assistanceif necessary. They even negotiate directly on behalf ofthe employees regarding accompanying socialmeasures if required. In case of foundations created bycollective agreement, they initiate and negotiate the


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agreement. Other permanent foundation structureswere initiated and are co-managed by the unions andthe Workers' Chamber.


See above

State andadministration

9. Information

Labour Market Service: receives the notice and isobliged to consider all circumstances, to assesspossible labour market policy-related measures and toadvise both employees and employer in order topossibly prevent dismissals after all or at least be ableto realize qualification and job placement measures in awell-organized way and as early as possible, viaoutplacement measures e.g. implementation of a"labour foundation".(Although the Labour Market Service underwentoutsourcing from public administration, it remains aninstitution under public law exerting sovereign rights.)

10. Influence Counselling and assistance in the context of labourmarket promotion. This is based both on law and theLabour Market Service's programs and works as aprocess of co-operation between Labour MarketService, union/Workers' Chamber, employers,employees and frequently regional institutions as well.The labour foundations mentioned above are amongthe outcomes of these measures and have proved to bequite successful means of support in cases of structuraladjustment. However, their capability of shockabsorption and alleviation of harmful consequences onbehalf of the employees is limited.

In cases of an employer's request (to the LabourMarket Service) to shorten the 30 days time limit,representatives both of the employer (BusinessChamber) and of the employees (union/Workers'Chamber) have to be consulted by the Labour MarketService. After this consultation the Labour MarketService decides whether the time limit is beingshortened (which is handled rather restrictively inpractise).


If time limits and regulations are disregarded, requestsfor shortening of time limits have to be rejected. If thenotice is given incorrectly, the Labour Market Servicehas to demand an amendment. If this does not takeplace, dismissals are legally ineffective and theemployee can request the ineffectiveness being statedin court. As some accompanying social measures areconcerned, the Labour Market Service acts as a co-donor and can therefore enforce the employers'meeting their obligations (hardly relevant in practise,


63

no known cases).

12. Othermeasures

No considerable measures apart from labour marketpolicy (counselling, training, job placement andaccompanying financial assistance). During theeighties' big re-structuring periods measures based onSocial Law were provided, e.g. various kinds of earlyretirement. These, however, were cancelled in thenineties on the one hand due to budget problems (thesemeasures being extremely expensive). On the otherhand, early retirement contradicts increasing theemployment ratio, which became the primary objectivein order to secure the welfare state.

Enterprises13.Alternatives

The obligation to negotiate based on an enforceableshop agreement can be called in by the works council.If an agreement cannot be achieved, parties can appealto a board of conciliation. In the context of collectiveredundancies, this is hardly relevant in practise. If thereis a sound financial base, usually accompanying socialmeasures are implemented and the number ofdismissals is possibly reduced. If financial means arelacking, there is not much the board of conciliation cando.

14.Ultima ratio -last resort

No, enterprises are not obliged to do this. Only ashortening of the time limit cannot be obtained withoutspecific substantiation.

15.Consideration ofemployees'interests

As described above

16. AppealEmployees17.Information

30 days before the first notice of dismissal, if no workscouncil exists. Given the existence of a works council,information in advance is compulsory.

18. Protectiveclauses

There is only the legal obligation of the employer toinform the Labour Market Service in due time beforenotices of collective redundancies are given. Eachemployee can challenge the dismissal individually incourt on grounds of unsocial conduct.In companies employing at least 20 employees theworks council can enforce a Sozialplan whichalleviates the harmful consequences (additionalseverance pay, funding of re-training, creation oflabour foundations)

19. Rights ofaction

Generally, dismissals are legally effective (if there areno special circumstances, e.g. failure to comply to rulesof early warning). However, § 105 Labour ConstitutionAct provides the opportunity to challenge dismissals

§ 105LabourConstitution


64

individually, e.g. on grounds of unsocial conduct.If failure to comply with legal regulations occurs (noinformation of the Labour Market Service, noobservation of the time limit) dismissals are legallyineffective and are not able to end employmentrelationships. Each employee can file a lawsuit in orderto state a continuing employment relationship.

Notices of dismissal, which fail to comply with theselegal standards, are legally ineffective; hence theemployees in question can file a lawsuit to declare theiremployment relationships continuing. There is noestablished case law, but as legal provisions areunequivocal on this subject, all known cases in thesphere of operation of the Workers' Chamber Viennawere resolved in the employees' favour withoutlawsuit. The employer's economic risk in case ofdisregard is considerable: if after court proceedingslasting one year (and may be longer, if all rights ofappeal are utilized) the continuing existence of e.g. 100relationships of employment was stated, all wages forthese employees would have to be paid retrospectivelywithout them having worked during the course of theproceedings. Frequently a company is to be sold in thisstadium. Which potential buyer would take this kind ofrisk during a trial? Hence the slight propensity to go tocourt in this context.

Act

§ 105LabourConstitutionAct

20. Severancepay

Case law

Procedure

Criteria

In all cases of dismissal by the employer (i.e. not onlyin case of collective redundancies) every employeeemployed at least three years is entitled to severancepay which amounts to two to 12 months' wages(including proportional special payments, whichusually means a 13th and 14th month's wage in Austria).In cases of collective redundancies in companiesemploying at least 20 employees on a regular basisworks council and employer can negotiate aSozialplan. This internal agreement can be enforced incourt if an agreement between both parties cannot beachieved. Its objective is the alleviation of employees'disadvantages, including financial benefits provided bythe employer, e.g. additional severance pay. Criteriausually include duration of employment, age and socialaspects (e.g. alimony obligations). Hence, thesepayments are based on internal agreements.

Not known

Works council starts negotiations with the employer assoon as it is aware of forthcoming collectiveredundancies, e.g. due to information rights based onlaw. If a voluntary agreement cannot be achieved, alawsuit will be filed. The court installs a board ofconciliation, the chairman being a professional judge.


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The board establishes a Sozialplan, which iscompulsory as far as the employer is concerned.

As a rule, the Sozialplan includes the employer'sobligation of special severance pay for redundantemployees. In most cases the payments are attached toseverance pays based on law, e.g. proportionaladditional payments. Hence the criterion of duration ofemployment is considered. Frequently age and alimonyobligations concerning children are included in thecalculations as well (e.g. additional 25% of legalseverance pay for each child).100% of legal severance pay as additionalcompensation represents the lower limit in terms ofadequate "voluntary" severance pay. The actualamount, however, differs according to branches ofindustry and is in the end dependant on the economicsituation of the enterprise. Apart from severance pay,qualification measures, e.g. the labour foundationsmentioned above, have become components ofSozialplan since several years.

21. Eligibilitycriteria

Generally, there are no compulsory regulationsregarding eligibility criteria for redundant employees(free right of dismissal). In the context of individualprotection against unfair dismissal (based on law)employees can file a lawsuit on grounds of unsocialconduct and demand a social settlement. Accordinglythe court has to consider a weighing of interests. Asocial settlement includes the comparison of socialaspects concerning various employees regarding age,alimony obligations etc. A socially unjustifieddismissal has to be declared legally ineffective.

22. Rights ofreturn

In general there is no right of return. However, it isfeasible to negotiate rights of return in internalagreements (hardly relevant in practise).

Other measures23. Prevention

Yes, e.g. by introduction of short hours (based on law).Both sides of industry are obliged to agree in collectivebargaining on a shortening of working hours in casesof short-term fluctuations of employment to preventdismissals. Employees have to be compensated forcancelled working hours by the employer. Likewise theemployer receives a grant from the Labour MarketService (which is considered a measure of activelabour market policy).

24. other legal No

25. collectiveagreements

No

26. SMEs No


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27. EUguidelines

The legal regulations of "early warning" mentionedabove according to § 45a Labour Market PromotionAct have been modified due to EU regulations.

Early detection28. Earlydetectionsystems

In order to enhance early detection of insolvencies theEnterprise Re-structuring Act was implemented inAustria in 1998. Financial data (particularly equityrates below 8% and dept redemption periods exceeding15 years) should serve as indicators of forthcominginsolvencies of enterprises yet solvent and cause action(re-structuring of enterprises) on part of the employers.In terms of positive incentives the Enterprise Re-structuring Act provides higher strength of re-structuring loans against rescission in case ofinsolvency taking place after all. This should facilitatethe banks' granting of credits due to risk reduction. Asfar as negative incentives are concerned, strongerresponsibility for executive organs takes place if inspite of indication no adequate action required by theEnterprise Re-structuring Act was taken. Naturally,collective redundancies can be inferred from theexistence of an indication according to Enterprise Re-structuring Act in most cases. Enterprise Re-structuringAct 's intention to provoke a reaction againstforthcoming insolvencies regards acts of preventionconcerning also the subject of personnel: sensible re-structuring of the enterprise including re-organizedmanpower planning instead of dismissals followed bysearch for newly needed skilled manpower (e.g.internal job placement after re-training, because incases of re-structuring a lack of specifically skilledworkers occurs simultaneously with oversupply ofother personnel). Grants for this type of schemes areavailable from the Labour Market Service. Access tothis information is available to all bodies of thecompany, and therefore to the works council as well,who is a member of the supervisory board.Furthermore access is granted to the banks, if theywere included in the preparations of the re-structuringprocess, and the court responsible for the monitoring ofthis procedure. Union and Workers' Chamber and theLabour Market Service respectively can serve aspotential co-operation partners and are therefore alsoentitled to access to information. The law - which wasacknowledged as a best practise model by an 8 memberstates' EU project regarding preventive labour marketpolicy - was not accepted very well in practise andtherefore serves as a theoretical early warning systemonly.

a) See aboveb) See above

URG(Enterprise Re-structuring Act)


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Statistics29. Quantity

In 2001, 1870 enterprises in all Austria gave an earlywarning according to § 45a Labour Market PromotionAct which means forthcoming collective redundanciesmatching the above mentioned definition were reportedto the Labour Market Service. In total, 86.677employees (including 75.810 men and 10.867 women)were concerned (i.e. a notice of dismissal was given toas many employees, but not necessarily realized).

Strategies30. Concepts

a)We are (Arbeitskammer Wien) interested in theimplementation of the Enterprise Re-structuring Act asan additional early warning system and are also keenon the extension of the early warning system accordingto § 45a Labour Market Promotion Act. They managedto enforce the application of § 45a Labour MarketPromotion Act to dismissals of fewer employees aswell, if these are above a certain age. Employees'representatives keep trying to achieve a more completeand more obligatory connection of the triggering ofearly warning with labour market policy measures asearly as during the notice of dismissal. To this effect,more incentives for employees to contact the LabourMarket Service earlier should be introduced (e.g.restoration of the entitlement to holidays for jobseeking which was cancelled by the current Austriangovernment.)

b) Are trying to enforce earlier compulsory registration ofemployees with the Labour Market Service by meansof impairment of unemployment benefit.

c) ??

d)

31. Rulessufficient

Regulations are not sufficient. An early warningsystem similar to the one which ought to be providedby the Enterprise Re-structuring Act (which can hardlybe resurrected in its present form) is lacking on aneconomic level. Furthermore, the binding character toimplement measures of active labour market policy asa consequence of triggering the early warningaccording to § 45a Labour Market Promotion Act isinsufficient. Anyway, the Labour Market Service islacking adequate means in this respect.

Further remarks


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Belgium

Question Answers(1) Ref.1 Definition Qualitative criterion: redundancies for one or more

reasons not inherent to the person of the workers.Quantitative criterion: redundancies which during aperiod of 60 days affect a number of workers:-at least equal to 10 in companies employing onaverage more than 20 and less than 100 workers,during the calendar year preceding the redundancy,-representing at least 10% of the number of workersin companies employing on average at least 100 andless than 300 workers, during the calendar yearpreceding the redundancy;-at least equal to 30 in companies employing onaverage at least 300 workers, during the calendaryear preceding the redundancy.Sectional CLAs set lower thresholds.The company is deemed to be a technical productionunit and each of its divisions is likened to atechnical production unit (degree of economic andsocial autonomy)

CollectiveLabourAgreementno. 10of1973,asamended

2 Motivation Economic or technical reasons. Reasons linked toproduction

EmployeeResp3.Involvement

The negotiation constitutes a major stake of theprocedure (cf. below) which lasts around 3 months.Even if a “social plan” is not required by law. Theprocedure below often ends in an agreement on the“social plan”.

4 Rights Information and consultation of the Works Councilor failing that the trade union delegation. If there is


69

no Works Council or trade union delegation, theprocedure takes place directly with employees ortheir representatives.The following procedure must be followed by theemployer, “in sufficient time to allow the workers’representatives to react”:-Present to the Works Council, failing this the tradeunion delegation, failing that the workers’representation,a written report on the collectiveredundancy proposal. This report must containseveral pieces of information: the reasons for theredundancy, the criteria for choosing the workers tobe made redundant, the number and categories ofworkers to be made redundant, the number andcategories of workers habitually employed, theenvisaged calculation method for any redundancypay that does not ensue from the law or thecollective agreement; the period during which theredundancies must be made.-Hold several meetings with the Works Council orfailing that, with the trade union delegation, orfailing that with the workers’ representatives.-encourage workers’ representatives to examine thequestions relating to the envisaged redundancies bygiving them time to ask questions and the chance tomake counter-proposals)-Examine these questions, notably the counter-proposals or alternatives proposed and respond.

5Enforcement

The employer must provethat it has followed theinformation and consultation procedure and hastherefore implemented the above obligations(question no. 4). In the event of a collective dispute(cf. individual dispute no. 18) the employer eitherre-starts the procedure or proceeds with theredundancies with the risk of being taken to court.If the procedure is not followed (court decision) theemployer must re-start the procedure [and] continueto pay employees’ salaries even if they have left thecompany. This for up to 60 days after notificationthat the procedure has been successfully concluded(correct accomplishment of the procedure).

Unions6 Involvement7 Influence8Enforcement

State9 Information

The Director of the Subregional EmploymentServiceof the place where the company is situatedmust be notified of the collective redundancyproposal.This notification must include:


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-A copy of the written report on the redundancyproposal (cf. no. 4)-The notification of the redundancy proposaldecided by the employer following the consultationprocedure. The notification must contain thefollowing information: the name and address of thecompany, the nature of the company’s activity, theJoint Committee responsible for the company, thenumber of workers employed, the reasons for theredundancy, the number of workers being maderedundant, according to sex, age group, professionalcategory and division, the period over which theredundancies will be made, evidence that theemployer has respected the conditions of theinformation and consultation procedure.

The employer must observe a period of 30 daysfrom the date on which theDirector of theSubregional Employment Servicewas notified ofthe redundancy proposal before notifying theworkers of their redundancies.It is during thiscooling-off period that the partners discuss andnegotiate the “social plan”.If the company closes as a result of a court decisionthis period does not apply.However, if the closure of the company is not as aresult of a court decision, the 30-day period may bereduced by the aforementioned Director.The latter may also extend the period by up to 60days after the notification provided the employer isinformed of this at least one week before the end ofthe first 30-day period and the reasons for thedecision explained to him.

10 Influence The Director of the Subregional EmploymentService may extend the cooling-off period to 60days (cf. above) and the administration must alsocheck that the procedure is properly implemented.No prior authorisation for the redundancy.

11Enforcement

If the procedure is not followed, the administrationmay order the company to repay all Federal funds ithas received at any time over the previous five years(recent penalties rarely applied)

12 OtherMeasuresCompanies13Alternatives14 Ultimaratio


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15 SocialInterests

The social plans agreed by the employer and theWorks Council or staff representatives often includethe following elements. In the case of discretionarypayments and benefits; these are also useful leversin facilitating the implementation of the informationand consultation procedure:-Access to the occupational reclassification serviceand,-Supplementary monthly payments on top ofunemployment benefits for a specific period andsupplementary severance payments (awardedaccording to grade and for which reference is oftenmade to the company’s previous restructuringschemes and to what the trade unions have beenable to obtain from other employers in a similarsector).

16 Appeal If the period is extended by the administration (up to60 days) during which the employer must waitbefore sending the redundancy letters, the latter mayappeal (without suspensive effect) against theadministration’s decision before the ManagementCommittee of the Regional and CommunityEmployment and Training Office (OfficeCommunautaire et Régional de la Formation et del’Emploi, FOREM), which will issue a decisionwithin 30 days.

17 EmployeesInformation18 Protection Each worker has 30 days (from the time the copy of

the notification of the collective redundancyproposal is posted in the company) to contest theredundancy procedure.If the collective redundancy procedure is notfollowed by the employer, the worker may demandto be reinstated (if his/her employment contract hasalready been severed). The employer must reinstatethe employee within 30 days and must pay thesalary from the date on which the contract wasterminated. If the employer fails to observe thisreinstatement period, he must pay the worker, inaddition to the severance payment, the salary for aperiod beginning on the date on which the contractwas terminated and ending 60 days after a newnotification to the administration (cf. no. 5 above)

19 Challenge


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20Compensation

The following are excluded from conventionalcover: “workers hired for a specific period or job,workers in the construction industry (these benefitfrom specific conventional dispositions), workers(except those who benefit from the Joint Committeeof the diamond industry and trade) covered by thesystem of compensation for company closures (cf.below)The total of redundancy payments and lost notice islimited to 7 months’ pay.The collective redundancy pay (this is due on top ofthe unemployment benefits to which the redundantworkers may be entitled) is equal to half thedifference between the worker’s net pay (afterdeduction of social security contributions and theincome tax) and the unemployment benefits whichthe worker may claim or the total of the netresources obtained by virtue of new employment.This net pay is limited to 2,579.08 euros per month.The benefit is due for a period of 4 monthsbeginning the day after the date on which thecontract ends. However, the total of redundancypayments and lost notice (when this is at least 3months) is limited to 7 months’ pay:

Noticepayments

At least 3 months4 months

4 months3 months

5 months2 months

6 months1 months

7 months0 months

Collective agreements may contain more favourableprovisions.In the event of redundancy following the closure ofa company, workers are entitled to a specificseverance payment, the “closure payment” providedthey have been with the company for at least oneyear and are on an open-ended contract. In this casethe basic payment is 114.3 euros per year of service(up to a maximum of 2,286 euros), an additional

CollectiveLabourAgreementno. 10of 8May1973

Article8 ofCLAno. 10



Act,Royal


73

payment is granted for each year with the companyfrom the age of 45.With regard to the length of notice, the legalprovisions (act, regulation, etc.), a distinction ismade between worker and employee:-Workers: the legal system is 28 days (less than 20years’ service), 56 days (more than 20 years’service). The legal framework is often improved aspart of sectoral agreements-Employees: 3 months (less than 5 years’ service), 6months (between 5 and 10 years’ service), 9 months(between 10 and 15 years), 12 months (between 15and 20 years). But if the annual salary is greaterthan 23,475 euros, the length of notice is determinedby agreement between employer and employee, atthe time the severance is announced to the otherparty (it may not be less than 3 months per trancheof 5 years’ service begun).

Decrees,EmploymentRegulations

21 Selection The Works Council is responsible for setting theselection criteria: seniority, age, marital status, etc.)

CLAno. 9 of9March1972

22 PriorityProcedures23 Prevention24 Legal25Agreements26 SMEs27 RecentDirective’simpact28 Earlydetection29 Statistics A report in 1998 by the Federal Planning Bureau

attempted to gauge the effects of globalisation andin particular relocations on employment. Althoughdifficult to assess except in the case of relocation inthe strict sense, a survey among trade unions, dataon collective redundancies being able to be linked torelocations in the strict sense, showed that in theperiod 1990-1995, 17,279 workers would have beenaffected by relocation, i.e. 19% of workers affectedby collective redundancies. Annually, the figuresfluctuate between 2,000 and 3,900 workers

Prospects30 Strategies31RegulationsRemarks


74


Denmark

Questions Answers Ref.1 Definition A collective redundancy situation arises if during a period of 30

days the number of dismissed employees equals.at least 10employees in companies who in average employ morethat 20 but less than 100 employees

at least 10% of the total number of employees in companieswho employ in average at least 100 but less than 300 employees

at least 30 employees in companies who in average employmore than 300 employees

Number of employees to be dismissed 10 or more employees inorganisation between 20 and 100 employees. 10 % or more ofall employees in organisation between 100 and 300 employees.30 or more employees in organisation more than 300employees.

CollectiveDismissalsActof1997

2 Motivation The employer must provide written information about:- the motivation for dismissal- the number of employees to be dismissed- the total number of employees currently being employed- the date of dismissal- the criteria to be used when selecting employees fordismissal- whether any employees are entitled to severance payunder an individual or a collective agreement, and if so, howthose payments are to be calculated.

EmployeeResponsibility3.Involvement

The employer must inform timely the workers representatives orthe employees about the dismissal.

The employer should provide the written information asmentioned above under “Motivation”

4 Rights The employer has to assure adequate information informationfor and consultation of the workers representatives. Thisconsultation is aimed on preventing dismissals, limiting the


75

number of dismissals and limiting negative consequences.

5Enforcement

If the employer fails to meet his obligations regardinginformation and consultation, he can be fined.An employer who does not observe the proceduresstipulated in the Act may be issued with a fine for whichthere is no upper limit.

6 UnionInvolvement7 Influence

8Enforcement

9 StateInformation

The employer must notify the Regional Labour Market Council(RLMC) of the intention to start consultation and send a copy ofthe information provided to employees. If the employer, afterhaving negotiated with the appropriate representatives, stillwants to proceed with the dismissals, it must inform the RLMC.This notification must contain the following information:• The reason for the collective dismissals• The total number of employees employed, and• The period during which the dismissals will take place.If at least 50% of the workforce in a company of 100 or moreemployees is to be dismissed, the RLMC cannot be notifieduntil at least 21 days after consultation has started with theemployees, unless a collective agreement provides otherwise.

10 Influence

11Enforcement

If the employer doesn’t meet his obligations regarding notifyingthe Employment Office (as mentioned at ‘Information’), he isobliged tooffer the employees, affected by this dismissal, each acompensation of30 days pay.

It is a criminal offence for an employer not to follow theprocedures in relation to consultation and notification and a finemay be imposed. There is no upper limit on the amount of fine.

12 OtherMeasures13 CompanyAlternatives14 Ultimaratio15 SocialInterests16 Appeal17 EmployeeInformation

Employees must receive notification of their dismissals at thesame time as the RLMC is notified of the names of those


76

employees who are to be dismissed. The earliest that thedismissals can take effect is 30 days after notice of thedismissals has been given to the RLMC and the staff. In the caseof a company with at least 100 employees, where at least 50%of the workforce is to be dismissed, the dismissals cannot takeeffect until 8 weeks after notification. A collective agreementmay provide for al longer period.The Danish law does not have special regulations forcompensation in case of collective redundancy. The dismissedemployers receive financial protection via the unemploymentcompensation system. The Danish system has developed itselfas such mainly because smaller companies, who make up themost important part of the economy, need flexibility in this.Office workers with not interrupted long-term seniority have theright according to the ‘Funktionaerlouen’ to a redundancyscheme (Seniority Payment: 2 years 1 monthly pay, 5 years 2monthly pays; 18 years 3 monthly pays).

Some collective labour agreements for labourers (blue collarworkers) can include extra regulations like extension of thenotice or the redundancy schemes. In case of bankruptcy, duewages and holidaypay of employees are guaranteed to a maximum of 75.000,-Dkr. These payments are done by the Pay Guarantee Fund(Lonmodtagernes Garantifond or LG), which is funded by theState and employerscontributions.

18 Protection When selection employees for dismissal, the employer needs toconsider whether any of the employees enjoy special protectionfrom dismissal. Such protected employees include shopstewards, health and safety representatives, board memberselected by the employees, pregnant women and, in certaincircumstances, employees from ethnic minorities.

19 Challenge

20Compensation

If an employer does not consult with the employees or therepresentatives, or fails to notify the RLMC, compensation willbe payable to the employees. The compensation is theequivalent of 30 days pay. In the case of a company with at least100 employees where at least half of them are to be dismissed,the compensation will be the equivalent of 8 weeks´ wages. Anypayment in lieu of notice will be deducted from thiscompensation. The amount of compensation may be varied by aterm in a collective agreement. It is a criminal offence for anemployer not to follow the procedures in relation to consultationand notification and a fine may be imposed. There is no upperlimit on the amount of the fine.

21 Selection22 Priority23 Prevention


77

Procedure24 Legal25Agreements26 SMEs27 RecentDirective’simpact

Denmark has approved legislation for executing the EuropeanGuideline of 1975. The regulations of the Guideline aretranslated in the Danish legislation via the following legaldecisions:Law Nr. 38 of January 26th 1977 of amendment the lawconcerning employment and unemployment compensations.Letter of the Ministry of Labour of March 4th 1977 concerningthe measures to be taken by the employment commissions incase of receiving a notification of a collective redundancyDecree Nr. 73 of the Ministry of Labour of March 4th 1977

28 Earlydetection29 StatisticsProspects30 Strategies31RegulationsRemarks


78


Finland

Questions Answers Ref.1 Definition Quantitative criteria: Rules on codetermination apply

-In an undertaking normally employing at least thirty persons asparties to an employment relationship-Also (except some provisions) in a undertaking normallyemploying not more than thirty but at least twenty persons asparties to an employment relationship when the employer considersthe termination of the contracts of at least ten employeesQualitative criteria:The reason for termination may derive from the individualemployee or the financial situation of the enterprise- See 2.

Act oncooperation inundertakings(725/1978)amended inparticular by theAct n° 478/2001

EmploymentContracts Act55/2001 Ch.7,S.2 & S.3

2 Motivation No one shall be dismissed from employment without a lawfulreason."The employer shall not terminate an indefinitely validemployment contract without proper and weighty reason""The employer may terminate the employment contract if the workto be offered has diminished substantially and permanently forfinancial or production-related reasons or for reasons arising fromreorganisation of the employer’s operation. The employmentcontract shall not be terminated, however, if the employee can beplaced in or trained for other duties (…). At least the followingshall not constitute grounds for termination:

-either before termination or thereafter the employer hasemployed a new employee for similar duties even though theemployer’s operating conditions they changed during theequivalent period, or-no actual reduction of work has taken place as a result ofwork organisation."

Constitution Act731/1999, S.18EmploymentContracts Act55/2001 Ch.7,S.1

EmploymentContracts Act55/2001 Ch.7,S.3

Employee Reps3. Involvement - Collective redundancies require prior negotiation between the

employer and workers' representatives.- Workers' representatives are usually shop stewards, as providedfor by the General Agreements (approximately 80% of workers aremember of a union). The law considers any person elected as ashop steward, contact person (for managers) or principal shop

Act oncooperation inundertakings725/1978, S.3.2


79

steward, according to the provisions of the collective agreementapplicable and persons elected specifically for the purposes of co-determination and safety delegates as representatives of employees.The law also provides for non-unionised employees, where theyform the majority of the employees and where they so wish, andcategories of staff not having a shop steward, to be able to electtheir representatives for the purposes of co-determination- In companies with more than 150 employees or groups with morethan 500 employees: participation of employee representatives inthe board according to agreement (if no agreement one fourth ofthe members)

& S.5

Act onpersonnelrepresentationin theadministrationof undertakings725/1990

Employee Reps – Con't4 Rights - Information: The employer must inform the employees’

representatives without delay of any major change in the economicand financial development of the undertaking. The employers mustalso supply the information necessary for the negotiations providedfor in the co-determination procedure before these begin. Wherethe dismissal of more than 10 employees is envisaged, thisinformation must be sent in writing- Obligation to negotiate (co-determination procedure): theemployer must initiate negotiations with the employees concernedor their representatives, where appropriate at a meeting common tothe different categories concerned, by discussing with them thereasons for the decision envisaged, its effects and the possiblealternatives. Written proposals must be submitted five days beforethe beginning of the negotiations. Any agreement concludedwithin this framework has the effects of a collective agreement.This obligation to negotiate, which is not an obligation to conclude,operates before any decision concerning any major change inorganisation, investment or activities, any plans relating toemployment, training or rationalisation, any cutback in staff ormodification to contracts following a merger or a transfer and thecorresponding training and redeployment plans, any dismissal,layoff or reduction in working time for economic, financial andreorganisation reasons and training and redeployment plans, anyconsequence of the above measures affecting the number andallocation of the employees.

In the event of a cutback in staff (dismissal, layoff orreduction in working time) provided for by one of thesedecisions,

. the obligation to negotiate is met by concluding an agreement or ifthe minimum negotiation periods have passed, unless there is acontrary agreement: 7 days for less than 10 employees, 6 weeks ifmore than 10 employees are concerned and in the event of atransfer, one month in the event of a procedure involving the“reorganisation of the undertaking”,. in undertakings with less than 30 employees (or less than 20employees if more than 10 employees are affected by the cutback),it is the provisions of the Work Contracts Act which apply: priorinformation of staff representatives, 6 weeks’ minimum advancenotice in the event of dismissal

Act oncooperation inundertakings725/1978,S.11.1 & S.11.2

Act oncooperation inundertakings725/1978, S. 7& S.8

5 Enforcement See 8.Unions


80

6 Involvement -Employee representatives are chiefly union delegates. See 3.-Prior information and negotiation. See 4.-Participation to the board. See 3.

7 Influence -Approximately 80% of workers are member of a union.-Shop stewards have a strong position, which is guaranteed bylabour legislation and general agreements between the socialpartners. In some cases it is possible to influence politicians,especially when there are real or supposed national interests. Forexample, in the restructuring of state-owned Kemira (chemicals), anational union created a coalition to influence parliament againstrestructuring.-According to a 98's survey, around 2 agreements per establishmentdealt with job design and staff planning (major changes, dismissals,transfers,..) on which half of respondents perceive a "greatly" or"mostly" influence of employee representatives.

MISEP 2002

P.Linkola inEIRO 09/02

Univ. of Turkuin EIRR 324,01/2001

8 Enforcement Distinction between conflicts of interest resolved in opennegotiations and disputes of rights which may be brought beforethe tripartite Labour Court, whose decisions cannot be appealed.The consequences of breaking the law are in general a fine. Inaddition, when the violation of the Cooperation Act results in anemployee being given notice, the employee has the right to receivepunitive damages from the employer up to a maximum of 20months' wages

N.Bruun,Introduction toFinnish law

State9 Information -In case of co-determination procedure (See 4.): The manpower

authorities have to be informed in writing, at the beginning of thenegotiations, of the proposals being submitted to the negotiation,provided for that corresponding information has not been providedpreviously in some other context. If the relevant informationaccumulated during the negotiation differ essentially from thatdelivered earlier, the employer shall deliver these information alsoto the manpower authorities-In other cases, when more than 10 employees are to be dismissed,prior information of staff representatives and of the workadministration [department] with 6 weeks’ minimum advancenotice

Act on cooperaton inundertakings725/1978 S. 7 b& 8

10 Influence Political influence and tri-partism11 Enforcement In practice, no sanction. In theory, an administrative penalty is

possibleN.Bruun 2002

12 OtherMeasures

Support to lifelong learning, working life and productivityprogrammes, promotion of professional and regional mobility,regional and local actions, framework on flexibility, measures forspecial groups (young people,...).

NAP 2002

Companies13 Alternatives Before the employer takes a decision on any matter covered by

section 6 (a section which identifies matters covered by theprocedure of cooperation, in particular in the event of a cutback instaff), he shall negotiate the reasons for the action envisaged, itseffects and possible alternatives with the wage earners or salariedemployees concerned or their representatives. See 4.If no agreement, the employer shall be deemed to have fulfilled hisobligation to negotiate, if the matter has been dealt with inaccordance with section 7 or within the committee referred to in

Section 7,paragraph 1 ofthe law oncooperation inundertakings

Section 8, par.1


81

section 4. The employer may initiate action on matters on whichconsensus has not reached after informing the participants in theco-operation procedure of the action decided upon on the matter.Exceptions exist in case of liquidation or bankruptcy. But if theundertaking is covered by the procedure referred to in restructuringof Company Act (47/1993) the negotiation period shall be sevendays as from the beginning of the negotiations.The employer shall ensure that the dates of the meetings, theparticipants and the outcome of the negotiations or the opinions ofthe parties are noted down in minutes. The negotiating parties shallinspect and sign the minutes.

Section 8, par 5

Section 8 (a)

14 Ultima ratio The employer cannot order the dismissal of an employee for aneconomic or production reason unless there is a steep and definitivereduction in the workload and if the employee, bearing in mind hisprofessional knowledge and skills, cannot reasonably be assignedto, or trained for, another post.


15 Social Interests No obligation as regards social plan like in France is provided but:"Obligation to offer work and provide training:Employees shall primarily be offered work that is equivalent to thatdefined in their employment contract. If no such work is available,they shall be offered other work equivalent to their training,professional skill or experience.The employer shall provide employees with training required bynew work duties that can be deemed feasible and reasonable fromthe point of view of both contracting partiesIf an employer which in fact exercises control in personnel mattersin another enterprise or corporate body on the basis of ownership,agreement or some other arrangement cannot offer an employeework as referred to in paragraph 1, it must find out if it is possibleto meet the employer’s obligation to provide work and training byoffering the employee work in other enterprises or corporate bodiesunder its control"

EmploymentContracts Act55/2001 Ch. 7 S.4

16 Appeal In case of breaches of Law, neglecting of obligations arising fromemployment contract or losses caused to employer, the employee isliable to the employer for the loss caused

EmploymentContractsAct55/2001Ch. 12 S.1

Employees17 Information -In case of termination on economic grounds, either the employer is

obliged to negotiate (See 4.), either he has a duty to explain. In thiscase, the employer must as early as possible explain to theemployee to be given notice the ground for and alternatives totermination. If the termination concerns more than one employee,the explanation may be given to a representative of the employeeor, if no such representative has been elected, to the employeesjointly.-At the employee's request, the employer shall notify the employeewithout delay in writing of the date and grounds of termination

-Any matter affecting a particular wage earner or salariedemployee shall in the first instance be discussed between theemployer and the person concerned so requests, the mattershall also be discussed between the employer and the



Act oncooperation inundertakings,


82

relevant staff representative. S.718 Protection Protection of specific categories of workers from dismissal: on

grounds relating to pregnancy, participating in parental or careleave, or reasons relating to the duties connected with the positionof an employee representative.A shop steward can only be dismissed for misconduct if themajority of the employees he represents consent to it; a shopsteward can only be dismissed for economic reasons in the event ofthe complete cessation of his work and where it is impossible tofind a job matching his professional qualifications. In practice, thismeans that a shop steward is the last person to be dismissed.

EmploymentContracts Act55/2001 Ch.7,S.9 & S10

19 Challenge If the employer intentionally or through negligence commits abreach against obligations arising from the employmentrelationship or the Act, he is liable for the loss of earnings causedto the employee.The compensation for groundless termination varies from 3 to 24months (up to 30 months for a shop steward)The employees may challenge the redundancy within 2 years oftermination of contractWhen the employer breaks rules on information-negotiation,additional damages to the employees concerned. see 8.

EmploymentContracts Act55/2001, Ch.12S.1 & S.2, Ch.13S.9

20 Compensation -Severance payments are required by law only in the case ofworkers aged over 45 years made redundant for economic reasonswhen it has not proved possible to offer them a new job or trainingduring the period of notice or within one month of the terminationof the contract. Severance payment is a compensation for loss ofearnings, depending on the length of service and earnings, paidthrough a fund financed by employer's contributions.-In other cases, negotiation on severance payment case by case asthere is no obligation based on law or collective agreement.-Period of notice from 14 days (for one year's service) to 6 months(for 12 year's service) may include non-worked periods.The recent Co federal Bargaining Round has added some newelements:an increasedincome related unemployment benefit period wouldbe extended from 130 to 150 days for employees with 20 years’working career and 5 years’ membership in an unemployment fund.That would mean in practice to raise their unemployment benefit inaverage by some 5€ per day. Last year it was agreed to skip the oldretraining scheme in the social security, one part of that deal beingintroduction of this increased unemployment benefit for 130 days.The new bargaining round, closed on 18 November 2002 thenmeant to replace 130 by 150 days. See that the increased benefit isas a whole in a bill still subject to a decision of the Parliament but itwill certainly be adopted still in December and will enter into forceby 1 January 2003. – So, this was all the confederations got in thebargaining round while a severance payment scheme wasdemanded, thus paid the ‘own’ employer, not by the social securitywhich is financed on a tripartite basis. The result is, hence, more orless cosmetic. But getting a real severance payment scheme wouldhave meant resorting to a general strike, and the unions were notready for that.

Education andredundancypayment fundAct 537/1990,MinisterialDecision779/1999

EmploymentContracts Act55/2001, Ch.6,S.3

Outcome of theco federalbargaininground, 18November 2002


83

However, Trade unions consider that the severance pay issue willbe a severe target in the future

21 Selection There are no legal selection criteria, but there has to be nodiscriminationThe employment contract shall not be terminated, however, if theemployee can be placed in or trained for other duties


22 Priority The employer shall offer work to his former employees maderedundant on economic grounds for the same or similar workwithin 9 months of termination

EmploymentContracts Act55/2001, Ch.6,S.6

Procedures23 Prevention Lay-offs

Support to lifelong learning, working life and productivityprogrammes, promotion of professional and regional mobility,regional and local actions, framework on flexibility, reducing thetax burden on labour …

EmploymentContracts Act55/2001, Ch.6,S.6NAP 2002

24 Legal No other compulsory legal procedures25 Agreements Collective agreements (such as for paper industry) include specific

measures or procedures, in particular relating to negotiation26 SMEs Promotion of entrepreneurship, simplified procedures NAP 200227 RecentDirective’s impact

Changes not directly linked to Directive regarding collectiveredundancies

28 Early detection Bankruptcy Act is being reviewed NAP 200229 Statistics Major changes in the past decade. For example, about one third of

jobs in the financial sector have disappeared, (about 25 000 jobs)Unemployment rate (average) in 2001: 9.1%Great regional differences

P.Linkola inEIRO 09/02MISEP 2002

Prospects30 Strategies The closure of the profitable Fijitsu-Siemens computer plant at

Kilo in autumn 2000 (450 employees made redundant) focused theattention of trade unions on the protection against redundancies inFinland, notably on the level of compensation. A comparativestudy was commissioned in 2001. In their autumn 2002 goals fornational negotiations, trade unions demand better protection foremployees, with higher compensation, met directly by theemployer and with support in training and replacement. Employersresist demands.

Ministry oflabour, in EIRO09/2002Jari Hellsten"Provi-sions andProceduresGoverningCollectiveRedundancies inEurope », 09/2001

31 Regulations New employment contracts Act, known as the "constitution forworking life" came into force in 2001 after long-running dispute.There is little chance to reform its provisions quickly, unless thereis a wider perspective or a tripartite will.

Minor changes to severance payments being made NAP 2002Remarks

-By avoiding unfair "competition" regarding cheapness ofcollective redundancies, European regulation on minimum level ofcompensation for redundancies or length of notice period could bewelcome in Finland by TUs and State-High unemployment (16,6% in 1994, 9,1% in 2001) is a centralissue for political debate


84

-Importance of tripartism


France

Question Answers Ref.1 Definition Qualitative criteria: Constitutes a redundancy carried out

by an employer for economic reasons, for one or morereasons unrelated to the employee personally, resulting ina job loss or revision, or a major modification to a workcontract, especially as a result of economic difficulties,changes in technology, a reorganisation decided upon bythe employer in order to retain the competitiveness of thecompany, or of the Group’s branch to which it belongs.

Qualitative criteria for collective redundancyThe rules of procedure relating to collective economicredundancy are applied differently depending on thenumber of people to be made redundant (less than 10people in the same 30 day period, at least 10 people in thesame 30 day period); the same applies in the provisions toforesee: in this way the new law on social modernisationincludes an obligation for the employer to draw up asocial plan renamed job protection plan in thefollowing circumstances:

-In a company having at least 50 employees (legalthreshold for establishing a WC), and there are more than10 redundancies in 30 days.

-When a company having at least 50 employees has, over3 consecutive months, made more than 10 peopleredundant for economic reasons, without having mademore than I0 people redundant in the same 30 day period,any new redundancies for economic reasons foreseenduring the course of the following three months will besubject to the legislation concerning a job protectionplan.

Article L321-1of the LabourLaws

Article L.321-1modified of theLL


85

-If, during the period of a calendar year (from 1st Januaryto 31st December), more than 18 redundancies have beencarried out for economic reasons without presenting a jobprotection plan,any new redundancies for economicreasons foreseen during the course of the three monthsfollowing the end of the calendar year will be subject tothe legislation concerning a job protection plan.

(The purpose of the last parts of the provisions laid downin the previous two paragraphs is aimed essentially atavoiding any circumvention or evasion of the law.)For 9 or less employees involved, there is a shorterredundancy procedure (6 or 8 weeks) and no requirementfor a social plan.

2Motivation

-Economic reasonsresulting in a job loss or revision, ora major modification to a work contract, have to bemotivated as a result of economic difficulties, changes intechnology, or reorganisation decided upon by theemployer in order to retain the competitiveness of thecompany, or of the Group’s branch to which it belongs.In the event that an employee refuses a majormodification to their work contract, economic redundancycan be invoked, alternatively, if the redundancy follows arefusal by the employee to accept a minor modification totheir work contract, this is always considered to be aredundancy for personal reasons.-The causes of the job loss, revision or majormodification to a work contract, are for the moment veryextensive, mainly due to the use of the term “especially”.However, a redundancy that takes place following therefusal of one or more employees to accept a modificationto their work contract due to the application of anagreement relating to a reduction in working hours is notconsidered to an economic redundancy.For all redundancies, there must be a “real and seriouscause”.

Article L.321-1of the LabourLaws

EmployeeResponsibility3. Involvement

The Comité d’Entreprise (Works Council WC) must beinformed and consulted prior to a decision aboutredundancies being taken by management.The French Scheme uses a double system of distinctprocedures known as "Tome IV and Tome III of theLabour Code". Employee representatives are included andconsulted in both of its procedures.In the first instance, WC is consulted concerning measuresthat can affect the number or the structure of theworkforce (Tome IV); and in the second instance, the WCis consulted concerning the proposed redundancy scheme(Tome III). Henceforth, Tome IV must be closed beforethe Tome III procedure is opened*. The separation inprocedures does not concern companies in receivership orlegal liquidation.

Article L.432-1of the LabourLaws

4 Rights Right of information and consultation (with the exception


86

of companies in receivership or legal liquidation -especially see question 3):-Triggering the Tome IV procedure: The obligation (incompanies of at least 50 employees irrespective of thenumber of proposed redundancies) to arrange twomeetings with the WC*, at a minimum of 15 day intervals(21 day interval if a chartered accountant is appointed (seebelow), in order that the WC can prepare theirrecommendations concerning the proposedrestructuring scheme and possibly formulatealternative proposals* (items which are passed on to theappropriate authority). The employer must justify itsreasons during the meeting and cannot move onto theTome III procedure unless this has been done*.Option to appoint a chartered accountant* (in effect aneconomics and financial expert)during the first TomeIV meeting without risk of prejudicing the right to have anexpert (the same or another) within the framework ofTome III. This option is mainly in order that thepersonnel representatives clearly understand the situationthe company is in, can look for a way to remedy thesituation and better manage the implementation of thechanges in the companies concerned (reorganisation)When the plan involves the closure of a site or part of itand the WC states its opposition at the end of Tome IVprocedure, a mediator may be appointed by agreementbetween the WC and the employer or by the Court within8 days*.The mediator’s mission cannot exceed 1 month*.Tome III procedure. Before starting, the working week must have beenreduced to 35 hours, or at least serious negotiations musthave taken place.. Information: the employer must give the WC thefollowing information in writing:

- the reasons for the redundancy scheme- the number and status of the employees to be

made redundant and the criteria to be used inselecting the employees concerned

- the number and status of the employees normallyemployed.

- the period over which the redundancies arescheduled to be carried out

- the anticipated consequences- the draft social plan (package of accompanying

measures) where 10 or more redundancies. Consultation: at least two meetings must be heldseparated by a maximum interval depending on thenumber of dismissals (up to 99: 14 days, between 100 and249: 21 days, over 250: 28 days). The WC may appoint achartered accountant in order to analyse the plan, with theneed to hold a supplementary meeting.

ArticleL.321-7-1 of theCode duTravail

L321-4of CodeduTravail

L321-3 ofCode duTravail

5 Enforcement Legal action can be taken at any time by the WC, the


87

unions or the individual employees, even after thenotification of dismissals has taken place.

Since the "Samaritaine" case, redundancies can bedeclared to be null and void due to the collectiveredundancy procedure not being fulfilled.In general, the procedure is restarted, though the judge canalso order the workers to be reinstated.The procedure is cancelled not only in the event ofshortcomings in the plan for safeguarding jobs but alsowhen the consultations with the employees’representatives have not been fulfilled.Incidentally; the employer (or the administrator in the caseof official receivership) that does not comply with theinformation and consultation procedures, risks both civiland penal sanctions (“entrave”: obstruction). Penaltiesfor special infractions, in the event that the procedures forredundancies involving more than 10 people are violated,are also included in the Labour Laws.It must also be stressed that, if deemed urgent and useful,the WC can request that a special hearing judge, issue aninjunction ordering the information to be produced, or toappoint an expert.

(The situation in France is characterised by the dispersenature of litigation involving labour legislation.) There isnot a specific judge for collective redundancies andvarious courts can intervene during the procedure: it is notunusual that a President of the Tribunal de GrandeInstance on submission (within the framework of a specialhearing) of a request from the WC to issue a temporaryinjunction (fault in the redundancy scheme, within theframework of a collective redundancy) orders thesuspension, or the renewal, of the consultation procedureswith the employee representatives during a proposedeconomic based redundancy scheme.

Soc. 13February 1997No. 1300 RJS3/97 No.269

Article L.321-11-1

6 UnionInvolvement

Union Delegates to assist to WC meetings.Moreover, during the mandatory annual collectivenegotiations on salaries held at either branch or companylevel, examinations of job developments and the nextyear and future years forecasts are discussedThe collective agreement can also set the list of criteria tobe retained in order to set the order of redundancies / twocomments are to be made concerning this point:-The employer is bound to comply with the legal criteria-The sanction in the event of non-compliance with thesecriteria does not have the effect of qualifying theredundancy of the redundancy scheme, without due andserious cause.

Article L 132-12 Code duTravailArticle L 132-27 Code duTravail

7 Influence In a situation original to France, elected representationand union representation coexists within a company. Ingeneral, the elected employee representatives and WC are


88

also union representatives, which sometimes gives thenecessary impetus to elected bodies.That is to say, in terms of collective redundancies, theelected body plays the major role.We should also not underestimate the pressure that theunions can bring into the negotiations, especially withinthe framework of the collective right to strike action(especially within the framework of reorganisations).

8 Enforcement Legal actions can be taken at any time by the unions, onbehalf of the employees, on the fulfilment of theemployer’s obligations (see 5.).(Unions’ rights are legally protected (in the case of illegaldiscrimination, obstruction etc.). The right to strike is notcovered by any specific legal protection over and abovethe protection of union rights (legal sanction in the case ofobstruction for example))

9 StateInformation

The local Labour Administration must be notified (theinformation coming after the issue of redundancy noticesfor redundancies involving less than 10 people, moredetailed information coming at various stages in theprocedure for redundancies involving at least 10 people,and most especiallybefore the redundancy notices areissued)The administration assesses the social plan and mustnotify the employer within 8 days if it considers that themeasures included are insufficient, it may makeobservations or suggestions to which the employer has torespond before notifying staff of the dismissals.

10 Influence Formal role limited to checking on the employmentprotection plan:

In principle : The validity of the employment protectionplan is evaluated taking into consideration the resourcesavailable to the company, or if necessary, the social oreconomic unit or the group.

Several alternative cases are possible:

1. There is no employment protection plan

In this case, the redundancy procedure is null and void, asa plan aimed at reclassifying the employees which, as partof the employment protection plan has not been presentedby the employer to the personnel representatives, whoshould have been called together in order to be notifiedand consulted

The court should then issue an injunction making theredundancy scheme null and void and order either thecontinuation of the work contract or the payment of the

Article L.321-4-1 modifiedof the Code duTravail

Article L.122-14-4 modifiedof the Code duTravail


89

last months salary.

2.The employment protection plan requires modificationsor additions:

In this case, the appropriate administrative department(Labour Inspectorate) can, throughout the entireprocedure right up to the last meeting of the WorksCommittee present the employer with proposedmodifications or additions.

The local Labour Administration has also an importantinformal role of mediator in case of industrial action.

11 Enforcement The legal power wielded by the administrative departmentis relative weak (no ability to check on the truth andseriousness of the economic reasons), however itsdecisions, (“carence”: shortcomings in the employmentprotection plan for example), are open to legal recourse interms of declaring the redundancy null and void (seequestion 11. and 5)

12 OtherMeasures

The State can intervene financially in certain cases andunder certain conditions (notably in compliance withCommunity law in terms of State aid) in order to restartbusiness activity. It can also intervene indirectly throughan employment policy, which, for example, encompassesboth professional training schemes and a reduction andimprovement in working hours.

13 CompanyAlternatives

The trend is to encourage the search for alternatives otherthan measures likely to effect jobs (Tome IV) andredundancy schemes (Tome III). This search is facilitatedby the right to appoint an expert for economic andfinancial advice (see question No.4). The principle of theultima ratio (question hereinafter) is incidentally anexpression used to express the search for alternativesolutions.Also look at (the chapter on External Responsibility) forthe obligations on companies to provide socially importantinformation to General Meetings of Shareholders.

14 Ultima ratio -In practice, the employer is bound to study allmeasures that may avoid making redundancies, and itshould examine each one of the following possiblemeasures: reducing working hours, changing over to parttime working, developing new business opportunities, etc.If this is not done, even if some months later the companysubmits to the 35 hour working week, the collectiveredundancy is considered to be null and void due to themeasure of reduced working hours not being initiated.This jurisprudence is henceforth a precedence underArticle 108 of the law on social modernisation,the ultimaratio rule .

-However above all, inasmuch as a company is obliged to

Soc.App.28March 2000,No.98-21.870Bull. Civ.V,No 131.

Soc.App.23January 2002.No 00-14.521.SA Rexamoverturned

Article L131-1Code du


90

draw up an employment protection plan (see above); thepriority aim of this plan is to avoid or limit the number ofredundancies.

Travail

15 SocialInterests

The employment protection planThe old term "social plan" is now replaced by theappellation "employment protection plan” (Article 93 ofthe modernisation law)

This plan should cover such measures as:- Actions aimed at in-house replacement of the

employeeswith the same or equivalent job categorythat they previously occupied or, subject to theexpress agreement of the employee concerned, at alower category;

- The creation of new business activitiesby thecompany;

- Actions encouraging replacement outside of thecompany, especially by supporting thereactivation of the local employment area;

- Actions supporting the creation of new business or thereturn to existing business activities by theemployees;

- Training schemes, by the validating ofachievementsand experience, or by retraining insuch a way as to facilitate the in-house or outsidereplacement of the employees in equivalent jobs;

- Measures toreduce or improve working hours, aswell as measures to reduce the amount of regularovertime hours worked; when this amount showsthat the company is established on the basis of acollective duration obviously higher than 35 hoursper week or 1,600 hours per year, and that thisreduction can preserve all or part of the jobs that itis proposing to make redundant

L;321-4-1 duCode duTravail

16 Appeal17 EmployeeInformation

Staff cannot be given notice before a certain periodstarting from the notification to Labour Administrationand varying from 30 to 60 days (or 45 or 75 days when achartered accountant is appointed by the WC) according tothe number of dismissals.The letter of notification must set out the reasons for thedismissal and inform the employee of his priority if asuitable job becomes available within one year followingthe dismissal.An interview with the employee is mandatory, irrespectiveof the type or the number of redundancies proposed; but of10 or more employees are exempt from this formality ifthere is an employee representation

-For redundancies involving less than 10 people (2 to 9

Article L-321-6 Code duTravail



91

employees) over the same 30 day period:These should be submitted to the Works Committee, oralternatively the personnel representatives for theirrecommendations. The law listsall the information thatthe employer should place before the personnelrepresentatives, for example, the economic, financial ortechnical reasons which support the proposed redundancyscheme, the number of permanent and temporaryemployees, the number of redundancies proposed.

-For collective redundancies of at least 10 people over thesame 30 day period:

The rules covering information and consultation varyaccording to the number of employees (over or under 50)and the number of proposed redundancies:

-Less than 50 employees: the employee should call ameeting of the personnel delegates and in addition to allthe information it is obliged to giveit is bound topropose a conversion agreementto all the employeeswhich fulfil the conditions required to benefit from it.

-50 employees or more:

The employer is bound to call a meeting of the WorksCommittee on a least two occasions (Article L.321-3).The law allocates a certain time period between thesemeetings depending on the number of redundanciesproposed. The Works Committee can call on the help ofan expert who presents the consultation of the personalrepresentatives, more important than in small companies.As a result of the expert (chartered accountant)’s analysis,the personnel representatives have a clearer understandingof the company's situation and the various initiatives thatcan provide a remedy to resolve the situation.

The consultation will have more depth, inasmuch as thehead of the company must now also submit anemployment protection plan (see above)

18 Protection An employer is prohibited from notifying a dismissalduring maternity leave.The dismissal of employee representatives requires theprior authorisation of the labour Administration and theconsultation of the WC.

L122-27 Codedu TravailL436-1 Codedu Travail

19 Challenge Legal action can be taken at any time by the individualemployees, even after the notification of dismissals hastaken place (see 5.)

20 Compensation Employees to be dismissed are entitled to-the payment of salary and benefits during the noticeperiod depending on the length of service and thecollective agreement, these periods are usually between 1and 3 months.


92

-the severance payment itself depending on the applicablecollective agreement and the length of service.-the minimum is set per law: Decree No.2002-785 of the3rd May 2002 relating to the rate of legal compensation,incorporates, in order to take into account Article 113 ofthe law on social modernisation, a doubling of the rate oflegal compensation due to all employees made redundantfor economic reasons (in cases were the collectiveagreement has not already set a higher amount).Incidentally, the Decree incorporates the 1977 agreementprovisions (national inter-professional agreement) relatingto a monthly basis calculation (increased redundancycompensation for employees having over 10 yearseniority) into the Labour Laws.This is to say, from now on, the legal rate is 2/10 of amonth salary per year of seniority up to ten years ofseniority and two tenths of a month’s salary plus twofifteenths of a month’s salary (1/3 of a months salary intotal) per year of seniority over ten years. Forredundancies other than for economic reasons, the scaleremains unchanged (one tenth of a months salary per yearof seniority during the first ten years, with an increase forthe years over that).The salary to be taken into account for calculatingredundancy compensation is one twelfth of theremuneration for the last 12 months or (if moreadvantageous for the employee) 1/3 of the last months(taking into account prorata temporis bonuses or annualpayments paid during this period).Collective agreements usually foresee increased payments.In addition, the employer has also to pay for the cost ofmeasures included in the social plan (average around oneyear’s salary).

Decree No.2002-785 of 3rd

May 2002

21 Selection The law states that three criteria shouldmost especiallybetaken into account: family responsibilities, seniority andany specific socially orientated features that would make itespecially difficult for the employee to findreemployment.

L321-1 Codedu Travail

22 Priority The employee has a one-year priority in terms of anyreemployment by the company.


23 PreventionProcedures

Several mechanisms aimed at anticipating the risks areincluded here or in the legal texts. The difficulty is infinding the mechanisms to be triggered and implementedupstream of any decision that may have an impact on jobs.It is important to mention:

-The provisions aimed at setting up job forecastmanagement.

-The training of the personnel elected representatives(especially in management, economics and,

SpecificallyArt. L.434-10Code duTravail


93

communication.) in order to anticipate or respond toeconomic decisions taken by the employer.

-The services of a financial expert appointed to assess thesituation in order to provide the social partners theresources and knowledge (financial, economic, strategic,legal, etc.) enabling them to direct their efforts towardsnegotiated solutions.

-The “droit d’alerte” right of triggering an early advancewarning by the WC or the in its absence, the personaldelegates, thus enabling the elected representatives to askthe employer for an explanation when they become awareof something of a "disconcerting" nature that could havean influence on the company's economic status.Depending on the answers provided, the WC draws up areport (2nd step) and can make a complaint against thecompany's management structure if this proves to benecessary (3rd step).

-The procedure by which the WKC can request atemporary injunction (legal action) in relation to theproduction of information or the appointment of an expert.

-Further downstream, the prevention policy also concernsanticipated management of the future employmentprospects of the employees, especially where this concernsprofessional training (see the chapter on Employability).

-The Employer has to inform the WC in writing of jobdevelopment over the previous year, and concerning itsjob forecasts for the coming years, qualifications and theactions it has carried out in terms of training. A yearlydiscussion is held covering these subjects which shouldresult in recommendations. This is a real way ofencouraging (within the framework of consultation) jobforecast management. This forecast information shouldalso be transmitted to the Group WC.

-Practices of voluntary redundancy, early retirement,working time reduction, use of non-permanent work,temporary lay-off.

-Local employment pacts (see territorial responsibility)

See Art. L.236-9, L.321-3,L.432-4,L.432-5, L434-6 of Code duTravail

Article L. 432-5; L.434-6; R.432-17 ofCode duTravail

Article L432-1-1 Code duTravail

24 Legal Before starting an economic redundancy procedure, theworking week must have been reduced to 35 hours, or atleast serious negotiations have taken place.

25 Agreements Branch collective agreements include specific measures26 SMEs Lighter procedures when less than 50 employees27 RecentDirective’simpact

No recent impact


94

28 Earlydetection

Works Council right to early warning: request forexplanation; advice by chartered accountant (see 23.)Expert legal advice on management operations requestedby works council.WC informed-consulted on amiable settlement ofdifficulties.Financial information to WC + advice by charteredaccountant

L432-5 Codedu TravailArticle L223-37, L225-31,L226-1,L227-1 Codedu Commerce.L434-6 Codedu Travail

29 Statistics There are around 25000 economic redundancies per monthin France in the first part of 2002, in significant increasecompared to 2001.

Le Monde, 25octobre 2002.Les échos 16July 2002.

Prospects30 Strategies

A “task force” has been set up in 2002 bringing togetherthe government, companies, local authorities and publicbodies to identify and centralise information on proposedredundancy schemes.Another idea has begun to grow: to remedy the differencein economic redundancy procedures between the majorcorporations and small companies in relation to suchmatters as replacement, training, re-conversion andassistance

31 RegulationsRemarks


95


Germany

Questions Answers Ref.1. Definition According to the Law on Protection Against

Unfair Dismissal, staff reduction is consideredcollective redundancies, if in a companyemploying

0 > and < 60 employees more than 5 employees0 and > 500 10/100 employees of the employeesmployed in the company on a regular basis or morehan 25 employees

min. 500 employees employed on a regular basismin. 30 employees are dismissed within 30 days.

.

Ref.:Kündigungsschutzgesetz(KSchG) (Law onProtection Against UnfairDismissal) § 17 Abs. 1

2. Substantiation The employer has to inform the works councilregarding reasons, number, occupational groups,period and anticipated eligibility criteria.

Ref.: KSchG (Law onProtection Against UnfairDismissal)§ 17 Abs. 1 undAbs. 2Ref.Betriebsverfassungsgesetz(Employees' RepresentationAct) § 111


If a Betriebsänderung (change in the object of anenterprise) according to § 111 Employees'Representation Act occurs (given the existence ofa works council and the company (enterprise)employing at least 20 employees) the workscouncil can exert the right of co-determination.One possible consequence of change in the objectof an enterprise could be collective redundancies.In cases of a change in the object of an enterprisethe employer has to inform in due time, whichmeans prior to a final decision.Furthermore, the works council has to be informedcomprehensively and the employer has to consultthe works council regarding options to prevent orrestrict dismissals or alleviate their consequences.

According to § 17 Law on Protection Against

Ref. BetrVG (Employees'Representation Act) § 111

Ref.: KSchG (Law onProtection Against UnfairDismissal)§ 17


96

Unfair Dismissal the employer is obliged toinform the works council in writing concerningreasons, number, occupational groups, period andanticipated eligibility criteria.

The company is obliged to inform and consult theworks council in time and comprehensivelyregarding forthcoming change in the object of anenterprise if these are anticipated to causesubstantial disadvantages for the staff or partsthereof.

Ref.: BetrVG (Employees'Representation Act)§§111,112, 112a

4. Rights Information and consultation:According to § 17 Law on Protection AgainstUnfair Dismissal the employer has to inform theworks council in writing regarding reasons,number, occupational groups, period andanticipated eligibility criteria as well asprocedures for the calculation of possibleseverance pay.

Veto:Right to forbearance (but only in the regions(Landesarbeitsgerichtsbezirke) Hamm, München,Berlin, Hessen), if collective redundancies wereexerted without any effort to negotiate anInteressenausgleich (settlement of conflictinginterests).

The company is obliged to inform and consult theworks council in time and comprehensivelyregarding forthcoming change in the object of anenterprise if these are anticipated to causesubstantial disadvantages for the staff or partsthereof. Right to take external consultants (> 300employees enforceable).

Sozialplan (social plan) and Interessenausgleichhave to be put in writing and signed by both theemployer and the works council.

Special case: Compulsory Sozialplan, if staffreduction is the only issue at hand. Other criteria.Definition of collective redundancies is different.

Ref. § 17 KSchG (Law onProtection Against UnfairDismissal)

Ref.: BetrVG (Employees'Representation Act) § 111,case Law(Landesarbeitsgerichte)

Ref.: BetrVG (Employees'Representation Act) § 111,§ 80 Abs. 3

Ref.: BetrVG (Employees'Representation Act) § 112

Ref.: BetrVG (Employees'Representation Act) § 112a)

5. Sanctions/Rightsof action

If the procedure concerning the change in theobject of an enterprise fails to comply to theregulations (information of works council)sanctions according to § 23 par. 3 and § 119Employees' Representation Act can be imposed.In fact § 119 is hardly relevant. However,sanctions caused by failure to inform the workscouncil do play a significant role.

The employer has to disclose all economic

Ref.: BetrVG (Employees'Representation Act) § 23Abs. 3 und § 119

Ref.: BetrVG (Employees'Representation Act) §§106 -


97

information substantial to his planning. Sanctions:the works council can sue for surrender ofinformation by court-order proceedings or theemployees' committee for management (inenterprises exceeding 100 employees) can instituteproceedings of the board of conciliation.

If an Interessenausgleich or an agreementconcerning the Sozialplan cannot be achieved,both the employer and the works council canappeal to the President of the RegionalEmployment Office for mediation. If the effort ofmediation either does not take place or does notsucceed, both the employer and the works councilcan appeal to the board of conciliation.If an agreement cannot be achieved, the board ofconciliation decide about the Sozialplan butcannot decide about Interessenausgleich.

Board of conciliation can be built in cases ofdisagreement between employers and workcouncils.

109

Ref.: BetrVG (Employees'Representation Act) § 112(2)

BetrVG (Employees'Representation Act) § 112(4)

BetrVG (Employees'Representation Act) § 76


Indirectly: access of unions via works councils;Participation in meetings of works councils/employees' committees for management

7. Influence Collective agreementsCases: DEC/Ditec, BSH, DB AG, FES

8. Sanctions/Rightsof action

Collective agreements only. But hardly relevant.

State andadministration

9. Information

In order to obtain validity, dismissals in thecontext of collective redundancies have to followa predetermined procedure. If collectiveredundancies are on the agenda, according to § 17Law on Protection Against Unfair Dismissal theemployer is obliged to give notice of his intentionto the employment office (obligation to notify).Furthermore, he has to inform the works councilcomprehensively and to discuss options to preventor reduce dismissals or alleviate theirconsequences. This includes both dismissals andtermination agreements.

According to § 17 Law on Protection AgainstUnfair Dismissal a copy of the employer's noticeto the works council has to be enclosed to hisletter to the employment office. The notice to theemployment office has to be put in writing; theworks council's comment concerning thedismissals has to be enclosed.

For a period of one month from the date of receiptof this notice, dismissals which are subject to theobligation to notify according to § 17 Law on

Ref.: § 17 KSchG (Law onProtection Against UnfairDismissal)



98

Protection Against Unfair Dismissal are becomingeffective only in case of the employment office'sconsent. Consent can be granted retrospectivelyuntil the date of application. This represents anactual ban on dismissals for this period. (§ 18 Lawon Protection Against Unfair Dismissal)

10. Influence • Direct or indirect Subventions ofcompanies in agreement with the EUguidelines:Investigation aid, guarantees, infrastructureaid, allowance to costs (e.g. employeesQualification, market access)

• Aid for buying or rent of buildings• Employment measures

SGB III §§ 10, 175, 254

11.Sanctions/Rightsof action

No.

12. Other measures Public promotion of trade and industry,guarantees, grants

Law on Protection Against Unfair Dismissal: shorthours are admissible, if the enterprise cannot keepall of its employees totally occupied.Employment measures, Qualifying, mediationthrough regional job centre


SGB III, § 112 BetrVG(Employees' RepresentationAct)


The employer is obliged to discuss alternativeswith the works council -> Right of Effect

- If the employer does not comply to thisobligation, sanctions according to § 113Employees' Representation Act can beimposed

- sanctions, prohibit injunction regarding theimplementation of the measure

Rights to forbearance are dependent on therespective regions (Bundesländer) (Hamm,München, Berlin, Hessen)

Interessenausgleich

§ 102 Works council's right to be heardconcerning dismissals due to operationalrequirements

The employer has to inform the works councilcomprehensively and to discuss options to preventor reduce dismissals or alleviate theirconsequences.

Collective redundancies: competence to decidewith the employment office.

Ref.: § 113 BetrVG und §111 BetrVG (Employees'Representation Act)

Ref.: § 102 BetrVG(Employees' RepresentationAct)



14.Ultima ratio - lastresort

Collective dimension:Interessenausgleich has to be tried in case ofBetriebsänderung.

Ref.: § 111 BetrVG(Employees' RepresentationAct)


99

Individual dimension:Company has to prove that there is no otherpossibility to continue the work contract (transferto another job; possible qualification within 6months for another job).Economic reasons for dismissal have to be provenby employer.

Ref. § 1 KSchG (Law onProtection Against UnfairDismissal)

15. Consideration ofemployees' interests

Interessenausgleich

Sozialpläne are enforceable according to § 112Employees' Representation Act -> alleviation ofdisadvantagesRestriction § 112a

Ref.: BetrVG (Employees'Representation Act)§§ 111,112, 112a

16. Appeal Decision by court whether a board of conciliationmust decide about Interessenausgleich/Sozialplan.

Employees17.Information

Notice of dismissalPractice beforeNot obligated

18. Protectiveclauses

(1) If the employer digresses from theInteressenausgleich without sufficient cause,employees who were dismissed due to thisdigression can file a suit at the labour court andapply for severance pay. § 10 of the Law onProtection Against Unfair Dismissal appliesmutatis mutandis.

(2) If employees suffer other financialdisadvantages due to a digression according topar. (1), the employer has to compensate for thesedisadvantages within a period up to 12 months.

(3) Par. (1) and (2) apply accordingly, if anemployer implements a change in the object of anenterprise according to § 111 Employees'Representation Act without an effort to realize itby means of a Interessenausgleich and due to thismeasure employees are dismissed or suffer otherdisadvantages.

Protection of employees in case of rationalization:redundancy in collective agreements

Substantiation of dismissals due to operationalrequirements.


19. Rights of action Legal action against dismissals due to operationalrequirements

- in case of compliance with the rules§ 113 BetrVG (Employees'Representation Act)


100

The Kündigungsschutzgesetz provides theopportunity to challenge dismissals individually,e.g. on grounds of unsocial conduct.Each employee can file a lawsuit in order to statea continuing employment relationship.

Ref.: §§ 1KSchG (Law onProtection Against UnfairDismissal)

20. Severance pay In cases of changes in the object of an enterpriseaccording to § 111 Employees' RepresentationAct (defined in § 112 Employees' RepresentationAct ) the employer has to agree on a Sozialplanwith the works council, i.e. an agreement oncompensation or alleviation of employees'financial disadvantages caused by the forthcomingchange in the object of an enterprise.

In some cases the Law on Protection AgainstUnfair Dismissal presents the legal base tocalculate the amount of severance pay.

Protection of employees in case of rationalizationredundancy in collective agreements

Ref.: BetrVG (Employees'Representation Act) § 111, §112


21. Eligibilitycriteria

Social criteria: Age, children etc.

22. Rights of return If cause of collective redundancies in time ofperiod of notice is not applicable exist thepossibility of return.

Ref: Case law,Bundesarbeitsgericht


Social Security Code § 175 SGB III benefits,compensation for workers put on short time

Social Security Code § 254 SGB III Jobplacement and counselling for unemployedworkers

ESF

„wage grants“ by risk of unemployment

Ref.: § 175 SGB III

Ref.: § 254 SGB III

Ref.: §§235c, § 417 Abs. 2SGB IIII

24. other legal25.collectiveagreements

Protection of employees in case of rationalizationredundancy in collective agreements: for exampleIG Metall (Metal Workers Union), IG DruckPapier (ver.di) (Industrial Union for the Printingand Paper Manufacturing Industry), ÖTV(ver.di)(Industrial Union for Public Services, Transportsand Traffic)Transfer Sozialplan : IG Chemie (BCE)(Industrial Union for the Chemical Industry)Agreement on employment protection: IG Metall


101

(Metal Workers Union)Collective agreements on the enterprise level: e.g.DEC/Ditec, Burger, BSH, DB AG, FES

26. SMEs < 20 employees no Interessenausgleich/Sozialplan

No Sozialplan in new companies within the firstfour years.


Ref.: BetrVG(Employees'RepresentationAct) § 112a

27. EU guidelines Applies to very large corporations in the contextof Euro-Works Councils

Early detection28. Early detectionsystems

Information through Wirtschaftschaftsausschuss.Employees Member of Supervisory Board.

Information of Labour office

Ref.: BetrVG (Employees'Representation Act) §§ 106109Aktiengesetz (AktG), GmbH-Gesetz (GmbHG),Montanmitbestimmung§ 17 KSchG (Law onProtection Against UnfairDismissal


No statistics on governmental level.


Unions and works councils: Sozialplan,Interessenausgleich, transfer companies, trainingand qualification, counselling, job placement

31. Rules sufficient No.Further remarks


102


Greece

Questions Answers Ref.1. Definition Dismissals effected for reasons not related to the

individual workers:-4 employees per month in companies employingbetween 20 and 200 workers,-2% to 3% of the workforce for those with over 200employees, up to 30 personsProcedure does not apply to workers who are dismisseddue to termination of the operation of the enterprise orestablishment

Lawn°2874/2000Ch.1-ix

99'Am. to Law1387/1983Article5

2. Motivation No legal duty to motivate the redundancies, unless inpublic sector, but the employer must provide workers'representatives with all useful information and notifythem in writing of the reasons for planned dismissals.Case law based chiefly on the abuse of right: aredundancy is improper if it isn't based on a "real cause",if it cannot be justified by the reasonable interests of theenterprise or if the employer has failed to consider thelabour aspects of the redundancy or has not sought othersolutions.In practice, the system of administrative authorisation incases of disagreement means that the administrativeauthorities have ultimate responsibility to considermotivation.

99'Am. to Law1387/1983Article 3Civil Codeart.281Review byN.Gavalas,E.Kroustalakis,Cassation C.May 1998

Employee reps3. Involvement

Collective redundancies require prior concertationbetween the employer and workers’ representatives inrespect of potential ways of preventing or reducing boththe number of redundancies planned and their effects.Workers’ representatives are taken to mean the delegatesof the enterprise-level union representing most personnel(its members must account for at least 70% ofemployees) and representing most of the employeesaffected by the collective redundancy.

Law 1387/1983Article 3

Law 1767/1988Article14


103

Failing this, the works council of the enterpriserepresents employees during this concertation: there is asubordinate position of the WC with respect to theenterprise-level union

4. Rights -Information: The employer must provide workers'representatives with all useful information and notifythem in writing of the reasons for planned dismissals, thenumber and categories of staff being dismissed, thenumber and categories of workers usually employed, thetime period in which the dismissals will take place andthe criteria for choosing staff to be dismissed. -Concertation: the concertation starts with an invitationfrom the employer and takes place over a 20-day period.The results are recorded in minutes. If agreement isreached, the redundancies are carried out in accordancewith its terms. If there is no agreement, the Prefect or theMinister of Labour decides whether to authorise or rejectall or part of the planned redundancies, within 10 days ofreceipt of the minutes of the concertation procedure.Thereafter, the employer may implement redundanciesonly within the limits specified by the administrativedecision, and if the order is not issued within the timeperiod, he may implement the collective redundancies inaccordance with the last concessions made to theworkers’ representatives during the concertationprocedure

Law1387/1983Article 3 & 5

5. Enforcement Failure to observe the above formalities makes thecollective redundancy null and void with itsconsequences: payment of full salary and reintegration(often followed by a second dismissal).In practice, the system of administrative authorisationprevails.

Civil CodeArticle 180Law 1264/1982Article 23.2

Unions6. Involvement See above 3. and 4.7. Influence In practice, the system of administrative authorisation

prevails. The unions prefer to take labour disputesinvolving staff cuts to the "conciliation" procedurecarried out through an agency of the Ministry of Labour.

Researchby EIE in1999

8. Enforcement Failure to observe the above formalities makes thecollective redundancy null and void: see 5.As regards offences under labour and social security law,the trade unions may refer and bring grievances to theadministrative and judicial authorities


State9. Information

The employer shall forward to the local office of theMinistry of labour a copy of the written communicationgiven to the employee representatives within 8 days ofthe beginning of the procedure. If there areestablishments in different regions, the documents are tobe sent to the Ministry of Labour and to the relevant

Law 1387/1983Article 3 & 5


104

Employment organisation (OAED) of the most affectedestablishment. The authorities are also to receive theminutes of the concertation procedure (see 10.)

10.Influence If there is no agreement between the employer and theemployee reps, the Prefect or the Minister of Labourdecides whether to authorise or reject all or part of theplanned redundancies, within 10 days of receipt of theminutes of the concertation procedure. Thereafter, theemployer may implement redundancies only within thelimits specified by the administrative decision, (and if theorder is not issued within the time period, he mayimplement the collective redundancies in accordancewith the last concessions made to the workers’representatives during the concertation procedure). Inpractice, the system of administrative authorisation incases of disagreement means that the administrativeauthorities have ultimate responsibility.

Law 1387/1983Article 3 & 5

11.Enforcement

Failure to observe the above formalities makes thecollective redundancy null and void: see 5.

12.OtherMeasures

Training programmes, measures for special groups(women, young, long term unemployed.), flexibleorganisation of working time, promotion of part time,promotion of local pacts, ESF funding, subsides fortemporary layoffs,Early retirement mainly abolished in 2001

NAP 2002

Companies13.Alternatives

Case law based on the abuse of right: a redundancy isimproper if the employer has not sought other solutions,so as to maintain employment by reducing working time,proposing transfers or changes in the contracts.Prior concertation needed between the employer andworkers’ representatives in respect of potential ways ofpreventing or reducing both the number of redundanciesplanned and their effects. See 3. -5.Employers tend to avoid becoming involved in the legalprocedure for collective redundancies, particularlybecause of the administrative intervention and usuallyresort to practices of voluntary redundancy, earlyretirement, phasing dismissals, use of non-permanentwork…

Civil Codeart.281E.KroustalakisCassation C.May 1998

Research byEIE in 1999

14.Ultima ratio Case law based on the abuse of right: a redundancy hasto be considered as ultima ratio; it is improper if theemployer has not sought other solutions.Prior concertation needed between the employer andworkers’ representatives in respect of potential ways ofpreventing or reducing the number of redundanciesplanned. See 3.In practice, evaluation by the administrative authorities

Civil Codeart.281N.Gavalas,E.KroustalakisCassation C.May 1998


105

15.Social interests Case law based chiefly on the abuse of right: aredundancy is improper if it cannot be justified by thereasonable interests of the enterprise or if the employerhas failed to consider the labour aspects of theredundancy.Prior concertation needed between the employer andworkers’ representatives in respect of potential ways ofpreventing or reducing the effects of redundanciesplanned. See 3.In practice, evaluation by the administrative authorities

Civil Codeart.281Review byN.Gavalas,Cassation C.May 1998

16.Appeal Civil Court - Abuse of right if an employee has provokedhis dismissal in order to receive severance pay but rareappeals from employers.

N.Gavalas,Cass.C.

Employees17.Information

Written notification containing proposal for severancepay.

Law3198/1955Article 2.1

18.Protection Protection of specific categories of workers fromdismissal: women (pregnant and with children under 1year), employees returning from military service during 1year after military service, people with special needs(handicapped and disabled), TU members and employeereps,Case law based on the abuse of right: a redundancy isimproper if the employer has failed to consider socialaspects, so as dependants or age, when selecting theworkers to be made redundant; the consequences on thepersons affected are to be made the mildest possible (see2.).Special provisions on seasonal work, part-time work.

Law1493/1984Art.15, Law547/1937Art.11, Law1648/1986Art.11, Law1264/1982Article 14 & 9

19.Challenge The employees may challenge the redundancy within 3months of termination of contract for abuse of right (see2., 5., 8., 11.14.15.18.). Action regarding severance payhas to be made within 6 months of payability.Possible mediation of the local office of the Ministry ofLabour.

Law3198/1955Article 6

20.Compensation One sole amount including severance pay and notice,differences between manual and non-manual workers butno distinction between the different cases of terminationof contract.Salaried employees: if notice is served, then theindemnity is halved. Amount: 1 month's notice or salaryfor 2 months to 1 year's service; 2 months for 1 to 4years; 3 months for 4 to 6 years; 4 months for 6 to 8years; 5 months for 8 to 10 years; 5 months plus an extramonth for each additional year up to a maximum of 24months for 10 to 28 yearsBlue-collar workers: no notice but equivalent pay whenunemployment benefit ("extraordinary redundancy").Amount: 5 days notice for 2 months to 1 year's service;10 days for 1 to 2 years; 15 days for 2 to 5 years; 30 daysfor 5 to 10 years; 60 days over 10 years; Pay up to 91days over 20 years until 2002; National General


Royal Decree16/18 July 1920Article 3Nat.GenColl.Agr.21 March1994, art.1


106

Collective agreement for 2002-2003 foresees a bettercompensation for blue-collar workers on termination ofcontract.

21.Selection There are no legal selection criteriaCase law based on the abuse of right: the employer mustuse criteria such as productivity, social aspects, length ofservice, when selecting the workers to be maderedundant; the consequences on the persons affected areto be made the mildest possible (see 2. & 18.)

Review byN.Gavalas,E.Kroustalakis,Cassation C.May 1998

22.PriorityProcedures

No priority right

23. Prevention Industrial restructuring agency(OAE)administers privateenterprises facing problemsPractices of voluntary redundancy, early retirement,phasing dismissals, working time agreements, use ofnon-permanent work or use of insolvency proceduresTemporary (no more than 3 months) layoff whenshortage of activityLocal employment pacts

Lawn°3198/1955Article 10Law 2639/1998Article 4

24. Legal No other compulsory legal procedures

25. Agreements Severance pay for blue-collar workers by Nationalgeneral collective Agreements 1994 & 2002 (see 20.) andsome branch collective agreements

26. SMEs No regulation of collective redundancies under 20employees

Lawn°2874/2000

27.RecentDirective's impact

1999's amendments to Law 1387/1983 were set out inorder to comply with the EC directive: detailedinformation to employee reps, obligation regardless ofwho takes the decision, non application when terminationof operation

28.Early detection -Trade union and employers’ organisations are entitledand have a duty to bargain to conclude a collectiveagreement. General trends in the enterprise to the extentthat these are likely to have an impact on employmentrelationships so as conclusion, terms and termination ofcontracts of employment are part of the bargainingmatters. The employees’ side of collective bargaining isentitled to request any information and documentation onthe economic situation and policy and on the personnelmanagement policy of the enterprise from the employer-WCs have the right to be informed annually on thegeneral trends in the enterprise, in the economic sectorand in production planning and on the annual accounts ofthe enterprise. The employer must inform WCs, beforereaching any decision full or partial transfer, and

Law 1876/1990Article 2 & 4

Law1767/1988,Article13

Law1365/198


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extension or retrenchment of enterprise plant, changes topersonnel structure, reduction or increase in the numberof workers and any layoffs or alternative working-In the “socialised” sector including the public sector(telecommunications, public services, transport, etc.) andbanking and insurance (without modifying ownership)there is up to one third of participation by the State, localauthorities, consumers and personnel in the companyorgans of enterprises. A “representative assembly forsocial control” of 27 members including 9 Staterepresentatives, 9 local authority and consumers’representatives and 9 members elected directly by thepersonnel of the enterprise, in theory has the power todecide investment, price, procurement, employment andindustrial relations policy in the enterprise, within thebudget decided by the government, and to examine andapprove the annual accounts and report.

3

29. Statistics Unemployment rate going back: 10.2% Q2 2001 / 11.1%Q2 200Unemployment is not the result of redundancies: morethan half the unemployed have never workedDatas for 2001: 1.033.800 vacancies filled (+5.6%),527.575 terminations of contract (-1.4%), 386.049voluntary resignations (+13.1%)

NAP 2002

Prospects30. Strategies

Review of severance pay (enacted in 1920) deemednecessary by social partners (collective agreement in2002)Importance of State regulation by way of conciliationand agreement for medium and big companiesDevelopment of "local pacts"

31. Regulations Trend in case-law towards ultima ratioRemarks State regulation remains very important


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Holland

Questions Answers Ref.1 Definition Collective redundancy: dismissal of at least 20

employees (with a contract of employ) within a3 month period within the same area ofemployment ('werkgebied')

Wet meldingcollectief ontslag 24maart 1976

2 Motivation Employer is obliged to give written motivationwhen announcing the dismissals at an earlystage so that it is possible to prevent or softenthe consequences of the dismissals by takingextra precautions or measures.

Procedures and actors:Announcing in writing to the relevantauthorities (CWI) along with a copy of theannouncement to the relevant association ofemployees (unions, works council)

• reason for the dismissals• the number of employees proposed to

dismiss (divided by gender, age, andoccupation)

• the number of employees employed bythe employer

• the dates of terminating the contracts• the proposed methods of selecting

employees who may be dismissed• the proposed methods of calculating

redundancy payments.Also the employer must report whether there isa works council present in the organisation,whether the proposed actions of the employerfall under art 25 section 1 WOR and whetherthe works council is consulted of will beinformed and consulted.The employer will keep the relevant authoritiesinformed of the results of the consultation ofthe relevant unions and the works council.


Employee Responsibility3. Involvement

Works council is entitled to render adviceabout the proposed shut down of (part of) thecompany. Employer is obliged to ask for

WOR art 25 section1-c


109

advise of the works council. When there is(are) a relevant union(s) they negotiate theredundancy payments. If there is a companytreaty (ondernemingsovereenkomst) betweenemployer and works council

(there was no relevant union and theworks council has negotiated thecollective labour agreements in the past)the works council negotiates on behaveof the employees.

WOR art 32

4 Rights The works council has the right of information,right of consultation and to render advise. Inorder to do so the works council has otherrights (e.g. time to analyse information, rightto call for experts, …)Employer has to address every objection andalternative in the advise of the works council.

WOR: section 23(information) ;section 25 (renderadvise); section17(facilities), 18(time spend) & 22(costs)

5 Enforcement Yes, at the chamber of commerce. If employerdoes not ask for advice, does not treat givenadvise correctly or if procedures are notfollowed correctly. Also an appeal can belaunched of the employer did not consider althe interests of the parties involved.

WOR art 26

6 Union Involvement Unions negotiate on behave of employees theredundancy package: payment, training,outplacement procedures etc in a social plan.

Wet meldingcollectief ontslag 24maart 1976;Fusie -gedragsregels vande SER; bij CAOvastgelegd;governmentalrestructuring andredundancies:ARAR art 113

7 Influence Unions co-operate with works council: workscouncil withholds positive advise on theproposed shut down of (part of) the companyas long as there is no good social plannegotiated with the union. Employer can onlyshut down (part of) the company with positiveadvice of works council or he has to wait 1month after the negative advice of the workscouncil. If the works council has not givenadvice at all and the employer starts to carryout his plans the works council has 1 month tolaunch an appeal at the chamber of commerce.

WOR art 25

8 Enforcement No, if employer does not follow correctprocedures e.g. announcing redundancies tothe proper authorities, approvals for dismissalis withhold. If employer dismisses over 20employees within 3-month period it is up toworks council to petition an appeal.

Wet meldingcollectiefontslag 24maart 1976WOR art 26

9 State Information Centrum voor Werk en Inkomen (CWI), inWet melding


110

writing, at such a time that it is possible to takemeasures to prevent dismissals or soften theconsequences.

collectief ontslag 24maart 1976

10 Influence Wet melding collectief ontslag 24 maart 1976gives role and position to OR and union. CWIhas to make sure proper procedures arefollowed.


11 Enforcement Yes and no, they can only withhold theapproval for dismissal

12 Other Measures ?

13 Company Alternatives Yes, the alternative concepts of the workscouncil.

14 Ultima ratio Yes, to works council. Employer has toconvince works council that there's no otherway. It's up to the strength of the workscouncil whether they are (to) easily convinced.

WOR art 25

15 Social Interests Yes, it is up to the strength of the union(backed up by the works council) to negotiate asocial plan that meets the needs of theemployees.

16 Appeal17 EmployeeInformation18 Protection Dismissal on individual basis after a procedure

at the cantonal court. There is severance pay ifmalfunction by the individual cannot beproven.

Art 610 Boek 7Burgerlijk wetboek

19 Challenge Individuals do not have to participate in socialplan but can fight termination on individualbasis at the cantonal court. The contract will beterminated and the severance payment maysometimes be higher that in case of a socialplan.

If there is no social plan termination on requestby the employer is only possible via thecantonal court.

20 Compensation Yes, negotiated by unions or laid down by thecantonal court. Relevant law / procedures /relevant categories and coefficients: Amount isa # monthly payments based on the number ofyears employed * age* factor. Factor is part ofthe negotiation process. Factor = 1 is commonpractice in case of redundancies (if there isenough money).

21 Selection Yes, if agreed by union, works council andemployer in social plan / plan for shutting


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down (part of) the company

22 Priority Yes, if agreed in social plan.

23 Prevention Procedure Early detection of possible redundancies byright to render advise (wor art 25), generalright of information (wor art 23) and biannualdiscussion of plans of the employer with theworks council.

WOR art 25

art 23 & 24

24 Legal25 Agreements26 SMEs27 Recent Directive’simpact28 Early detection

29 Statistics concepts, strategies and activities pursued

a. Unions: preservation of local employment.Definition of local depends on the plans of theemployer (regional, national, European)b.Trade associations: survival of the tradec. Government: preservation of localemployment, if not possible replacement orretrainingd.Political parties:

Prospects30 Strategies31 RegulationsRemarks


112


Ireland

Questions Answers Ref.1 Definition Collective redundancies means dismissals… where

in any period of 30 consecutive days the number ofsuch dismissals is:

a) At least five in an establishment normallyemploying more than 20 and less than 50employees.

b) At least ten in an establishment normallyemploying at least 50 but less than 100employees.

c) At least ten per cent of the number ofemployees in an establishment normallyemploying at least 100 but less than 300employees, and

d) At least thirty in an establishment normallyemploying 300 or more employees.

Section 6 (1) ofthe Protection ofEmploymentAct,1977,

2 Motivation From the terms of the relevant legislation, it is takento be the case that the reasons for collectiveredundancy will in all cases be economic. (Asregards procedures, see answer to 2(b) below).

There is very little case law. The one notable case isMINISTER FOR ENTERPRISE, TRADE AND

EMPLOYMENT V LISLYN RETAIL TRADING (2002)where the court found that the employer had notconsulted with his employees prior to affecting acollective redundancy. The case was heard in theDistrict Court which is the lowest courtadministratively. The action was successful.

Under the terms of section 9 of the Protection ofEmployment Act, 1977, an employer who proposesto effect a collective redundancy must, with a view toreaching an agreement, consult the employees’representatives at the earliest opportunity and in anyevent at least thirty days before the dismissal takesplace. The consultations must cover:- The possibility of avoiding the proposed

Section 6 (2)Protection ofEmployment Act,1977

Case Law:Minister for ETEv Lislyn Retailtrading

Section 9Protection ofEmployment Law


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redundancies, reducing the number ofemployees affected by them or mitigating theirconsequences by recourse to accompanyingsocial measures aimed at redeployment orretraining of employees made redundant.

- The basis for deciding which particularemployees will be made redundant.For the purpose of these consultations theemployer must give all relevant information inwriting to the employees’ representatives,including the following:

- the reasons for the proposed redundancies- the number and description of categories of

employees whom it is proposed to makeredundant

- the number of employees and description ofcategories normally employed and

- the period during which it is proposed to effectthe planned redundancies

- the criteria proposed for the selection of theworkers to be made redundant, and

- the method for calculating any redundancypayments other than those methods set out inthe Redundancy Payments Acts, 1967 to 1991,or any other relevant enactment for the timebeing in force.

Redundancy PaymentsActs, 1967to 1991


In practice, the consultation process consists ofmanagement informing employees’ representativesof the situation as it pertains at the time. The focus ison consultation rather than on negotiation.

4 Rights The whole basis of protection of employmentlegislation (1977 Act as amended) revolves aroundconsultation. The employees have a right to be fullyand comprehensively consulted

5 Enforcement Under the European Communities (Protection ofEmployment) Regulations, (2000), there is provisionfor a right of complaint to a Rights Commissionerwhere the employer contravenes section 9 or 10 ofthe Protection of Employment Act, 1977 (givinginformation to and consulting employees).

Section 9 or 10ProtectionEmployment Act,1977

6 Union Involvement In a company where there are unions, the employeerepresentatives have full rights of information andconsultation, but not of veto.

7 Influence The employees have a right to be consulted about thepossibility of avoiding the proposed redundancies orreducing their number. There must also beconsultation on the basis of deciding which particularemployees will be made redundant.

8 Enforcement The unions do not challenge the company and they


114

do not impose sanctions. The state may, however,seek to prosecute a company for breach of therelevant statutes. (See the answer to 2(a) above).

9 State Information The Minister for Enterprise, Trade and Employmentneeds to be informed at least 30 days before the firstredundancy takes place. These statements to theMinister regarding a collective redundancy arewritten in a standard way and conform to what isstipulated in a checklist supplied by the Departmentof Enterprise, Trade and Employment

10 Influence There are none

11 Enforcement No

12 Other Measures Retraining is available from FÁS, the nationaltraining agency. Notice of a collective redundancy inany area is forwarded by the Department ofEnterprise, Trade and Employment to the FÁS officein that area.


The Protection of Employment Act, 1977 obligesemployers to consult with employee representativeswith a view to avoiding the proposed redundancies,reducing their number and mitigating theirconsequences. While this clearly does not amount toan obligation to negotiate alternative concepts tocollective redundancies, there is an obligation toconsult about the possibility of avoiding theproposed redundancies etc.

Sections 9 (1)and 9 (2) )

14 Ultima ratio Other than the protection of employment legislation,there is no obligation upon employers during theconsultation process or at any other time to provethat they tried other measures to prevent collectiveredundancies.

15 Social Interests Companies in Ireland have no obligations of the kindspecified. However, when the Minister forEnterprise, Trade and Employment is notified of acollective redundancy, the Department must, in turn,notify the relevant district office of the nationaltraining authority (FÁS).

16 Appeal Not applicable

17 EmployeeInformation

30 days before the collective redundancy through acomprehensive and clearly defined consultationprocess.

18 Protection The relevant law with regard to collectiveredundancies is statutory law. The Act obliges theemployer to include in the consultation process (withthe employee representatives) the following matters:- the possibility of avoiding the proposed

redundancies,

Section 9(2a)Protection ofEmployment Act,1977(asamended).


115

- the possible reduction of the number ofemployees effected

- and any means that could mitigate theconsequences of the redundancies

19 Challenge An employee or a trade union/staff association has aright to make a formal complaint to a RightsCommissioner that the employer has contravenedsection 9 or 10 of the PE Act, 1977, relating toproviding information to and consulting withemployees.The Rights Commissioner, having considered theissues, and come to a conclusion, can require theemployer to comply with the legislation and canorder the employer to pay the employeecompensation of a maximum of 4 weekscompensation

EuropeanCommunities(Protection ofEmployment)Regulations,2000.

Section 9 and 10PE Act

20 Compensation Compensation arrangements do exist on the basis oflegislation.30 days prior to a collective redundancy, theemployer is obliged by law to notify the Minister forEnterprise, Trade and Employment of the upcomingevent. The employer must also supply a copy of thatnotification to an employees’ representative.If matters are in order, the employer can expect toreceive a 60% rebate from the Department ofEnterprise, Trade and Employment, provided that theemployer has paid the employee his/her full statutoryredundancy lump sum.Age is the relevant coefficient here (allowing, ofcourse, for earning power). All calculations aresubject to a ceiling of euro 507.90.There is only a small amount of relevant case law

RedundancyPayments Acts,1967-2001Protection ofEmployees(EmployerInsolvency) Acts,1984 to 2001.

21 Selection This is at the discretion of the employer. Theemployer is obliged to inform the employeerepresentatives as to the basis for deciding whichparticular employees will be made redundant.

Section 9(2) PEAct, 1977

22 Priority There is no such priority right, though in practicehighly- skilled and satisfactory employees aresometimes re-hired when the economic situationimproves.

23 PreventionProcedure

The Industrial Development Agencies (IDA Ireland,Enterprise Ireland etc) operate an “Early WarningSystem” whereby they can be notified by one of theirclient companies that they are in difficulty. Everyeffort is then made to assist such a company.

24 Legal There is no such priority right, though in practicehighly skilled and satisfactory employees aresometimes re-hired when the economic situationimproves.

25 Agreements (See the answer to 23 above).


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26 SMEs No27 Recent Directive’simpact

Statutory Instrument 488 of 2000 (whichimplemented EC Directive No 75/129/EEC) allowedfor the prosecution of employers. This can occurfollowing a complaint to a Rights Commissioner thatan employer had contravened sections 9 and 10 ofthe Protection of Employment Act, 1977.

StatutoryInstrument 488 of2000

28 Early detection No

29 Statistics Collective Redundancy notifications under theProtection of Employment Act, 1977 amounted to16, 490 in 2001 (compared to 5,890 in 2000). Thislarge increase was due to the higher level ofredundancies as well as greater compliance with theAct.

Prospects30 Strategies31 Regulations It appears to be no compelling evidence that the

existing regulations are unsatisfactory from the pointof view of the parties concerned.

Remarks


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Italy

Question Answers(1)10 Ref.1 Definition Two types of collective redundancies:

-Redundancies outside Cassa IntegrazioneGuadagni, for a company with more than15employees due to a reduction or change in businessor work concerning at least 5 employees over aperiod of 120 days in one company or in severalestablishments of the same company within thesame province.-The dismissal of employees on Cassa IntegrazioneGuadagni Straordinaria (CIGS salary supplementsystem for partial unemployment) when thecompany feels that it is not able to reintegrate theemployees that it has placed on Cassa IntegrazioneGuadagni Straordinaria. In this case, there are nonumerical, geographical or temporal criteria, andthese are always collective redundancies.

L.23 July1991,n.223

On the CIGS read« Dritos del Mercatodel Lavoro » a curadi Mario Rusciano eLorenzo Zoppoli,« l’interventostraordinario dellaCassa integrazionzguadagni » by G.Natullo.

2 MotivationEmployeeResponsibility3. Involvement

In Italy the trade unions play the leading role interms of representation within the company, andtherefore in the collective redundancy procedures(see hereinafter)

4 Rights (see hereinafter)5 Enforcement (see hereinafter)Unions6 Involvement

The trade unions have to be notified. A copy has tobe forwarded to the Regional EmploymentDirectorate, Ufficio Provinciale del Lavoro e dellaMassima occupazionze (UPLMO).This notification has to include:-The economic reasons to justify the redundancies-The technical, organisational or production motivesthat make it impossible to avoid all or part of theseredundancies-The number of workers concerned, their

Article 4 of the lawof the 23 July 1991,n.223.For the designationof unions see, art. 19and 20 of the LawL. 20 May 1970,n.300

10 Much information comes from the Dares Report “Les conditions du licenciement pour motif économique”Mai 2002


118

professional profile and their position-The redundancy schedule-Any measures to be taken to cushion the socialconsequences of redundancy-The envisaged method of calculating anyredundancy payments other than those resultingfrom the labour legislation and/or collectiveagreements. .

7 Influence The trade union representatives have 7 days (asfrom notification) to request a joint analysis with theemployer of the reasons for redundancies and tostudy the possibilities of in-house reclassification.An expert can assist them.The tendency in Italy is towards negotiationbetween the partners with a view towards ending upwith an agreement on the possibilities for avoidingall or part of the redundancies, and can also bear onthe setting up of accompanying measures in order tofacilitate conversion and re-qualification.The negotiations must bear on:

-The reasons for the reduction or conversionin business and work-The reasons why redundancies are necessary-The solutions to avoid all or part of theseredundancies

In Italy, the implementation of accompanyingmeasures mainly comes down to collectivenegotiation. The parties have 45 days countingfrom reception of the negotiation in which to reachagreement. Financial considerations (See No. 13)generally encourage the parties to negotiate.Failing agreement within 45 days, the authoritiesintervene. The relevant authority plays the part ofarbiter (generally the parties try to reach agreementin order to avoid submitting to the decision reachedby arbitration): the Regional Labour Directorate orthe Ministry intervene to try and reconcile theparties. The authorities make proposals to bothparties and monitor the negotiation. The relevantauthority has 30 days in which to bring the parties toan agreement.The deadlines (45 days and 30 days) are reduced byhalf if the number of redundancies is less than 10.

8 Enforcement There are two schemes governing disputes linked tocollective redundancies:-The real trusteeship, which includes thereintegration and the payment of compensationequal to 5 months salary (applied to companies withmore than 60 employees, or more than 15employees in the same establishment oradministrative district. Real trusteeship mightintervene when, for example, there is failure to


119

respect procedures, discrimination – nullity), in theevent of illegal reasons or the illegal use of criteriafor redundancy.-Mandatory trusteeship (which is not a true trusteemanagement scheme). Illegal redundancy does notnecessarily give rise, in this case, to reintegration(though this may be possible within the frameworkof a new contract). Under this scheme, thecompensation varies between 2.5 and 6 monthssalary–10 months for more than 10 years seniority,14 months for more than 20 years seniority

State9 Information

The role of the authorities is supplementary; theycan only intervene in the event of negotiationsbreaking down. If, after 45 days of negotiation, theparties have not reached agreement, a secondnotification of the authorities should take place,showing the points of disagreement with thesyndicates. This second notification triggers theaction of the authorities, which play the role ofarbiter. They have 30 days to propose solutions tothe employer and to the unions with a view towardsreaching an agreement.At the end of the negotiation period (45 days ifagreement, 45+30 days if arbitration is required),the employer can go ahead with the redundancies.At this point it must inform the company’s tradeunions and the UPLMO (See No. 6 hereinbefore),and in the notification specify:

-the list of names of redundant workers-where they live-their qualification-their management level-their age-their family responsibilities-occasional information on the use of thecriteria for order of redundancies.

10 Influence11 Enforcement Notification must be made in writing. If not in

hardcopy, the procedures are not binding.Article 4 , paragraph12 of law.223

12 Other Measures The law places the emphasis on collectiveagreement rather than redundancy. Law No.223/1991 on solidarity contracts constitutes aninstrument for preventing redundancies and work-force reductions. A solidarity contract allows thesocial partners to sign a company agreement for acut in hours and wages, which may exceed 30% ofcollectively, agreed levels. The reduction in workingtime may be on a daily, weekly or monthly basis.The public authorities (through the CassaIntegrazione Guadagni) make quarterly payments(based on the reduction in hours), which aredistributed equally between companies and workers.

Law N° 223/1991

Law No. 236/93;Law No. 451/94;Law No. 608/96


120

The trade union delegates or the main trade unionconfederations at regional or national level may signsolidarity contracts with the company’smanagement.

Companies’13 Alternatives

Companies are encouraged to reach agreement, as inthis case, if they can call upon the CIGStraordinaria, they will only have to pay theNational Insurance three months of the revenue paidby the CIGS (80%) of the salary per employee,instead of 6 or 9 months.The demand for recourse to the CIGS must includethat the company intends to implement the measuresthat it plans to set up to cushion the social effects ofthe redundancies. This programme must beformulated taking into account the opinion of theInter-ministerial Committee for the Co-ordination ofIndustrial Policy (CIPI). The company, afterconsulting the company trade unions, or failing thatthe trade unions that best represent the commoditysector in the area, may modify a programme duringits implementation. The programme (restructuring,reorganisation, conversion) may not extend over 2years (possibility of waiver by the ministry) 12months in the case of company crisis.

Article 1 of thelaw.223

14 Ultima ratio According to jurisprudence and the prevailingdoctrine, “the extrema ratio” is the expression of anequity and rationality principle that does not opposethe economic interests of the employer, protected bythe Constitution; it can from there be supported inits “invocabilita” in terms not only of individual butalso collective dismissal (riduzione di personale).One particularity or curiosity should be noted in theeconomic redundancy scheme: jurisprudence laysdown an obligation to reclassification for individualeconomic redundancies, but there is no suchobligation for collective redundancies (at least 5employees)

Especially seedoctrine: UmbertoCarabelli « Ilicenziamenti perriduzione diPersonale in Italia »,2001

15 Social Interests16 Appeal17 EmployeeInformation

The employer must notify each redundant employeein writing, specifying the period of notice.The notification of the employees must take placebefore the 120th day counting from the start of theprocedure (date of reception by the unions of thefirst notification of the projected collectiveredundancy.The worker placed on CIGS has rights andobligations. The main consequence for the salariedworker is the substitution of its ordinary wage byintegral wage processing. In this case the workcontract is suspended. The worker has the right to80% of its remuneration for every hour not workedbetween 0 and 40 hours a week: e.g. if it normally

Law L. 427/80


121

works 38 hours per week, but sees its working weekreduced to 20 hours, it will receive a salary for the18 hours not worked of 80% of what it would havereceived had these hours been worked.During this period the worker retains its unionrights, it can especially take part in union meetings.Among the employee’s obligations there is anobligation to loyalty (similar to our obligation torefrain from unfair competition) (the employee mustnot use the suspension of its contract to fulfilanother professional position, whether paid or not).

Article 8 co,4L.160/88

18 Protection19 Challenge20 Compensation Two types of indemnity co-exist: the end of working

relationship indemnity and the mobility indemnityafter economic redundancy (excluding theintervention of the Cassa Integrazione Guadagni)Payment due to termination of an employmentrelationship is payable when leaving a job for anyreason (calculated on a basis of one month’s pay peryear of service.The Italian mobility allowance is a privilegedunemployment benefit replacing any other benefit tothe jobless. To qualify under this scheme theemployee must have 12 month’s seniority in theenterprise. Apprentices, managers, seasonal workersor those working under fixed-term employmentcontract cannot qualify.The Maximum duration of the allowance dependson the worker’s age and the geographical location ofthe former production unit:

Age Paymentperiod

North ItalySouth Italy

Under 30 years 12 months24 months30 to 50 years 24 months36 monthsOver 50 years 36 months48 months

The allowance may not exceed the length of servicein the enterprise that initiated the mobilityprocedure. For the first 12 months, the allowance isequal to 100% of the special short periodcompensation benefit, i.e. of the final agreed pay,falling to 80% for any additional period. Theamount is subject to an annual increment based onthe consumer price index. It replaces any sick pay or

L.23 July 1991,n.223, especiallyart.7 and 16

11 On this subject see Jari Hellsten « Provisions and Procedures governing Collective Redundancies in Europe,September 2001


122

maternity allowance and is suspended if the workerrefuses to accept employment for the period offer,and in any case for not less than one month.11

21 Selection In principle the criteria for collective redundancyare set by collective agreements, and failing that thelaw decrees:-Family responsibilities-Seniority-Productive exigency and organisation

22 Priority Salaried workers admitted for processing by theCassa Integrazione, return to the company after theirperiod of salary take-over by the service.

Article 4 paragraph13 of law No..223

Procedures23 Prevention24 Legal25 Agreements26 SMEs27 RecentDirective’s impact28 Early detection29 StatisticsProspects30 Strategies31 RegulationsRemarks It was only in 1991 that Italy took up a specific

policy in terms of collective redundancies. Thesystem had to take into account the existence of theCassa Integrazione Guadagni set up in 1945, andwhich is at the heart of industrial relations in Italy.Recourse to the Cassa Integrazione Guadagni(C.I.G.) is becoming increasingly difficult followingcertain abuses of the system. It would now seemthat this intervenes mainly when there is reason tothink that this intervention (suspension of workcontract for certain employees who will receive80% of their salary during this period) will help thecompany to take back these employees at the end oftheir C.I.G. period.


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Luxemburg

Questions Answers Ref.1. Definition Collective redundancy is defined as dismissal of

- 7 employees within 30 days or- 15 employees within 90 days

for economic reasons.Any retirement from the company caused by otherthan personal reasons is understood as dismissal.

Ref. 23.07.1993 (MemA-54/1993 S. 1074)art.6

2. Substantiation The economic motivation has to be precise.According to case law, a real and seriouscause is needed..

Review byR.Schintgen


There is no explicit statement in the lawconcerning the date of participation of employees'representatives. This is to take place "in due time",which should generally be understood as "inadvance". The employer is thus obliged tonegotiate a Sozialplan (social plan) withemployees' representatives.Employees' representatives include

- staff representatives- the mixed works council- the unions, if they are present in the company

due to an existing collective agreement.If there are no representative bodies of employeesin companies where these institutions arecompulsory, election proceedings have to beginprior to any procedures concerning collectiveredundancies.

Ref. 23.07.1993 (MemA-54/1993 . 1074)art.7

4. Rights Rights are regulated exclusively by legislation.Rights of information in advance of forthcomingnegotiations concern the following points:

a) motives of forthcoming collectiveredundancies

b) number and type of employees concernedby collective redundancies

Ref. 23.07.1993 (MemA-54/1993 S. 1074)art.7& 8


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c) number and type of employees normallyemployed by the company

d) eligibility criteria regarding the dismissalof employees

e) calculation methods for possible severancepay

Employees' representatives, and the mixed workscouncil in particular, are entitled to consult experts.

5. Sanctions/Rights ofaction

There is no explicit power to impose sanctions orrights of action; with the exception of theemployer's impeding purposely the work ofemployees' representatives. Otherwise, theemployees' representatives can deliver commentson the employers' suggestions to the concernedinstitutions, employment office and tradesupervisory authority.If both parties do not reach an agreement on theSozialplan (social plan), they have to appealmutually to the national conciliation board.A dismissal effected without the signature of anagreement or the minutes of the conciliationprocedure is null and void; the industrial relationscourts are to state the nullity.

Ref. 23.07.1993 (MemA-54/1993 S. 1074)art.7 & 10


Unions being party to the related collectiveagreements are considered as employees'representatives. There is no right of veto for eitherparty.

Ref. 23.07.1993 (MemA-54/1993 S. 1074)art 7

7. Influence See 3. and 4. Also: through the tripartite NationalConciliation Board

8. Sanctions/Rights ofaction

See 5.

State andadministration9. Information

Employment authorities and trade supervisoryoffice have to be informed in advance in writing.

Ref. 23.07.1993 (MemA-54/1993 S. 1074)art 9

10. Influence - through the tripartite National Conciliation Board-if the company received State Aids, there is ameeting with the Economic and EmploymentDepartments and the local authorities affected. TheMinistry of Employment may extend the specialnotice period to 120 days

Ref. 23.07.1993 (MemA-54/1993 S. 1074)art 7Law 14.05.86 art.12

11.Sanctions/Rightsof action

If the employer does not respect his duties, thedismissed employee may receive damages forundue dismissal, in addition to the severance pay

Ref. 23.07.1993 (MemA-54/1993 S. 1074)art 13

12. Other measures A frequently utilized alternative is represented byearly retirement of the employees (pré-retraiteadjustment).Otherwise employment policy grants assistancemeasures, e.g. partial wage subsidies.

Gesetz vom24.12.1990 betreffenddieVorruhestandsregelung(Law on EarlyRetirement)Gesetz vom23.07.1993 betreffend


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die einführung vonverschiedenenarbeitsmarktpolitischen Maßnahmen (Lawon the Introduction ofVarious LabourMarket PolicyMeasures)


Anything is subject to negotiations. Naturally,alternatives have to be discussed. In fact, variousagreements do exist regarding temporary wagereduction, reduction of working hours a.s.f. Finalsuggestions and decisions are the nationalconciliation board's responsibility.

14.Ultima ratio - lastresort

Negotiation results have to be fixed in a mutualreport. This report has to be submitted to theabove-mentioned institutions. Both parties have theopportunity to comment on the report separately.Regulation is still based on the legal foundation of1993 concerning collective redundancies.There is no established case law.

Ref. 23.07.1993 (MemA-54/1993 S. 1074)art.7

15. Consideration ofemployees' interests

One law provides the basis for all regulations.At least, possible alternatives in order to prevent orreduce dismissals have to be negotiated, as well asopportunities to redeem social consequences e.g.accompanying social measures, assistance forretraining and qualification, re-integration in thelabour market and financial compensation.

Ref. 23.07.1993 (MemA-54/1993 S. 1074)art 7

16. AppealEmployees17.Information

Staff has to be informed in advance throughemployees' representatives or directly in casethese do not exist,. ??( I don't find the references)

Ref. 23.07.1993 (MemA-54/1993 S. 1074)

18. Protective clauses See the above-mentioned options of temporarywage reduction and reduction of working hours.Special protection against dismissal to employeerepresentatives, in case of pregnancy andinvalidity

19. Rights of action Each employee has the right of action tochallenge their dismissal individually, even incase of compliance to all existing rules. It is theindustrial relations courts' responsibility to statewhether the economic reasons given for thedismissal are valid.In case of failure to comply with existingregulations, a summary trial can declare thedismissal null and void.

Gesetz vom 24.05.1989über den Arbeitsvertrag(Law on the LabourContract)Ref. 23.07.1993 (MemA-54/1993 S. 1074) art7


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20.Procedure/Severancepay

The law provides for a right to severancepayment in compensation of the losses (minimum1 month 1 month after a length of service of 5years, 3 months between 15 and 20 years, up to12 months for clerks over 30 years) and forminimum notice periods (from 2 to 6 months).However, these procedures are not to start before75 days. The Ministry of Labour can prolong thisperiod to 90 days. Everything else is subject tonegotiations.

Law on the labourcontract 24.05.1989art.24

Ref. 23.07.1993 (MemA-54/1993 S. 1074) art11

21. Eligibility criteria Eligibility criteria usually refer to age, maritalstatus, duration of employment and social mattersin general. They are stated upon proposal of theemployer during negotiations regardingSozialplan (social plan)s by the Mixed WorksCouncils.

Ref. 23.07.1993 (MemA-54/1993 S. 1074) art8

22. Rights of return "Normal" labour contract law of 1989 states theright of an employee dismissed for economicreasons to apply for return to the company if thefirm hires new personnel. These applications aregranted priority treatment, limited to a one-yearperiod.

Gesetz vom 24.05.1989über den Arbeitsvertrag(Law on the LabourContract) art 48


-The "crisis law" allows enterprises subject toserious long-term or short-term problems, causedby unforeseen economic developments, toconclude single-employer agreements to reduceproduction costs in order to protect employment.The enterprise must report on prior measures tomaintain employment and must have obtainedauthorization to apply the short-time working orextraordinary works of general interest system.The Tripartite Coordination Committee mustgive its opinion as to the validity of a request toopen such negotiations.-Iron and steel sector: special provisions andprevention measures

Law of 24 December1977, as amended,authorising thegovernment to takemeasures to stimulateeconomic growth andmaintain fullemployment (known asthe crisis law) Article 19

24. other legal None25. collectiveagreements

See 23.Also: the Tripartite Coordination Committee- meets if there is a decline in thecompetitiveness of Luxembourg enterprises(changes in prices, activity indicators, wagecosts, short-time working, etc.),-assesses the economic and labour situation andgovernment proposals to rectify the situation,-rules by a majority of the members of each ofthe groups representing employers and therepresentative trade unions; in the event ofdisagreement, a mediator may be appointed toreview the problem and draw uprecommendations.


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26. SMEs Companies under 20 employees may substituteseverance payment by increased notice periods

Law on the labourcontract 24.05.1989art.24

27. EU directives National law is based on EU directives.Early detection28. Early detectionsystems

See 25.



31. Rules sufficientFurther remarks


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Portugal

Questions Answers Ref.1 Definition According to the Law, staff reduction is considered collective

redundancies in the following circumstances:a) When it affects at least to:

- 2 employees: in enterprises between 2 and 50 employees.- 5 employees: enterprises of more than 50 employees

b) Dismissals must occur simultaneously or successively during aperiod of 3 months.c) The cause is the definite shutdown of the enterprise, or of oneor several sections, or caused by a reduction of the workforce dueto structural, technological or critical reasons.

DL 64-A/89, 27Fevreiro(despedimentocolectivos)Art 16º

2 Motivation Legislation obliges enterprises to lay the foundations ofcollective redundancies and to justify any of the followingcauses:

1. Economic or due to the market: proved reduction of theenterprise activity attributable to a reduced production ofgood or services, or the legal or practical impossibility toplace those goods and services in the market.

2. Technological: changes in techniques, or manufactureprocesses, or production equipment automation, either asthe result of computerization of services or the automationof media.

3. Structural: definite shutdown of the enterprise or severalunits or sections, or an economic and financial instability,caused by a new activity or a change in main products.

DL 64 – A/89Art 26º


The plan to promote a collective redundancies process must be awritten communication to the employee representation elected byall employees, - work council - and if it does not exists, to thetrade union representatives of the enterprise.

The communication must include:− A description of the economic, financial or technical

reasons− Affected staff, differentiated by sections

DL 64 – A/89Art 27º


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− Indication of the criteria used as a basis to select theemployees to be dismissed.

− Number of employees to be dismissed and theirprofessional categories.

− Time period of the dismissal process.− Calculation method of eventual compensations to give to

dismissed employees.

If there is not a representative body, employees affected by thecollective redundancies process can create a representativecommission with a maximum number of 3 to 5 members,depending if the dismissal affects 5 or more employees.

4 Rights Right to information and negotiation. Starting 15 days after thecommunication. The purpose is to obtain an agreement about thedimension and the effects of the measures to be applied, andother possible alternative measures, such as:

- Interruption of the job- Reduction of obligatory work service- Remuneration and professional re-classification- Anticipated reforms and pre-reforms

In the case of not having an agreement in 30 days, counting fromthe communication date, the enterprise must communicate inwriting to each affected employee the dismissal decision, with aconcrete reason and the date of termination of the contract.

DL 64 – A/89Art 18º

5 Enforcement If no agreement was reached and the collective redundanciesoccur, affected employees can request its judicial interruption.

DL 64 – A/89Art 24º

6 UnionInvolvement

Unions do no have the right to negotiate the case of collectiveredundancies. Unions can only intervene if no employeerepresentatives exist. In practice, Trade union representation isthe most common channel of employee representation.

DL 64 – A/89Art 17º

7 Influence In the processes of negotiation, Unions will provide technical andunion support to staff commissions or Union commissions.

8 Enforcement Unions do not have the power to dispute or to impose sanctionsto the decisions of the enterprise. Usually, Unions representaffected employees in Court.

9 State Information A copy of the communication referred in number 3, must be sentin the same date, to Ministry of Labour’ Services (Serviços doMinistério do Trabalho da área das Relações de Trabalho).

DL 64 – A/89Art 17º

10 Influence Ministry of Labour’ Services participate in the negotiationprocess, with the purpose to ensure procedures are fulfilled and topromote conciliation of parties’ interests.Specific Ministry’s services – of Labour, of Social Security – canintervene to inform within the bargaining process.

DL 64 – A/89Art 19º


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11 Enforcement Public authorities cannot be in opposition to enterprise’sdecisions. In case of non-fulfilment of any of the dispositions,they could oblige to impose economic sanctions of administrativenature through the Labour Inspection Body (Inspecção doTrabalho)

DL 64 – A/89Art 24º

12 Other Measures Public services can intervene with employment policy(professional training) and Social Security (allowances)measures.

DL 64 – A/89Art 19º


Management of the enterprises are denied to reject bargainingmeasures presented, although are not obliged to accept.In case of no reached agreement, redundancies decisionscorrespond to the management.

DL 64 – A/89Art 18º

14Ultima ratio

The law does not establish anything in relation to this term anddoes not oblige to demonstrate that other solutions exist.

15 Social Interests No legal provisions of employee social interest.

16 Appeal Practically, no existence of jurisprudence.


Employees are informed:- At the beginning, about the aims of the enterprise to promote

a collective redundancy, if no employee o unionrepresentative exists.

- Bargaining phase, relative to application of measures relatedto professional re-classification or related to reforms or prereforms.

- Last phase, about the decision of the enterprise to proceed oncollective redundancies, 60 days before the measure willtake place.

DL 64 – A/89Art 21º

18 Protection Permanence criteria can be regulated in collective bargaining.During pre-notice period, employees can rescind contracts ifcommunicated in advance at least 3 days, without prejudice ofloosing compensation rights.During 60 days, there is a right to free availability of two daysper week paid by the enterprise for looking a new job. This is aright for all the workers affected by the dismissal.When exercising functions at the redundancies communicationdate, Union representatives -delegados sindicais- and membersof workers’ commission - comité de trabalhadores-havepreference to maintain job positions in the same section andcategory.

DL 64 – A/89Art 23º

19 Challenge Employees can oppose the enterprise through:- Applying to Labour Inspection to intervene of the

enterprise is not fulfilling procedure norms.If Court declares illicit the collective redundancies,employees can chose between a reincorporation in theenterprise or obtaining a severance.

DL 64 – A/89Art13º&24º&25º

20 Compensation If no regulation exists in collective agreement, Law states the DL 64 – A/89


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right to compensation; which corresponds to one-month basesalary by each antiquity year or fraction, not being less than threemonths. To these effects, time must be considered from the dateof the sentence.

Art 13º & 23ºº

21 Selection If a section or equivalent structure presents a number of jobs withidentical tasks, the enterprise shall observe the following order ofcriteria:

1. Least antiquity in the job2. Least antiquity in the category3. Inferior class category.4. Least antiquity in the enterprise.

DL 64 – A/89Art 27º

22 Priority No23 PreventionProcedure

No

24 Legal No25 Agreements No26 SMEs No27 RecentDirective’s impact

Some dispositions were modified upon Directive’s transposition.Currently, is pending in the Justice Court of EuropeanCommunity an action of the European Commission against thePortuguese State linked to a possible restriction in the concept ofcollective redundancy (Process C – 55/02, nº JOC 97/6 20 ofApril of 2002)

28 Early detection No29 Statistics Refer to table beneath


Not many enterprises have established works council (this type ofinstitutions exist more often in public enterprises). Unionrepresentatives participate most generally in the consultation andnegotiation processes.

Union strategies to prevent collective redundancies are orientedby:

− Alternative economic measures to collective redundancies.− Active search of alternative labour solutions for employees,

who need to be reconverted.− Enterprise responsibility of enterprises that are part of the

same enterprise group, to confront the situation ofcollective redundancies on one of them.

− Consultation and information rights development.− Involvement of employees and representatives in re-

structuring processes.− Search of new enterprises for the interrupted activities.− Contract responsibility of the enterprise that invest abroad

and supported by beneficiary States, but not fulfillingcompromises established as a result of processes of re-structuring and de-location of enterprises.

Union’s opinion criticizes that law states a consultationperiod, and in theory, of negotiation, even though thedecision corresponds exclusively to management, withoutprejudice to the possibility to appeal to Court. Nowadays


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regulations lessen the efficacy of the negotiation.31Regulations

Remarks Enterprises almost do no use collective redundancies, in legalterms. Main means used to reduce employment are mutualagreement contract cancellation (with severance paymentscalculated by years in the enterprises), in processes related toanticipated reforms and shutting down of enterprises, which arenot, regulated as collective redundancies.Portuguese legislation has at disposal another legal systemrelative to redundancies by extinction of jobs not included incollective redundancies. It is applied when the followingrequirements occur at the same time:- Enterprises need to reduce staff due to economic or market,

technologic or structural causes.- Redundancies are not included in the collective redundancy

framework (simultaneously cessation of contracts during aperiod of 3 months: 2 employees in enterprises between 2and 50 employees or 5 employees in enterprises of morethan 50 employees). See nº 1

Other applicable legislation:- DL 519-C1/79, 29th December on collective bargaining- DL 353-H/77, 29th August on enterprises in dared economic

situation- DL 261-91, 25th July on pre-reform- DL 219/99, 12th September on Work Councils- DL 119/99, 14th April on Unemployment Protection- DL 291/91, 10th August o Social Protection of restructuring

sectorsDL 247/95, 29 March of unemployment prevention


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Spain

Questions Answers Ref.1 Definition “Cessation of contracts based on economic, technical,

organisational or productive causes, when over a period of 90 days,termination affects at least to:

a) 10 employees, in enterprises of less than 100 employees.b) 10 percent of the total number of employees in enterprisesbetween 100 and 300 employees.c) 30 employees in enterprises with 300 or more employees.”

In addition, collective redundancies include termination ofcontracts that affects to all enterprise staff, always when thenumber of affected employees is more than 5, and when it occursas a result of the total cessation of its enterprise activity, based onthe same causes described earlier.

In order to achieve dismissals, management must obtain anagreement with employees’ representative. In other direction, anauthorization of the Labour Administration is necessary.

In both cases, causes must be proved and accredited.

These actions are called “employment regulation procedure”,which is initiated by requesting an authorization by management tothe Labour Authority; the Authority opens a consultation period,where dismissals and its conditions are negotiated with employees’representatives. Management must justify that legal causes arefound.

Art. 51.1

Estatuto delosTrabajadores(ET)

(WorkersStattute Law)

2 Motivation Causes are found “when the adoption of proposed measurescontributes, if the stated are economic, to overcome the negativeeconomic situation of the enterprise, or, if causes are technical,organisational or productive, to guarantee the future feasibility ofthe enterprise and its employment, through the most adequatedistribution of resources”.

Administrative authorization will proceed when documentationstates that measures proposed by the enterprise are necessary to thegoals mentioned before

Art. 51.1 ET

Art. 51.6 ET


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This definition of the causes in the Law is interpreted byJurisprudence. Usually, there are not interpreted or developed in.Collective Agreements.

Economic causes are related to revenues and looses, and theeconomic equilibrium of the enterprise. A critical economicsituation is not requested: only a negative evolution of revenues,including that the labour measures will contribute to overcome thesituation. Labour Administration uses the concept of “preventivedismissals” in order to understand that the negative economicsituation does not need to come about in that moment but canverify that will occur if labour measures are not considered.

Economic causes, as well as organization or productive, aredefined as a lack of balance between the workforce and productionneeds or market position, in order to achieve a better organizationor enterprise resources.

Technological causes include scientific innovations that result inchanges that affect organizational aspects of the enterprise.

In general terms, Jurisprudence justifies redundancies when thecause is found, as economic, technical, etc. cause, labour measuresare part of a equilibrium recovery plan. It is requested aninstrumental relationship between labour contract termination andovercoming of unfavourable enterprise situations, with adequacyand proportionality criteria.

SupremeCourtSentence(STS) 24-9-2001

(STS) 13-2-2002

(STS)16-12-1999


Consultation period with employee representatives is obligatory inall collective redundancies, further in cases of major forces.Management must communicate to employee’s representatives thatan administrative authorization has been requested. The LabourAuthority must know the criteria of representatives before dictatingresolutions.

Even though Law uses the term “consultation period”, it specifiesthat “parts must negotiate, with good faith, in order to reach anagreement”

The content of the consultation period is more like a negotiation.However, in case of disagreement, management can request andobtain administrative authorization. This means that the final effectof this disagreement cases rather be more proximate to aconsultation than a real bargaining.

Art. 51.4 ET

4 Rights The right to consultation includes the right to information: proveddocumentation of the causes presented to the Labour authority isthe same offered to employee’s representatives for consultation.In addition, the right to issue reports: a report of employees’representatives must be included.If an agreement is reached, the Labour Authority must authorize –and analyse - it in order to demonstrate whether it was reachedproperly (for example, without pressures), or if its goal is


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fraudulent. (for example, in respect of obtaining public incentivesor subsidies).If the employees’ representatives have representation equivalent tothe required to subscribe a collective agreement, once authorizedthe agreement will be in general efficient, as a collectiveagreement, both, in respect to dismissals and the conditions thisoccurred - compensations, alternative measures to collectiveredundancies, etc -.

5 Enforcement Taking into account that it is an administrative procedure,employees’ representative rights during the consultation processare also fundamental elements of that procedure; therefore, if notfulfilled, procedures will not result in effects.For instance, if necessary documentation is not presented toemployees’ representatives, or if management, unilaterally, beforea minimum period of 30 days closes the consultation period,employees’ representatives will be able to formulate an accusationto the Administration, and it will paralyse the process until defectsare rectified.

In general, transgression of information and consultation rights isan administrative infraction, susceptible of economic sanctions tomanagement, as well as shutting down the enterprise withoutadministrative authorization.

If the employer does not obtain authorisation from the relevantlabour authority before carrying out collective redundancies, theywill be void.

There are no criminal sanctions under Spanish law if the employerdoes not adhere to the correct procedure.

6 UnionInvolvement

Negotiation during the consultation period takes place with electedrepresentatives of employees (works council orstaffrepresentatives-delegados de personal-). It is also possible to reachagreements with union representatives in the enterprise (delegadossindicalesand union bodies-secciones sindicales), who representalmost the majority of the members or representative bodies,according to the general union measurement system by “electoralaudience”.

Art. 51.4 ET

7 Influence In addition, during consultation period, unions participate throughtheir internal bodies or even with the direct presence of unionorganisations (the Federations that correspond to each activitysection of the enterprise). This union involvement is usuallyrelated to the size of the enterprise, labour transcendence of themeasures established, or social incidence of these.

8 Enforcement

9 State Information The presence of Administration in regulating employment movesbeyond a report, because it is requested its authorization.Labour Authority which intervenes in these procedurescorresponds to each Comunidades Autónomas (AutonomousRegions), in cases where employment regulation affects toemployees that perform their activities in only one of them. If the


136

proceeding affects several Comunidades Autónomas, the Ministryof Labour and Social Affairs intervenes, requesting the report ofthe Autonomous Administrations.

10 Influence Because it is a system of administrative authorization, bothdemonstrate influence, the accuracy of the procedure and theauthorization itself.Besides the authorization, the Administration influencesemployment regulations when applying the general framework ofunemployment subsidies, as well as other economic aids, toworkers that could see themselves without protection, or in cases ofsectoral re-structuring. Usually, this type of extra aids does nohave a generalised application and is not financially important.

11 Enforcement Administration faculties in employment regulation procedurescould include a requirement to the manager to rectify transactiondeficiencies, such as the referred when information andconsultation obligations with employees’ representatives are notfulfilled. In addition, there is a possibility the Administrationrequests the manager to paralyse measures, which could constituteinefficiencies in the procedure result.In general terms, manager’s fraudulent actions could constitute apenal infraction (fraudulent bankruptcy).

art.51.3ET

art. 257Criminal Code

12 Other Measures Because in collective redundancies there is an extensive legalframework of measures or administrative interventions, otheractions would be those with political connotations, such as cases ofcollective redundancies in enterprises socially relevant. Precisely,because its political nature, these could vary enormously, from thenegotiation momentum to the time measures are taken to decreasethe effects of the crisis.


The consultation period must consist of motivation causes and thepossibilities to avoid or reduce its effects, as well as aboutnecessary measures to reduce consequences on affected employeesto leave room for the continuity and viability of the enterpriseproject.In enterprise with more than 50 employees, these measures must bearticulated in a Plan, and sufficiently documented.

With this legal formula, negotiations during consultation movefurther away from causes’ assessments and the proportionality oflabour measures, when they consider aspects related to theprotection of affected employees, and being oriented to reducesocial consequences of redundancies.

However, if there is no reached agreement and administrativeauthorization is requested, the later will only value if betweencollective redundancies measures and concurrence of causes areadequate and connected; a Social Plan that could looks insufficientcannot be rejected if it covers minimum legal compensations.

art. 51.4 ET

art. 51.6 ET

14 Ultima ratio Nor Law or Jurisprudence requires the employer to justify thatdismissals are the only possible measure, after exhausting others orbeing these unfeasible.However, Jurisprudence criteria is oriented to the need of


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instrumentality of extinctions, in order to overcome anunfavourable situation; in other words, must be a direct andadequate contribution, and not indirect.In addition, they also declare the proportionality of the labourmeasure in respect of the cause and the enterprise’s situation. Thismeans that in a concrete case could reject the authorization of thecollective redundancies when the dismissal measure is notproportionate.

15 Social Interests The Social Plan might consider measures such as re-qualificationor the promotion of new jobs. However, it does not mean they arerequired. Management are obliged to discuss these measuresduring the consultation period if employees formulate them, or ifthe manager has incorporated measures in the Social Plan. If thereis no agreement on the measures, Labour Administration cannotdetermine its existence, neither impose them.

Management shall incorporate measures in the negotiation, duringconsultation as far as possible and reasonable. And vice versa, themanagement shall not incorporate them if justified economicweakness –due to the negative situation of the enterprise- or thatthere are not technical possibilities to use them.

In practice, the use of anticipated retirement schemes as SocialPlan measures, results in dismissals of employees near retirementage. This will not be discriminatory if continuity of earnings untilretirement age is guaranteed, and justified that if these were notdismissed, others would and no compensations could be guaranteedfor them. In this case, these would be in worse situation in terms ofentering the labour market.

art. 51.4 ET.

art. 6 of theRules onEmploymentproceduresregulations.

TS 25-1-1999

16 Appeal As part in the administrative device of employment regulation, themanagement has the right to know any reports, allegations,accusations, etc. incorporated to the device, and to formulateallegations related to what found.

Decisions made by the Labour Authority during the procedures aswell as the final resolution are susceptible to appeals. First, throughadministrative means; second, judicial means, against definiteadministrative resolutions.


Information and consultation with workers is performed throughtheir collective representatives. If they not exist, management shallperform the consultation with affected employees individually(jurisprudence criteria), or these could select representativesspecifically to this negotiation.

If the manager obtains authorization of collective redundancies, itshall be notified individually to each employee. Employees canoppose the resolution in circumstances where his/her professionalcategory or the enterprise area where he performs his/her duties,considers that the causes do not justify the resolution.


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18 Protection The only preference to stay in the enterprise in case of collectiveredundancies are employees’ representatives, who have the right tostay in the enterprise while job positions on his/her category orprofessional group are available.

Managers are able to select, between affected employees, those tobe dismissed, always if this selection is performed with objectivecriteria and without discriminating by sex, race, union affiliation,etc.

There are no fixed criteria, which must be applied when selectingemployees for dismissal..If the whole workforce will not be affected by the collectiveredundancies, the legal representatives of the employees and thetrade union representatives must be given priority when theemployer is deciding which employees will remain.

19 Challenge During the consultation period, individual rights of employeesmust be canalised through collective representation, although couldmake an allegation to the management or to the Labour Authority,of interference with individual rights –such as preferences toemployees’ representatives to stay-.

Once the redundancies are authorized, the possibilities to appeal itby individual employees are wide, particularly during the phase oflegal and court control of the authorization.There is no remedy available to an employee once the dismissalshave been authorised by the labour authority, unless the employeebrings an appeal against the decision of the labour authority inwhichever court is superior to the administrative court (whichvaries from region to region).

20 Compensation Right to “ a compensation of 20 days salary per year of service,shared out in months periods less than one year, with a maximumof 12 months payments”.

These minimum amounts can be increased in the consultationagreement or by decision of the management, expressed in therequest authorization of redundancies.

Employees that loose their jobs due to a collective redundancies,are legally unemployed, with the right to obtain unemploymentbenefits, as well as in some cases, assistance benefits.

art. 51.8 ET

21Selection

See point 18: criteria to select employees to be dismissed aredetermined by the management, being the limits the principle of nodiscrimination and relationship between the job activity of thedismissed employee and the enterprise areas where causes of theredundancies are occurring.Therefore, criteria will be fixed to select staff in each collectiveredundancies decision.

22 Priority Law does not recognize the reallocation of redundancies in casethere is an improvement of the situation that produced thatdismissal. As enterprise compromise, it can appear in Social Plans.


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23 PreventionProcedure

The only legal provisions on the future evolution of employment inthe enterprise, are the right of the work council to receiveinformation every three months “ about the general evolution of theeconomic sector where the enterprise is ascribed, about thesituation of the production and sales of the enterprise, about itsproduction programme and probable evolution of jobs in theenterprise”. In addition, able to know the Balance of Payments,Income Statements and other annual reports. In the case that theenterprise uses the form of share society, all other documents thatare given to shareholders, and in the same conditions.

art. 64.1ET

24 Legal In the 80’s decade, a legal regulation specific to industrialreconversions existed.

25 Agreements Sectoral collective bargaining does not include employmentregulation issues. In general terms it only treats on information andconsultation rights, without establishing specific procedures aboutthis question.

26 SMEs In enterprises of less than 50 employees, the minimum legal periodof consultation is reduced from 30 to 15 days

In enterprises of less than 25 employees, the Public Fund of WageWarranty (Fondo de Garantía Salarial) will pay 40 percent of thelegal indemnification of employees in collective redundancies.

The obligation to formulate in written a Social Measure Plan ofAccompaniment (Plan Social de Medidas de Acompañamiento),will only correspond to enterprise of 50 or more employees.

The obligation to use procedures of employment regulation in thecase of termination of contracts, which affect the totality of staff,operates within frameworks of enterprises of more than 5employees

art. 51.4 ET

27RecentDirective’simpact

A current legal regulation were introduced by the reform of theEstatuto de los Trabajadores of 1994, and has a clear influence ofthe Directive in the considerations of collective redundancies aswell as in the content of the negotiations during consultations.

28 Early detection The only indicators that could be related to possible collectiveredundancies are information about the economic evolution ofbusiness, production and employment, which the enterprise mustprovide periodically to the work council (see number 23).

29 Statistics The Labour Statistics Bulleting of the Ministry of Labour andSocial Affairs provides extensive information about collectiveredundancies.


31 RegulationsRemarks


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Sweden

Question Answers Ref.1 Definition Quantitative criteria: l threshold of 5 redundancies "at the

same time" as superimposed on 20 redundancies over 90days (irrespective of the number of employees and the size ofthe company), to trigger the procedure and the opening up ofrights.

Qualitative criteria: by collective redundancy, we meanredundancies carried out by an employer for one or morereasons unrelated to the employees personally.

2 Motivation Objective grounds for dismissal are required. According toprecedents set by the Labour Court, shortage of work isregarded as an objective ground.

EmployeeResponsibility.3.Involvement4 Rights Information

Information given in writing in order to enable the unionrepresentatives to formulate constructive proposals:-The reasons for the redundancy scheme-The number and status of the employees to be maderedundant-The number and status of the employees normally employed-The period over which the redundancies are scheduled to becarried out-The criteria to be used in selecting the employees concerned(see question 21)-The method of calculation envisaged for all possibleredundancy compensation due to collective agreements.-A photocopy of the redundancy scheme proposal sent to theRegional Employment Office.ConsultationConsultation is carried out in compliance with CommunityDirectives concerning the possibilities of reducing thenumber of redundancies and alleviating the consequences byassistance measures. In practice, the parties try to reach anagreement, even an informal one.


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The employee's representatives do not act in an advisorybasis on company strategy (in contrast to France, within theframework of the so called Tome 1V procedure).The procedure for informing and consulting unionrepresentatives is carried out in parallel with the procedurefor notify the Public Authorities (see below)

5 EnforcementUnion6 Involvement

In practice, anticipatory measures are more widespread: thecompany notifies the Regional Employment Office (AMS) asearly as possible (in practice, approx. 6 months in advance)and gives an estimate of the number of people concerned.During this period, it is usual to create a discussion andconsultation group that includes the main actors involved: thecompany's general management, the representatives of theunions involved, the local authorities, official auditors andthe local employment agencies. This group acts as a forumfor the exchange of information (concerning the situation,company's market potential and the job market) and in anadvisory capacity. The AMS is responsible for initiating andpresiding over this group. The unions are notified of thenumber of anticipated redundancies at this time. Theemployer is not bound to co-operate with the AMS, however,social pressure and the company's reputation are importantfactors in encouraging it to do so.

After this has taken place, the real negotiating period begins:this continues for an approximate period of between 1 and 3months. Ideally, the aim is to reach agreement on the numberof employees to be made redundant and the measures set upto assist them. The legal position is based on the "last in,first out" principle which protects the longest servingemployees, however the parties can negotiate other solutions.In 90% of cases, negotiations are based on applying the "lastin, first out" rule, and an agreement is reached. Negotiationscan take place both on a local or central union level.

7 Influence The employer is bound to consult the unions in the event of amajor change in the company's business (reorganisation,reshuffling, etc.). If the employers claims the changes aredue to economic reasons, the unions has no right of dispute ifthese reasons are well founded.

8 Enforcement If the employer does not comply with the consultationprocedure the unions can demand compensation. In practicevery few proceedings are initiated within the framework ofcollective redundancies.The judge does not have the power to force the employer tore-employ the employees.

Law on Co-determination

9 State Information The employer is bound to inform the Regional EmploymentOffice of any redundancy scheme, within deadlines that varyin accordance with the number of people to be maderedundant:-At least 2 months before the effective date of redundancy ifmore that 25 employees are to be made redundant


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- At least 4 months before if between 25 and 100 people areconcerned- At least 6 months before if more than 100 people areconcerned

In the event that it is impossible to keep to these deadlines, itmust be at least one month before the projected redundancies.

10 Influence11 Enforcement Economic sanctions if the deadlines are not (100-500 SEK

per person and for each week behind. Only the RegionalEmployment Office (AMS) can place proceedings before anadministrative court in order to demand payment of thesesanctions.

12 Other MeasuresCompanies13 Alternatives14 Ultima ratio15 Social Interests16 Appeal17 Employees

Information18 Protection “Last in, first out rule”19 Challenge20 Compensation Neither the law nor collective agreements make any

provision for compensation in the case of collectiveredundancies.Very often, companies make offers of higher compensationin exchange for greater flexibility in managing the proposedredundancies in order that they can keep selected employees.“In March 1999 the US-owned car seat manufacturersuddenly announced the immediate closure of a factory inBengtfors. While the Swedish Codetermination Act wasobviously infringed, the government also took part in thenegotiations between the unions concerned and the company.No legal action ensued, while the company agreed to paywages for approximately six months, plus the statuaryperiods of notice of between one and six months. The wagecost amounted to some EUR 5 million. The company alsoagreed to pay the rent on the abandoned factory for twoyears”12

21 Selection The law gives the employer a limited choice

22 Priority In the event that the company intends to re-employpersonnel, ex employees have a priority right to return to aposition within the same company during the 9 monthsfollowing redundancy.

Procedures23 Prevention24 Legal

12 Report by Jari Hellsten "Provisions and Procedures Governing Collective Redundancies in Europe, 2001"


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25 Agreements26 SMEs27 RecentDirective’s impact28 Early detection Representation on Board of Directors

Prior information in the event of a change of activity.Information and negotiations with UD.

29 StatisticsProspects30 Strategies31 RegulationsRemarks


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United Kingdom

Questions Answers (1) Ref.113 Definition A collective redundancy situation arises where an

employer proposes to dismiss twenty or more employeesas redundant within a ninety-day period. Fore thesepurposes, the definition ofredundancydiffers slightlyfrom the one used to establish entitlement to statutoryredundancy payments. It means a dismissal for a reasonunrelated to the individual employee concerned. Thismight occur, for example, where a business or plantcloses down, or where an employer no longer needs asmany employees to carry out a particular task. It mightalso occur where dismissals are to take place in areorganisation or reallocation of work, but where there isno overall reduction in the number employed because theemployer is taking on new recruits.

In conclusion, two definitions co-exist, depending on theobjectives set by the texts:-1.One definition dealing with the determination ofredundancy payments and the invocation by theemployer of a just motive for redundancy (“economicnecessity”, see No. 2 hereinafter)-2.One definition dealing with the application of theprovisions relating to information and consultation ofworker representatives (see No. 4 hereinafter). Here,redundancy for economic reasons is a layoff for one ormore reasons that have no bearing on the employee.From here, some layoffs can meet one definition, but notthe other. Thus in terms of substantially modifyingcondition of work contract, if employee agreement is notobtained, (and there is therefore breach of contracts),definition 2 is applicable (layoff for a reason that has nobearing on the employee), while definition 1 is notnecessarily applicable.

EmploymentLegislationRedundancyConsultation&NotificationPL833

2 Motivation Economic necessity is a potentially fair motive:This means deciding whether an employee is entitled to

13 The Dares Report “les conditions du licenciement collectif pour motif économique” Mai 2002 and the document from theTUC were very helpful for collecting the information.


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receive a legal redundancy payment, or if the employerhas a fair reason for layoff. 4 situations can, in principle,occur:

• The employer ceases all business activity• The job held by the worker ceases to exist• The employer needs less employees to

accomplish the work• The employer stops business in one area, to

move to another.The employer must give:

° the reason for the proposals;° the number and descriptions of employees it isproposed to dismiss as redundant;° the proposed method of selecting the employeesof any such description employed by the employerat the establishment in question;° the proposed method of carrying out thedismissals, taking account of any agreedprocedure, including the period over which thedismissals are to taken effect;° the proposed method of calculating anyredundancy payments, other than those required bystatute, that the employer proposes to make.

Employee Resp.3. Involvement4 Rights Consultation (see: unions, influence). In relation to

redundancies, employers provide that employers mustinform and consult representatives of employees whomay be affected by the dismissals or by measures takenin connection with the dismissals must be consulted.Stock Exchange rules do not preclude employeerepresentatives being informed and consulted in advancewhere collective redundancies are planned in connectionwith a takeover14. Provisions can be made for employeerepresentatives to be subject to confidentiality constraintsfor a specified period, but at the same time be sufficientlyinformed to hold meaningful consultations with theemployerSo the employer has to inform and consult theappropriate representatives of the employees concernedif it proposes the redundancy of at least 20 employees foreconomic reasons, within the same establishment(jurisprudence accepts a fairly broad definition ofestablishment) within the same ninety-day period. Theserepresentatives are trade union representatives recognisedby the employees concerned. If there is no unionrepresentation, then it is the elected personnelrepresentatives for consultation purposes, or the namedor elected representatives for another purpose that will be

Trade Union andLabourConsolidation Act1992IRLR 324

14The Director-General of the Takeover Panel has confirmed this.


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consulted and will receive information on the projectedredundancies. Elections may therefore take place in orderto name the appropriate representatives. Procedures forsuch elections are set out in the 1999 Regulations. Ifthere are recognised union representatives in theestablishment, the employer is legally bound to consultthem.In terms of information, the employer must inform theserepresentatives:

-Of the reasons for the projected redundancies-The number and category of workers normallyemployed-The criteria envisaged for the selection of workersto be made redundant-The period during which redundancies arescheduled to take effect-the method envisaged for calculating anyredundancy payment other than that resulting fromnational legislation and/or practices. Thisinformation may be transmitted orally or inwriting.

Alternative jobs in the company; if the employee agreesto consider an alternative job in the same company, theycan work for a trial period of one month, after whichtheir redundancy entitlement remains if they choose notto take the alternative jobThe consultation should start well beforehand andwhatever the case:

• 90 days before the first redundancy takes place, if theemployer envisages making 100 or moreemployees redundant,

• 30 days in other casesTo this must be added the time required, should itbe necessary, to elect (see above) the relevantrepresentatives

Recent decisions of the UK Employment AppealsTribunal (EAT) have precise the necessity to anticipateall the social risks, as early as possible.In a case of MSF v Refuge Assurance plc (2002), theEAT makes a distinction between two notions which areimportant for the application of the law in this field ofcollective redundancies, because they determine themoment for consultation of workers representative: theEC Collective Redundancies Directive provides that anemployer who is “contemplating” collectiveredundancies shall begin consultation. The English lawprovides that the consultation should being when theemployer is “proposing” to effect collectiveredundancies.The judge says that the consultation under English lawdon’t have to permit consultation in the UK to begin at alater stage than the directive would allow. In a recent

IRLR 332

Employment RightsAct 1996


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decision (Middlesborough Borough Council v TGWU -2002), The judge considered that the consultation wastoo late: consultation began about the ways of mitigatingthe impact of a businesses decision but no consultationwas undertaken in relation to the decision to effectredundancies itself, nor as the business rationale behindit.The consultation (to avoid, reduce or abate) must beundertaken with a view towards reaching an agreementwith the representatives.

5 Enforcement The consultation procedure can be set aside if theemployer can argue that exceptional circumstancesprevented it from carrying out this consultation (up to theemployer to prove this). It is also up to the employer, inthe event of litigation, to prove that it has done all it canto take the employee representatives’ arguments intoaccount during the consultation phase.In the event of failure to respect the procedure(individual or collective court proceedings) thecompensation that can be claimed by the employees canreach 13 weeks salary per employee. There is an upperlimit of £250 per week. This is adjusted annually in linewith the Retail Price Index.

Unions6 Involvement

Recognised Unions have the right to be consulted if morethan 20 employees are to be made redundant in oneestablishment; see point 4 above.

7 Influence Unions/workforce representatives must be consulted witha view to reaching an agreement. The clearest definitionof “consultation” in UK case law can be found in R vBritish Coal Corporation ex-parte Price, 1994, IRLR 72.

8 Enforcement If the employer does not pay the compensation orderedby the Employment Tribunal, the employees may applyto the country court (sheriff court in Scotland) for anenforcement order.

State9 Information

The employer must notify the Department of Trade andIndustry in writing of its intention to enforceredundancies. It must indicate the identity of thepersonnel representatives as well as the consultation startdate.

10 Influence The authorities have a minimal influence; in particularthey cannot delay the redundancies if they feel there is achance of solutions.

11 Enforcement12Other MeasuresCompanies13 Alternatives

Companies must consider alternatives proposed by theunion/workforce representatives.

14Ultima ratio15 Social Interests16 Appeal Appeal is to the Employment Appeal Tribunal; appeal

from that is to the Court of Appeal and then to the Houseof Lords. Reference to the ECJ can be made at any stage


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by the courts involved.17 EmployeesInformation

In non-union cases, where affected employee fail to electrepresentatives, having had a genuine opportunity to doso, the employers concerning may fulfil their obligationsby providing relevant information to those employeesdirect.

18 Protection Union/workforce representatives are protected. If aworker is selected for redundancy on the basis of theirtrade union membership or activities, that is unfairdismissal and actionable in law.

Trade Union andLabour Relations(Consolidation) Act1992


19 Challenge20 Compensation The right to redundancy payments is subject to a

condition of seniority in the company: the employeemust have been employed without interruption for atleast two years under an open-ended contract (unlessotherwise provided for in labour conventions).The amount of the payment is:

-One and a half week’s salary per employee peryear in the company after 41 years.-One weeks salary per year in the companybetween 22 and 40 years-One half weeks salary per year in the companybetween 18 and 22 years

The total number of years used in calculating thepayment is restricted to 20. The maximum amounttherefore varies between 18 weeks and 30 weeks ofsalary (the company’s labour conventions can improvethese thresholds).If no period of notice is mentioned in the contract, itmust nevertheless be “reasonable”. The length will bedecided in compliance with certain criteria such asseniority in the job or comparable with that applied toother employees with similar positions. This noticecannot be less than one week per year served in thecompany, nor more than 12 weeks.


21 Selection No selection criteria are demanded when selecting theemployees to be made redundant. The criteria mustnevertheless be reasonable and objective. Failing this thedismissal may be considered unfair.Among the more generally used criteria:The “last in first out” principle, i.e. the seniority criteria.Employers can also base their selection on an attendancerate.It is illegal to select employees for redundancy on thebasis of their sex, race, disability or trade unionmembership.Insofar as collective redundancies hit the workstationsfirst (and therefore the employees who work these

Sex DiscriminationAct 1975,Race Relations Act1976, DisabilityDiscrimination Act1995, EmploymentRights Act 1996Trade Union andLabour Relations(Consolidation) Act1992.


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stations), it is more difficult for the employer to dismissaccording to the workers’ own characteristics orcircumstances. Companies sometimes seek to negotiatethe departure of certain employees whose positions arenot due to disappear in exchange for larger payments forthe dismissed workers.

22 PriorityProcedures23 Prevention24 Legal25 Agreements26 SMEs27 RecentDirectives impact28 Early detection29 StatisticsProspects30 Strategies31 Regulations Collective Redundancies and Transfer of Undertakings

(Protection of Employment) Regulations 1999 (unders.188 of the Trade Union and Labour Relations(Consolidation) Act 1992.

Remarks


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Case StudyCollective RedundanciesAlitalia – Italy 2001-2002

The Italian national airline Alitalia had been in difficulties for some time, with businessfalling off sharply during the final quarter of 2001. As had been anticipated, in January2002, the airline sent the unions, which represent its workforce a letter signallingcommencement of the process to lay off 2,600 workers.

The company wanted to make a total of 2,600 people redundant across the group and toachieve 900 additional jobs cuts visa natural wastage. In its letter concerning AlitaliaTeam (part of Alitalia Holding and dealing mainly with passenger transportation), thecompany stated that, in the 2002-03 plan, it needed to make a global reduction in thesupply of flight hours compared with 2001, as original estimates were based on thesituation before 11 September 2001.

Alitalia wanted to reduce flight hours by 5.4% in 2002 and 3.3% in 2003. Alitalia alsounderlined that in order to keep labour costs under control and in line with its two-yearplan, "there are no alternative possibilities to redundancies...as the reduction in activityhas an impact on the whole company and therefore it is not possible to reemployredundant peoplein other jobs."

No agreement was reached between the airline and the unions by the deadline of 15February 2002 and so Alitalia decided to begin the formal procedure required underItalian Law to start the redundancy process. Accordingly, the unions sent the company arequest to commence format negotiations over redundancies. In the meantime, informalmeetings between unions and the company were underway to gain a better view of howto reduce labour costs and how to implement solidarity contracts arrangements underwhich working time is cut with corresponding loss of pay, but with this loss made goneby payments from the INPS. This bilateral process appears to have been successful inpreventing compulsory redundancies.

The draft agreement reached on 22 March 2002 between seven unions and themanagement provided for "soft" measures to reach the goals of the 200203 saving plan.It also envisaged the possibility that other shares would be given to employees, as amoue to compensate for their pay tosses.

12,700 ground staff with an open-ended contract were [to be] involved in solidaritycontracts (see above) for a total of 14 days. This meant that they would lose a total ofsome€22 million of gross pay in 2002 and 6 million in 2003 (€1,730 each in 2002 and€500 in 2003). A fourth of this income loss was supplemented by the state EmploymentFund.


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All workers will also contribute to savings by allowing a freezing of pay vises linked toprojected inflation rate for the two years, and freezing of Alitalia's contributions tosupplementary pension funds of Alitalia employees. Moreover, ground staff gave upsome payments for public holidays that they worked

According to the unions, in two years the company would save euros 142.8 million.Alitalia felt it attained the goal of reducing labour costs, which was quantified in therequest of making 2,101 redundancies in 2002 and 1,085 in 2003. Job reductions arenow limited to 800 voluntary redundancies and the no renewal of fixed term contracts of400-500 workers.


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Case StudyCollective RedundanciesEricsson – Sweden 2000

On 24 March 1997, the chair of the metalworkers' union atEricsson's Norrkôpingplant was informed by the company that 1,400 workers would lose their jobs15. Ericssonwas going to moue the production of printed circuit boards to Scotland, where wageswere lower. However, subsequent plant level extensive negotiations around the criteriafor redundancy selection and seniority roles helped to reduce the number of the lay-offsto 587.

Following the Norrkôping closure, Ericsson continued restructuring other parts of itsproduction system. In January 2000, the entire production of mobile phones was handedover to a new company. 1,100 of the assembly workers in the Linkôping factory weregiven jobs in the new company, with 500 people losing their jobs. The Norrkôpingapproach was used as a model for dealingwith these job losses.

Union representatives played a key role in reducing the number of redundancies and inmitigating the impact of job loss at Norrkôping16. Local and national officials had verydifferent roles. Within the plant, union efforts were concentrated on negotiations withthe aim of reducing the number of redundancies, and helping to upgrade the skills ofolder workers so that they could take on more demanding and skilled tasks.

At national level the union did not seek to challenge the company's decision to close theplant. Instead, from the beginning it saw its job as to help attract other entrepreneurs andhelp its members find other jobs through retraining and any other available measures. Aspecial team within the union was given the rote of working with the community, theEricsson corporation, the labour market authorities and ail other political agencies tocreate alternative employment, and, through media coverage to win sympathy with thegeneral public and thus put pressure on the company, the local communities and thelabour market authorities to act.

In both rounds of redundancy, separate manpower companies as indicated below alsoplayed important roles

16 Trade unions in Sweden have statutory rights to negotiate over redundancies. As this casestudy shows, these rights put them in a strong position to influence the level of redundanciesin an organisation. However, activity to mitigate the effects of redundancy and to findalternative employment to redundant workers is outwitting the legal framework in Sweden


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Once redundant, the 587 NorrkSping workers were employed by the organisation Profilein a co-operative arrangement with the County Labour Market Board, which relieved thestate placement service of a considerable administrative burden.

The Ericsson Corporation paid full wages for one year while the workers were assistedto plan a new career. Those concerned were divided into groups of 15, each group withone instructor/tutor. One Profile expert also looked at other questions of rehabilitation ofthose who were sick on a long-term basis and workers who worked part-time because ofdisability.

When the Profile employees felt that they were prepared to actively seek a new job, fourofficers from the state placement service were assigned the job of helping to find newjobs and to advise on possible training such as vocational guidance.

In the case of the later redundancies at LinkSping, the workers concerned were alsogiven a year's employment at a manpower company with wages paid by Ericsson. Inaddition an important rote in the job search process was played by the recruitmentagency Industry Competence owned by 70 major companies in the region.

Of the 587 workers who did not immediately find a new job alter the closure of theNorrkôping circuit board production plant, 277 found new jobs during the period ofemployment at Profile, 58 accepted the early retirement option, and 64 were inlonger-term training programs leading to a guaranteed job at the end. At Linkôping, allof the 500 redundant workers found jobs within the period of time that they wereguaranteed income security

Giving the role of working with redundant workers to a specialist organisation with theexpertise, time and resources to prepare them for alternative employment was a keyfactor in the success of the model developed at Norrkôping. The company's ongoingfinancial commitment to the workers it had made redundant also helped their moue intoalternative employment. In the second round of redundancies the use of a recruitmentagency bringing together other local employers played a key part in finding alternativeemployment for the redundant workers.


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Case StudyCollective RedundanciesSafeguarding PlanGeneral Semiconductor (Ireland)17

Of all the five EU member states studied here, the Irish Employment Law framework isthe most similar to that applying in Scotland. In case of collective redundancy, legalobligations on employers are limited to consulting with employee representatives andnotifying the Minister of Enterprise, Trade and Employment. Thus, most of thepartnership activity in this case study took place without the prompting of legalrequirements.

The closure of theGeneral SemiconductorIreland (GSI) electronics manufacturingplant atMacroom, Co. Cork, was announced in August 2001 and was completed byDecember 2001, with the loss of 670 jobs18. The plant had been the largest employer inthe town.

17 From IRS 2002

Key Aspects of Legal Framework applied in the case study

In Italy, employee rights to information and consultation over collective redundancieshave strong legal support. This case study shows how the application of formalprocedures in line with the law and parallel informal discussions helped to minimisecompulsory redundancies at Alitalia

Background

The Italian national airline Alitalia had been in difficulties for some time, with businessfalling off sharply during the final quarter of 2001. As had been anticipated, in January2002, the airline sent the unions, which represent its workforce a letter signallingcommencement of the process to lay off 2,600 workers.

The company wanted to make a total of 2,600 people redundant across the group and toachieve 900 additional jobs cuts visa natural wastage. In its letter concerning AlitaliaTeam (part of Alitalia Holding and dealing mainly with passenger transportation), thecompany stated that, in the 2002-03 plan, it needed to make a global reduction in thesupply of flight hours compared with 2001, as original estimates were based on thesituation before 11 September 2001.


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Alitalia wanted to reduce flight hours by 5.4% in 2002 and 3.3% in 2003. Alitalia alsounderlined that in order to keep labour costs under control and in line with its two-yearplan, "there are no alternative possibilities to redundancies...as the reduction in activityhas an impact on the whole company and therefore it is not possible to reemployredundant people inother jobs."

Partnership and Activity

No agreement was reached between the airline and the unions by the deadline of 15February 2002 and so Alitalia decided to begin the formal procedure required underItalian Law to start the redundancy process. Accordingly, the unions sent the company arequest to commence format negotiations over redundancies. In the meantime, informalmeetings between unions and the company were underway to gain a better view of howto reduce labour costs and how to implement solidarity contracts arrangements underwhich working time is cut with corresponding loss of pay, but with this loss made goneby payments from the INPS. This bilateral process appears to have been successful inpreventing compulsory redundancies.

Key Actions and Interventions

The draft agreement reached on 22 March 2002 between seven unions and themanagement provided for "soft" measures to reach the goals of the 200203 saving plan.It also envisaged the possibility that other shares would be given to employees, as amoue to compensate for their pay tosses.

12,700 ground staff with an open-ended contract were [to be] involved in solidaritycontracts (see above) for a total of 14 days. This meant that they would lose a total ofsome€22 million of gross pay in 2002 and 6 million in 2003 (€1,730 each in 2002 and€500 in 2003). A fourth of this income loss was supplemented by the state EmploymentFund.

All workers will also contribute to savings by allowing a freezing of pay vises linked toprojected inflation rate for the two years, and freezing of Alitalia's contributions tosupplementary pension funds of Alitalia employees. Moreover, ground staff gave upsome payments for public holidays that they worked

Monitoring of OutcomesAccording to the unions, in two years the company would save€142.8 million. Alitaliafelt it attained the goal of reducing labour costs, which was quantified in the request ofmaking 2,101 redundancies in 2002 and 1,085 in 2003. Job reductions are now limited


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The workforce at the plant could be described as having a medium skill level. About athird of the positions required third level qualifications, including technicians,engineers, and professional staff. The remainder, mostly in operative jobs, wererequired to run a significantly automated plant, many of which required special training.

The lead in dealing with the impact of the closure was taken by the Minister forEnterprise, Trade and Employment, who set up the Macroom task force. The setting upof such local task forces has been a common governmental response to major local jobcatastrophes in Ireland in recent years.

Those represented on the task force included: the senior local authority manager (aschairman); four representatives from the industrial promotion bodies IDA Ireland(overseas investors), Enterprise Ireland (indigenous industry), and the local `countyenterprise board' (small business); the regional director for the state employment andtraining agency FAS; the social partners in the shape of the SIPTU trade unionsregional leader and the regional IBEC business confederation director; and the chiefexecutives of three major local industries , as well as the GSI plants own generalmanager.

Search for replacement industry.The company assured the Macroom task force that the site and buildings would bemaintained at least through 2002, to help their promotion as a location for new industry.At the time this research was conducted, the search for replacement industry was in itsearly stages. It had included company visits arranged by the task force and by GSImanagement, and also the development of a promotional brochure for the site. Thisbrochure was produced by the task force and funded by GSI.

Employment Resource CentreOne of the major initiatives taken on reemployment was the establishment of an`Employment Resource Centre' in the GSI plant. This was up and running a week alterthe closure announcement and operated through to the end of December 2001, at a totalcost to the company of€317,500 (IR£250,000). Its main activities were: makingemployees aware of jobs in other companies; acting as an information centre; providingoutplacement training and counselling; supporting FAS personnel in the registration ofworkers; providing office resources to assist in job applications; and providing trainingon internet job searching and on establishing a business.

Assistance with business start-upA programme to encourage new business start-ups from among the GSI workforce wascarried out by a private consultancy, Flexible Learning Ireland. The process involved aworkshop with case studies and experts, and giving participants access to the speakerson an individual basis. The programme manager met all participants individually to helpthem to start to assess the viability of their ides.

to 800 voluntary redundancies and the no renewal of fixed term contracts of 400-500workers.


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Severance package:A key activity for SIPTU, the main plant trade union, was thenegotiation of severance packages in excess of the legal minima. Following conciliationby the Labour Relations Commission a deal was agreed which provided for six weeks'pay per year of service plus statutory entitlement. The deal is believed to have cost thecompany up to€12.5m (just under IR£10 million).

Monitoring of OutcomesTake up of training and development opportunitiesFAS came to register workers on-site and eventually just over 500 were registered. Ofthese, 321 applied for training. FAS provided programmes to enable former GSIworkers to operate in the pharmaceutical and medical devices industry, which is strongin the Cork region. The agency also provided funding for the finishing of educationcourses that were close to completion.

Around 45 workers participated in a programme to encourage new business start-upsfrom among the GSI workforce.

Employment outcomesAn analysis of what had happened to each of the 670 redundant employees as ofNovember 23, 2001, is given in the table below:

Still employed at GSI In 109 (with 28 already having other jobs)New employment 220Pursuing own business 5In full-time sponsoredTraining with FAS 58Seeking work 148Unavailable for work 125

By April 2002 it is understood at least 300 of the former GSI employees were inemployment, up from the 220 in November 2001. Company sources estimated that sincenot all employees can be tracked after December 2001, the actual number inemployment could be higher

This case study indicates some of the roles that employers can play in reducing theimpact of closure decisions:

- The company provided considerable financial resources to assist redundant employeesin finding alternative employment.

- It maintained the closed site and provided other assistance in the search for alternativebusiness.


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Case StudyCollective RedundanciesSafeguarding Plan 2001Atelier et Chantiers du Havre19

The naval construction firmAtelier et Chantiers du Havre (ACH) had been in seriousfinancial difficulties for some time. In the 1990s it survived largely by means offinancial subsidies from the state and had mounting debts - it needed financial help ofF100 million a month in the mid-1990s. Despite this, in 1995 it accepted an order tobuild three ships for the Norwegian government. However, it delivered the first ship twoyears late, the second was finished abroad and the third was never built. In October1998, the government decided to cease financial aid to the group, resulting in thebankruptcy of the firm, the redundancy of around 1,000 workers and causing majorupset in the town of Le Havre, in which it was based

Trade unions took the lead in campaigning for retraining for the redundant workers andthe revitalisation of the industrial site. A specialist retraining agency, Sodie, wasemployed to work with those made redundant, with the aim of retraining the entireworkforce. Most importantly, trade unions, consultant organisations, local authoritiesand state representatives met regularly in order to monitor progress

A social plan was drawn up which provided for several payments of an average ofFF200,000 (roughly £20,000) for each redundant employee, varying according tolength of service. The plan also contained a number of measures aimed at aiding thereturn to work for those made redundant, including:

- retraining leave for all employees over 50;- a training budget of around FF10,000 per person;- guarantees of the maintenance of salary in subsequent employment;- around FF1 million to finance employee plans to set up their own business;- help in relocating

Each redundant employee was offered a total of three alternative jobs, which wereeither open-ended contracts or fixed-term contracts of a long duration, with identicalpay and within a radius of 50km

19 From IRS research 2002


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The redeployment measures were entirely financed by the state, which contributed atotal of Eur41 million to retraining the redundant workers. In total, it is estimated thatEur450 million of public money was spent in closing the firm

As at December 2001, only seven of the 1,000 people made redundant wereunemployed. Most of the redundant workers had found open-ended employmentrelationships. Some had taken early retirement, either under the national scheme orunder special provisions relating to workers who had come into contact with asbestosduring their working life

The state's rote in providing support to redundant workers and in providing substantialfunding for that support is a key aspect of this case study.

The effectiveness of the measures undertaken is illustrated in the fact that three yearslater only seven of the redundant workers were unemployed.


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Case StudyPfaff Industrie Maschinen AG 2001-2002

Pfaff Industrie Maschinen AG employed a workforce of around 1,000 at its works inKaiserslautern in the manufacture and worldwide sale of industrial sewing machines. Inthe course of a restructuring planned in 2002, the pre-manufacture with around 250 jobswas to be relocated to suppliers in China. The employees’ council and IG Metallengaged business management and legal experts. In a negotiation process lasting 3months, agreement was reached on an early retirement arrangement that was acceptedby 40 employees. The central component of a balance of interests were rules for thecalculation procedure in outsourcing. The company obligated itself to follow these rulesconsisting essentially of the following elements:

- Obligatory inclusion of qualitative factors as from a specific yearly purchasing volume

- Inclusion of additional costs and anticipated remaining costs in the costs comparison

- Definition of the methods to determine own manufacturing costs

- Definition of minimum costs differentials between own manufacture and thesupplier’s offer

- Last call procedure for own manufacture

The costs of a series of parts and components was calculated using this procedure. Witha few exceptions, it turned out that keeping the own manufacture was more economicthan buying in from third parties. The result was that the jobs stayed in Kaiserslautern.

It was agreed in advance that if it came to dismissals, then the employees affected wouldbe supported with labour market instruments. But this turned out to be unnecessary forthe time being.

Source: EWR Consulting, Frankfurt/Main


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Case StudySiemens AG, Frankfurt / Main 2001-2002

Siemens AG, Werk Frankfurt/Fechenheim wanted to restructure its switching gearworks in 2001. Besides relocating air-insulated switching gear production to Portugal,the weak earnings situation was to be turned back to sustained profitability withoutsourcing. This would have caused 111 dismissals.

The employees’ council and the trade union IG Metall had formed working groupstogether with business management experts and scrutinised the entrepreneurial reasonsfor the measure. This made clear that alternatives could be envisaged, especially for theplanned outsourcing measures. An own business concept for dealing with theoutsourcing was developed and negotiated with the company. As a result, the companydiscarded the outsourcing measures. In return, measures to enhance productivity wereagreed.

Transfer of the air-insulated switching gear production to Portugal was not prevented.But it was managed to get a medium-term location assurance from Siemens AG. Thiswas connected with guarantees regarding unit quantities, value addition depth andinvestments.

In order to diminish the negative effects of threatening dismissals for operationalreasons, possibilities of reducing the individual working hours were agreed in a balanceof interests. In addition, the employees threatened with redundancy were givenoutplacement consulting conducted by a firm specialised in this field. The timeframe forimplementing the measures was extended over a longer period. If dismissals foroperational reasons had threatened, then a transfer company would have beenimplemented. But it turned out that the aforementioned measures were sufficient and nodismissals for operational reasons had to be notified. This was made easier by an earlyretirement agreement and a comparatively well furnished social plan.

Source: EWR Consulting, Frankfurt/Main


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Case StudyMass Redundancies and Job Protection PlanWhirlpool

In March 2002,Whirlpool announced its intention to transfer its production of washingmachines to Slovakia. A transfer that would be accompanied by the shedding of 360 ofthe 860 jobs at theAmiens sitein France.

At the end of a long process of negotiation and with the help of external experts, themanagement and trade unions found an area of agreement on the Job Protection Plan.

The Job Protection Plan finalised on 14 October in Amiens concerns 265 of the 800 jobsat the factory. The Amiens site will specialise in tumble-driers, and the manufacture ofwashing machines will be relocated to Czechoslovakia. Of the 360 losses initiallyplanned, the key measures concern:

- 40 operator’s positionshave been preserved thanks to a new annual distribution ofworking hours. This was one of the key points of the negotiation: the manufacture oftumble-driers is highly seasonal and requires flexible human resource management.External flexibility (use of temporary labour formerly made by the company to copewith high- and low-season cycles) will now be replaced by internal flexibility (newcontracts (Objective Employment Contract) on an annual part-time basis - the TPAs(annual part-time salaried workers).20 These workers will also be given priority withregard to returning to full-time work. These40 employeeswill work 70% of theircurrent working hours (26 weeks) and will receive six months’ pay as compensation.

- 160 people will benefit from early retirement at the age of 52.5 for workers andadministrative staff, 55 for executives. Whirlpool will fund this retirement in full,paying 79% of the net salary.- 45 voluntary departures for professional projects will be financed.- 17 jobs must be taken over by a packaging manufacturer and supplier who will setup shop in one of the factory workshops.- 2 new staff will be taken on

- In fact, the direct impact of the Protection Plan should be limited to less [than?]three employees

20 “Travail à temps partiel annualisé” = part-time work where the hours worked are calculated on a yearly basis -trans.


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Case StudySocial Responsibility and Collective RedundanciesThe lessons drawn from expert economic appraisal within company groupformations21

As a general rule, a redundancy scheme within a subsidiary is never initiated without thego ahead from the central body of the group. We can be sure that even within groupswith a wide diversification in terms of business activity, the initiative always originatesfrom the group or branch's Head Office. It is true that in very many cases, the centralbody hides behind the "proposals" that are made from the operational echelons in orderto achieve profitability targets in relation to capital invested.

However, it is always the central body that encourages the standardisation ofperformance and productivity between the various entities operating in the samebusiness activity, or by calling upon sector or local "standards". It is always this centralbody, which sets the objectives in terms of return on capital investment.

Recent developments in legislation and jurisprudence (assessment of economicconstraints, and especially the research perimeters in terms of reclassification solutions)testify to this centralised responsibility

This cannot, in our opinion, be disassociated from the group's strategic responsibilitiesand its unity in terms of economic strength when opting to allocate resources.

We cannot dispute the fact that as a general rule, today's products and markets have verylittle chance of being faithfully reproduced, either in type or in size, in the future.

Unending technological advances have the effect of modifying the conditions forobtaining both products and services. To face up to these changes and above all to tryand anticipate these trends, even initiate them to their profit, companies and theiradvisers have developed what are now recognised as strategic management tools. Theseare especially aimed at re-allocating financial resources resulting from current products,markets and technology, to those of tomorrow.

Monitoring of operations carried out by multifaceted companies, and a study of theirannual reports, displays the widespread distribution of these strategic management tools.

21 Document created following an interview with a member of the ALPHA Group who has for several yearstaken part in the reorganisation of a large number of European groups


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However, where does the reallocation of human resources come in this? We are forcedto note that in this area, anticipation would seem to be the exception, and that it wouldseem that we are witnessing the separate announcement of a reorganisation on one side,and redeployment on the other.

Group structuring (a business sector, a market = a "legally" autonomous company)would appear to rather encourage a lack of anticipation, insofar as crisis may appear tobe limited to an entity isolated from the rest, especially from the true decision makingcentre. The dividing up of standard business activities into specific "skill sectors" tendsto remove all idea of reallocation within the same structure as, according to groupculture, this would no longer be the skill sector nor the vocation of the entity.

We therefore end up with a collective redundancy process and, if we wish to impose onthe group its responsibility to look for ways of carrying out re-classification, it isnecessary to implement proceedings on a legal level.

It would appear that when offers of re-classification are made, this is very often only aformality insofar as they involve a level of geographical mobility that proves difficultfor employees to meet.

For a company, this therefore is a burdensome form of management, which could alsobe harmful to its corporate image. Whilst certain studies concerning stock marketdevelopments on certain shares following the announcement of a redundancy schemehave a tendency to show a positive link between reorganisation and future performance(and therefore have an end value for the shareholders) recent announcements of hugeredundancies have resulted in a fall in stock market prices. At the end of the day thisreflects the growing doubts of the financial market in terms of global growth, even if the"global" scale companies, created to dominate their market sector, have no othersolution than to draw in their horns…

As a result and in purely economic terms, it would appear that the analysis ofreorganisation schemes and their impact often remains highly approximate. We have atendency to link the cost of a scheme with reduced personnel expenses in order to beable to affirm a "return on investment" often based on a 1 to 2 year time scale,depending on the extent of the scheme. This has the effect of creating a rise in the stockmarket prices due to an anticipated higher cash flow in the short term.

An approach of this type is erroneous inasmuch as it compares two solutions, one ofwhich is unrealistic because it presumes that the personnel that you propose to makeredundant would be paid for producing nothing should they not be made redundant.

The real alternative to redundancy is: how and under what conditions can we envisagemaking personnel considered to be surplus to requirements once more productive.

It is this that we should be able to cost as accurately as possible: investments in site re-conversion, personnel training, cost of possible under activity and higher storage levelsthan would be strictly necessary, development costs, etc.


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This amount should be compared with the direct costs of job losses (redundancycompensation, non compliance with legal notice periods), increased by possible large-scale writing off of equipment22 and the cost of stopping work (payments for thetermination of leases, putting the site back into good order, etc.). These costs shouldalso include the loss of skills to the group, however this remains difficult to evaluate.

This analysis goes full circle by linking together the updated cash flows, onerepresenting solely a more or less regular outflow (reorganisation), the other (found bystudying an alternative) is made up of an outflow, the re-conversion costs, but also anincoming flow corresponding with the future profit margins on the new businessactivity.

The most widespread use of this approach without doubt encourages a convergencebetween the allocation of financial resources and the re-allocation of human resources.This makes the link between the group's concern to extend its control over a growingnumber of sources of income and the question "with whom, with what humanresources?» This last question is not simply quantitative; it is also qualitative and isdependant on the concept of the workforce's preferred territory23.

The trend towards external growth is however in opposition to this initiative.

On one hand, the existence of a business market is reassuring. It illustrates the fact thatthere are buyers for businesses judged to be not sufficiently profitable by the seller,which prefers liquidity and withdrawal.

On the other hand it represents (a least) two major inconveniences:

• It returns the decision on re-allocating financial resources to a third party, the seller,whilst the buyer takes over an existing workforce: in general, this type of growth factordoes not offer favourable perspectives for the buyer's employees;

• It is carried out under financial conditions by which the buyer estimates it can makesufficient profit against its investment to justify its choice; most especially to itsshareholders, and by which the seller has a liquidity preference. Attaining profitabilityfor the buyer is often achieved at the expense of scaled economies; and ofrationalisation, the effects of which can be especially hard on the workforce, the buyerand the target.

External growth can nonetheless be the means to give a company, by aligning itself witha group, the resources it requires to achieve the necessary growth (including jobcreation) to meet market demand that it could achieve on its own.

22 Even if this does not represent a monetary flow, it is a cost, which weighs especially on the share returns forstock market quoted companies.23 See P.N. GIRAUD. L’inégalité du Monde (Inequality World-wide) – Gallimard 97.


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In accounting terms (according to American standards), external growth operations alsoenable the use of the "purchase accounting" method, which consists of passing thereorganisation, costs that the buyer estimates to be necessary in that town under theacquisition difference. With this provision the reorganisation costs are amortised withthe acquisition difference, having very little effect on the accounts and preserves theprofits per share.

To conclude, it appears that group structure, by enlarging the perimeter of businessactivity, does not in the end encourage the extent and diversity of re-allocation of humanresources that we might have expected. A company operating from one site and in onebusiness sector, and more integrated into its locality is sometimes more sensitive to thisproblem.


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Case StudyCollective Redundancies“Method Agreements in France and their Development

So-called “method” agreements tend to develop in France. Valéo, HP Compaq, Lejaby,General Electric, are just some of the companies that have inaugurated the new practicesconsisting of in giving elected officials and unionistsmeans that the legal system ofgroup redundancy does not offer.

Whereas the law lays down a precise and “rigid” framework concerning the procedureof collective redundancies (application of Book IV and Book III of the Labour Code),the method agreement allows for negotiation,whether it be to offer more time toinitiate restructuring or to reinforce current practices in order to avoid anynegative social impact from this restructuring.

The exercise is partly based on expertise. In the same way that management hasreconstruction expertise, employee representatives have at their disposal through themethod agreements of their experts, who will seekinformation, process it, thusallowing these representatives to be real players in negotiating with management.The role of the experts is not limited to strategic economic analysis (analysis of the workorganisation, feasibility study, financing method, etc.); they also have to examine thebest possible solutions to avoid the negative impact of future decisions.

If relocation allowances are foreseen by the texts; one must for example, ask oneselfhow to best allot the available resources examining all the possibilities available topeople liable for a redundancy, and to find work in the local area. If possibilities arereduced, allowances may have to be adapted to suit further mobility (outside France, forexample). The reverse situation could be a conversion of local jobs.

Legal practitioners also play a part in the process but this is rather to validate andformalise what is decided during negotiations. Hereby, the method agreement resultsmore from a cultural approach close to that existing in Italy, even in the UK, than a trulyregulated approach such as dictated by the Labour Code.


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Indeed it is based on a philosophy of which the principle points are:

-It is primarily based onUnion involvement. The process can only really be initiatedwith the go-ahead from the unions; this is to say that they have to jointly find solutionswith management.On this point, experience shows that Worker’s Representatives are more and moreinclined to ask their experts to meet demands in terms of effectiveness, with the aim, forexample, of modifying the social consequences of reconstructing;they want results.-The method agreementshould not confirm a reconstruction; once again, it opens anew way to deal with reconstruction problems.-What is important is todiscuss with managementwhen dealing with problems thatinvolve the identification of staff needs.-Underlying the process is the wish toremove the asymmetry between the analysisand the existing competencebetween the means available to management on the onehand, and the worker’s representatives on the other.

Example of method agreement:In anticipation of change in Valeo (France)

Valeo is an independent industrial Group fully focused on the design, production andsale of component, integrated systems and modules for cars and trucks. Valeo ranksamong the world’s top automotive suppliers. The Group has 143 plants, 53 R&Dcentres, 10 distribution centres and employs nearly 70,000 people in 25 countries.

In January 2002, Valeo announced a large restructuring plan at European level, amongwhich the gradual disengagement from wiring manufacturing in France through aprogramme for the Management of Anticipated Employment Levels affecting 1,370people (in 18 months). This involves Valeo’s last four enterprises (wire manufacturing)in France: the Cablea site of Dreux (Eure et Loire) the Sylea sites of Sissonne (Aisne),Bellegarde (Loiret), and La Bastide Saint-Pierre (Tarn et Garonne)445 employees work at Sissonne (70% women); 337 in Cablea, 400 in Bellegarde andnearly 200 employees at Bellegarde.

Method agreements negotiated at Valeo (wire manufacturing) offer alternatives tosimply closing factories.

These method agreements have been the first agreements of this type concluded inFrance, following the implementing of the law on social modernisation.The objectivewas to negotiate the best possible conditions for the employees who were maderedundant by VALEO in the four French industrial sites. The joint action should beregistered within18 months inclusive between March 2002 and September 2003.


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The objective of the meeting:

-to agree on thenegotiation schedule-to define the playersfor the negotiations-to agree onthe means allocated to staff Representatives(credit hours, travelexpenses, expert assistance, preliminary studies, choosing reassignment offices, specificrights for communication between personnel)-to define the articulationbetween negotiation and legal procedures.-to offer strong guarantees to staff (sites kept active for 18 months, salarycontinuation, etc.

The meeting was neither simple nor easy and the advice consultancy ALPHA oftenacted as mediator in the different phases of the process. Today’s evaluation is ratherpositive; it illustratesthe interest in developing these methods on a wider scale:

-Keeping a site active (the Bellegarde site)with a real industrial project for this site.-Key role of the elected in choice and meansgiven to the reassignment offices and ofreindustrialisation.-Better financial measures.-Appropriate support measuresto fit staff needs-The ability for the worker’s representatives to influence economic, reclassification,and reindustrialisation alternatives. This has for that matter helped to reinforce thelegitimacy of their role with employees.


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CHAPTER II

EMPLOYABILITY


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IntroductionCompany Restructuring and Employability

Search for alternative solutions to guarantee the employability of workers.Obligations of the employer (for means or results)Role of authorities

a. Further training

b. Re-orientation

c. Re-grading

d. Professional orientation

e. Aid for job-hunting

f. Support for development of independent activities

g. Support for creation of SMEs

h. Support for resumption of certain activities by the workers

i. Monitoring redundant workers


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Introduction

Definition of Terms

The Aim of Employability

• Central significance of measures to obtain qualifications

Instruments to improve Employability

• Employability tools for training• Employability tools for development• Employability tools for internal mobility• Employability tools for external mobility

Companies policy and obligations

• Companies obligation to use tools to improve employability in cases of collectiveredundanciesObligation for a policy to maximize employability in case of collectiveredundancies• Companies obligation to use employability-tools in preventionObligation for a policy to maximize employability in prevention• The base of the above mentioned issues• Best-practices of company policy

Employees and their representatives’ participation

• Participation of the employees or their representatives in case of employabilitymeasures in processes of collective redundancies• Right of participation of employees representatives in policy-making on employability• Specific rights of the unions• Rights of works councils or other collective forms of employees-representation (basedon law, collective agreements, other regulations)• Sanctions and rights of action of employees representatives• Individual rights of the employees in case of collective redundancies• Law obligations for employability rights to specific target groups of employees

Strategy of protagonists• Concepts and strategies• Other institutions which are involved in employability questions

Conclusion


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Company restructuring and employability

Introduction

The issue of employability plays an important part in connection with corporaterestructuring. Impact and results of restructuring are a changed work environment, theloss of jobs and particularly the threat of mass redundancies. This gives a pivotal role tothe issue of employment perspectives and the protection of the affected employees. Onthis issue, employability is a decisive condition.

Unemployment in Europe – Autumn 2002 and evolution

Euro-zone1 seasonally-adjusted unemployment2 stood at 8.3% in September 2002,Eurostat - Statistical Office of the European Communities in Luxembourg – reports inNovember 2002. It was 8.0% in September 2001. The EU15 unemployment rate was7.6% in September 2002. It was 7.3% in September 2001.

Among the twelve Member States for which data are available for the most recent twomonths, ten recorded an increase in their unemployment rate in the last twelve months.Luxembourg, the Netherlands, Ireland, Portugal and Austria recorded the mostimportant relative increases.

Eurostat estimates that, in September 2002, 11.5 million men and women wereunemployed in the euro-zone and 13.4 million in the EU15. These are seasonally-adjusted figures in line with ILO criteria. Unemployment rates (%) in August 2002 andAugust 2001 in ascending order for 2002

August2002

August2001

August2002

August2001

EU15 7.6 7.3 (sept) Portugal 4.6 4.4

Euro-zone 8.3 8.0 (sept) Sweden 4.8 4.7

Luxembourg 2.5 2.0 Belgium 6.9 6.8

Netherlands 2.9 2.4 Germany 8.3 7.9

Austria 4.2 3.9 France 8.8 8.5

Denmark 4.3 4.3 Finland 9.1 9.0

Ireland 4.5 3.8 Spain 11.2 13.0

Source: Eurostat


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1. Euro-zone: Belgium, Germany, Greece (from January 2001), Spain, France, Ireland,Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland.

2. Unemployed people according to International Labour Organisation (ILO) criteria arethose aged 15 and over who: are without work , are available to start work within thenext two weeks and have actively sought employment at some time during the previousfour weeks.

The monthly unemployment rate and numbers of unemployed are estimates based onresults of the Community Labour Force Survey (LFS). These results are interpolated/extrapolated to monthly data using national survey data and national monthly series onregistered unemployment. Estimated rates might differ from national unemploymentrates due to differences in methods and definitions of unemployment.

The following results on the issue of employability have been produced by the severalexpert offices, representatives of the trade unions, the industries and public offices of theEU member states, based on interviews following a questionnaire (see attachment)including the evaluation of national employment policies and the legal framework ofthese countries. It was not always possible to receive in-depth answers to the individualquestions from all countries. The individual legal basis of the following statements canbe found in the individual country presentations (see attachment).


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Definition of Terms

The term “employability” is named by OECD, the EU, individual countries andemployment as the central benchmark of political strategies, corporate employmentpolicies and individual qualification profiles. Deriving from the word "employable",meaning usable, applicable or to be employed, employability describes the task tomaintain or create employability.

The concept of employability became a focus of scientific and economic interest at thebeginning of the 1990s. Employability is generally defined as “the capacity to beproductive and to hold rewarding jobs“ (McKenzie/Wurtzburg 1998, 13). This involvesa person’s ability to “offer his or her work force, based on his or her professional scopeof manoeuvrability, output and productivity and to be able to enter the job market, tohold down a job and, if necessary, to find new employment“ (Blancke/Roth/Schmidt2000, 9).

According to this, employees should be supported in such a way that, by (life long)studies and training in aptitudes in self-management and self-marketing, they are able tomove (relatively) freely on flexibilised job markets and to be able to secure theirlivelihood (Security through Mobility). Individual employability thus presupposes thatthe individual is to become an “entrepreneur for his or her own cause “ (source: "Deraktuelle Begriff" [The topical term], brief information of the scientific service of theGerman Federal Parliament, under: http://www.bundestag.de/aktuell).

There is no general definition of the term “Employability” in individual countries of theEU. Employability can be understood with the help of the programmes on employmentpolicies of individual EU states. These are governmental instruments for thedevelopment of employability and requirements demanded from employees in order toremain employable. It is the aim of state authorities to ensure an increased self-reliability in employees in order to safeguard their employability.

These aims are reflected in the understanding of employability in the individualcountries.

Employability is an objective of labour market policies' aims and measures; measuresincluding qualification of employees and thus enable employees to gain access to andsafeguarding on the labour market (Germany). Employability is the level or ability toadapt "knowledge and skills" so as "access to the labour market" or "job prospects"more used (Greece).


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The common understanding of employability can be characterised as follows:employability presents a challenge for public labour market policy - via measures ofactive labour market policy - either to enable employees and unemployed persons tokeep their jobs despite changing requirements on part of the employer or to providequick placement of vacancies reported to the public labour market institution (labourmarket service (AMS)) by the means of adjustment qualification (Austria). France usesthe term “capacité d’insertion professionnelle” which is close to the definition of theEuropean Commission: “a person is employable when he or she has the marketableskills, competence or features which are regarded by labour market demand as necessaryconditions for hiring”.

Also in Belgium there exists no common definition but the European Social Observatoryfeels that rather than a definition, it is preferable to frame it in three political and socialdynamics: flexibility, the fight against exclusion, adaptation of life cycles to theorganisation of labour. And for the Netherlands it could be said most common definitionis broad and lifetime availability for different and changing jobs.

In addition, a further definition is generated in the event of disability. This is based on aperson being (un) able to follow his or her profession. For example in Austria is adefinition inferable only from regulations included in the pension law (invaliditypension and occupational disability pension), the state's attitude towards the non-existence of employability because of physical restrictions can be concluded.


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The Aim of Employability

According to the above-described definition of employability, the answer must lie in therelevant employment policy of the EU member states. The political aim is usually thereduction of unemployment or the increase of people in gainful employment in theindividual EU countries.

Measures for the integration of unemployed are usually devised for specific targetgroups. In all EU countries, the main target is the reduction of youth unemployment, theincrease of working women, migrant workers, older employees and the reduction oflong-term unemployment. These targets correspond with the employment targetspronounced at EU level.

In individual countries, a reorganisation of the job centres (Austria, Germany, France)was performed to better reach this target. Higher and more effective brokerage is at theheart of this.

Main goals of employability are usually - as it is described for the Netherlands -availability for different and changing jobs, possibilities of job-changes, strongerindividual position at the labour market and of course especially – as defined forSweden - equipping the unemployed with those skills that enable them to return to work.

One can generally assume that the employment policy target described for Austria alsomore or less applies to other EU countries: as far as labour market policy is concerned, amedium-term concept targeting increasing empowerment on the labour marketindependent of the company's exploitation interests is not developed adequately.Employability is understood merely as short-term introduction of placeability ofunemployed persons via adjustment of qualifications (Austria).

In Germany, it is an important aim to improve the employability of employees directlythreatened by unemployment in cases of mass redundancies. For this, supportprogrammes of work administration and special instruments have been developed (e.g.transfer companies/out placement).

The aim of employability within companies generally depends on the company structureand company policy. In countries and areas of high unemployment, the tendency seemsto be to use the external job market, if the need arises and to restrict company activitiesto the essential: due to high unemployment and the opportunity to supply necessaryqualifications from the external labour market by replacement of staff (which wasrendered possible by the extension of qualification measures of active labour marketpolicy), the willingness of employers to develop a medium-term concept ofemployability and implement this concept in employment policy has decreasedsignificantly (Austria).


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In segments with a partial staff shortage, the importance of corporate activities for thedevelopment of employability is significantly higher. However, some companies also tryto increase the ties of employees to the company and to cut costs relating toemployability (e.g. training measures in connection with a repayment clause in the eventof termination of employment).

Central significance of measures to obtain qualifications

In the employment policies of the countries of the EU, measures to obtain qualificationsare of central significance, even in those countries without high unemployment such asthe Netherlands or Luxembourg.

The labour market policy is focused on: arranging qualification and alleviatingqualification shortfalls (Germany), the development of skills, education, life longtraining, the development of training in the field of NTIC (France), training programmesin order to reduce illiteracy and improve knowledge and skills so as the institution ofvocational training (Greece), the introduction of so-called adjustment qualifications bythe AMS in order to fill vacancies as quickly as possible and the filling of vacancieswhich appeared due to lack of specially qualified employees in certain sectors (e.g.information and telecommunication, nursing and health) via training of unemployedpersons in courses created in co-operation with the concerned companies targetingexclusively the tackling of perceived qualification deficits (Austria).

Luxembourg is strengthening active policies in order to prevent youth and long-termunemployment. So far priority has been given to the youth problem. Measures toimprove employment for people with disabilities are introduced and a review of thelegislation of disability pensions has recently started (Luxembourg). Jobseekers must beencouraged to remain active and to work on improving their qualifications and skills.

Exclusion has to be prevented, structural unemployment has to be reduced andinteraction between different sectors of social policy has to be reinforced (Finland). InDenmark the main goals are to strengthen the active labour market policy and helpemployees to go into education or find a job at the ordinary labour market, to providepossibilities to acquire or update skills and qualifications to enhance the chances ofreinsertion in the labour market, developing the competences of employees and testingtheir labour market availability (Denmark).

The main goal of employability is to help employees to remain marketable through theongoing development of their skills and knowledge (United Kingdom). In Swedendevelopment of active employment policy (taking account not only training life longlearning but taxation, adaptability, coordination of macro-economic policy, etc., Combatyouth and long term unemployment, Promoting employment, active ageing, lifelonglearning, counteracting discrimination and improve tax and benefits systems are themain goals.


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Instruments to improve employability

Employability tools for training

Like in Denmark, competence development programmes of varying intensity are used,with an increased emphasis on instruments such as job placement, specifically-targetedprogrammes and availability checks: developing entrepreneurship, placement units andmeasures to make it easier for companies to recruit employees in the target group (seenas employability-tools for training to improve employability).

In Germany, according to a survey questioning entrepreneurs, on-job training isabsolutely the most frequently (45%) occurring type of advanced vocational training atthe enterprise level. Combined with self-controlled learning (11%) far more than half ofall measures of advanced vocational training takes place individually. 30% of advancedvocational training in enterprises takes place in internal or external lectures. Informationmeetings occupy a proportion of 11%; retraining measures and other measures ofadvanced education account for 3%. Business invests about€ 7 billion each year inadvanced vocational training in Germany (Handelsblatt 2002-12-6/7). There are about35.000 specialised training enterprises in Germany. Only 10% of them have more than25 employees. Experts estimate, that the revenues of the training firms are 15% lowerthan in 2001.

In connection with employment policies, training and further training is promoted toincrease employability. Various measures, mostly aimed at target groups, are to improvethe qualifications of employees. In Germany, the Federal States and the Department ofEmployment have spent 2001€21.9bn on employment measures in 2001. In addition€1.84bn has been spent by the Federal States.

In total, approx.€2m people have taken part in measures of active employment policies.Furthermore, there is a federal programme regarding "Vocational Qualification ofTarget Groups with Particular Needs for Assistance" (up to 2005 about€ 55 million). Inall 16 Federal States (Bundeslaender), regionally specific supplementary measures areimplemented.

Also in Belgium there exists a number of preventive programmes which are providedfor young people: integration course, Young Plus Plan, integration plan trainingschemes, First Job Agreement for which the budget was 99.2 million euros in 2000.Training is also provided for workers (aged 50 and above). Right to lifelong learning: atraining leave scheme has allowed more than 45,000 workers from 4,800 companies tobenefit from general training or requalification. Where continuing vocational training isconcerned, competence centres have been created in partnership with the social partners.


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Development of sectoral measures to support training (free access to training forcompanies in the finance sector by the sectoral fund).

In France life long training and training in the field of NTIC have been improved. Thestarting point for the initiatives in 2001 on life long training is that life long training is anational obligation.

Working in coordination with the labour representative bodies, the State has taken stepsregarding equality in access to training and the development of qualifying processesbased on the confirmation of skills acquired: in small and medium sized enterprises(BTP craftsmen for example) and target groups of employees (due to age, level ofqualification, professional background) (textile chemical industries, food industry,home services).

In Greece only 1.1% of adults participated to trainings in 2000, the lowest level over EU(EU average 8.0%), according to Eurostat.

In 2001, 189 000 individuals participated in various types of vocational training,according to the Greek Ministry of Labour: 59 000 in the public sector officers and 130000 private sector employees, mainly through Public Employment Services (OAED andKPAs) and the Employment and Vocational Training Found programmes (LAEK).Beneficiaries of "employability" measures of NAP 2001 relating to training (targetgroups: young and long-term unemployed people) are: 21 000 in "training measures"and 31 000 in "education actions". It is remarkable that population aged 15-64 is about 6878 000 but employment is about 3.920.000.

In the Netherlands the most frequent used employability-tools are: schooling andtraining, task expansion/job enlargement and task/job enrichment. There is a growinginterest for Personal Development Plans (POP's).

16% of people aged between 25 and 64 took part in some form of education or trainingin the Netherlands in 2000, twice the average EU level and five or six percentage pointsbehind the top two performers (the United Kingdom and Sweden).

In 1997, the Netherlands was about 10 percentage points behind the top two performers(Sweden and Denmark). In other words, it is drawing level but has not yet caught upwith the top two performers. In order to close the gap, in 2001 the government reserveda substantial structural budget for the development of vocational education and set asidefunds for training people already in work.

The government has made an extra€ 91 million available for investments in initialvocational training in 2001 and€ 136 million in 2002. A major proportion of the newfunding will be used to improve continuity between pre-vocational secondary education(VMBO), secondary vocational education (MBO) and higher professional education(HBO).


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Alongside the investment in initial vocational education, extra money will be madeavailable in 2002 to fund the training of people already in work. Less educated peopleare frequently the first to lose their jobs when technology changes and find it difficult toget back to work afterwards. The training of less educated workers as well as jobseekersis therefore extremely important to ensure lasting participation in the labour market.

In the United Kingdom the most used employability tools are different forms of training,in-service-training, retraining, application training.

In July 2002 the Employment Bill was enacted. The Act includes the statutoryrecognition of union learning representatives (ULR’s), which had been pressed for bythe TUC and its unions. Under the legislation ULR’s will have rights to paid time offfor duties and training.

How rights to paid time off for union representatives are applied are set out in the ACASCode of Practice 3 on Time off for Union Duties and Activities. The code is particularlyimportant in respect to union representatives presenting a claim to an employmenttribunal where the employer has failed to provide time off for such duties.

In Sweden exist labour market programmes for unemployed who are in need ofeducation, retraining, work experience. Life long learning is a central part of theemployability strategy.

Employability tools for development

In Luxembourg personnel development plans, regular meetings concerning personnelissues, mentoring and coaching are used as employability-tools for development. But theimplementation of the instruments in enterprises depend on the respective managementstyle and corporate culture.

Generally far-sighted human resource management presents a minority in the landscape,especially where the economic structure is characterised by SMEs, for example inAustria. And in Greece small enterprises are in a very important position. The rate ofself-employment is 32% in 2001; the rate of employment in SMEs with less than 50employees is 89% (63% with less than 10 employees).

In France the organisations linked to a branch convention, or (if not) with a professionalagreement, meet at least each 5-year for negotiating on the priorities, the goals and themeans of the professional training of employees.The employer must inform the work’s council each year on the agreements at theprofessional branch level.


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In Belgium – like in France - a skill validation system has been introduced: skillsacquired through work experience, vocational training which validates these skills(“skills qualifications”). Fiscal reforms have been continued to encourage training(project to reform corporation tax).

In Denmark, from year 2001 it has been possible for the public employment service(PES) to offer unemployed persons participation in ‘ intensive job seeking activities’and ‘special placement measures’.

The introduction of these new instruments has taken place with a view to strengthen andtargeting job seeking activities in continuation of the unemployed persons’ participationin programmes for upgrading of skills but also in order to involve other actors than PESin measures to bring the unemployed back to the labour market in unsubsidised jobs.

The reform of the adult vocational training system plays an important role in thepossibilities for adults to acquire or update skills and qualifications to enhance theirchances of reinsertion in the labour market. One of the elements of this reform is thePreparatory Adult Education programme, which started on 1 January 2001. This is anoffer to adults over 18 who have a need for courses in basic skills such as reading,writing and mathematics.

The aim is to qualify the participants for continuing in the educational/training system orobtaining a closer labour market attachment. The adult vocational training systemcontinues to be a cornerstone in the Danish strategy for lifelong learning. With theintroduction of this reform Denmark lives up to one of the conclusions of the LisbonSummit in March 2001 concerning possibilities for all adults to acquire vocational skillsand qualifications.

In Greece the introduction of team work, the continuous improvement and enhancementof worker skills, the autonomy or active involvement of the workforce remain taboosubjects or beyond the scope of most businesses and large organisations. For theunemployed, individualized approach at the Employment agency since 2001 through the"individual action plans" covering training, work experience and employment afterhaving uncovered personal characteristics, abilities, knowledge, needs and aspirations.

In Finland an anticipation system has been developed by the Employment and EconomicDevelopment Centres (TE Centres) in anticipating change in labour and skills needs(labour force and training needs survey). Advanced apprenticeship training was raisedfrom 12 900 to 16000-student places per year in 2001. Aim was to improve regionallabour force mobility.

Services (special expert service) have been introduced for SMEs, services to supportimprovements in competitiveness at SMEs and the skills of their personnel. Training inICT has been developed, and specific measures or programmes for young people andolder; also a special integration plan for migrants and combating discrimination.


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In the United Kingdom personal development plans, mentoring and coaching,opportunities to participate are instruments to improve employability. Most usedemployability-tools on development are personal development plans, mentoring andcoaching and opportunities to participate in different projects.

In Sweden municipal youth programme where unemployed youth under 20 are offeredfull time activities. For young people 20-24 municipality and employment office canagree on youth guarantee (guarantee of work and education or employment programmewithin the first 100 days of unemployment).

The largest training programme is the Labour market training. The next largest is the jobtraining which aims at giving the unemployed the opportunity to develop their skills andworkplace. Recruitment incentives are provided too -tax reductions are part of that).

The average employment rate is 67% in the ages 55-64 during 2001. Face to the need toincrease the employment levels for older people the government has taken measures:improving employability and quality of work, modernise work organisation, improve theworking environment, for example.

For Life long learning the Government has presented a proposal for a system ofindividual skills development in working life; developing e-learning. A new agency“National Centre for Flexible Learning” is created. Developing Regional and localaction for employment: regional growth agreements are concluded between differentplayers and implemented.

In the Netherlands task expansion/job enlargement are part of the most frequently usedemployability tools for development.


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Employability tools for internal mobility

Another tool for employability is internal mobility.

In the Netherlands several companies have their own internal mobility centre or havean agreement with an external mobility centre.

In Luxembourg they use for internal mobility the displacement to similar (adequate)occupations, competence management (promotion of employees) and information onvacancies.

In France the company may also resort to internal transfers. Employees that acceptthese transfers are covered by certain guarantees under the terms of labour or companyagreements (no loss of seniority, payment of moving costs, accommodation allocation,job search for partner, a trial period (in case the employee fails or changes his/her mind),observation under the same terms as the mass redundancy procedures), payment of aremoval indemnity; maintenance of supplementary benefits.

In the United Kingdom employability is focused on competence-management andinformation on internal vacancies. Employability-tools used for internal replacement areimproving suitable and exchangeable functions, competence management and providingsufficient information on internal vacancies.

In Finland legislation and the operating methods of work communities improve theorganization of work and quality of working life. There exists a preparation in tripartitecooperation between the Government and social partners of legislative amendments andworkplace development, continuous negotiating procedure in particular on job training,improvements to the job security of people in atypical employment. In 1996 a switchleave system has been implemented: the employer undertakes to employ an unemployedperson to replace the employee on switch leave. In 2001 7 700 persons on average wereon switch leave, 10% used their leave for vocational studies. Training allowance foradults is available for employed persons and entrepreneurs taking study leave, if theirincome falls due to their studies. The allowance is the equivalent of 80% of eachperson’s unemployment security. Since 1994, anyone who does not work completeweeks (reduced week or day, part-time work, occasional full-time work for a period ofless than one month, auxiliary work or activities compatible with receipt ofunemployment benefit) may receive adjusted unemployment benefit. Change in workorganisation involves a variety of employment practices multi-skill, team work,contingent pay, participatory programmes, extensive training, and as we sawemployment security (importance of the decentralised collective agreements).


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In Swedenthe Riksdag has allocated SEK 300 million over a 3-year period for activitiesaimed at reducing part time employment. The funds will be primarily used to test newwork organisation and working methods to create more full-time positions. Thecollective agreements on skills development, which the social partners have made, arenormally of a general character and allow considerable scope for local collaboration inskills development issues. Prioritised areas are the identifying and foreseeing skills andqualifications needs, recognising and validating competences and qualifications,information, support and guidance and to promote co-investment and favour new waysof finding resources.

Employability tools for external mobility

In the case of external mobility/replacement inGermany the Employment PromotionAct provides various forms of assistance for unemployed persons and job seekers facingunemployment to promote regional mobility financially (e.g. travel expenses forinterviews, mobility assistance in cases of entering an occupation). In 2001, travelexpenses were granted in about 356 300 cases and mobility assistance grants in about136 500 cases.

In Belgium in 2001 ORBEM’s outplacement service intervened in around twentycompanies to help employees (approx. 250) to prevent them from being laid off. TheFlemish Government is replacing outplacement with “support” for workers who havebeen laid off following bankruptcy: 7,437 million euros have been set aside for 2002 tofinance this replacement fund. Furthermore, a policy aimed at improving the mobilityof workers between regions as well as professional mobility is being drawn up. Tofacilitate mobility the financial contribution of the employer to workers’ travel costs hasbeen increased to 60% (season ticket charges) following an amendment to theappropriate collective agreement. For professional mobility, partnerships are beingorganised with the SPEs (Services Publics Pour l’Emploi – Public EmploymentServices) with a view to orienting the training offered towards companies’ real needs.ORBEM has decentralised its services. A collective labour agreement on outplacement(OP) regulates, for employers and workers, the individual and collective relations withregard to the offer, organisation and content of the outplacement mission, the time whenthis mission can start and its cost.

In theUnited Kingdom they use outplacement and information on external vacancies.

In Spain there exists an experimental plan of geographical mobility in agriculture aimedat coordinating employment of agricultural workers in the different campaigns, makingit easier for them to travel between regions. The plan is financed with funds from thePublic Service for Employment and is managed by the employers' association of thesector.

In Sweden new agencies for entrepreneurship are created: Business DevelopmentAgency (NUTEK), The Institute for Growth Policies Studies (ITPS) and the Agency forInnovation Systems). A new system Simplex reduces the administrative burden of theregulation for SMEs. The Government is developing so called “24 hour agencies”.


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Companies policy and obligations

Companies obligation to use tools to improve employability in cases of collectiveredundancies

In France the employer is expected to carry out reclassification before any redundancymeasures, for example “reclassification actions within or without the company, thecreation of new activities, training and conversion activities, actions to reduce and re-arrange working hours”. The obligation to reclassify is not restricted to offering theemployee an equivalent job or the previous one, but also jobs requiring less qualificationand offering less remuneration (risk of dismissal is refused by the employee). Theoutlines of the reclassification obligation are extremely broad: the jobs available withinthe group must also be offered, from among those companies wherein the activities, theorganisation and the operating site enable the transfer of all or part of the personnel. Theobligation to reclassify is reinforced by an obligation concerning vacant positions,especially if there are vacant positions within the company. The obligation to adapt theemployee to the job is often raised by jurisprudence. Sanction to the reclassificationobligation: absence of real and just cause for redundancy. In companies of over 1000employees, a reclassification leave has been created, which can extend up to 9 months,during which the people concerned may be reclassified without any breach of their workcontract. The remuneration paid to the employee corresponds with the amount of theconversion leave allocation and is at the employer’s expense.

In Belgium there exists no outplacement obligation like in France in case of dismissals.At Federal level there is the right to an outplacement procedure for workers whoseemployer has terminated their contract of employment and who have reached the age of45 at the time they are dismissed. It is up to the National Labour Council to establish,via a collective labour agreement, the legal framework for this measure.

In Luxembourg andUnited Kingdom there exists no obligation at all in this case.

In Germany utilisation of Social Security Code (SGB III) is feasible in order to fundqualification measures and job placement in cases of re-structuring and mass dismissals.Furthermore, similar like in France, the employer has to prove in case of dismissal that itwill not be possible, that the employee could be trained for another job within 6 month(case law). In case of failure, consequence is the absence of real and just cause for theredundancy.

In Austria obligations of employers to apply instruments in order to enhanceemployability are based exclusively on social redundancy plans (collective agreementson the enterprise or company level to alleviate social consequences of mass dismissalsbased on matching regulations of the Labour Constitution Law). Currently, neitherpublic contracting nor enterprise promotion creates incentives for employers tointroduce employability measures in enterprises.


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In Finland according to the Act, the obligation to negotiate means that measuresaffecting personnel should be subjected to negotiation in good time, when there stillexist factual alternatives to the proposed "personnel arrangements" or redundancies.

In Spain different tools to improve employability can be subject of negotiation withinthe framework of the Social Plan. Except for large companies and smaller ones with ahigh added value where a training strategy does exist, both internal and for professionalinsertion and related to human resources policies, usually the rest of the companies donot have a strategy and only devise training programmes aimed at their short-termneeds. According to the 1999 Survey on continuing training, 27.5% of all companiescarried out training activities for their employees, spending 1,700 million euros, out ofwhich the Administration reimbursed 8% (155 million euros). Not all employees tookpart in these activities: only 23% (1,653,000 engaged employees). Another 2.1 milliontook part in other training activities (conferences, quality circles, etc.). Participantsdedicated an average of 42.6 hours to training actions, 62% of which were part of workhours.

In Swedenthere were no major developments in collective bargaining on job security in2001. However, the announcement made by the Swedish-owned Ericsson electronicsgroup in the spring of 2001 of a massive programme of redundancies in Sweden andelsewhere (see below under `Company restructuring´) focused attention on a particularlyinnovative project agreed in 1999 to find new jobs for 587 workers made redundant atthe Ericsson Telecom plant in Norrköping (SE0104193F). The `Norrköping model´,widely regarded as having been very successful, brought together the company, tradeunions, the Proffice temporary work agency and various local government and labourmarket bodies. Four months later, on 25 May 1999, Ericsson Telecom presentedofficially the project for the redundant workers. This involved several parties - above allthe trade unions (which were still positive to the idea), the temporary work agencyProffice, the county labour market authority (Länsarbetsnämnden), the local job centre(Arbetsförmedlingen), the Norrköping municipal council (Norrköpings kommun), theCounty Board (Länsstyrelsen) and Ericsson Telecom itself. The stated aim of the projectwas to make it easier for the redundant workers to find new jobs or another occupation.The project that was accepted by all parties was named the "Norrköping model"(Norrköpingsmodellen). On 3 June, the negotiations ended and it was stated that theparties' common goal was that all workers affected by the end of production at theNorrköping plant would have a new job or another new source of income at the end ofthe project period.

In the Netherlands prior dialogue needed between the employer, the trade unions andthe works council regarding major changes. In cases of collective redundancies mostcompanies have the obligation (based on Collective Labour Agreements or Social Plans)to solve the problem of employee-surplus by schooling/retraining, internal replacementor outplacement. The social plan contains various measures to assist affected employeessuch as internal reinstatement and proposals for external job applications

http://216.239.39.100/search?q=cache:UEJTtQO0pYoC:www.eiro.eurofound.ie/2001/04/feature/SE0104193F.html


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Obligation for a policy to maximize employability in case of collective redundancies

In Austria the companies have not the obligation to formulate a policy to maximize theemployability in case of collective redundancies, unless they committed themselves to acollective agreement negotiated with the works' council.

In France there exists the obligation for the employer to pay the ASSEDIC acontribution (known as the Delalande) for any redundancy of an employee of 50 yearsor older (inciting the creation of reclassification measures in the plan to save jobs forolder workers).

In Denmark companies have been stimulated by Government to play an active role inthe senior policy, to ensure that older employees stay longer at work and to reinsertolder employees in the labour market.

In the Netherlands in cases of collective redundancies most companies have theobligation (based on Collective Labour Agreements or Social Plans) to solve theproblem of employee-surplus by schooling/retraining, internal replacement oroutplacement.

In Belgium the redundancy programmes agreed by the employer and the Works Counciloften include the outplacement service.

In the United Kingdom companies do not have the formal obligation to formulate apolicy to maximise the employability of employees in case of collective redundancies orin prevention although it is considered to be good practice. No legal obligation exists forcompanies to justify/motivate the employability-policy and used tools.

Companies obligation to use employability-tools in prevention

In Germany there exists no obligation to use tools in prevention but according to § 92aEmployees' Representation Act (BetrVG) the works' council can suggest measuresconcerning safeguarding and promotion of employees, which have to be considered bythe employer. Employment office's measures to promote vocational training: promotionof advanced education by the employment office via funding training expenses and costsof living.Also there exist wage subsidies for employees facing unemployment who areparticipating prophylactically in training measures, qualifying tests or measures ofadvanced vocational training while still occupying their jobs. And wage subsidies foruntrained employees in order to gain formal vocational qualification duringemployment. For Job rotation employers permitting an employee to participate inmeasures of advanced vocational training and employing an unemployed person insteadare entitled to a wage subsidy.


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In Austria employability measures can be included in collective agreements at theenterprise level regarding internal employment policy.

In Belgium from 2004, 1.9% of the wage bill will be devoted to continuing vocationaltraining. InFrance under certain conditions (especially when the company is not subjectto reclassification leave), the employer must offer the employees the benefit of priorPARE (Plan to Help a Return to Work). The implementation of the PARE may result inreclassification measures or training following employee interviews at the ANPE(National Employment Office). All companies must spend a minimum percentage of thepayroll on contributing to the training of its personnel (otherwise taxed to theequivalent), the amount: 1.5% of the payroll, less for companies with less than 10employees.

In Luxembourg andUnited Kingdom there exist no obligation at this point.

In Swedenas regard financing of skills development various arrangements have beentested in different collective agreements depending of the industry’s need andprerequisites. In some case the employer has met the costs alone. An example: PowerPlant agreement from 2001; the parties agreed that a minimum of 0,5% to totalwages/year was to be set aside by the employer for skills development, development ofwork organisation, etc. If the social partners cannot reach agreement locally on the useof these resources, individual pay increase at an average of 0,3% and year.

In the Netherlands exist the obligation to draw up a training plan and to reach anagreement with the works council regarding training, recruitment, promotion andassessment rules. Though most organisations take measures to improve theemployability of their personnel, only one-third has a formulated policy in this area.


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Obligation for a policy to maximize employability in prevention

In Germany employers have to consider responsibly consequences of their decisions foremployment of employees and unemployed persons and therefore the utilisation ofbenefits of employment promotion. Particular responsibility concerns the developmentof vocational achievement potential to assist employees' adjustment to changingrequirements. Principally, measures at the enterprise level should help to avoidutilisation of benefits of employment promotion and dismissals of employees.

In Austria companies have not any obligations unless they committed themselves to acollective agreement negotiated with the works' councils.

In France if it is provided by Collective agreements VAE has to be taken into accountby employers.

The base of the above mentioned issues

In Germany the legal base is the Employees' Representation Act §§ 92, 92a, §§ 96- 98.Furthermore there exist some Collective agreements concerning qualification andadvanced education, e.g. textile and clothing industry, metal and electrical industry.

In Austria some employability instruments are described in the Labour ConstitutionLaw and the Labour Contract Law (e.g. promotion of female employees, educationalleave, old-age part time work, technical employment safety regulations, regulation ofworking hours). In regional collective agreements particular instruments concerningspecial branches of industry have been developed further, e.g. regarding old-age parttime work in the metal industry. These instruments based on law and described in moredetail in collective agreements can - in this framework - be adjusted to the respectiveenterprise's requirements by collective agreements on the enterprise level.

Even inFrance though the law does not require it, numerous agreements reached withinthe framework of the plan to save jobs have come in to back up the legal set-up(institution of a reclassification unit, mobility, etc.).

In Luxembourg there is only the obligation to negotiate all possibilities to preventdismissals in cases of mass dismissals connected to social redundancy plans.

In Belgium collective agreements (sectors-companies) play a major role in terms oftraining.


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The Netherlands has a history of institutionalising lifelong learning within collectivebargaining, especially at a sectoral level. The number of agreements on training hasincreased in recent years and the principle issues are the right of training and anobligation to undergo training. According to research conducted by the LabourInspectorate and published in 2000, some 20 collective agreements, covering 21% ofemployees covered by collective bargaining, include a right to training, with the samenumber (covering 26% of employees covered by collective bargaining) including anobligation to undergo training. Provisions relating to personal development plans hadbeen included in 42 agreements, covering almost a third of employees covered bycollective bargaining. Yet, collective agreements provide for issues such as specificarrangements for training and training leave, education plans, provisions on general orposition-specific training, apprenticeship and paid leave. The Dutch Trade UnionFederation (Federatie Nederladse Vakbeweging, FNV) considers that agreements ontraining remain inadequate.

In Spain in the case of mass dismissals, the law establishes the possibility of negotiatingand agreeing on employability tools. In 2001, 21% of employees had a CollectiveAgreement that included a Training Plan.

Best-practices of company policy

In France in practice, the trend is to offer, in addition to the legal obligations (seeabove), transfer positions for workers that accept geographical mobility. Specificreception units are sometimes set up to welcome these mobile workers.Reclassification units are sometimes set up with the help of specialist firms (ofteninvolving the intervention of psychologists, following the example of the reclassificationunits at Caddy-textile clothing).

In Belgium a certain number of sectors provide, within the framework of collectivelabour agreements, for recourse to outplacement, which generally includes a majortraining component. Ten sectoral collective labour agreements have been entered into todate. Three collective labour agreements relate to collective dismissals, one torestructuring and seven to individual dismissals, including workers threatened withdismissal, one those whose qualifications no longer correspond to the needs of labourorganisation and one workers for whom reorientation is impossible.

In Austria there exists the Labour foundation which is an instrument of active labourmarket policy, which targets either the meeting of demand for labour by employingregistered unemployed persons (implacement foundation) or the improvement of theposition of former employees in the labour market (outplacement foundation); both bythe means of planned vocational and further education which is financed jointly by theAMS, the enterprises and the regional governments.


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In Swedenlike in Ericsson case employees can be transferred to an outplacement firmcalled Proffice that provides each worker with an analysis of his skills and helpsorganize retraining if necessary. Dismissed employees joining the plan have to show upevery morning just as if they still had jobs.

In the Netherlands examples are the project "In good courses" (Health care sector):schooling, mobility and career-policy, Philips Lighting (experiment): schooling/trainingand job-guarantee for employees with a weak position at the labour market and careerplanning for employees in Rijnmond/Rotterdam focused on lower-grade employees(training, individual counselling, supervision, etc.).


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Employees and their representatives’ participation

Participation of the employees or their representatives in case of employabilitymeasures in processes of collective redundancies

In Luxembourg anything is subject to negotiations, which are obligatory in cases offorthcoming mass dismissals. However, there is no legal foundation, which prescribesemployability measures.

In Belgium in accordance with article 8 of Collective Labour Agreement n° 9 of 9March 1972, the works council will be consulted on organisational and implementationmeasures relating to vocational training and rehabilitation of a collective nature.Denmark has a long tradition for involving the social partners in the field of adultvocational training system. The legislation in this field gives the social partners a highdegree of influence. The description of the ‘Danish model’ comprises the interactionbetween the competencies and qualification needs at all levels, at the company levelwith local agreements, within the framework of collective agreements, at board level intraining centres, at sector level and at the national level through their representation inthe training council.In Austria in companies employing 20 or more employees works' councils are entitledto negotiate social redundancy plans to alleviate social consequences in cases of massdismissals. They can obtain counselling and support from the union and the LabourChamber. Furthermore, the employer is obliged to deliver information to the works'council and the staff.In Germany according to § 92a Employees' Representation Act the works' council cansuggest measures concerning safeguarding and promotion of employees, which have tobe considered by the employer; a rejection has to be substantiated. If the employer isplanning or implementing measures causing change in the employees' occupation andresulting shortfalls in vocational knowledge and abilities which generate failure to fulfiltheir new duties, the works' council is entitled to co-determination regarding measuresof vocational training. If an agreement cannot be achieved, the board of conciliationdecides. The conciliation board's decision substitutes the agreement of employer andworks' council.In Luxembourg, on 7 February 2001, the Luxembourg Hospitals Alliance (Entente deshôpitaux luxembourgeois, EHL) signed a new collective agreement for the hospitalsector with the Luxembourg Confederation of Independent Trade Unions (OnofhängegeGewerkschafts-Bond Lëtzebuerg, OGB-L) and the Luxembourg Confederation ofChristian Trade Unions (Lëtzebuerger Chrëschtleche Gewerkschafts-Bond, LCGB). Itruns for two years from 1 February 2000 (backdated) to 31 January 2002.

The agreement also provides for special employee protection in the event of mergers,takeovers, takeovers of departments and "synergies" between two or more EHLmembers (a factor rarely addressed in collective agreements in Luxembourg). In theevent of such a contingency, collective or individual dismissals of employees in place at


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the time of the change, and not related to serious personal misconduct or behaviour, arenot allowed for a period of 10 years from that date. All employees' rights in contractsand collective agreements are protected. In the event of the closure of a departmentwhose activities are to be taken over by an outside firm, no employees may be dismissedfrom establishments with a workforce of over 100.With regard to vocational training, competence for decision-making on the organisationof training at the level of each establishment will now lie with the company jointcommittee (Comité mixte d'entreprise) or, if no such body exists, with the joint trainingcommittee (commission paritaire pour la formation). It was also decided to set up afoundation for continuing vocational training in the hospitals sector, bringing togetherEHL and the signatory trade unions. The foundation will be responsible for promotingand coordinating employees' continuing training in EHL member establishments.In Finland the Act on Codetermination in Companies is the most important law oncollaboration between employers (management) and employees within undertakings.The aim of such codetermination is both to increase ways in which employees caninfluence their work and decision-making improve operations and working conditionswithin the company. The act is applied in companies regularly employing at least 30people, and it establishes the employer’s duty to consult employees about the goungsfor, effects and options to the measures concerned with those employees affected.Matters affecting large number of employees, such as major technological andorganizational changes, are primarily dealt with the employer and shop stewards or thecomparable employee representatives in the case of white-collar employees. A specialcommittee can also be elected to deal with codetermination matters.In the Netherlands the Works Council has the right to give an advice on thereorganisation inclusive the personal consequences. The employer must consult with thetrade union and the works council about the content of social plan, which should beagreed before it is presented to the employees.


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Rights of participation of employees’ representatives in policy-making onemployability

In the Netherlands the works council has the right to take initiatives on employabilitymeasures and participate pro-active in policy-making on employability. The WorksCouncil has the right to veto schooling/training programs or development plans.

In France the multiplication of methodological agreements is starting to have a certainimpact on preventive measure practices (especially training and social audit), for dealingwith mass redundancies.

In Belgium the government is listening and is taking into account the points of view andopinion of social partners with regard to vocational training. In Austria instruments ofpublic labour market policy are subject to co-determination of employees andemployers' representatives. At the enterprise level, there are possibilities of co-determination of the works' council (e.g. regarding social redundancy plans, plans topromote female employees, design of qualification systems on the enterprise level,design of work organisation, monitoring the observance of employment safetyregulations).

In Germany according to Employees' Representation Act § 96 (promotion of vocationaltraining) employer and works' council are obliged to promote employees' vocationaltraining in the context of internal personnel planning and in co-operation with theinstitutions concerned with vocational training and the promotion thereof. On request ofthe works' council, the employer has to investigate the demand for vocational trainingand to consult the works' council regarding subjects of vocational training of thecompany's employees. The works' council can place suggestions. The employer has toconsult the works' council regarding the establishment and equipment of trainingfacilities, the implementation of internal training measures and participation in externalqualification measures. The works' council is entitled to co-determination concerningthe implementation of internal training measures.

In Finland, the Act on Codetermination in Companies is the most important law oncollaboration between employers (management) and employees within undertakings.The aim of such codetermination is both to increase ways in which employees caninfluence their work and decision-making improve operations and working conditionswithin the company. The act is applied in companies regularly employing at least 30people, and it establishes the employer’s duty to consult employees about the goungsfor, effects and options to the measures concerned with those employees affected.Matters affecting large number of employees, such as major technological andorganizational changes, are primarily dealt with the employer and shop stewards or thecomparable employee representatives in the case of white-collar employees.


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A special committee can also be elected to deal with codetermination matters. One ofthe main concern of trade unions seems to be employee’s ability to manage their careersand living in changing situations.

In Spain in the III National Agreements on Continuing Training, signed by trade unions,employers' associations and the Government. Only in this case is the right toinformation and consultation about the elaboration of continuing training plans incompanies insured.


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Specific rights of the unions

In Germany the Alliance for Labour, Training and Competitiveness agreed upon theparties to a collective agreement negotiating a framework for advanced educationguaranteeing lifelong learning. Long-term work hours accounts should be utilised foradvanced education. Particular collective agreements include employees' entitlements toadvanced education. The collective agreement of the metal industry in Baden-Württemberg negotiated in 2001 includes the implementation of a dialogue onqualification once a year.

In France there is an obligation for the enterprise to negotiate the aims and the means ofthe training (see question 3 b).

In Belgium firstly vocational training is managed along joint lines. Training plans areoften put in place via collective agreements. In the case of collective dismissals,retraining units are set up and implemented by FOREM and trade union organisations.The scheme appears to be effective (80% reintegration).

In the Netherlands in processes of collective redundancies the trade unions have theright to negotiate on employability measures. Collective agreements at branch levelinclude employability provisions.

In Spain in the III National Agreements on Continuing Training, signed in 2000, and intheir application and development rules.

In Swedensocial partners play an important role and often work together with localauthorities. The employee participation arrangements relating to corporate restructuringare the main basis for company-level negotiations in Sweden. Where negotiations occuras part of such participation, these usually relate to the consequences of the change andrestructuring for employees, rather than to the decision over the restructuring.


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Rights of works councils or other collective forms of employees-representation (basedon law, collective agreements, other regulations)

In France the work council and trade union have the possibility to contest the “plan tosave jobs” before the “Country Court”. The training plan (plan de formation) is drawnup with consultation of the work’s council, which can ask for experts, can create atraining committee, and can provide studies. Reclassification units are sometimes set upwithin the framework of agreements dealing with plans to save jobs.

In Austria for references based on Labour Constitution Law and collective agreements.

In Germany based on the Employees Representation Act the employer has to informthe works' council comprehensively and in due time presenting all information inwriting regarding personnel planning, particularly as far as current and upcomingpersonnel requirements are concerned, likewise resulting measures regarding personneland vocational training. The works' council can place suggestions on safeguarding andpromotion of employment. This also includes employees' qualification measures. Thesesuggestions have to be negotiated with the works' council; a rejection has to besubstantiated. On request of the works' council the demand for vocational training has tobe surveyed. The reformed Employees' Representation Act includes new rights of co-determination in cases of change in the employees' occupation and resulting shortfalls invocational knowledge and abilities, which generate failure to fulfil their new duties. Thisenables the works' council to enforce internal training measures early and preventivelyfor the benefit of the employees in order to safeguard their jobs. Works' Council's rightsof consultation on subjects of vocational training.

In Finland compared with many other European countries, shop towards have a strongposition, which is guaranteed by labour legislation and general agreements between thesocial partners, while bodies such as works counsels have never gained a significantfoothold. So, Union representatives play the key part in Finland.

In the Netherlands obligation to draw up a training plan and to reach an agreementwith the works council regarding training, recruitment, promotion and assessment rulesand some provisions are included in branch collective agreements.


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Sanctions and rights of action of employees representatives

In Austria to some extent, works' councils can enforce their co-determination rights incourt (social redundancy plans, plans to promote female employees). If co-determinationrights of unions regarding the design of public labour market policy are violated by non-observance of the rules of procedure, these acts are void.

In Germany according to § 97 Par. 2 (Co-determination on subjects of vocationaltraining in cases of changes in the employee's occupation), if an agreement cannot beachieved, the board of conciliation can be appealed to and finally decides. In addition, ifan agreement between employer and works' council regarding the participation ofparticular employees in qualification measures fails to take place, the board ofconciliation can be appealed to and finally decides.

In France if the plan to save jobs does not foresee reclassification measures, it is up tothe judge (appeal) to order the re-working of the procedure and to suspend theredundancies.

In Luxembourg the employee’s rights are based on the law concerning mass dismissals.

In Finland between 2005 and 2010, the change in the age structure of the working agepopulation will make it difficult to increase the employment rate any further. For thegovernment it is essential to raise the average retirement age before the baby-boomgeneration (after the second World war) begins to take early retirement.

In the Netherlands in case of collective redundancies, the Labour administration willnot issue the necessary permission if the legal procedures are not followed. If theemployer fails to comply with his obligation to inform and consult in case of importantchanges, the works council may lodge an appeal against the decision of the managementat the Amsterdam Court of Appeal.


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Individual rights of the employees in case of collective redundancies

In France “Reclassification Leave” rights (at least 1000 employees) employees are notobliged to go in a “conversion de conversion” in case of economic dismissal. Priority tore-employment in the event of mass redundancy, with a period of one year (see also 3c).

In Belgium there exists an individual right to training. Outplacement is not a right forthe worker; the company retains the initiative (the employee’s consent is required).

In Austria in generally there are no individual rights, unless these rights are based onthe employment contract or the social redundancy plan. In theUnited Kingdomindividual employees do not have legal employability-rights in case of collectiveredundancies.

Law obligations for employability rights to specific target groups of employees

In France there are specific measures for certain categories of workers such as olderemployees (see question 5). Plans to save jobs can thus contain specific measures forcertain groups, despite the principle of equal rights for employees placed in an identicalsituation.

In Belgium it is at sectoral level that the risk groups are defined that are covered bycollective agreements. With a view to keeping elderly workers in employment, theEmployment Act of 5 September 2001 included, for the benefit of workers over the ageof 45 who are laid off, the right to outplacement, except where the dismissal was withgood reason for early retirement. The task of implementing this right was entrusted tothe social partners, who concluded CLA n° 82 of 10 July 2002 within the NationalLabour Council.

In Germany there exists no directly law obligation, but According to § 96 (promotionof vocational training), concerns of elder employees, part-time workers and employeesresponsible for families have to be considered. As far as employment policy isconcerned, particular target groups should be promoted. There are special aid schemesfor young as well as elder employees, women, and foreign nationals. (See question 2).

In Luxembourg there are incentive programmes of training for woman, young people.In the case of older workers, incentives are geared to a mix of work and retirement,either resumption of activity for persons unable to work or revaluation of pension rightsif working life is extended, two respective draft laws were voted on in June 2002.

In Finland in particular, they try to encourage entrepreneurship for women, but Finlandalso has programmes for both young and ageing people.


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Strategy of protagonists

Concepts and strategies

In France the plan to save jobs, in the event of mass redundancy, may eventually giverise to the signing of a collective agreement. Excluding this facility, the trend inpractical terms is to negotiate the mass redundancy scheme uphill of the event,“method” agreements that supplement the legal framework. This means implementing aprocess negotiated in advance, thus avoiding risks to employment (see practicalexamples).

In Luxembourg they are listing persons concerned, they make assessment of theirrespective situation (as far as matters of family or enterprise are concerned), checkingexisting competencies (bilans de compétences), co-operation with labour offices,assignment of accompanying measures which target improved emp among other things.

In Belgium the strategies are mainly left to negotiation between social partners wherecollective dismissals are concerned.

In Germany the Hartz Commission made new concepts of labour market policy. Policyof employment promotion should be redesigned to activating labour market policy. Thisconcept focuses on the unemployed's individual integration performance, which ispromoted and safeguarded by offers of service and promotion measures. The servicessupplied - including taking up temporary employment, participation in qualificationmeasures and finally entering an occupation - should enable unemployed persons to acton their own behalf to accomplish integration. On the other hand, an integrated systemconsisting of counselling, support and financial safeguarding should provide assistanceto utilise these options. Activating measures concerning the promotion of integrationshould match requirements of job-seekers and enterprises in the respective region. Thisis based on concentration on particular target groups whose employability is impaired,enforcement of responsibility, measures to assist and influence individual behaviour,individualisation of the application of instruments and these instruments' explicitlytargeting the first labour market. Strategic objectives of this new labour market policyinclude placing priority on employees (re-) entering occupations quickly and in asustainable way. Therefore, the emphasis of these activities is on job placement andintegration. Policies should be designed in a prevention-oriented manner. Primary tasksof the new labour market policy: Job placement, measures to promote job placement andensuring a means of livelihood in cases of unemployment. More and more, services ofprivate suppliers (employment agents, temporary employment/time work) should beused. New structure and new design of the employment offices: job centre.


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These have to incorporate services of counselling and assistance relevant to the labourmarket (social welfare office, youth welfare office, accommodation office, counsellinginstitutions dealing with addiction and debt, interface PSA (loan employment organisedby the employment office) etc.). Procedures in the job centre should target quickestimation of the requirements concerning counselling and support and earlyimplementation of necessary measures, also involving the Personnel Service Agency.Further points of focus of the new labour market policy are: the increase of the pace ofjob placement, newly defined acceptability and voluntariness, enforced measures for thebenefit of unemployed youths, promotion of elder employees (bridge system),combination of unemployment relief and public welfare, grants for companiesdisplaying a positive development of employment, establishment of Personnel ServiceAgencies (PSA - loan employment), advanced education close to the enterprise,integration of hard-to-place unemployed persons, "myself companies", etc.).

In theNetherlands the government and social partners meet in spring and autumn for totalk about the socio-economic situation and their respective roles and responsibilities.Against the background of the Lisbon objectives, the government and social partnershave stated that the level of education and training of the entire working-age populationneeds to be raised. Alongside government investment in vocational education, the socialpartners will continue to invest in training and vocational education. They favour the useof personal development plans with an individual budget, which was one of therecommendations presented by the Labour Foundation (STAR) in its 2000 report. Thegovernment and social partners are considering ways of setting up personal developmentaccounts, that is, individual accounts or budgets to be used exclusively for trainingpurposes.

In Finland recently (18th November 2002), the social partners agreed upon developingthe co-operation procedure under the Act on Co-operation within undertakings(725/1978) or corresponding collective agreements with the following: 1) In the contextof co-operation procedure at collective redundancies measures shall be mapped so as tomake it easier for those under threat of redundancy to be replaced by the same employer.When needed, also replacement by another employer is assessed in co-operation withthe labour market authorities. The target is to make this before the end of the workcontract. 2) For those under the threat of redundancy or subject to redundancy themeasures are explained/presented, and, when needed, a re-employment programme ismade, so as to support direct re-employment or that through training. The measures mayconsist of training by the employer or public authorities, replacement possibilities by thesame employer, replacement guidance when needed, and support in searching a new joband possible economic aid. 3) The worker concerned has to have the opportunity to takepart in discussing the measures.


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In Swedenregional labour market authorities are encouraging the setting up of localnetworks of employers, trade unions and public bodies that are having some success indeveloping alternative employment for redundant workers. In addition, there is anincreasing local activities in some areas, with local partners and labour authoritiesworking together to increase the diversity of the local economy, thereby making it lessvulnerable to the failure of a particular large enterprise.24

Other institutions, which are involved in employability questions

In Luxembourg there exist the Comité de Coordination Tripartite (institution of threeparties which include government, patronage and unions - an instrument to deal withcrises created at the end of the seventies) and the Comité Permanent de l’Emploi(permanent committee of employment, which is also composed of three parties).

In Belgium at local level, Flanders organised competence centres (13) and localemployment offices (60) VDAB, in Wallonia FOREM, competence centres (12),employment centres (23 new ones in 2002), local development agencies (60), the InstitutBruxellois Francophone pour la formation professionnelle (Francophone BrusselsInstitute for Vocational Training) in the Brussels-Capital Region. At sub regional level:in Flanders the subregionale Tewerkstellingcomités (subregional employmentcommittees), in Wallonia the Comités subrégionaux de l’Emploi (subregionalemployment committees), the Regional Missions. The experimental proximity servicesdevelopment fund allows new services to be developed in the regions.

Other specific institutions inUnited Kingdom involved in employability questions, are:CIPD, ACAS. InSpain there is the Tripartite Foundation for Training and Employment(parity institution: trade unions-employers for Continuing Training, created in the IIINational Agreements), the National Qualifications Institute and the NationalEmployment Institute.

24 IRS research 2002


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Conclusion

The term ‘employability’ has been defined and interpreted in very different ways.

In all different member states there is no precise juridical definition of the term, so it canbe adapted to very different national contexts and traditions.

The most used definitions of employability are:• labour market availability• having marketable skills and competences.

Employability is variously interpreted as meaning ‘training’ (matching all forms oftraining to the needs of the business), ‘prevention’ of unemployment, ‘activation’ forstrengthening the employee position at the labour market and ‘re-integration’ of youngor long term unemployed.

The main goals of employability are considered to be:a) the development (acquiring or updating) of skills, qualifications, competences,b) the creation of a stronger position at the labour market,c) an active employment policy, a fight against exclusion.

In practice most used employability tools are:• training systems (especially work place training),• life-long learning systems,• personal development plans, competence development plans,• internal replacement and outplacement,• job-enrichment and –enlargement,• improving mobility,• plans for keeping older people in work

Social partners have the responsibility to establish the legal framework via collectivelabour agreements. Appointments have been made by social dialogue and via socialplans. In some countries there exist regional competence centres.In several countries the works council has the legal right to be involved in thedeveloping of training programmes, to influence the decision making process on trainingand employability.


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Government policy is mainly focused on:

• participation of unemployed persons in employment schemes, intensive job-seekingactivities and special placement measures,• encouraging greater individual participation in higher education,• adult vocational training systems,• modernisation of the organisation of labour,• improving mobility between regions as well as professional mobility, and• several forms of (re-) integration.

In individual EU states, financial means for the promotion of the employability ofemployees are supplied – especially in cases of insufficient or no qualifications. Theoption of the use of such means usually depends on target groups such as olderemployees, women, youths, migrant workers. These funds are supplied to unemployedor those threatened by unemployment.

The promotion of employability in companies usually depends on the size of thecompany and on the relevant business culture or policy. There is usually no generalliability for companies to promote employability. In the context of restructuring andissues of job security, there is a number of legal regulations, which – mostly inconnection with social schemes and harmonisation of interests – also raise issues on theemployee qualifications and which demand measures.

To evaluate the usefulness and the direction of preventive measures, which keepemployees employable or which improve their employability, different levels aresignificant:

- the individual level: the responsibility of the individual employee for his or heremployability is being highlighted in many European countries,

- the company’s responsibility: companies also need to act. An increased corporateresponsibility to increase employees’ employability in connection with staff planningand qualifications would be beneficial to the companies and would also make asignificant contribution to the prevention of unemployment. Companies’ socialresponsibility becomes then a crucial stake in this context.. Relevant legal requirementsand/or collective agreements with adequate rights to measures and sue in events ofviolation for employees and their representatives would give greater clout to theemployability of employees. A certification of corporate systems for the increase ofemployability, similar to the experience made with environmental audits, etc. could beuseful.


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- the government policy, focused on training systems, educational programmes,special placement measures, re-integration etcetera. Prevention of unemployment andimprovement of employability first of all start at school.

Regarding employers obligations, there are some recent developments that are veryinteresting. Especially in Austria, Germany, France and Italy there is practise concerningemployers obligations. A distinction between obligations to take care about employee’semployability in “normal time” and in restructuring periods makes sense. Inrestructuring processes there should be a distinction whether dismissals are motivated bythe need of increasing productivity or declining revenues. In case of provisions that areaiming towards increasing productivity, the skill level of the remaining employees hasto be raised. This requires measures to increase the employability of the workers. Incase of lacking revenues, the redundant employees need higher qualification because oftheir competitiveness on the labour market. There are strong links between the quality ofthe current job and the employability of the redundant employee. A key success factorfor the employability of the employees is the dialogue between the actors (employer,employee, state). In restructuring cases, there is a stronger role of the states authorities.The main question is how the company’s obligations regarding employability ofredundant workers should be formalized. Employability should be incorporated (by law,collective agreements, etc) both the individual employee’s right and the company’sobligation.


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Employability

Austria

Questions Answers Ref.1. Definition There is no legal definition of employability in Austria. Only

from regulations included in the pension law (invalidity pensionand occupational disability pension) the state's attitude towardsthe non-existence of employability because of physicalrestrictions can be concluded.The common understanding of employability can becharacterised as follows: Employability presents a challenge forpublic labour market policy - via measures of active labourmarket policy - either to enable employees and unemployedpersons to keep their jobs despite changing requirements on partof the employer or to provide quick placement of vacanciesreported to the public labour market institution (labour marketservice (AMS)) by the means of adjustment qualification. Theunderstanding of employability on an enterprise level depends onthe respective corporate culture. Due to high unemployment andthe opportunity to supply necessary qualifications from theexternal labour market by replacement of staff (which wasrendered possible by the extension of qualification measures ofactive labour market policy), the willingness of employers todevelop a medium-term concept of employability and implementthis concept in employment policy has decreased significantly.As far as labour market policy is concerned, a medium-termconcept targeting increasing empowerment on the labour marketindependent of the company's exploitation interests is notdeveloped adequately. As described above, employability isunderstood merely as short-term introduction of placeability ofunemployed persons via adjustment qualifications.Employees' representatives apply a more comprehensiveunderstanding of employability. Aspects of health protection,ongoing vocational end further education independent ofexploitation interests due to the current employment relationshipas well as the establishment of key qualifications (teamwork,problem solving...) and measures to reconcile family andoccupation are included.

2. Objectives Recognisable objectives of the understanding of employability inAustrian labour market policy:

• Introduction of so-called adjustment qualifications by theAMS in order to fill vacancies as quickly as possible


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• Filling of vacancies which appeared due to lack ofspecially qualified employees in certain sectors (e.g.information and telecommunication, nursing and health) viatraining of unemployed persons in courses created in co-operation with the concerned companies targeting exclusivelythe tackling of perceived qualification deficits.• Employees' representatives expect employability toprolong the working life of elder employees and to overcomediscrimination in the labour market via investment in healthprotection, work organisation, vocational and further education.

3. Instrumentsa) Training

The state's active labour market policy realises all possibilitiesmentioned under a).

b) Amelioratingdevelopment

The implementation of the instruments mentioned under b) and c)in enterprises depends on the respective management style andcorporate culture. Examples could be given for every instrument,nevertheless far-sighted human resource management presents aminority in the landscape of Austrian enterprises, which is in partdue to the economic structure characterised by SMEs.

c) Internal mobility See aboved) External mobility4. Obligations in casesof mass dismissals

Obligations of employers to apply instruments in order toenhance employability are based exclusively on socialredundancy plans (collective agreements on the enterprise orcompany level to alleviate social consequences of massdismissals based on matching regulations of the LabourConstitution Law).Currently, neither public contracting nor enterprise promotioncreate incentives for employers to introduce employabilitymeasures in enterprises.

5. Obligations tointroduce preventivemeasures

The above mentioned points apply - employability measures canbe included in collective agreements on the enterprise levelregarding internal employment policy.

6. Laws, collectiveagreements, guidelines

This question cannot be answered comprehensively. Someemployability instruments are described in Labour ConstitutionLaw and Labour Contract Law (e.g. promotion of femaleemployees, educational leave, old-age part time work, technicalemployment safety regulations, regulation of working hours). Inregional collective agreements particular instruments concerningspecial branches of industry have been developed further, e.g.regarding old-age part time work in the metal industry. Theseinstruments based on law and described in more detail incollective agreements can - in this framework - be adjusted to therespective enterprise's requirements by collective agreements onthe enterprise level.

7. Nation-wideprocedures in cases ofmass dismissals

See the questionnaire regarding mass dismissals

Enterprise policy8. Enterprise's obligation No, unless they committed themselves in a collective agreement


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to introduce strategies toenhance employability

negotiated with the works' council.

9. Obligation tointroduce preventivestrategies

No, unless they committed themselves in a collective agreementnegotiated with the works' council

10. Substantiation ofpolicy

See above

11. Best practicespolicy and instruments

Labour foundation: Instrument of active labour market policy,which targets either the meeting of demand for labour byemploying registered unemployed persons (implacementfoundation) or the improvement of the position in the labourmarket of former employees (outplacement foundation); both bythe means of planned vocational and further education which isfinanced jointly by the AMS, the enterprises and the regionalgovernments.

Participation ofemployees12. Participation Yes. In companies employing 20 or more employees works'

councils are entitled to negotiate social redundancy plans toalleviate social consequences in cases of mass dismissals. Theycan obtain counselling and support from the union and theLabour Chamber. Furthermore, the employer is obliged to deliverinformation to the works' council and the staff.

13. Rights ofparticipation ofemployees'representatives

Instruments of public labour market policy are subject to co-determination of employees' and employers' representatives. Onthe enterprise level, there are possibilities of co-determination ofthe works' council (e.g. regarding social redundancy plans, plansto promote female employees, design of qualification systems onthe enterprise level, design of work organisation, monitoring theobservance of employment safety regulations).

Rights of unions Both15. Rights ofparticipation ofemployees'representatives on theenterprise level (laws,collective agreements,guidelines)

Regarding rights: see question 13 above; for references: LabourConstitution Law and collective agreements.

16.Sanctions/Rights ofaction of employees'representatives

To some extent, works' councils can enforce their co-determination rights in court (social redundancy plans, plans topromote female employees). If co-determination rights of unionsregarding the design of public labour market policy are violatedby non-observance of the rules of procedure, these acts are void.

Individual Rights17. Individualemployability rights ofemployees

No, unless these rights are based on the employment contract orthe social redundancy plan.

18. Obligations andrights concerningparticular groups of

None.


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employees19. Rights of actionStrategy andprotagonists

See questionnaire regarding mass dismissals.

20. Concepts, strategies21. Rules sufficient22. Alternative Concepts23. Other institutionsFurther remarks


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Employability

Belgium

Question Answers Ref.1. Definition No definition but the European Social Observatory feels that

rather than a definition, it is preferable to frame it in threepolitical and social dynamics: flexibility, the fight againstexclusion, adaptation of life cycles to the organisation of labour

EuropeanSocialObservatory1998

2. Goals -To develop an active employment policy (global approach)-integration of young people-keep people aged 50 and over in work-reintegration of the long-term unemployed-prolong the working life

Tools3. a Training

-A number of preventive programmes are provided for youngpeople: integration course, Young Plus Plan, integration plantraining schemes, First Job Agreement for which the budgetwas 99.2 million euros in 2000.-Training is also provided for workers (aged 50 and above)-right to lifelong learning: a training leave scheme has allowedmore than 45,000 workers from 4,800 companies to benefitfrom general training or requalification-Where continuing vocational training is concerned,competence centres have been created in partnership with thesocial partners.-financial incentives are available such as the “training cheque”and “adaptation credit”.-Promotion of skill assessments for better career development(support for workers in their employment counselling).-Development of sectoral measures to support training (freeaccess to training for companies in the finance sector by thesectoral fund)-Development of new training in New Information andCommunication Technologies.

NAP 2002


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3.bDevelopment

-Recent development: as in France a skills validation systemhas been introduced, skills acquired through work experience,vocational training and life and which validates these skills“skills qualifications”.

-Fiscal reforms are being continued to encourage training(project to reform corporation tax)-Recent act: Act on socially responsible production–TheMinister for Trade will be able to grant a label for products forwhich all stages of production have been recognised as beingsocially responsible by an Ad-Hoc Committee and an AppealsCouncil

Programme Actof 30 December

2001

Act of 27February 2002

3.c Internalmobility

-Interprofessional agreement of 22 December 2000: the sectorsare invited to use all the possibilities of innovation inorganising labour.-support for the modernisation of the organisation of labour,with the help in particular of an “encouragement subsidy”stimulated by the Flemish Government and social partners: in2001 almost 47,000 applications for this subsidy were received(42,000 beneficiaries). The emphasis is placed on theautonomous management of careers, lifelong learning,reconciliation between work and parental responsibilities.Companies in difficulty or that are restructuring (havingentered into an agreement to reduce working time) are entitledto a max. subsidy of 125 euro per worker/month for a max.period of two years.-Part-time work

Tools cont'd3.d Externalreplacement

In 2001 ORBEM’s outplacement service intervened in aroundtwenty companies to help employees (approx. 250) to preventthem from being laid off.The Flemish Government is replacing outplacement with“support” for workers who have been laid off followingbankruptcy: 7,437 million euros have been set aside for 2002 tofinance this replacement fund.

Furthermore, a policy aimed at improving the mobility ofworkers between regions as well as professional mobility isbeing drawn up.

To facilitate mobility the financial contribution of the employerto workers’ travel costs has been increased to 60% (seasonticket charges) following an amendment to the appropriatecollective agreement.

For professional mobility, partnerships are being organisedwith the SPEs (Services Publics Pour l’Emploi – PublicEmployment Services) with a view to orienting the trainingoffered towards companies’ real needs. ORBEM has

NAP 2002

Ditto andadvice n° 1322of 21September2000 of theWorks Council

CLA n° 19 of26 March 1975amended in2001NAP 2002-10-17


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decentralised its services.

Encouragement for the creation of companies, for examplecreation cheque for 300 applicants each year.

Implementation of “transitional course”: career break (withreplacement of outgoing worker), home-working, teleworking.

A collective labour agreement on outplacement (OP) regulates,for employers and workers, the individual and collectiverelations with regard to the offer, organisation and content ofthe outplacement mission, the time when this mission can startand its cost.The OP must relate to one or more of the following services:

• a psychological frame (management of the emotionalimpact associated with redundancy or applicationinterviews, etc.);

• the drawing up of a personal appraisal;

• aid in organising and implementing a job-seekingcampaign;

• assistance with a view to negotiating new employmentcontracts;

• logistical and administrative aid (drafting applications,employment contract models, etc.).

The Flemish Region has set up a Reintegration Fund aimed atpromoting the reintegration of workers laid off following thebankruptcy of a company or the legal winding-up of an ASBLbecause of an established state of insolvency and which cannotresort to CLA n° 51 on outplacement.See also question n° 11

Ditto

CLA n° 51 of10 February1992

4. Obligationwhen collective

dismissal

No outplacement obligation like in France in case of dismissals

At Federal level the right to an outplacement procedure forworkers whose employer has terminated their contract ofemployment and who have reached the age of 45 at the timethey are dismissed. It is up to the National Labour Council toestablish, via a collective labour agreement, the legalframework for this measure (see question 18)

Act of 5September2001

5. Overallobligation

From 2004, 1.9% of the wage bill will be devoted to continuingvocational training

Interprofessional agreement of22 December2000

6. Regulations Collective agreements (sectors-companies) play a major role interms of training


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7. Nationalprocedures

when collectivedismissals

Company Policy8. Formulationwhen collective

dismissal

The redundancy programmes agreed by the employer and theWorks Council often include the outplacement service

9. Overallformulation10. Justification11. Practice A certain number of sectors provide, within the framework of

collective labour agreements, for recourse to outplacement,which generally includes a major training component. Tensectoral collective labour agreements have been entered into todate. Three collective labour agreements relate to collectivedismissals, one to restructuring and seven to individualdismissals, including workers threatened with dismissal, onethose whose qualifications no longer correspond to the needs oflabour organisation and one workers for whom reorientation isimpossible

Participation12. Rights whencollectivedismissals

See question 15

13. Rights inpolicy-making

The government is listening and is taking into account thepoints of view and opinion of social partners with regard tovocational training.

14. Unions Firstly vocational training is managed along joint lines.

Training plans are often put in place via collective agreements

In the case of collective dismissals, retraining units are set upand implemented by FOREM and trade union organisations.The scheme appears to be effective (80% reintegration)

15. Workscouncils

In accordance with article 8 of Collective Labour Agreement n°9 of 9 March 1972, the works council will be consulted onorganisational and implementation measures relating tovocational training and rehabilitation of a collective nature

CLA of 9March 1972

16. EnforcementIndividual rights17.Whencollectivedismissal

Right to training. Outplacement is not a right for the worker;the company retains the initiative (the employee’s consent isrequired)

18. Specificgroups

It is at sectoral level that the risk groups are defined that arecovered by collective agreements.With a view to keeping elderly workers in employment, theEmployment Act of 5 September 2001 included, for the benefitof workers over the age of 45 who are laid off, the right tooutplacement, except where the dismissal was with goodreason for early retirement. The task of implementing this rightwas entrusted to the social partners, who concluded CLA n° 82of 10 July 2002 within the National Labour Council

CLA n° 82 of10 July 2002


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19.ChallengeProspects20. Strategieswhen collectivedismissal

The strategies are mainly left to negotiation between socialpartners where collective dismissals are concerned.

21.Regulations See question 2022.Concepts23.Institutions Local level: in Flanders competence centres (13), local

employment offices (60) VDAB, in Wallonia FOREM,competence centres (12), employment centres (23 new ones in2002), local development agencies (60), the Institut bruxelloisfrancophone pour la formation professionnelle (FrancophoneBrussels Institute for Vocational Training) in the Brussels-Capital Region.At subregional level; in Flanders the subregionaleTewerkstellingcomités (subregional employment committees),in Wallonia the Comités subrégionaux de l’Emploi(subregional employment committees), the Regional MissionsThe experimental proximity services development fund allowsnew services to be developed in the regions

NAP 2002

Remarks


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Employability

Finland

Question Answers Ref.1. Definition No legal definition. Adjustments to policies on

employment, education and the economy will help toensure the availability of skilled and qualified labour,both in the aftermath of a recession and in the longerterm

NAP 2002

2. Goals - Jobseekers must be encouraged to remain active and towork on improving their qualifications and skills- Exclusion has to be prevented- Reduce structural unemployment-Interaction between different sector of social policy hasto be reinforced

NAP 2002

Tools3. a. Training

In 2001 over 63 000 jobseekers entered jobseekertraining, in 2002, 120000 are expected

3.b Development - Anticipation system developed by the Employment andEconomic Development Centres (TE Centres) inanticipating change in labour and skills needs (labourforce and training needs survey)- Advanced apprenticeship training was raised from 12900 to 16000 student places per year in 2001.- Improve regional labour force mobility- Services (special expert service) has been introduce forSMEs. Service to support improvements incompetitiveness at SMEs and the skills of theirpersonnel.- Development of training in ICT- Specific measures or programme for young people andolder- Special integration plan for migrants- Combating discrimination

NAP2002

3.c Internal mobility Legislation and the operating methods of workcommunities improve the organization of work andquality of working life.-Preparation in tripartite cooperation between theGovernment and social partners of legislative

NAP 2002EmploymentContracts Act(55/2001);Act on


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amendments and workplace development-Continuous negotiating procedure in particular on jobtraining-Improvements to the job security of people in atypicalemployment

-Switch leave system (implemented in 1996): theemployer undertakes to employ an unemployed person toreplace the employee on switch leave. In 2001 7 700persons on average were on switch leave, 10% used theirleave for vocational studies.

-Training allowance for adults is available for employedpersons and entrepreneurs taking study leave, if theirincome falls due to their studies. The allowance is theequivalent of 80% of each person’s unemploymentsecurity.

-Since 1994, anyone who does not work complete weeks(reduced week or day, part-time work, occasional full-time work for a period of less than one month, auxiliarywork or activities compatible with receipt ofunemployment benefit) may receive adjustedunemployment benefit.

-Promote healthy and safe working environment.

-Change in work organisation involves a variety ofemployment practices multi-skill, team work, contingentpay, participatory programmes, extensive training, and aswe saw employment security (importance of thedecentralised collective agreements).

Labourmarkettraining(763/1990),Study leaveAct(273/1979)

Act on the jobalternationleaveexperiment22/12.95

Tools con't3.d Externalreplacement

Individual employee, such as outplacement, part-timeretirement, sabbatical leave and job sharing are also used.When applied these are combined with study leave orexternal training. In replacement for the loss of employeeinputs buffer workers, students or trainees are used andthe retiring person is used as a tutor for them.

The major part of enterprises in Finland is small and themajority (94%) of companies in the SME sector employless than 10 people. So the Government put measures forimproving entrepreneurship as an attractive careeropportunity. Social partners are involved in this matter.

New legal provisions in Company law and accountingtend to facilitate entrepreneurship (reducingadministrative burden).New measures aim at to facilitate entrepreneurship forwomen.It is predicted (survey) that about 2 500 people annually(gross) would move to Finland from the new MemberStates (enlargement).

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Reimbursement of travel costs for improvinggeographical mobility for jobseekers. An employedperson entitled to labour market support may be grantedtravel cost assistance when taking up a new job lasting atleast six months outside his commuting area.

Finland (61% of all company employees worked inSMEs-2001) has developed an entrepreneurship project,which is being implemented jointly by nine ministriesand the association of Finish Local and RegionalAuthorities, in cooperation with entrepreneurs’organisations and the social partners.

4. Obligation whencollective dismissal

According to the Act, the obligation to negotiate meansthat measures affecting personnel should be subjected tonegotiation in good time, when there still exist factualalternatives to the proposed "personnel arrangements" orredundancies.

Recently (18th November 2002), The social partnersagree upon developing the co-operation procedure underthe Act on Co-operation within undertakings (725/1978)or corresponding collective agreements with thefollowing:

1.In the context of co-operation procedure at collectiveredundancies measures shall be mapped so as to make iteasier for those under threat of redundancy to be replacedby the same employer. When needed, also replacementby another employer is assessed in co-operation with thelabour market authorities. The target is to make thisbefore the end of the work contract.

2.For those under the threat of redundancy or subject toredundancy the measures are explained/presented, and,when needed, a re-employment programme is made, soas to support direct re-employment or that throughtraining. The measures may consist of training by theemployer or public authorities, replacement possibilitiesby the same employer, replacement guidance whenneeded, and support in searching a new job and possibleeconomic aid.

3.The worker concerned has to have the opportunity totake part in discussing the measures.

CooperationAct 725/1978

Co federalbargaininground 18th

November2002

5. Overall obligation6. Regulations7. Nationalprocedures whencollective dismissalsCompany Policy


219

8. Formulation whencollective dismissal See question 49. Overallformulation10. Justification11. Practice See EVAC case study

Participation

12. Rights whencollective dismissals

The Act on Codetermination in Companies is the mostimportant law on collaboration between employers(management) and employees within undertakings.The aim of such codetermination is both to increase waysin which employees can influence their work anddecision-making improve operations and workingconditions within the company.The act is applied in companies regularly employing atleast 30 people, and it establishes the employer’s duty toconsult employees about the youngs for, effects andoptions to the measures concerned with those employeesaffected. Matters affecting large number of employees,such as major technological and organizational changes,are primarily dealt with the employer and shop stewardsor the comparable employee representatives in the caseof white-collar employees. A special committee can alsobe elected to deal with codetermination matters

13. Rights in policy-making

See question 4 the Co federal bargaining round.Otherwise, the cooperation Act gives a key role to thenegotiation between social partners.

14. Unions See question 4 the results of the Co federal bargaininground, and question 15.

One of the main concern of trade unions seems to beemployee’s ability to manage their careers and living inchanging situations

EIRO

15. Works councils Compared with many other European countries, shoptowards have a strong position, which is guaranteed bylabour legislation and general agreements between thesocial partners, while bodies such as works counsels havenever gained a significant foothold. So, Unionrepresentatives play the key part in Finland.

16. EnforcementIndividual rights

17.When collectivedismissal

See question 4,The results of the Co federal bargaining round

18. Specific groups In particular, encouraging entrepreneurship for womenbut also programme for young people and ageing people.

19.Challenge Between 2005 and 2010, the change in the age structureof the working age population will make it difficult toincrease the employment rate any further. For thegovernment it is essential to raise the average retirement

NAP 2002


220

age before the baby-boom generation (after the secondWorld war) begins to take early retirement.

Prospects20. Strategies whencollective dismissal

See question 4

21.Regulations Collective agreements play an important role in this fieldof employability. Collective redundancies.

22.Concepts23.Institutions

Remarks For Finland improving Employability is very linked tothe necessity to improve the quality of work andemployment,


221

Employability

France

Questions Answers Ref.1. Definition No precise definition or juridical definition but France uses

the term “Capacité d’insertion professionnelle” which is closeto the definition of the European Commission: “a person isemployable when he or she has the marketable skills,competence or features which are regarded by labour marketdemand as necessary conditions for hiring».

NAP 2002

2. Goals In the NAP 2002 there are 7 guidelines (goals):-Prevention for long term unemployed people andmodernisation of the employment services-Activation of measures for employment putting in evidencetheir efficacy and the tax benefits-Development of skills, education, life long training-Development of training in the field of NTIC-fight against the difficulties for hiring-fight against discrimination and incentive for integrationthrough employment

NAP 2002

Tools3. Training

Life long training and training in the field of NTIC have beenimprovedThe principal Initiatives in 2001 on life long training:-Life long training is a national obligation-Working in coordination with the labour representativebodies, the State has taken steps regarding equality in accessto training and the development of qualifying processes basedon the confirmation of skills acquired: in small and mediumenterprises (BTP craftsmen for example) and target groups ofemployees (due to age, level of qualification, professionalbackground) (textile chemical industries, food industry, homeservices)-The network of one-to-one teaching workshops for peoplewho have left the educational system and have problemsaccessing the professional training offer. 175,000 peoplewere trained in 2001.-The National Education life long training activity(GRETA/CAFOC)-The development of life long training in higher education

NAP 2002

Art. L.900-1C.T.


222

establishments – especially generalisation of skills acquiredthrough experience.The labour modernisation laws have set up a RegionalCoordination Committee responsible for guiding theemployment and professional training policies. It is composedof an equal number of State representatives in the region,members of regional assemblies, trade unions representatives,employers organisation representatives and consular offices-Improvement of transparency in the training opportunitiesavailable.

The labour modernisation law of the 17 January 2002promotes the “validation of skills acquired throughexperience” (VAE) covering not only employees, but alsocraftsmen and voluntary workers. It is an individual right forany person engaged in working life, to acquire all or part of adiploma, a professional qualification or a qualifyingcertificate shown on the list drawn up by the paritycommission for employment in a given professional sector,thus validating the skills that have been acquired throughexperience.

The law is to create a national directory of professionalqualifications.

There are projects for Europe-wide professional diplomas(with 5 member states and 2 candidate countries), in theautomobile and hotel management sectors.

-Youth contracts (between 16 and 22 years old): grants to theemployer (225 euros for a minimum basic wage salary) inreturn for an open-ended contract (mandatory) for youngpeople who have not reached university entrance examinationlevel. It may be an alternating contract (part time education +work) - (qualifying contracts, adaptation, orientation).

Art.910-1 C.T

Art. L.900-1C.T

Law of the 29August 2002,decrees andapplicationcircular

3.bDevelopment

-The organisations linked with a branch convention, or (ifnot) with a professional agreement, meet them at least all 5years for negotiating on the priorities, the goals and the meansof the professional training of employeesThe employer must inform the work’s council, each year, onthe agreements at the professional branch level

-Training plan:• no definition of the training plan in law• Employer obligation for adapting jobs to the

evolution /development of the enterprise, newtechnology, for ex.

• However, the employee’s inability to acquire thenecessary skills can be justification for dismissal

• the training plan is not a negotiated plan; it is up tothe employer to take responsibility.

• If employee refuses training, it could be a justification

Art. L.933-2Labour laws

Art. L.932-2Labour laws


223

for dismissal

-Each hour of training is considered as an hour of work, thetraining costs being at the employer’s expense, and the lawgoverning working illnesses or accidents still covers theemployee.

-Training may (within the framework of the collectiveagreement of the 3 July 1991) also take place outside workinghours (as long as overtime is paid). Branch or companyagreements can also prescribe part of training outside workinghours (only within the framework of skills development)

-“Premium training” clauses also exist: these engage theemployee to remain with the company once training has beencompleted

-Training time capital: scheme whereby an employee mayundertake training on its own initiative within the frameworkof a company-training plan. The training time capital isimplemented by branch agreement.

-Also at the employee’s initiative, but disassociated fromtaking part in the company’s training scheme is IndividualTraining Leave in order to:

• Achieve a higher level of qualification• Change activity or profession• Prepare for a diploma examination

This is subject to specific seniority conditions (12months in the company)

-Individual leave for employees on a fixed term contract-Young workers training leave-Teaching and research leave-Labour economics and union training leave

article L.932-3of the labourlaws

L.931-15 L.L.

L.931-29 LL

L .931-28 LL

L.451-1 LL


See above for all the measures which can improved internalmobility and the “skills balance sheet”:The aim of the skills balance sheet is to enable workers toassess their professional and personal skills, as well as theiraptitudes and motivations, so as to define a professional aimand, should it be needed, a training project.See also question n°5The company may also resort to internal transfers.Employees that accept these transfers are covered by certainguarantees under the terms of labour or company agreements(no loss of seniority, payment of moving costs,accommodation allocation, job search for partner, a trialperiod (in case the employee fails or changes its mind),observation under the same terms as the mass redundancyprocedures), payment of a removal indemnity; maintenance ofsupplementary benefits.Work organisation and negotiation on the reduction ofworking hours. The law on labour modernisation lays down

Article L. 900-2LL


224

that, before a plan to save jobs is drawn up and transmitted tothe employer’s employee representatives (at least 50employees in the company and redundancy of at least 10employees in a 30 day period), a reduction in working hoursagreement must have been reached. The ConstitutionalCouncil has restricted the scope of this article against toobroad an interpretation.

Article 96 ofthe labourmodernisationlaws

Tools cont’d3.d Externalreplacement

Employees transfer; if the employee refuses the “transfer” hecan be dismissed.Reclassification units can be set up as well as help to returnand find employment in the country of origin, for immigrantworkers.Priority to re-employment within the same company is oftenentered into the agreements.A government project (Ministry of Trade) is currently beingstudied to encourage company formation and especially toavoid the administrative hassles involved (one counter body)

4. Obligationwhen collectivedismissal

The employer is expected to carry out reclassification beforeany redundancy measures: for example “reclassificationactions within or without the company, the creation of newactivities, training and conversion activities, actions to reduceand re-arrange working hours”.

The obligation to reclassify is not restricted to offering theemployee an equivalent job o the previous one, but also jobsrequiring less qualification and offering less remuneration(risk of dismissal is refused by the employee). The outlinesof the reclassification obligation are extremely broad: the jobsavailable within the group must also be offered, from amongthose companies wherein the activities, the organisation andthe operating site enable the transfer of all or part of thepersonnel

The obligation to reclassify is reinforced by an obligationconcerning vacant positions, especially if there are vacantpositions within the company. The obligation to adapt theemployee to the job is often raised by jurisprudence.

Sanction to the reclassification obligation: absence of real andjust cause for redundancyIn companies of over 1000 employees, a reclassification leavehas been created, which can extend up to 9 months, duringwhich the people concerned may be reclassified without anybreach of their work contract. The remuneration paid to theemployee corresponds with the amount of the conversionleave allocation and is at the employer’s expense.

Art. L.321.4-1LL

Class.Soc. 27October1999,RJS 11/99n°1356

Soc. 17February 1998RJS 4/18 n°434

Cass. Sociale17 March 1999

Labourmodernisationlaw


See above/obligationUnder certain conditions (especially when the company is notsubject to reclassification leave), the employer must offer theemployees the benefit of prior PARE (Plan to Help a Returnto Work). The implementation of the PARE may result inreclassification measures or training following employee


225

interviews at the ANPE (National Employment Office)

All companies must spend a minimum percentage of thepayroll on contributing to the training of its personnel(otherwise taxed to the equivalent), the amount: 1.5% of thepayroll, less for companies with less than 10 employees.

Obligation for the employer to pay the ASSEDIC acontribution (known as the Delalande) for any redundancy ofan employee of 50 years old or over (inciting the creation ofreclassification measures in the plan to save jobs) for olderworkers.

6.Regulations

Even though the law does not require it, numerousagreements reached within the framework of the plan to savejobs have come in to back up the legal set-up (institution of areclassification unit, mobility, etc.)

7.Nationalprocedures whencollectivedismissals

See question n°4 &5

CompanyPolicy8.Formulation whencollectivedismissal

See question n°4 & 5

9. Overallformulation

If it is provided by Collective agreements VAE has to betaken into account by employers.

10.Justification11.Practice

In practice, the trend is to offer, in addition to the legalobligations (see above), transfer positions for workers thataccept geographical mobility. Specific reception units aresometimes set up to welcome these mobile workers.Reclassification units are sometimes set up with the help ofspecialist firms (often involving the intervention ofpsychologists, following the example of the reclassificationunits at Caddy-textile clothing).

Participation12. Rightswhencollectivedismissals13. Rightsin policy-making

The multiplication of methodological agreements is startingto have a certain impact on preventive measure practices(especially training and social audit), for dealing with mass


226

redundancies.14.Unions

Obligation for the enterprise to negotiate the aims and themeans of the training (see question 3 b).

15. Workscouncils

The work council and trade union have the possibility tocontest the “plan to save jobs” before the “Country Court”.The training plan (plan de formation) is drawn up withconsultation of the work’s council, which can ask for experts,can create a training committee, and can provide studies.Reclassification units are sometimes set up within theframework of agreements dealing with plans to save jobs.

16.Enforcement

If the plan to save jobs does not foresee reclassificationmeasures, it is up to the judge (appeal) to order the re-working of the procedure and to suspend the redundancies.

Individualrights17.Whencollectivedismissal

“Reclassification Leave” Rights (at least 1000 employees)Employees are not obliged to go in a “conversion deconversion” in case of economic dismissal.

Priority to re-employment in the event of mass redundancy,with a period of one yearSee also 3c

Art.L.321-14LL

18.Specificgroups

There are specific measures for certain categories of workerssuch as older employees (see question 5). Plans to save jobscan thus contain specific measures for certain groups, despitethe principle of equal rights for employees placed in anidentical situation.

19.ChallengeProspects20.Strategieswhencollectivedismissal

The plan to save jobs, in the event of mass redundancy, mayeventually give rise to the signing of a collective agreement.Excluding this facility, the trend in practical terms is tonegotiate the mass redundancy scheme uphill of the event,“method” agreements that supplement the legal framework.This means implementing a process negotiated in advance,thus avoiding risks to employment (see practical examples).

ArticleL.321-6of thelabourlaws

21.Regulations22.Concepts23.InstitutionsRemarks


227

Employability

Germany

Questions Answers Ref.1. Definition None; Employability is an objective of labour market

policies' aims and measures; measures including qualificationof employees and thus enable employees to gain access andsafeguarding on the labour market.

2. Objectives Increase of the employment ratioReduction of youth unemployment (JUMP),Reduction of long term unemploymentEnhancement of women's employment ratio (up to 60%)Enhancement of the employment ratio of elder employees(up to 50%)Enhancement of access of foreign nationals and repatriatedGerman nationalsReduction of unemployment of disabled persons by 25%

Emphasis: Optimisation of the instruments of labour marketpolicy, continuation of strategies for lifelong learning as wellas by reforms regarding the tax transfer system.Emphasis of labour market policy: arranging qualificationand alleviating qualification shortfallsReform of the Federal Labour Office in order to moderniselabour administration and job placement in particularReform of income tax and taxation of business enterprises inorder to enhance the framework of job creationIncentives for recipients of welfare and unemployment reliefto enter occupations subject to social insurance: nation-wideimplementation of the "Mainz Model"Assistance to enable persons to establish a businessPromotion of lifelong learning on all levels of the educationsystem, particularly vocational training and adult education:increase of the budget for education and research. Funds foradvanced vocational training (Federal Labour Office)€ 6.5billion

NAP 2002


Promotion by the Federal Government and the FederalLabour Office: In 2001, participants of measures ofvocational training and adult education amounted to 770 000on yearly average (including youth immediate programJUMP). Federal Government and Federal Labour Office

NAP 2002


228

spent€ 21, 21,9 billion in 2001 (which was an increase of€

0.2 billion compared to 2000). Additionally, there are labourmarket policy measures of the regional governments, whichpromoted 656 000 persons on yearly average spending anamount of€ 1.84 billion.Consequently, about 2 million persons participated inmeasures of active labour market policy.Advanced vocational training in order to safeguardemployability as component of lifelong learning. Businessinvests about€ 18 million each year in advanced vocationaltraining. The Federal Labour Office provides fundsamounting to€ 6.5 billion. In addition, about€ 5 billion areprovided by individual funding. In 2001, about 450 000persons entered a sponsored advanced vocational training,48.5% thereof female. About 20% of these measuresconcerned retraining for new vocations. Exams in advancedvocational training were taken by about 131 200 persons in2000.Furthermore, there is a federal program regarding"Vocational Qualification of Target Groups with ParticularNeeds for Assistance" (up to 2005 about€ 55 million). In all16 regions (Bundesländer), regionally specific supplementarymeasures are implemented.According to a survey questioning entrepreneurs, on-jobtraining is absolutely the most frequently (45%) occurringtype of advanced vocational training on the enterprise level.Combined with self-controlled learning (11%) far more thanhalf of all measures of advanced vocational training takesplace individually. 30% of advanced vocational training inenterprises takes place in internal or external lectures.Information meetings occupy a proportion of 11%; retrainingmeasures and other measures of advanced education accountfor 3%.

b) Amelioratingdevelopmentc) Internal mobilityd) External mobility The Employment Promotion Act provides various forms of

assistance for unemployed persons and job seekers facingunemployment to promote regional mobility financially (e.g.travel expenses for interviews, mobility assistance in cases ofentering an occupation). In 2001, travel expenses weregranted in about 356 300 cases and mobility assistance grantsin about 136 500 cases.

NAP 2002

4. Obligations incases of massdismissals

No obligation. Utilisation of Social Security Code (SGB III)is feasible in order to fund qualification measures and jobplacement in cases of re-structuring and mass dismissals

Social SecurityCode (SGB III)§§ 175 and 254


No obligation. According to § 92a Employees'Representation Act (BetrVG) the works' council can suggestmeasures concerning safeguarding and promotion ofemployees, which have to be considered by the employer.

Employment office's measures to promote vocational trainingPromotion of advanced education by the employment office

Employees'RepresentationAct (BetrVG) §92a Par. 1 andPar. 2


229

via funding training expenses and costs of living.

Wage subsidies for employees facing unemployment who areparticipating prophylactically in training measures,qualifying tests or measures of advanced vocational trainingwhile still occupying their jobs.

Wage subsidies for untrained employees in order to gainformal vocational qualification during employment.

Job rotation: Employers permitting an employee toparticipate in measures of advanced vocational training andemploying an unemployed person instead are entitled to awage subsidy.

SGB III §§ 77-96

SGB III §§235c, 417 Par. 2

SGB III §§235c, 417 Par. 2

SGB III §§ 217– 233

6. Laws, collectiveagreements,guidelines

Employees' Representation Act §§ 92, 92a, §§ 96- 98Collective agreements concerning qualification and advancededucation, e.g. textile and clothing industry, metal andelectrical industry

BetrVG §§ 92,92a, §§ 96- 98

7. Nation-wideprocedures in casesof mass dismissals

Employers are obliged to notify the employment office indue time if changes in the enterprise are forthcoming whichare expected to bear consequences regarding employment.These include forthcoming curtailment and relocation ofbusiness operations in particular as well as furtherconsequences and strategies in order to avoid dismissals or toorganise transition to other jobs.

SGB III § 2 Par.3

Enterprise policy8. Enterprise'sobligation tointroduce strategiesto enhanceemployability9. Obligation tointroduce preventivestrategies

Employers have to consider responsibly consequences oftheir decisions for employment of employees andunemployed persons and therefore the utilisation of benefitsof employment promotion. Particular responsibility concernsthe development of vocational achievement potential to assistemployees' adjustment to changing requirements. Principally,measures on the enterprise level should help to avoidutilisation of benefits of employment promotion anddismissals of employees.

SGB III § 2 Par.2

10. Substantiation ofpolicy11. Best practicespolicy andinstrumentsParticipation ofemployees12. Participation According to § 92a Employees' Representation Act the

works' council can suggest measures concerningsafeguarding and promotion of employees, which have to beconsidered by the employer; a rejection has to besubstantiated.

BetrVG § 92aPar. 1 and Par. 2


230

If the employer is planning or implementing measurescausing change in the employees' occupation and resultingshortfalls in vocational knowledge and abilities whichgenerate failure to fulfil their new duties, the works' councilis entitled to co-determination regarding measures ofvocational training. If an agreement cannot be achieved, theboard of conciliation decides. The conciliation board'sdecision substitutes the agreement of employer and works'council.

BetrVG § 97Par. 2

13. Rights ofparticipation ofemployees'representatives

See aboveFurthermore, according to Employees' Representation Act §96 (promotion of vocational training) employer and works'council are obliged to promote employees' vocationaltraining in the context of internal personnel planning and inco-operation with the institutions concerned with vocationaltraining and the promotion thereof. On request of the works'council, the employer has to investigate the demand forvocational training and to consult the works' councilregarding subjects of vocational training of the company'semployees. The works' council can place suggestions.

The employer has to consult the works' council regarding theestablishment and equipment of training facilities, theimplementation of internal training measures andparticipation in external qualification measures.

The works' council is entitled to co-determinationconcerning the implementation of internal trainingmeasures.

BetrVG § 96Par. 1

BetrVG § 97Par. 1

BetrVG § 98

Rights of unions The Alliance for Labour, Training and Competitivenessagreed upon the parties to a collective agreement negotiatinga framework for advanced education guaranteeing lifelonglearning.Long-term work hours accounts should be utilised foradvanced education.Particular collective agreements include employees'entitlements to advanced education.The collective agreement of the metal industry in Baden-Württemberg negotiated in 2001 includes the implementationof a dialogue on qualification once a year.

NAP 2002

Collectiveagreement of themetal industryin Baden-Württemberg

15. Rights ofparticipation ofemployees'representatives onthe enterprise level(laws, collectiveagreements,guidelines)

The employer has to inform the works' councilcomprehensively and in due time presenting all informationin writing regarding personnel planning, particularly as far ascurrent and upcoming personnel requirements are concerned,likewise resulting measures regarding personnel andvocational training.

The works' council can place suggestions on safeguardingand promotion of employment. This also includes employees'qualification measures. These suggestions have to benegotiated with the works' council; a rejection has to besubstantiated.

BetrVG § 92Par. 1

BetrVG § 92 a

BetrVG § 96


231

On request of the works' council the demand for vocationaltraining has to be surveyed.

The reformed Employees' Representation Act includes newrights of co-determination in cases of change in theemployees' occupation and resulting shortfalls in vocationalknowledge and abilities, which generate failure to fulfil theirnew duties. This enables the works' council to enforceinternal training measures early and preventively for thebenefit of the employees in order to safeguard their jobs.

Works' Council's rights of consultation on subjects ofvocational training

Par. 1

BetrVG § 97Par. 2

BetrVG § 97Par. 1

16.Sanctions/Rightsof action ofemployees'representatives

Not directly. According to § 97 Par. 2 (Co-determination onsubjects of vocational training in cases of changes in theemployee's occupation), if an agreement cannot be achieved,the board of conciliation can be appealed to and finallydecides.In addition, if an agreement between employer and works'council regarding the participation of particular employees inqualification measures fails to take place, the board ofconciliation can be appealed to and finally decides.

BetrVG §97 Par. 2

BetrVG §98 Par. 4

Individual Rights17. Individualemployability rightsof employees18. Obligations andrights concerningparticular groups ofemployees

Not directly. According to § 96 (promotion of vocationaltraining), concerns of elder employees, part-time workers andemployees responsible for families have to be considered.As far as employment policy is concerned, particular targetgroups should be promoted. There are special aid schemesfor young as well as elder employees, women, and foreignnationals. (See question 2)

BetrVG § 96Par. 2

NAP 2002

19. Rights of actionStrategy andprotagonists20. Concepts,strategies

Hartz Commission: New concepts of labour market policyPolicy of employment promotion should be redesigned toactivating labour market policy. This concept focuses on theunemployed individual integration performance, which ispromoted and safeguarded by offers of service and promotionmeasures. The services supplied - including taking uptemporary employment, participation in qualificationmeasures and finally entering an occupation - should enableunemployed persons to act on their own behalf to accomplishintegration. On the other hand, an integrated systemconsisting of counselling, support and financial safeguardingshould provide assistance to utilise these options.Activating measures concerning the promotion of integrationshould match requirements of job seekers and enterprises in

Report of theHartzCommission


232

the respective region. This is based on concentration onparticular target groups whose employability is impaired,enforcement of responsibility, measures to assist andinfluence individual behaviour, individualisation of theapplication of instruments and these instruments' explicitlytargeting the first labour market.Strategic objectives of this new labour market policy includeplacing priority on employees (re-) entering occupationsquickly and in a sustainable way. Therefore, the emphasis ofthese activities is on job placement and integration. Policiesshould be designed in a prevention-oriented manner.Primary tasks of the new labour market policy:Job placement, measures to promote job placement andensuring a means of livelihood in cases of unemployment.More and more, services of private suppliers (employmentagents, temporary employment/time work) should be used.New structure and new design of the employment offices: jobcentre. These have to incorporate services of counselling andassistance relevant to the labour market (social welfareoffice, youth welfare office, accommodation office,counselling institutions dealing with addiction and debt,interface PSA (loan employment organised by theemployment office) etc.)Procedures in the job centre should target quick estimation ofthe requirements concerning counselling and support andearly implementation of necessary measures, also involvingthe Personnel Service Agency.Further points of focus of the new labour market policy:Increase of the pace of job placement, newly definedacceptability and voluntaries, enforced measures for thebenefit of unemployed youths, promotion of elder employees(bridge system), combination of unemployment relief andpublic welfare, grants for companies displaying a positivedevelopment of employment, establishment of PersonnelService Agencies (PSA - loan employment), advancededucation close to the enterprise, integration of hard-to-placeunemployed persons, "myself companies", etc.)

21. Rules sufficient22. AlternativeConcepts23. OtherinstitutionsFurther remarks


233

Employability

Greece

Questions Answers Ref.1. Definition - Neither definition nor common use found; level or

ability to adapt "knowledge and skills" so as "access tothe labour market" or "job prospects" more used.- In the NAP 2002, following actions are intended toimprove the "employability" of the workforce:

.the "individual action plans" for the unemployedcovering training, work experience and employment afterhaving uncovered personal characteristics, abilities,knowledge, needs and aspirations

.the "employability programmes" of the PublicEmployment services: "new jobs" and "youngentrepreneurs"

.the training programmes in order to reduce illiteracyand improve knowledge and skills so as the institution ofvocational training

NAP 2002

2. Goals - In the NAP 2002, the improvement of "employability"is mainly aimed at reducing the unemployment level(447 700 persons, 10,5% in 2001) by enhancing theaccess to the labour market.- Remark: unemployed have a relatively higheducational level in Greece: in 2000 unemployment 9.4%with low educational level (12.1% EU), 15% withintermediate level (7.9% EU), 7.9% with high level(4.9% EU)

NAP 2002Commission'sCommunication onskills and mobilityCOM(2002)72

Tools3. a Training

- Only 1.1% of adults participated to trainings in 2000,the lowest level over EU (EU average 8.0%), accordingto Eurostat.- In 2001, 189 000 individuals participated in varioustypes of vocational training, according to the GreekMinistry of Labour:

.59 000 public sector officers

.130 000 private sector employees, mainly throughPublic Employment Services (OAED and KPAs) and theEmployment and Vocational Training Foundprogrammes (LAEK)- Beneficiaries of "employability" measures of NAP2001 relating to training (target groups: young and long-

Commission'sCommunicationCOM(2002)72

NAP 2002

Eurostat


234

term unemployed people) :.21 000 in "training measures".31 000 in "education actions"- Remark: population aged 15-64: 6 878 000 ;employment: 3 920 000

3.b Development - Work organisation: "use of innovative productionmethods… is encountered in only very few dynamicbusinesses, while… the introduction of team work, thecontinuous improvement and enhancement of workerskills, the autonomy or active involvement of theworkforce remain taboo subjects or beyond the scope ofmost businesses and large organisations"- For the unemployed, individualized approach at theEmployment agency since 2001 through the "individualaction plans" covering training, work experience andemployment after having uncovered personalcharacteristics, abilities, knowledge, needs andaspirations

NAP 2002


- See 3.b on work organisation- Remark: small enterprises are in a very importantposition in Greece; the rate of self-employment is 32% in2001, the rate of employment in SMEs with less than 50employees is 89% (63% with less than 10 employees)

NAP 2002


- Very low external mobility: 84.3% in same positionsince more than 2 years in 2000 (the highest level in EU,average: 73.5%)- Employers tend to avoid becoming involved in thelegal procedure for collective redundancies, particularlybecause of the administrative intervention and usuallyresort to practices of voluntary redundancy, earlyretirement, lay-offs, phasing dismissals, use of non-permanent work…- 122 000 Beneficiaries of "employment promotionactions" of NAP 2001 for unemployed people


Research by EIE in1999

NAP 2002

4. Obligationwhen collectivedismissal

- Case law based on the abuse of right: a redundancy isimproper if the employer has not sought other solutions,so as to maintain employment by proposing transfers orchanges in the contracts.- Prior concertation needed between the employer andworkers’ representatives in respect of potential ways ofpreventing or reducing both the number of redundanciesplanned and their effects.- In practice, evaluation by the administrative authorities

Civil Code art.281E.Kroustalakis May1998Law 1387/1983Article 3


- Employer's contribution ( 0.71% of basic pay) to LAEKFund for Employment and Vocational Training, intendedfor the financing of vocational training and re-training aswell as health and safety activities and programmes forunemployed- Paid training leave for training in union affairs- Paid training leave granted for public servants,employees in public-law legal persons and employees oflocal authorities- Case law based on the abuse of right: employer has to

Law 2234/1996 afterseveral generalcollective agreements

Civil Code art.281I.Karakatsanis


235

share the tasks in a fair and impartial way, considering inparticular the legitimate interest of an employee to hold aposition favouring the evolution of his career

6. Regulations - Main tools based on law and action of institutional,mainly tripartite, bodies- Financing of vocational training established firstlythrough national collective agreement in 1991, beforeadoption of legal provisions

Nat. Gen. Col. Ag.1991/1992

7. Nationalprocedures whencollectivedismissals

- Workers dismissed through the industrial restructuringagency (OAE) which is a public-sector bodyadministering enterprises undergoing serious financialdifficulties, have the choice between normalunemployment benefit, special aid to create their owncompany (lump sum of 12 months' benefit) orparticipation to special re-training schemes- The “Integrated Programme of Intervention” consists ofa list of measures aimed at the re-integration of dismissedworkers through active support for a period of 37months. It includes training allowances, subsidised jobsand start-up grants for the creation of own business. Thenew programme attempts to create the right conditionsfor the re-integration of the unemployed into active life.It is expected to play an important role in supporting thecurrent privatisation process.

Law 1386/1983

Company Policy8. Formulationwhen collectivedismissal

- No specific obligation to formulate a policy tomaximize the employability of employees in case ofcollective redundancy- Case law based on the abuse of right: a redundancy isimproper if the employer has not been fair in selectingthe particular employees to be dismissed. The basiccriterion for this selection is efficiency. When equalefficiency, the employer must choose those who will bethe least badly affected by it (among others: likelyopportunities of finding employment with anotheremployer)


Civil Code art.281Review by Y.KRAVARITOU

9. Overallformulation

Conditions and proceedings regarding promotions are tobe set down in the enterprise work rules, on which WCshave rights of proposal and co-decision, or for lack ofworks rules, by mutual agreement between the employeeand the employer.

Decree-Law1389/1957Law 1767/1988,Article12

10.Justification

Case law based on abuse of rights: see 5. and 8.Principle of equal treatment has to be observed in thecompany policy

Constitution,art.22 &1

11. Practice Collective agreements in the banking sector: see 14.Participation12. Rights whencollectivedismissals

Collective redundancies require prior concertationbetween the employer and workers’ representativesin respect of potential ways of preventing orreducing both the number of redundancies plannedand their effects. Workers’ representatives aretaken to mean the delegates of the enterprise-levelunion representing most personnel (its membersmust account for at least 70% of employees) and


Law 1767/1988Article14


236

representing most of the employees affected by thecollective redundancy. Failing this, the workscouncil of the enterprise represents employeesduring this concertation: there is a subordinateposition of the WC with respect to the enterprise-level union

13. Rights inpolicy-making

WCs decide, with the employer, on the following matters(provided that these matters are not governed by a law orcollective labour agreement; they decide, moreover, onthese matters when there is no enterprise-level union inthe enterprise) the agreement of the parties being setdown in writing and having a normative value:

-planning of vocational training, continuingtraining and personnel redeployment, in particularfollowing technological change,-formulation of induction programmes in respect ofnew methods of enterprise organisation and the useof new technologies

Law 1767/1988,Article12

14. Unions - The following issues may be regulated by collectivelabour agreements:

.issues regarding the conducting of enterprise policy,insofar that it directly influences labour relations

.planning of vocational training, continuing trainingand personnel redeployment, in particular followingtechnological change, and formulation of inductionprogrammes in respect of new methods of enterpriseorganisation and the use of new technologies, withoutprejudice to the competencies of company boards- In practice, collective bargaining mainly restricted towage issues. unless in banking (working time, regulationof voluntary redundancies, incentives offered for earlyretirement) and telecommunications (working time,reform of the organisation of personnel) linked toprivatisation processes- Union participation through centralised institutionalschemes and tripartite bodies but little participation ofworker's and employers' organisations in effectivedecision-making and implementation of measures

Law 1976/1990,Article2Law 1767/1988,Article12

15. Workscouncils

See 12. and 13.

16. Enforcement - Failure to observe the above formalities in the processof a collective redundancy makes it null and void with itsconsequences: payment of full salary and reintegration(often followed by a second dismissal). In practice, thesystem of administrative authorisation prevails.- As regards offences under labour and social securitylaw, the trade unions may refer and bring grievances tothe administrative and judicial authorities

Civil Code Article180Law 1264/1982Article 23.2Law 1264/1982Article 4

Individual rights17.Whencollectivedismissal

- Written notification containing proposal for severancepay- Case law regarding selection criteria: see 8.- White-collar workers who have been given notice of thetermination of their contract of employment are entitled

Law3198/1955 Article2.1

Civil Code, article677


237

to ask their employer for the necessary time off work tofind a new job.

18. Specificgroups

Protection of specific categories of workers fromdismissal: women (pregnant and with children under 1year), employees returning from military service during 1year after military service, people with special needs(handicapped and disabled), TU members and employeereps.Case law based on the abuse of right: a redundancy isimproper if the employer has failed to consider socialaspects, so as dependants or age, when selecting theworkers to be made redundant; the consequences on thepersons affected are to be made the mildest possibleSpecial provisions on seasonal work, part-time work

Law1493/1984Art.15, Law 547/1937Art.11, Law1648/1986 Art.11,Law 1264/1982Article 14 & 9

19. Challenge The employees may challenge the redundancy within 3months of termination of contract for abuse of right.Possible mediation of the local office of the Ministry ofLabour

Law3198/1955 Article6

Prospects20. Strategieswhen collectivedismissal

Issue of collective dismissal mainly linked toprivatisation processes (the only "big" companies) forwhich major deals include maintain of employment,reduction/flexibility of working time, early retirement,incentives for voluntary redundancies; no specificstrategies regarding employability nor "normal" companyrestructuring

21.Regulations

Social partners have initiated regulation through NationalGeneral Collective Agreement in 1991. Now, lawregulates financial contribution to vocational training.But general regulation and coherence between strategiesand institutions of vocational training, employmentpromotion, companies … is still lacking and collectivebargaining containing references to vocational trainingits restricted to financing.

Nat. Gen. Col.Ag. 1991/1992

In EIRO 1998

22.Concepts

Creation of tripartite body in 2002: National Council forLinking of Vocational Training and Education withEmployment where strategies being discussed betweensocial partners and State

NAP 2002

23.Institutions

Promotion of the institution of technical and vocationaltraining began in 1980, in the form of programmesfunded mainly by the EU including further training of theemployed workforce, notably in specific organizations orenterprises, and programmes targeted towards theunemployed. Training is still to develop, despite theexistence of numerous organizations and institutions,mainly tripartite, dealing with that issue. The mostimportant of them are:-the Manpower Employment Organisation OAED.Reform of OAED is underway, with training to be underresponsibility of a subsidiary and policy regardingtraining being discussed-the Account for Employment and Vocational TrainingLAEK. Measures to activate projects by the LAEKforeseen.

Law 2956/2001

Nat. Gen. Col.Ag. 2002/2003In EIRR10/1998 &11/2001


238

-the accredited vocational training centres (in 1998; 56%private, 22% local government, 7% institutes of highereducation, 5% social partners, 3% welfare institutes) andthe National Accreditation Centre

-the Hellenic Organisation of Small and Medium-Sized Industries and Handicrafts EOMMEX;-the Hellenic Productivity Centre ELKEPASupplementing the above bodies are a significantnumber of other training and research institutes,resource centres, observatories, councils...

Remarks State regulation remains very importantEmployability policy to build upContext of SMEs and educated unemployed (See 2. and3.c)


239

Employability

Holland

Questions Answers Ref.1. Definition Most common definition is: broad and lifetime

availability for different and changing jobs.2. Objectives Main goals of employability: availability for different

and changing jobs, possibilities of job-changes, andstronger individual position at the labour market.Objectives of the government in order to improve labourparticipation and/or labour productivity for 2002 are:- Improvement in general labour participation: olderpersons (55-64), women (increase participation to 65% in2010), ethnic minorities (reduce the difference inunemployment between native Dutch people and ethnicminorities), unemployed with a certain distance to thelabour market- Improvement in performance of the (potential) labourforce: increase the percentage of population 25-64 thatparticipates in any kind of (adult) education, whether it isrelated to their occupation or otherwise, in order toapproximate the performance of the top two Memberstates; reduce the poverty trap considering that in nocircumstance should income decline due to accepting ajob

NAP 2002


The most frequent employability-tools are: schooling andtraining, task expansion/job enlargement and task/jobenrichment.There is a growing interest for Personal DevelopmentPlans (POP's).There is far more activity in the government sector thanin the market sector, in large companies than in smallerones.The principal target group is younger people.Attention is not heavily directed at enhancing theposition of weaker groups in the labour marketExpected: governance rules on fiscal advantages forPersonal Development Plans (POP's)16% of people aged between 25 and 64 took part in someform of education or training in the Netherlands in 2000,twice the average EU level and five or six percentage

NAP 2002


240

points behind the top two performers (the UnitedKingdom and Sweden). In 1997 the Netherlands wasabout 10 percentage points behind the top towperformers (Sweden and Denmark). In other words, it isdrawing level, but has not yet caught up with the top twoperformers. In order to close the gap, in 2001 thegovernment reserved a substantial structural budget forthe development of vocational education and set asidefunds for training people already in work.The government has made an extra€ 91 million availablefor investments in initial vocational training in 2001 and€ 136 million in 2002. A major proportion of the newfunding will be used to improve continuity between pre-vocational secondary education (VMBO), secondaryvocational education (MBO) and higher professionaleducation (HBO).Alongside the investment in initial vocational education,extra money will be made available in 2002 to fund thetraining of people already in work. Less educated peopleare frequently the first to lose their jobs when technologychanges and find it difficult to get back to 3workafterwards. The training of less educated workers as wellas jobseekers is therefore extremely important to ensurelasting participation in the labour market.

NAP 2002


Task expansion/job enlargement are part of the mostfrequently used employability tools

c) Internal mobility Several companies have their own internal mobilitycentre or have an agreement with an external mobilitycentre.

d) External mobility See c) above4. Obligations in cases ofmass dismissals

-Prior dialogue needed between the employer, the tradeunions and the works council regarding major changes.-In cases of collective redundancies most companieshave the obligation (based on Collective LabourAgreements or Social Plans) to solve the problem ofemployee-surplus by schooling/retraining, internalreplacement or outplacement.-The social plan contains various measures to assistaffected employees such as internal reinstatement andproposals for external job applications

WOR art.25

5. Obligations to introducepreventive measures

Depending on collective agreements (See 6.)


The Netherlands has a history of institutionalisinglifelong learning within collective bargaining, especiallyat a sectoral level. The number of agreements on traininghas increased in recent years and the principle issues arethe right of training and an obligation to undergotraining.According to research conducted by the LabourInspectorate and published in 2000, some 20 collectiveagreements, covering 21% of employees covered bycollective bargaining, include a right to training, with thesame number (covering 26% of employees covered by

EuropeanFoundationforImprovement of LivingandWorkingConditions,2002


241

collective bargaining) including an obligation to undergotraining. Provisions relating to personal developmentplans had been included in 42 agreements, coveringalmost a third of employees covered by collectivebargaining. Yet, collective agreements provide for issuessuch as specific arrangements for training and trainingleave, education plans, provisions on general or position-specific training, apprenticeship and paid leave. TheDutch Trade Union Federation (Federatie NederladseVakbeweging, FNV) considers that agreements ontraining remain inadequate.

7. Nation-wide proceduresin cases of massdismissals

Administrative control on collective redundanciesremains

Enterprise policy8. Enterprise's obligationto introduce strategies toenhance employability

Obligation depending on applicable collective agreement(See 6.)

9. Obligation to introducepreventive strategies

-Obligation to draw up a training plan and to reach anagreement with the works council regarding training,recruitment, promotion and assessment rules-Though most organisations take measures to improvethe employability of their personnel, only one-third has aformulated policy in this area

WOR art.27

10. Substantiation ofpolicy11. Best practices

policy andinstruments

-Project "In good courses" (Health care sector):schooling, mobility and career-policy.-Philips Lighting (experiment): schooling/training andjob-guarantee for employees with a weak position at thelabour market.-Career planning for employees in Rijnmond/Rotterdamfocused on lower-grade employees (training, individualcounselling, supervision, ...)

Participation of employees12. Participation -The Works Council has the right to give an advice on

the reorganisation inclusive the personal consequences.-The employer must consult with the trade union and theworks council about the content of social plan, whichshould be agreed before it is presented to the employees(See 4.)

WORart.25.1

13. Rights of participationof employees'representatives

-The Works Council has the right to take initiatives onemployability measures and participate pro-active inpolicy-making on employability.-The Works Council has the right to vetoschooling/training programs or development plans.

WOR art.23

WOR art.27.1

14. Rights of unions -In processes of collective redundancies the trade unionshave the right to negotiate on employability measures.-Collective agreements at branch level includeemployability provisions

WMCO

15. Rights of participationof employees'representatives on the

See 12. & 13.-Obligation to draw up a training plan and to reach anagreement with the works council regarding training,

WORart.27.1


242

enterprise level (laws,collective agreements,guidelines)

recruitment, promotion and assessment rules-Some provisions are included in branch collectiveagreements


-In case of collective redundancies, the Labouradministration will not issue the necessary permission ifthe legal procedures are not followed-If the employer fails to comply with his obligation toinform and consult in case of important changes, theworks council may lodge an appeal against the decisionof the management at the Amsterdam Court of Appeal

WOR art.26

Individual Rights17. Individualemployability rights ofemployees18. Obligations and rightsconcerning particulargroups of employees19. Rights of actionStrategy and protagonists20. Concepts, strategies The government and social partners meet in spring and

autumn for to talk about the socio-economic situation anttheir respective roles and responsibilities.Against the background of the Lisbon objectives, thegovernment and social partners have stated that the levelof education and training of the entire working-agepopulation needs to be raised. Alongside governmentinvestment in vocational education, the social partnerswill continue to invest in training and vocationaleducation. They favour the use of personal developmentplans with an individual budget, which was one of therecommendations presented by the Labour Foundation(STAR) in its 2000 report. The government and socialpartners are considering ways of setting up personaldevelopment accounts, that is, individual accounts orbudgets to be used exclusively for training purposes.

NAP 2002

21. Rules sufficient22. Alternative Concepts23.

Other institutionsFurther remarks


243

Employability

Italy

Questions Answers Ref.1. Definition « Occupabilità » in Italian language. There is no legal

definition. The term is often linked to the need foremployment security of atypical workers

2. Goals -To develop employability policies and conjugate them witha policy of flexibility and worker security. To update thispolicy for the employability of workers that benefit from ‘alreditto’ forms of integration-To develop measures for youth, women and senior citizens-To encourage the insertion of immigrants, theunderprivileged and mobile workers-To invest in training and increase investment in companyformation.-To fight ‘working on the black’ (emersione del lavoroirregolar)-To carry out differentiated strategies due to nationalunbalances. (North/South)

To increasefemaleemployability,Legislatorydecree196/2000

Tools3. a. Training

-Continuous training, like adult education, holds a privilegedplace in the training and apprenticeship schemes throughoutlife. It also concerns “atypical” workers.-National Institution of Interprofessional funds forcontinuous training, Introduction of tax measures thatstimulate training as a company initiative-Importance of Territorial continual education centres(CTEP)

-Certification of professional skills and creditti

Law 196/97and Law53/200(training leave)

3.bDevelopment

-Creation of a constant education framework

-Progressive transfer to the regions (and therefore tothe provinces) of skills in terms of employment policy.Development of the role of the social partners in thissector. Among the government initiatives envisagedwith the regions: Right-obligation to education andtraining for at least 12 years. For those over 15: work

Legislatorydecree469/97NAP2002


244

experience, alternating work/school etc..

-To increase the training offers, especially incontinuous training, especially for women.

-Improving the operation of funds for ContinuousTraining and the National Inter-professional Funds forContinuous Training.

-Improving the recognition of qualifications, skillsacquired within the framework of education, trainingand experience.

-Development of e-learning

-Modifications of a tax nature, to encourage training

NAP2002

Modif.ofArticle16 ofthe law196/97andart.118of theFinanceLaw2001

3.c Internal mobility -Development of part-time working to encourage theemployment of women-Increasing the adaptability of workers, improving labourorganisation.


Use of specialist out placement companies or agencies toprovide workers with support in retraining and job search


No obligation to reclassification exists under the law(possibility exists); this domain being left to collectivenegotiation.

5. Overall obligation 0.30% contribution to Funds (5 Funds) for Continuoustraining, paid by the employer

6. Regulations7. National procedureswhen collectivedismissals

See Chapter on collective redundancies

Company Policy8. Formulation whencollective dismissal

The Law does foresee the possibility of reclassification in theevent of collective redundancy, even with less favourableworking or salary conditions.

Bilaterally negotiated « area contracts »have been agreedbetween national employer’s organisations and labourconfederations in areas which are in crisis as a result of thefailure of formerly state-owned firms. Bilateral bodies areestablished and funding for their activities-includingminimising redundancies and promoting retraining and re-entry into the labour market-comes from employer’sorganisations based on a proportion of payroll costs.25

Article 2103 ofthe civil law

25 IRS 2002


245

9. Overall formulation10. Justification11. Practice See Question n°14

Participation12. Rights whencollective dismissals

See question 14

13. Rights in policy-making

See question n°14

14. Unions Various collective agreements include permanent bilateralarrangements between employer’s organisations and tradeunions bodies that work together to promote new businessinitiatives in areas hit by significant job loss. They work withthe companies to help them to avoid or minimiseredundancies and to promote access to retraining and re-entryto the labour market for their employees. These joint bodiestypically work with public bodies to provide support forredundant workers in the form of access to funding andassistance with documentation.26

In addition the Italian banking sector has specific structuresin place to monitor the economy for early warning of anypotential economic difficulties. These meet at least twice ayear and comprise equal numbers of trade union andemployers representatives.27

Trade Unions must also be consulted over social cushioningmeasures aimed at enhancing redundant worker’ retrainingopportunities and level of qualifications. Workers’representatives can ask for external expertise in this process.

Also relevant are the “negotiated planning” initiativesinvolving territorial pacts and area contracts. (see territorialresponsibility)

15. Works councils Employees’ representatives: right of Informationconsultation and participation in joint review of the need forjob cuts and of means of mitigating these cuts. The reviewmay cover strategies such as redeployment, job securityagreements and flexible working hours.

16. Enforcement See Chapter on collective redundanciesIndividual rights17.When collectivedismissal18. Specific groups19.Challenge The “solidarity contracts” involve short-term reduction in

working hours to help employers overcome temporaryeconomic difficulties. Employees’ wages are reduced in linewith the reduction in working hours, and so they bear some of

26 IRS research 200227 Idem


246

the financial burden of this job protection measure, althoughsome of the lost pay is made up by the state.28

Prospects20. Strategieswhen collectivedismissal

21.Regulations22.Concepts23.Institutions The wage Guarantee Funds in Italy under which employees

subject to restructuring can have their salary covered by thestate for a period designed to provide a “breathing space” forthe employer and so delay or prevent the need for formalredundancies.

Remarks

28 Idem


247

Employability

Luxemburg

Questions Answers Ref.1. Definition No legal definition; life long education and training are

at the core of the of the concept of employabilityNAP 2001

2. Objectives Luxembourg is strengthening active policies in order toprevent youth and long-term unemployment. So farpriority has been given to the youth problem. Measuresto improve employment for people with disabilities areintroduced and a review of the legislation of disabilitypensions has recently started. On lifelong learning.Luxembourg still has to define its objectives andtargets


Training on the job, retraining, application training,target group oriented measures (external), qualificationand education measures in the framework of so-calledemployment initiatives.

Eiro


Personnel development plans, regular meetingsconcerning personnel issues, mentoring and coaching.

c) Internal mobility Like (adequate) occupations, competence management(promotion of employees), information on vacancies.

d) External mobility Outplacement, information on external vacancies.4. Obligations in cases ofmass dismissals

None. The Social Plan has the objective to avoid or toreduce the number of collective redundancies by usingaccompanying measures (helps for redeployment orreconversion, immediate reintegration on the labourmarket) or financial compensation measures.

Before negotiations begin, the employer must give theemployees’ delegates every information that could beuseful for the social plan negotiation. This informationincludes at least a written communication about the

Law of 23July 1993


248

following items: the reason of the redundancy, thenumber of workers to lay off, the number of workersusually employed and the period when theredundancies will happen. The employer sends a copyof this information to the Employment Administration.

Fifteen days after negotiations have begun, the resultsare recorded in a convention or “social plan”, signed bythe partners. In case of disagreement, the parties referto the National Arbitration Committee that willelaborate a report after deliberation.

5. Obligations to introducepreventive measures

None. Even though the agreements on the employmentsecurity seem relatively rare, an agreement wasreached in the Hospital sector. This agreement protectsthe employees from redundancy and it allows them incase of merger or purchase to keep all their contractualrights during 10 years and formerly agreed duringcollective negotiations.Furthermore, if a service is closed and that all itsactivities are taken over by an external company, noemployee can be made redundant if the companytaking over has over 100 employees.


There is only the obligation to negotiate allpossibilities to prevent dismissals in cases of massdismissals connected with social redundancy plans.

7. Nation-wide proceduresin cases of mass dismissals

None.

Enterprise policy8. Enterprise's obligation tointroduce strategies toenhance employability

None. A vocational training law allows companies topursue life-long learning within their company, but theimplementation of this law lies with a public body(National Institute for the Development ContinuingVocational Training INFPC), which had had problemsand recently has been re-established.

On 24th February 1997, the government submitted apilot study of law on the organisation of continuingvocational training in the training houses. This pilotstudy has been drawn up, taking account of the opinionput forward by the Economic and Social Council(ESC).Following the observations of various training houses,the government reviewed the initial text and presenteda new pilot study on 17th July 1997.

Some of the main features are:

• all enterprises, except those from the public

Law of 1stDecember1992


249

sector and the professions, can avail of the newlaw;

• all the institutes offering training must have theapproval of the Minister for Welfare;

• In order to benefit from the state aids,businesses anxious to involve their employeesmust present a plan or a training project to aninterdepartmental group, which decides whetherthe project is acceptable or not (if the businessinvests funds more than 0.5% of its wage bill);

The businesses can choose state aid either as taxcredits or grants.


None.

10. Substantiation of policy None.11. Best practicespolicy and instruments

Some collective agreements provide trainingarrangements, for example (see also question 15):* Goodyear (3610 employees) This agreement providesfor management to present a « staff continuing trainingplan » to the Joint Committee every year. Attendanceat these courses counts as working time* Luxair SA (1370 employees) Employees may requestunpaid leave of up to one month per year for vocationaltraining or study that they organise privately.

Eiro

Participation of employees12. Participation See sub. 6. Anything is subject to negotiations, which

are obligatory in cases of forthcoming mass dismissals.However, there is no legal foundation, whichprescribes employability measures.

13. Rights of participation ofemployees' representatives

Rights of unions15. Rights of participation ofemployees' representativeson the enterprise level (laws,collective agreements,guidelines)

On 7 February 2001, the Luxembourg HospitalsAlliance (Entente des hôpitaux luxembourgeois, EHL)signed a new collective agreement for the hospitalsector with the Luxembourg Confederation ofIndependent Trade Unions (OnofhängegeGewerkschafts-Bond Lëtzebuerg, OGB-L) and theLuxembourg Confederation of Christian Trade Unions(Lëtzebuerger Chrëschtleche Gewerkschafts-Bond,LCGB). It runs for two years from 1 February 2000(backdated) to 31 January 2002.

The agreement also provides for special employeeprotection in the event of mergers, takeovers, takeovers

Eiro


250

of departments and "synergies" between two or moreEHL members (a factor rarely addressed in collectiveagreements in Luxembourg). In the event of such acontingency, collective or individual dismissals ofemployees in place at the time of the change, and notrelated to serious personal misconduct or behaviour,are not allowed for a period of 10 years from that date.All employees' rights in contracts and collectiveagreements are protected. In the event of the closure ofa department whose activities are to be taken over byan outside firm, no employees may be dismissed fromestablishments with a workforce of over 100.

With regard to vocational training, competence fordecision-making on the organisation of training at thelevel of each establishment will now lie with thecompany joint committee (comité mixte d'entreprise)or, if no such body exists, with the joint trainingcommittee (commission paritaire pour la formation). Itwas also decided to set up a foundation for continuingvocational training in the hospitals sector, bringingtogether EHL and the signatory trade unions. Thefoundation will be responsible for promoting andcoordinating employees' continuing training in EHLmember establishments.


Based on the law concerning mass dismissals.

Individual Rights17. Individual employabilityrights of employees

None.

18. Obligations and rightsconcerning particular groupsof employees

Incentive programmes of training for woman, youngpeople, In the case of older workers, incentives aregeared to a mix of work and retirement, eitherresumption of activity for persons unable to work orrevaluation of pension rights if working life isextended, two respective draft laws were voted on inJune 2002

19. Rights of action None.Strategy and protagonists20. Concepts, strategies Listing of concerned persons, Assessment of their

respective situation (as far as matters of family orenterprise are concerned), checking of existingcompetencies (bilans de compétences), co-operationwith labour offices, assignment of accompanyingmeasures which target improved emp among otherthings.

21. Rules sufficient They are all but non-existent and - moreover - are notof a compulsory nature.

22. Alternative Concepts23. Other institutions 1. The Comité de Coordination Tripartite


251

(institution of three parties which includegovernment, patronage and unions - an instrument todeal with crises created at the end of the seventies)

2. The Comité Permanent de l’Emploi(permanent committee of employment, which is alsocomposed of three parties)professional chambers have specific competencies inthe field of vocational training; they includeoverseeing their members’ vocational education andorganising « evening classes » designed to providethem with opportunities for continuing vocationaltraining.

Law of 4April 1924

Further remarks


252

Employability

Spain

Questions Answers Ref.1. Definition There is no legal definition.

As it is broad and comprehensive, we could select thedefinition of the ILO: capacity of a person to adapt to anemployment offer which depends on an adequate managementof the factors that have an incidence on it, as well as theconjunction of attitudes, interests, motivations, knowledge,training and abilities, which position this person favourablybefore the labour market.

Other definitions generated by private human resourcesconsultors give more emphasis to the capacity to learn and,therefore, to adaptability to changing environments,particularly technological environments.

InternationalLabourOrganization.“Learning andtraining to workin the knowledgesociety.”(2000)

2. Objectives Increase the actions aimed at the objectives of 2001 by 7%,that is, over a million unemployed persons will be able toparticipate in more than one insertion measure.

Experimenta programmes that explore new forms of labourinsertion, as well as different ways to establish objectives andmeasure results.Modernisation of the Public Service for Employment.ICT Plan: a training plan for technicians and professionals,aimed at the labour insertion of 14,000 professionals in threeyears.

NAP 2002


A lot of quantitative training measures, addressed to joblessand employers as well.

NAP 2002

b) Amelioratingdevelopmentc) Internal mobilityd) External mobility Experimental plan of geographical mobility in agriculture

aimed at coordinating employment of agricultural workers inthe different campaigns, making it easier for them to travelbetween regions. The plan is financed with funds from thePublic Service for Employment and is managed by the

NAP 2002


253

employers' association of the sector.

4. Obligations in cases ofmass dismissals

There is no obligation. Different tools to improveemployability can be subject of negotiation within theframework of the Social Plan.


No obligation


In the case of mass dismissals, the law establishes thepossibility of negotiating and agreeing on employability tools.

In 2001, 21% of employees had a Collective Agreement thatincluded a Training Plan.

Estatuto de losTrabajadoresNAP 2002

7. Nation-wideprocedures in cases ofmass dismissals

In the case of collective redundancies, there is a compulsoryperiod to negotiate with employee representatives duringwhich this type of measures can be agreed on.See response questionnaire regarding collective redundancies

Enterprise policy8. Enterprise's obligationto introduce strategies toenhance employability

No.Except for large companies and smaller ones with a highadded value where a training strategy does exist, both internaland for professional insertion and related to human resourcespolicies, usually the rest of the companies do not have astrategy and only devise training programmes aimed at theirshort-term needs.According to the 1999 Survey on continuing training, 27.5%of all companies carried out training activities for theiremployees, spending 1,700 million euros, out of which theAdministration reimbursed 8% (155 million euros).Not all employees took part in these activities: only 23%(1,653,000 engaged employees). Another 2.1 million took partin other training activities (conferences, quality circles, etc...)Participants dedicated an average of 42.6 hours to trainingactions, 62% of which were part of work hours.


No


No

11. Best practicespolicy and instruments

The Autonomous Community of the Basque Country haslegally regulated the operational integration of the threesubsystems of professional training: vocational, for theunemployed and continuing. There are experiences in TrainingCentres that have connections with industry, and theparticipation in management of business associations, whichguarantee the excellence of training and an appropriatetransition period between school and enterprise.(For instance, Instituto Máquina-Herramienta en Elgoibar,Guipuzcoa).


254

Participation ofemployees12. Participation Yes, in the negotioation process mentioned in answer 7.

13. Rights of participationof employees'representatives

In the III National Agreements on Continuing Training, signedby trade unions, employers' associations and the Government.Only in this case is the right to information and consultationabout the ellaboration of continuing training plans incompanies insured.

14. Rights of unions In the III National Agreements on Continuing Training, signedin 2000, and in their application and development rules.

15. Rights of participationof employees'representatives on theenterprise level (laws,collective agreements,guidelines)

They have the same rights as trade unions.

16.Sanctions/Rights of action ofemployees'representatives

No

Individual Rights

17. Individualemployability rights ofemployees

No

18. Obligations and rightsconcerning particulargroups of employees

No

19. Rights of action NoStrategy and protagonists20. Concepts, strategies21. Rules sufficient22. Alternative Concepts23. Other institutions The Tripartite Foundation for Training and Employment

(parity institution: trade unions-employers for ContinuingTraining, created in the III National Agreements) - See above.The National Qualifications Institute.The National Employment Institute.

Further remarks


255

Employability

Sweden

Questions Answers Ref.1. Definition Equipping the unemployed with those skills that enable

them to return to workNAP 2002

2. Goals -Development of active employment policy (takingaccount not only traing life long learning but taxation,adaptability, coordination of macro-economic policyetc..)

-Combat youth and long term unemployment-Promoting employment-Active ageing, lifelong learning-Counteracting discrimination-Improve tax and benefits systems

NAP 2002

Tools3. a Training

-Labour market programmes for unemployed who are inneed of education, retraining, work experience.-Life long learning is a central part of the employabilitystrategy

NAP 2002

3.b Development -Municipal youth programme where unemployed youthunder 20 are offered full time activities.-For young people 20-24 municipality and employmentoffice can agree on youth guarantee (guarantee of workand education or employment programme within the first100 days of unemployment)-The largest training programme is the Labour markettraining-The next largest is the job training which aims at givingthe unemployed the opportunity to develop their skillsand workplace.-Recrutement incentives are provided too -tax reductionsare part of that)-average employment rate of 67% in the ages 55-64during 2001. Face to the need to increase theemployment levels for older people the government hastaken measures: improving employability and quality ofwork, modernise work organisation, improve theworking environment, for example.

-Life long learning : the Government has presented

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a proposal for a system of individual skillsdevelopment in working life; developing e-learning. A new agency “National Center forFlexible Learning” is created.-Deveoping Regional and local action foremployment: regional growth agreements areconcluded between different players andimplemented.

3.c Internal mobility -The Riksdag has allocated SEK 300 million over a 3year periode for activities aimed at reducing part timeemployment. The funds will be primarily used to testnew work organisation and working methods to createmore full-time positions.-The collective agreements on skills development, whichthe social partners have made, are normally of a generalcharacter and allow considerable scope for localcollaboration in skills development issues.-Prioritised areas are:

• identifying and forseeing skills and qualificationsneeds

• recognising and validating competences andqualifications

• information , support and guidancepromote co-investment and favour new ways offinding resources.

NAP 2002


New agencies for entrepreneurship are created: BusinessDevelopment Agency (NUTEK), The Institute forGrowth Policies Studies (ITPS) and the Agency forInnovation Systems). A new system SimpLex reduce theadministrative burden of the regulation for SMEs.. TheGovernment is developing so called “24 hour agencies”

NAP 2002


No obligation of replacement (as in France) of theemployees

5. Overall obligation6. Regulations7. National procedureswhen collectivedismissals

The main procedure is provided through codetermination Act of Co-Determinationin the WorkPlace(Medbesfammanandelagen,MBL, SF1976:580)

Company Policy8. Formulation whencollective dismissal

There were no major developments in collectivebargaining on job security in 2001. However, theannouncement made by the Swedish-owned Ericssonelectronics group in the spring of 2001 of a massiveprogramme of redundancies in Sweden and elsewhere(see below under `Company restructuring´ ) focusedattention on a particularly innovative project agreed in

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1999 to find new jobs for 587 workers made redundant atthe Ericsson Telecom plant in Norrköping. The`Norrköping model´ , widely regarded as having beenvery successful, brought together the company, tradeunions, the Proffice temporary work agency and variouslocal government and labour market bodiesFour months later, on 25 May 1999, Ericsson Telecompresented officially the project for the redundantworkers. This involved several parties - above all thetrade unions (which were still positive to the idea), thetemporary work agency Proffice, the county labourmarket authority (Länsarbetsnämnden), the local jobcentre (Arbetsförmedlingen), the Norrköping municipalcouncil (Norrköpings kommun), the County Board(Länsstyrelsen) and Ericsson Telecom itself. The statedaim of the project was to make it easier for the redundantworkers to find new jobs or another occupation. Theproject that was accepted by all parties was named the"Norrköping model" (Norrköpingsmodellen). On 3 June,the negotiations ended and it was stated that the parties'common goal was that all workers affected by the end ofproduction at the Norrköping plant would have a new jobor another new source of income at the end of the projectperiod

9. Overall formulation As regard financing of skills development variousarrangements have been tested in different collectiveagreements depending of the industry’s need andperequisites. In some case the employer has met the costsalone. An example: Power Plant agreement from 2001;the parties agreed that a minimum of 0,5% ot totalwages/year was to be set aside by the employer for skillsdevelopment, development of work organisation, etc. Ifthe social partners cannot reach agreement locally on theuse of these resources, individual pay increase at anaverage of 0,3% and year.

NAP 2002

10. Justification11. Practice Like in Ericsson case employees can be transferred to an

outplacement firm called Proffice that provides eachworker with an analysis of his skills and helps organizeretraining if necessary. Dismissed employees joining theplan have to show up every morning just as if they stillhad jobs.

Participation12. Rights whencollective dismissals13. Rights in policy-making14. Unions Social partners play an important role and often work

together with local authorities (See question 20).The employee participation arrangements relating tocorporate restructuring are the main basis for company-

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level negotiations in Sweden. Where negotiations occuras part of such participation, these usually relate to theconsequences of the change and restructuring foremployees, rather than to the decision over therestructuring.

15. Works councils16. EnforcementIndividual rights17.When collectivedismissal18. Specific groups19. ChallengeProspects20. Strategies whencollective dismissal

Regional labour market authorities are encouraging thesetting up of local networks of employers, trade unionsand public bodies which are having some success indeveloping alternative employment for redundantworkers. In addition, there is an increasing localactivities in some areas, with local partners and labourauthorities working together to increase the diversity ofthe local economy, thereby making it less vulnerable tothe failure of a particular large enterprise.29

21. Regulations22. Concepts23. Institutions

Remarks

29 IRS research 2002


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Employability

United Kingdom

Questions Answers Ref.1. Definition Current policy debates are stressing the centrality of skills

and training to compete in the new ‘knowledge economy’.In times of rapidly changing technology and the need tofocus on high value-added products, workforce quality hasbecome of central importance.In the UK policies have focused on improving the supplyof skills, through changes in compulsory education andencouraging greater participation in higher education.From having one of the lowest proportions of young peopleentering higher education, the UK has rapidly moved tohaving one of the highest levels in Europe.

Chartered Institute of Personnel and Development (CIPD)?

2. Objectives Help employees to remain marketable through the ongoingdevelopment of their skills and knowledge.The main goal of employability is to help employees toremain marketable through the ongoing development oftheir skills and knowledge.


in-service-training, retraining, application training are usedtools. Most used employability tool are different forms oftraining, such as: in-service training, retraining andapplication training.


personal development plans, mentoring and coaching,opportunities to participate are instruments to improveemployability.

Most used employability-tools on development are:� personal development plans� mentoring and coaching� opportunities to participate in different projects

c) Internal mobility competence-management, information on internalvacancies. Employability-tools used for internalreplacement are:


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� improving suitable and exchangeable functions� competence management providing sufficient

information on internal vacancies.

d) External mobility Outplacement, information on external vacancies.Employability tools: outplacement, providing sufficientinformation on external vacancies, etc.

4. Obligations in casesof mass dismissals

No, but it is becoming common practice


No

6. Laws, collectiveagreements, guidelines7. Nation-wideprocedures in cases ofmass dismissalsEnterprise policy Companies do not have the formal obligation to formulate

a policy to maximise the employability of employees incase of collective redundancies or in prevention although itis considered to be good practice.Their exists no legal obligation for companies tojustify/motivate the employability-policy and used tools.

8. Enterprise's obligationto introduce strategies toenhance employability

8-9 No formal obligations although it is considered to begood practice

9. Obligation tointroduce preventivestrategies

8-9 No formal obligations although it is considered to begood practice


No

11. Best practicespolicy andinstruments

Contact the CIPD

Participationof employees

Employees and their representatives have the right toparticipate in case of employability measures in processesof collective redundancies. They have access tooutplacement.No legal right exists for employee-representatives toparticipate in policy-making on employability.

12. Participation Yes, access to outplacement13. Rightsof participationof employees'representatives

None.

14. Rights of unions Unsure15. Rights ofparticipation ofemployees'representatives on theenterprise level (laws,collective agreements,

No


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guidelines)

16. Sanctions/Rights ofaction of employees'representatives

No

Individual Rights17. Individualemployability rights ofemployees

No.Individual employees do not have legal employability-rights in case of collective redundancies.

18. Obligations andrights concerningparticular groups ofemployees

No

19. Rights of action NoStrategy andprotagonists

Other specific institutions involved in employabilityquestions, are: CIPD, ACAS, etc.

20. Concepts, strategies21. Rules sufficient22. Alternative Concepts23. Other institutionsFurther remarks


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Case StudyEmployabilityAughinish Alumina

Aughinish Alumina, an aluminium refinery in Ireland, turned its restructuring forsurvival into a success story, by creating a flat organisation and introducing self-managed development.

The CompanyToday, Aughinish Alumina Ltd., an aluminium refinery in Ireland, is a successful andgrowing organisation. Since its major restructuring in 1993 the organisation hasoutperformed each previous year's results. It is now recognised as a world-classaluminium facility with leading edge human resource practices. Achievements in theareas of human resources, training & development and safety have been recognised atnational level by industry representatives and government bodies. In the past year, theorganisation has received three important national awards for innovative and sustainedpractices in the area of human resource development.This level of sustained performance is in stark contrast to performance levels in the1980s and early 1990s, when the future of the organisation was not only uncertain butbleak in the extreme. The need for change was obvious as was the realisation that theorganisation’s only competitive advantage was its people.

The Impetus for Change

In Aughinish Alumina the impetus came from the fact that in the early 1990s thecompany was not only making significant losses but suffered from severe industrialrelations disharmony. The main drivers for the change programme were the need toreduce operating costs, to increase production capacity, provide more autonomy tofront-line teams, reduce bureaucracy, remove layers within the organisation and providea win-win situation for the company and its employees. This led to a major restructuringin 1993, which focused on technological and capacity change, coupled with a move to aflat organisation. One of the consequences of these changes was the loss of one hundredand fifty jobs across all categories within the organisation.

The redundancies alone would not have ensured Aughinish’s survival – in effect thisonly provided 25% of the required drop in costs. Aughinish’s survival depended on thesuccessful implementation of the restructuring plan. This plan among other thingsinvolved the flattening of the organisation structure down to just three levels.

The change process was initiated and managed by HR and a newly appointedmanagement team. In redesigning the organisation a number of guidelines were set.Principal amongst these was that teamwork would be the basis on which theorganisation was structured.


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Employees would have greater responsibility, the social and economic differencesbetween staff and direct employees would be removed and the traditional role ofsupervisor was replaced with that of facilitator.

There are now two structural leadership roles in the new organisation, that of managerand facilitator. However, leadership is expected and encouraged in all grades.Facilitation skills are deemed to be critical in carrying out a leadership position in thenew organisation. As facilitators are responsible for up to five teams of front-lineworkers they no longer have the time, nor does the organisation have the need for themto supervise. This release of control was perceived to be of major importance inintroducing and sustaining teamwork.

Managing ChangeThe change to teamwork was quite significant and involved a lot of change for theindividual. Comprehensive and ongoing training was essential to support the individualsand teams as well as the new structures. The danger of a capability gap arising was veryreal as the traditional decision maker and problem solver in the form of the supervisorwas removed.

While team roles were explained to some degree at the outset of the re-organisation, thelack of thorough guidelines had the potential to cause difficulty. An initial supportstructure was necessary and it was decided that a small number of the supervisors andother staff who were being made redundant would be retained for a period of time afterthe re-organisation to assist in re-training front-line workers.

With the benefit of hindsight more up-front training should have been provided ‘as it hasto be done anyway’, but the time factor did not allow for this given that the restructuringhad to be implemented quickly. This gap was redressed by the creation of a project teamwhich was created in the context of the new environment and consisted ofrepresentatives from management, staff and trade union representatives.

As a result of the work of this project team, a comprehensive re-training programme wasput in place.

Today, teams and individual employees discuss their learning and development needswith their facilitator and a plan is devised for them. Team performance reviews takeplace on a monthly basis.

Team development in Aughinish has been incremental with teams demonstratingdifferent levels of capacity to move to ‘higher level’ activities. Traditional supervisoryactivities that were adopted by the teams included: - work scheduling, equipment andtools supply, safety management, materials control, cost control, team meetingorganisation, budgeting and selection of new members.


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Key Lessons- The process takes time, resources and considerable effort and the business muststill continue.

- Planning the change is critical – anticipating as far as possible what to expect andplan for it. This makes the change process easier for everyone.

- Communicate. Two issues that were regarded as crucial in the on-going transitionprocess were the definition of the role of the facilitator and the need to involve theemployees and their representatives in the change process albeit after the decision tochange had been made.

- Management must be seen to "walk the talk" – They can’t expect everyone else tochange and to stay the same themselves.

- Remember – once you make the change, there’s no way back.


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Case StudyEmployabilityFIAT – AUTO GROUP

On 1 October 1997, the Italian motor manufacturer Fiat-Auto announced to trade unionsthe transfer of 2 700 workers to different activities by June 1998

The Fiat-Auto group - in agreement with the sectoral trade unions Fim-Cisl, Fiom-Cgiland Uilm-Uil, plus Fismic-Sida (the latter being the enterprise union which has a fairlyhigh level of membership among Fiat workers) -is carrying out a large-scale"outplacement" of excess Fiat-Auto workers to other companies.

This process, which began four years ago (in 1993), has so far involved a total of 9,000workers, who have been both redeployed within the Fiat group and"out placed" toother companies outside the group.

"These transfers", said Giuseppe Cavallitto, head of Fismic-Sida, "have not involved areduction in personnel but employment has increased in some companies where theworkers have been transferred." New transfers announced in October 1997 will involvea total of 600 workers from the energy sector whowill be out placed to the Fenicecompany, which specialises in environmental activities, while a further 400 workers willbe out placed to the Comao company, which specialises in the production of machinetools. Both companies are part of the Fiat group.

However, the solution for 1,700 workers in charge of goods transit in the Mirafiori andRivalta plants (Turin) is more complex. For these workers, Fiat suggeststheiroutplacement to the TNT Traco goods transport multinational, based in theNetherlands, which has already taken on 900 Fiat workers during the labourreorganisation at the Volvera plant in Turin.

The trade unions intend to reach a precise guarantee from Fiat, above all concerning thecollective agreement, which will be applied to the workers who are out placed in othercompanies. In a declaration on 2 October 1997, Claudio Stacchini of Fiom-Cgilexcluded any possibility of an agreement with the company if Fiat will not guarantee themaintenance of pay levels for transferred workers and continued coverage by themetalworking collective agreement.

Talks between Fiat-Auto and trade union organisations are continuing on these issuesand will also concern the confirmation of work for 1,000 young people who wereemployed by Fiat in Turin on fixed-term contracts which are due to run out soon, andwhich the unions want renewed. Cosmano Spagnuolo of Fim-Cisl hopes that theseyoung people will be re-employed on open-ended contracts, just as Fiat did for 50workers at Termoli. (Source EIRO 1997)


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Case StudyEmployabilityAnnouncement by Lever / Bilore

LEVER presents a project for the acquisition of the Haubourdin site by BILORE(Spanish company)

By presenting a project for the acquisition of the industrial installations at itsHaubourdin site by the Spanish company Bilore, one of the leading European detergentmanufacturers, to the Central Company Council in April 2000, Lever announced thatBilore, which is seeking to develop its activities in northern Europe, intends employingaround 230 people at the site.

The studies and analyses of costs and competitiveness carried out across all of Lever’sindustrial activities show that the company is in a position of overcapacity and that thiscould increase its costs in an ever-more restrictive competitive context.

Against this background, Lever intends withdrawing from the Haubourdin site by theend of 2000. Aware above all of perpetuating an activity that will generate jobs on thesite, Lever has studied Bilore’s proposal with interest.

Lever wishes to accompany this reorganisation with a determined social commitment. Inparticular, it will:

- maximise the job opportunities of employees with the new owner

- encourage redeployment within the group

- implement measures intended to encourage external redeployment (spaceredeployment, training, employment incentives, aid for personal projects, etc.) with areinforced system for helping employees aged 50 and over and those with specificsituations back to work

- put in place a programme to revitalise the labour market area, with access tosignificant funds.


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Case StudyADAPT – HRM Philips Lighting

Philips Lighting introduced an integrated HRM-policy, including at the level of front-line workers, in order to restructure the plant successfully.

The CompanyPhilips Lighting, based in Turnhout (Belgium), is a world leader in the lighting industry.It started its activities in 1955 and today employs approximately 2000 workers. Theplant consists of two units: one that makes the raw material and one that uses thismaterial to fabricate industrial lamps. Both companies have a variety of departmentswith a wide range of tasks. A lot of front-line workers are still working in productionlines with machines determining the pace of their work.

The Impetus for ChangeThe impetus for change came from the fact that the company was making significantlosses in the early nineties. A restructuring took place in which 400 people lost theirjobs, mainly through voluntary redundancies. In the meantime , trade unions andemployers engaged in discussions about the company’s future by establishing threethink-tanks: one focused on the learning organisation, one focusing on communicationand trust and one focusing on performance appraisal. The organisation moved todevelop self-managing teams, though until 1998 initiatives for task-groups were taken indiverse ways. This created great differences throughout the company: in somedepartments task-groups were a fact, in others operators had never heard about them.

In the meantime, management wanted to know what competencies and potential wereavailable or lacking at the operational level so each operator participated in a one-dayassessment. This resulted in a four-level categorisation of learning potential.

In 1998, management made the strategic choice to implement self-managing teams: in achanging environment one has to be flexible enough to keep ahead. Consultants wereasked to support this change. Ten pilot groups were established as self-managing teams.

Union representatives were monitoring progress, and flagged that some employees werenot able to keep pace with the speed of the change. They proposed a serious investmentin "the lower learning potentials". Management took these signals seriously and startedto rethink their HRM approach.

The company had not really invested in people for many years, so management itselfwas responsible for the existing lack of potential.


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The Adapt ApproachIn January 1999, Philips was looking for consultants, experts in working with lower-skilled workers. They contacted a number of companies, but experienced practitionerswere not so easy to find. In fact, most organisations having expertise in working withlower-skilled workers were focusing on the unemployed rather than people in work.

Philips decided to engage Vitamine W, an Antwerp based NGO, because of thesimilarity of their situation with Vitamine W’s ADAPT project. One of the main reasonsthey chose Vitamine W was because they suggested a multilevel approach.

The NGO would only guarantee results if allowed to work also with the directsupervisors of the front-line workers.

The consulting started in July 1999. During the first two months underlyingassumptions, background and vision were discussed. Pilot training modules were runbetween September and December.

The pilot was designed to give feedback and learning opportunities to feed into a furtherprogramme with 300 employees in the year 2000.

Twenty-four employees who were deemed to have "low potential" were chosen fromacross the plant. During a one-hour dialogue between their supervisor and a consultant,an individual diagnosis of training needs was established.

Resulting from these sessions, groups were formed based on common needs. Theseconsisted of a group of 4 people needing writing skills and a group of 12 for whom amodular package was designed addressing communication skills, assertiveness, team-building exercises, a ‘learning to learn" module, basic computer skills and problem-solving. At the same time, actions were taken by the management to implement newtraining methodologies within the company.

Therefore trainers from within the company were also committed.

Simultaneously, the direct supervisors met in workshops (5 workshops of 8 supervisors)to discuss the objectives of the project and to outline the desired outcomes. Somesupervisors questioned the commitment of their own direct managers.

This perceived lack of commitment was seen as an alibi not to engage themselves. Toget everyone going in the same direction, a document outlining the underlyingassumptions and desired outcomes of the project was prepared and distributed tomanagement.


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A formal and visible participation was requested from the highest organisational level:How many workshops could take place with supervisors? How did the trainingprogramme fit in with production requirements? Would supervisors continue to beevaluated on production rates only, or would the involvement of all team members intask-groups and their own role as coaches become decisive factors as well?

The workshops for operators concentrate on skills and attitudes as well as oninternalising the lessons of their daily work-life. Meanwhile, the supervisors need todevelop their role as coaches or facilitators enabling them to support and stimulate thelearning processes of their operators.

During this process the supervisors are guided by trainers, indicating bottlenecks andpoints of attention and monitoring individual learning progress. Individual coachingmodules support supervisors in their new role as facilitators.

Key Lessons- For work to be successful at operational level, all levels above must be involved(multilevel approach). This often requires a change in the mindset of management: theymust value working with lower qualified people.- Managers and supervisors must be seen to "walk the talk" – they can’t expecteveryone else to change and to stay the same themselves.- Low-skilled operators first need to gain confidence in their abilities to learn and togrow.- In order to achieve a willingness to participate in the project, everyone mustunderstand why change is needed and what implications change has for their own jobs.- Project leaders should inform participants on possible outcomes, objectives,background, vision, etc. of a project, in order to avoid a wide range of interpretations.This should also include written material.

Pitfalls- Management could decide to carry out a project at operators' level to appease the tradeunions or for external image building, without fundamentally changing the workingprocess. A multilevel approach seems the best guarantee for avoiding such a situation.

- Operators need to get confidence in a programme, knowing that the management ofthe company is not looking for a reason to fire them for ‘not succeeding in the trainingprogramme’ or ‘not being willing to follow the training programme’.


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Case StudyEmployability in case of RestructurationPythagoras Project at EVAC (Sweden) 1993-1994(1)

Evac AB is located in Bromölla in premises built in January 1992. Evac manufacturesand sells vacuum toilet systems for railway carriages, boats, aircraft and buildings. Thecompany has about 80 employees in Bromölla, of whom 47 are white-collar staff and 33factory workers. Evac has several subsidiaries in various locations in the world.Including these, the company has about 200 employees. Evac is owned by the MetrakonGroup of Finland and won ISO 9001 certification in December 1992.

The company has no manufacture of its own. Instead, production consists largely ofassembling components made by subcontractors. What has been lacking so far in thecompany's buildings are modern special purpose jigs, i.e. fixing devices for work pieces.

Until the beginning of the 80s, Evac had practically no competitors and expandedrapidly. However, there was also a rapid cost increase and profitability suddenlydiminished. As one office worker said:

Face to these new economic realities the company introduced a new process ofmanaging of change based on an employment quality philosophy. It has been inspiredto make changes by listening to other companies, which have successfully introducedsuch processes of change.

Evac's total project cost for the period 10 August 1992 to 30 August 1994 were put atSEK 3,442,000. Grants of SEK 910,000 were received from the fund.

The company decided to start a development project of its own, named "Pythagoras",aiming at high productivity, delivery reliability, high quality and employee motivation.Pythagoras can be divided into five development areas:

(1) from the Swedish Working Life Fund – Richard Nordholm


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Work organisation

An effort was made to "flatten" the organisation and introduce target-oriented groups. Inaddition, a review was made of logistics, production and work organisation. Eachemployee was to have authority to plan and control his work within predeterminedlimits. It was also considered important to increase the motivation of each employee andone way of doing this was through training. Everyone at Evac was to be trained toachieve the planned organisational change. Training aimed at creating involvement anda positive attitude to the changes, as well as increasing professional skills. The latterwould at the same time permit a wider variation of duties and greater flexibility amongthe personnel, as well as increasing productivity.

Quality

A further aim was to introduce quality responsibility in the organisation and developinstruments for measuring the quality level. It was also important to ensure deliveryreliability.

Working environment

There was a desire to meet high demands on the working environment and increase thepossibilities of job rotation in order to minimise the risk of injuries at work. Primarily,the company wanted to prevent the need for rehabilitation, but if such a need occurred, itwanted to facilitate "early rehabilitation" after sickness/injury. The intention was toreduce sick leave and personnel turnover.

Salary system

A new salary system was to be introduced based on "quantity, quality and deliveryreliability".

Routines

The company wanted to develop the routines and systems already in operation and totrain personnel in these.


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Implementation

The company formed a main project group consisting of the production manager asproject leader, a production engineer, the quality manager, quality engineers, aproduction supervisor and representatives from the Working Group.

The Working Group in turn consisted of the main project group and a secondaryconsultant, trade union representatives and other Evac employees. The primaryconsultant took part in both groups. "Pythagoras" was started in August 1992 and wasexpected to be completed in August 1994. All personnel were successively trained,production personnel being mixed with office staff. Training focused on professionalskills, group development and communication, and conflict management.

Results

Evac has implemented everything planned in the application to the Working Life Fund,in some cases even in advance of the timetable. What remains is to show positive resultsin the Annual Report. The company states that good progress has been made. Everyonehas learnt how the individual performs in groups, something the whole company hasvalued. There is increased understanding of what happens in various places in thecompany, such as causes of dissatisfaction or reasons for behavioural differences amongindividuals. This has led to an increased ability to cooperate, enabling employees towork in autonomous groups. Autonomy was introduced in March 1993. The groupsthemselves plan and perform their work on a week-by-week basis. The two supervisorshave been given other duties. Flex time was also introduced both for office staff andfactory workers.

Workplace meetings have been started in which the personnel discuss all the problemsthey encounter in their work. Assembly personnel may, for example, stop a job if theyconsider something is wrong. Everything has to be followed up. Employees have begunspontaneously to make suggestions for improvements after a couple of monthsintroduction to a new method of working. The groups have set a target level of onemonth for solving problems, which creates a certain degree of positive, challengingpressure also on the company. People go to their workplaces with greater willingnessand consider their work more rewarding. They also feel that their efforts have beenrecognised in the form of salary increases.

Sick leave has been reduced more than expected. Job rotation has partly started up andhas led to people generally feeling better. They can also act as temporary replacementsfor each other. The secondary consultant has made an ergonomics survey but found nosignificant problems. He has taken part from an early stage in planning the building andwas able to prevent mistakes. All production personnel have been given ergonomicstraining by the secondary consultant, as well as a week's training in preventive healthcare.


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Nowadays, the design department contacts the production department in order to takeproduction ergonomics into consideration during product development.

Evac has cooperated with the Social Insurance Office and Industrial Health Service indesigning an internal system for arranging rehabilitation. All of the five rehabilitationcases occurring during the past year are now back at work.

The planned training has been completed and further personnel training is in progress.

A health week has been introduced with diet information, free and more nutritiouslunches, fitness tests and information on the dangers of smoking and drugs.

Training has made ongoing conflicts more visible. The secondary consultant has pointedout the importance of avoiding potential conflicts from being swept under the carpet. Hehas also been attentive to the atmosphere in the company and has brought matters to thenotice of the people involved as well as management in certain cases.

The personnel have come closer to each other and a radically improved atmosphere hasbeen achieved in the company. There is also increased understanding of the fact thatindividuals are different and that they react differently to the same situation. It has beenseen that the lunchtime cliques have been broken up. People thinking in new ways andtaking responsibility for their work far more than expected positively surprise themanagement. It was also unexpected that people would be so interested or inclined todiscussion. The open information has meant a great deal for the process of change.However, knowledge always brings a responsibility that may leave the individual in twominds. Insight into the company's problems and a greater feeling of responsibility makeit difficult not to do jobs that benefit the company, but which on the other hand may bearduous.

Nevertheless, this is a situation that seems to have been noticed in the company.

Productivity has increased by 7-8%. According to one member of the office staff:

The company has raised its quality awareness in the stores and assembly departments toISO 9001 standard and installed technical aids such as lifting tables, taping machines,pneumatic tools, special jigs and so on. The personnel will now take activeresponsibility for what remains to be done.

The salary system has been continuously developed and only needs a decision toimplement it. Development work is on schedule and the system is planned to beintroduced in August 1994. It is based both on quantitative and qualitative work.


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Savings in sick leave, 1 February 1993 - 1 February 1994

Starting point Target Outcome

Reported injuries at work 0 0 0Days of sick leave, 1-14 980 609 400Days of sick leave, 15-36 0 0Employees 80 75Replacement recruitment 3 1 1

Productivity calculated as manpower requirementin person days/year 6,600 6,300 5,000

Number of rehabilitation cases, 5- of which started 5- back at work 5

Evaluation

In order to achieve good results in a project aiming at change, certain conditions must befulfilled.

For example, the production manager and secondary consultant have been especiallyimportant in carrying out the project.

They have known the basis for the company's operations, seen the shortcomings andcreated the visions.The production manager has been described as a capable enthusiast. According to thepeople interviewed in the company, the production manager and the secondaryconsultant have done an enormous job in carrying out and coordinating the training ofproduction personnel, the personnel category which has progressed most in cooperationand group development.The maturity and adaptation of the working groups have also been an importantcondition for a successful result.

The trade union representatives have wholeheartedly supported the personnel. TheManaging Director and company management has also supported the changesunequivocally. The fact that the management had the courage to make the decision todelegate the activities to target-oriented groups has probably been decisive.


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Without the grant from the Working Life Fund, the project would probably have had tobe reduced in scope. The major training effort would most likely have had to replace bylimited efforts in specific areas with high priority.

However, the breadth of the work carried out has led to a completely different sense ofcollective identity and communication within the company, for example betweendepartments such as Design and Production.

Evac's greatest challenge at present lies in profitability problems. Furthermore, thecompany is controlled from another country, which means that it does not feel completefreedom of action.

To sum up, the "Pythagoras" project has led toa process, a new way of thinking in thecompany and all its personnel categories. The personnel now have better capacity togenerate renewal ideas themselves and to implement them.


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Case StudyThe New Sulzer Example

The following example aims at demonstrating that in the event of a companyreorganisation that is likely to have a substantial effect on employment, thepsychological preparation of workers faced with notification of redundancy plays a vitalrole. Moreover, the employer also has a responsibility for the way in which theemployees face up to these notifications. If, over the years, they have not been made tofeel part of the company, been told that it was not their concern, locked into the sametasks, were shown a lack of confidence in them and had their skills passunacknowledged, then the changes will be hard to live with and job reclassificationpainful to bear.

With the crisis in the shipbuilding industry at the end of the 80's, this French marketleader (1,000 employees) in the manufacture of diesel engines for the marine sectorfaced a sharp decline in its market and the threat of massive job losses. Rather thanpurely and simply reducing the workforce, the Company's President undertook anextensive plan to reconvert its marine diesel engine manufacture to the manufacture ofturbines for electricity production. To do this, the General Management mobilised theenergy of the company's employees by means of a very strong participatory initiative.

Although this conversion was not achieved without some redundancies, all of theemployees that lived through this conversion phase and were instrumental in changingtheir own lives and that of their company, and especially those involved in the search foran alternative market for their company and the conversion to it successfully played arole in their own personal professional future. Even the employees that were maderedundant were, during this phase, aware that "by mobilising" they could have a valueon the labour market. Obviously, for the employees concerned, this had the effect ofmaking these job reclassifications less traumatic than if there had been no advanceindication or preparation for the change of circumstances30.

In this context, for some of the company's social relations experts, the employer'sresponsibility is to improve the conditions enabling an employee to act in forming theirown future and the life of the company. To do this, questions need to be raised anddiscussed concerning the operation of the company, and pro-active situations created inorder to stimulate the capacity for anticipation.

30 Incidentally, it is notable that employees that have already undergone a redundancy scheme containing the bestpossible terms that can be envisaged, suffer less anxiety than employees that have never been subject to areorganisation and tend to be aware that they have a certain value and something to offer on the labour market.


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Case StudyEmployabilityADAPT – KTECP – Knowledge, Technically Competent

Waterford Crystal is a world leader in the production of high quality crystal products.Originally founded in 1783 it was reborn in 1947 in a small factory situated in what wasthen the suburbs of Waterford City. The company grew rapidly and employed 3,300employees, making profits of over IR£17m, by 1987.

There were however serious problems with the cost base of the business, which resultedin a dramatic rationalisation programme in the same year. This involved the departurefrom the company of over 1,000 employees through voluntary redundancy and earlyretirement.

A dramatic downturn in operating profits coincided with the restructuring and a loss ofIR£18.7 was recorded in 1989. Between 1988 and 1992 losses totalled IR£80 million.

In 1995 Waterford Crystal was in the process of re-defining its future. Manyrestructuring initiatives had been undertaken to return the company to profitability.However, there was still a long way to go.

The time was right for employees to embrace the principles of theKnowledgeable,Technically Competent Employed/Employable Person (KTCEP)with its underlyingphilosophy of promoting lifelong learning, work-for-life teamwork and employability.

The ADAPT project became the driving force in the transformational process atWaterford Crystal and was key to an innovative response to business needs.

The objective of the KTCEP ADAPT project was to develop innovative trainingapproaches based on key skill and knowledge gaps identified as critical to buildingcompetitiveness for Waterford Crystal, while at the same time enhancing theemployability of employees and their capacity to obtain work for life outside thecompany. Shaping an adaptable workforce was essential to achieving the businessobjectives.

In order to gain a clear understanding of the prevailing organisational culture inWaterford Crystal, it was necessary to analyse company requirements and theimplications of the business consolidation plan on existing and required employee skilllevels.


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It was then possible to break down training needs into opportunities to improvecompetitiveness and establish the concepts of employability and work-for-life. Thesewere to replace the prevailing job-for-life aspiration held at that time by the majority ofemployees.

Meaningful training which was relevant to long-term business needs was to bedeveloped to improve worker employability and to enable workers to become realsources of sustainable competitive advantage.

To identify the core skills needed key managers and craft employees were interviewedface to face or in workshops. To integrate equal opportunities for women all femaleemployees and workers to express their opinions, needs and interests. The findingshighlighted areas, which required more in-depth study.

The analysis of the needs clearly demonstrated that the development of a single trainingcourse would not have sufficient impact on company culture to form the basis for long-term personal improvement plans.

It was necessary to build a set of independent but related courses to aim at making asignificant difference to the company-wide knowledge, skill and attitude base.Following the identification of training needs it was therefore decided to focus on sevenkey areas of development:

- New Product / New Process- Tank Technology- Information Technology- Cultural Change- Management Development- Team Building- Communications.

The training courses developed under ADAPT incorporated key skills and knowledge inthese areas.


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Employees responded to the challenge, becoming more flexible and demonstrating awillingness to learn and adapt. The following statistics give some indication of thetransition made by Waterford Crystal employees in adapting to the change environmentduring a period of rapid growth:

Between 1991 and 1997

- One hundred and thirty-seven paid employees had been promoted to staff positions.

- Approximately 500 employees had been successfully re-deployed into different jobs.

- An average of 180 employees had attended evening classes each year over the sevenyears - approximately 50 per cent of these were involved in a third level qualification.During 1997, fifty-one employees received qualifications ranging from NationalCertificates to Masters Degrees.

- Seven hundred employees had received on-site information technology training in1997 alone (and over 100 employees purchased home computers in 1997 in a companyGroup Scheme).

- In 1997 over 760 employees received shop-floor training ranging from technical andengineering to health and safety, quality, team building, information technology andcustomer service best practice.

- There are now 1,600 people employed in Waterford Crystal - this is over 300 morethan the figure forecasted at the start of the implementation of the 'Waterford 2-5-0'plan.

The improvement in skills and knowledge has advanced the role of the individualemployee within Waterford Crystal. The growing capacity of individual employees topositively influence the shape and effect of change initiatives has been an outstandingfeature of the ADAPT/KTCEP intervention.

Participation in problem solving has increased at all levels in the organisation throughnew developments in teamwork, communications, information technology, businessliteracy and in creating the flexible, multi-skilled employee.

In Waterford Crystal, the Human Resources Function plays a critical role in achievingthe targets set out in the business plan. The Training and Development Departmentensures that employees' skills are developed to meet strategic requirements.


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The KTCEP project was a new direction in education and development for a wide cross-section of employees. It challenged the Training and Development Department toidentify and analyse training needs on a long-term basis, and to design innovativesolutions.

It promoted the employability concept company-wide, and gave the TrainingDepartment the incentive, resource and space to test and refine new educational andtraining possibilities.

The project therefore challenged the department to become more strategic andinnovative in its approach to the design, delivery and evaluation of education andtraining interventions.


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Case StudyEmployabilityZAB – Zentrum für Arbeit und Bildung GmbH

The Centre for Employment and Education Ltd. (ZAB – Zentrum für Arbeit undBildung GmbH) was founded in 1984 in Frankenthal near Ludwigshafen/Mannheim. Astaff of roughly 100 offers labour market and social policy services and programmes inwhich significantly more than 600 people from the region currently participate. Thebusiness segment Personnel Services has consisted of the following units for the past 6years:

• Non-profit making employee lending• Direct work• Employment and qualification company

The ZAB has developed in the last years into a central carrier of measures to promoteemployment in the Rhine-Neckar region. Very many projects accompanying companyrestructuring have been undertaken, especially in the state of the Rhineland-Palatinate.Employees threatened by unemployment are basically offered two services here:

• Labour market agency

In the final phase of employment with the original employer, the employees threatenedby unemployment are offered in cooperation with an applicant’s office on the originalemployer’s premises measures to improve their chances on the labour market and thetransparency to make this possible. A job exchange is established on site. The ZABlabour market experts acquire situations vacant in the region. The employees’ careerplanning is supported in individual and group consulting. Consulting is also given in thecase of mediation hindrances (qualification, mobility, ...). Support in the job applicationprocess is just as much a task of the ZAB as creating transparency in the regional labourmarkets. The main focus of activities is to support the employees’ own initiative.


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• Transfer company

If redundancies on a large scale occur in connection with operating restructuring, theemployees are offered employment for a limited term with a transfer company. Theemployment is limited to a term of between 6 and 24 months, depending on the financialmeans provided to the transfer company by the transferring employer. In general, 80percent of the last net wage is paid during the limited employment term.

The orientation phase in the meaning of the labour market agency mentioned above isfollowed by a qualification phase in which the individual labour market chances areimproved by lasting, additional professional qualifications. These qualification measuresare financed by funds from the former employer and from the European social funds.

Probationary employment and non-profit employee lending have proven to be verysuccessful instruments for mediating employees to employers. These measures willachieve considerably higher importance in Germany in the mediation of unemployedpeople or employees threatened by unemployment when suggestions proposed in the so-called “Hartz concept” and the operation of personnel service agencies are realised. TheZAB has a clear lead in practical experience here.

The aim of employment in the transfer company is lasting mediation to anotheremployer. For this reason, it is possible that the employees firstly transfer to anotheremployer. If this employment relationship ends within the overall contract term of thetransfer company, then there is a right of return to this company.

The additional security makes the transition to employment under different conditionseasier (place of work, remuneration, etc.). The wage costs of employees in the time ofemployment with the Zentrum für Arbeit und Bildung GmbH are carried in roughlyequal measure by the transferring company and through subsidies from the FederalLabour Office.

The financing is considerably influenced by whether or not the employees can beemployed at the transferring company until the end of their termination notice period. Ifemployment is not possible or viable during the notice period due to lack of work, thenthe employees are offered the possibility of entering into a transfer company, generallywith a shortening of their period of notice. The wage costs saved in this way finance alarge portion of the total means necessary to pay wages and salaries during employmentin the transfer company.


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In summary, it can be said that:

- Supporting the mediation of employees threatened by unemployment necessitatesspecialised expertise in this field.

- It must be proven that targeted further education measures in connection with theactive mediation of employees to other employers results in clearly higher mediationquotas.

- Non-profit making employee lending is an instrument to increase the employabilityof employees threatened by unemployment.

- The fact that employees apply to other employers from a position of employment fora limited term and not from unemployment enhances the employability.

- The transferring company must make substantial contributions to finance themeasures for enhancing the employability of employees threatened by unemployment.

- The chances of mediation rise considerably if the experts whose task it is to enhancethe employability of employees threatened by unemployment are anchored in the region,and especially have contacts to the employers in the region.


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CHAPTER III

EXTERNAL RESPONSIBILITY


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1. Outsourcing as a Companies’ Strategy

Since the 90’s, the companies’ subcontracting phenomena have noticeably expanded. In1999, the OECD emphasized on the fact that the « industrial restructuring is mainlycharacterised by the increasing specialisation of the firms and their extensiveoutsourcing».The concept of subcontracting we use here is linked to the different outsourcing formsknown in the companies, as we already mentioned in the introduction of this report.

The industrialist’s strategy consists in calling on subcontractors. It has miscellaneousfoundations, including:

• Entering into new agreements requiring specific equipment or expertise that are notpresent in the existing organisation. This gives the opportunity to an entire network ofsubcontracting companies to develop themselves around an industry.• The industrialist decides to focus his business on its predominant sector butoutsources the parallel activities to subcontractors who have the equipment and theexpertise (i.e.: industrial cleaning, catering, security, guarding, etc).• Even if the situation does not involve equipment or expertise, the order placer mightalso call on a subcontractor who can supply him with human resources.

These outsourcing strategies are not excluding one another. They represent different stepsin almost all the sectors of economy: software, pharmaceuticals, telecommunications,wholesale trade, finance, etc.

They are particularly developed in the electronics sectors where a movement ofrelocation towards the Asian and the candidate countries is perceptible. If the reason thatis usually put forward is the necessity of refocusing on the heart of the profession, itseems that, most of the time, the concerned electronics suppliers have decided not tocarry on with the production of such or such manufactured product, being of low addedvalue. The emphasis is increasingly on a strategy of seeking greater profitability, theconquest of the major markets (for the order placers), the desire for sector diversificationand an increased rate of production plant usage (for the sub-contractors).

These policies lead directly to the outsourcing of production towards the periphery ofthe developed economies (especially Maghreb, Central and Eastern Europe, Mexico,China), where we should see large-scale increases in quantities produced in these lowwage scale countries (cost reduction logic).


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Since the 80's, first the I.T sector manufacturers, followed by the telecommunicationcomponent manufacturers have progressively disengaged themselves frommanufacturing the actual products that they sell: the strong trend now is towardsoutsourcing production from sites, which now sells for next to nothing.

-Among the World's main I.T manufacturers: IBM-first large scale electronics sub-contracting contract with SCI Systems for the manufacture of the complete range ofIBM PC, HP, NEC, SUN, COMPAQ, etc; electronic boards)

-The same has happened with the telecommunication component manufacturers(ERICSSON, CISCO, NORTEL, ALCATEL,)ERICSSON, for example has sub-contracting contracts with at least two of the giants inthe sub-contracting sector: FLEXTRONICS and SOLECTRON

The transfer of manufacturing sites mainly concerns I.T. and telecommunications,however the more traditional manufacturing (measuring instruments, medicalequipment, automobile industry) is nonetheless not unaffected.

This development encourages the growth of the main American electronics sub-contractors:

The main electronics manufacturers in 200231

Employees

Factories

Sales Countrieswhererepresented

SOLECTRON 84,000 82 18,692 21FLEXTRONICS 70,000 91 12 ,10 44SANMINA 34,000 67 4,239 14SCI 35,000 49 8,714 19CELESTICA 30,000 40 10,004 10JABIL 20,000 23 4,331 12C-MAC 9,000 60 10BENCHMARK 6,158 14 8

31 Source : Alternatives économiques (Economic alternatives, No.198, December 2001. Does not take intoaccount the two mergers made in 2001, one between C-MAC and SOLECTRON and another betweenSANMINA and SCI.


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The majority of these primary electronic product-manufacturing multinationals wereformed in the 70's

FEXTRONICS, originally an American company and which has its Head Office inSingapore, was founded in 1969

SOLECTRON, with its Head Office in San Francisco, was founded in 1977SANMINA was created in San Francisco in 1980

The risk is in facing up to a major wave of decentralisation (as an example of a majorline, portables are already being manufactured elsewhere)

The trend towards outsourcing is not simply limited to manufacture but has also spreadover into development activity.Actors such as Altran, Alten, Cap Gemini, Teleca, Logica are moving into this marketand are taking over the component manufacturers’ R&D centres.

For example, last April 2002 (Monday the 29th), during an extraordinary meeting of theBoard of Directors, the General management of Ericsson France presented a project fortheoutsourcing of its research and development department.The department's 188employees, who are mainly involved in creating software packages, will be taken overby the Swedish I.T solution and application provider Group, Telca.

Outsourcing of this type is generally justified by the overall reduction in investment bytelecom operators.

The traditional relationship between the order placer and the sub-contractor is showing amarked tendency towards disintegrating, and even more so when outsourcing projectsoften go along with plans on the part of the order placer to gradually reduce loads vis-à-vis the sub-contractor:

The purchasing of sites accelerated at an incredible pace from the second half of the90's, without really meeting the concern for overall consistency: on the one side, theorder placers do not really want to hand over all of their industrial set-up to oneorganisation (sub-contractor), on the other side, the major sub-contractors buy upopportunities willy-nilly and share them out among the industrial electronic set-ups on aWorld-wide scale.

The flexibility, that sub-contractors often have to show proof of when faced withpressure from the order placers, which incidentally often places them in competition, isnot generally coupled with any form of security, especially where this concernsemployment (no firm commitments in terms of workload, for example).


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The paradox however, is that the order placers and the sub-contractors are forced tomanage tighter and tighter partnerships, if only to guarantee improved articulationbetween the designing of the product, its creation and its speedy distribution onto themarket32

One can ask, will we not soon being seeing the development of sub-contractors to thesub-contractors in the same way as the sub-contractors commodities appeared in theautomobile industry.

What will be the main development directions for the sub-contractors (buyouts -mergers between sub-contractors? Pursuit of sector diversification in order to gainemancipation from the order placers in the telecommunication and I.T. sectors,expansion of the decentralisation strategy?)

These major sub-contractors appear at this moment to be involved in a phase ofreorganising industrial set-ups that were formed without any measure of consistency.

Indeed, these outsourcing and subcontracting phenomena are not recent. What is newer istheir expansion and the way the companies use them as a real group’s strategy.Strategies that are already registered in the new conventions of the CorporateGovernance.

Many companies are keen on subcontracting everything that doesn’t form part of theiroriginal profession. Sometimes, such attitude leads to important human consequencesthat, once again, can only seriously be treated in term of anticipation. The externalresponsibility is firstly determined, by the relationship that the main company and thesubcontractor or partners agree on, in order to avoid a bad management of theoutsourcing process and its impact on the employment situation.

A recent study made by Allen&Overy33shows the importance of the use of theoutsourcing process. 150 European firms were contacted, among them about 40 Belgiumcompanies, to reveal that, one way or the other, 96% of them turn to the outsourcingstrategy. Most of them are big firms which purpose is not only to refocus on the originalprofession but also to reduce the expenses due to the cost of work.

Concerning the human resources, the study demonstrates that a little more than 20% ofthe companies using the outsourcing do detach some of their employees to thesubcontractors. Moreover, only 27% of the firms would transfer their competentemployees to the relevant outsourced sector of the subcontractor.

32 This incidentally has a tendency to modify, at least in the short term, the balance of power between the orderplacers and, to their advantage, the sub-contractors.33 Study Allen&Overy May 2002 by the Belgium newspaper « Le Soir » 25th May 2002


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The risk for these employees would be to loose their advantages and status given bytheir previous work conditions. Still according to the study, only 55% of the companieswould organise adapted information training for the workers and 45% would put inplace specific procedures of « management of change ».

These outsourcing strategies also give rise to an increase of partnership betweenmultinationals and small and medium companies. They sometimes merge to becomereal multinationals as we already observed in the electronics manufacturers situation.

« Local sourcing by multinationals is also pulling SMEs into cross-border businessarrangements large manufacturing firms in automobile, electronics and others sectorspushing their domestic suppliers to establish international supply networks”34

The globalisation of SMEs is influenced by economical, technological or political andlegal factors.This restructuring was perceived as an opportunity for the small and medium companies,willing to enlarge their market and their distribution networks as well as reducing theircosts. The new information and communication technologies have also encouragedinternational joint ventures, allowing the integration of strategies like Research andDevelopment (share of the costs on R&D for instance). Likewise, the deregulation in thepower or telecommunication sectors and the new legal structure that generates thesepolitical choices, make it easier for the national networks and transnational companies todevelop.

The graphic below shows how the alliances have progressed through the years. Duringthe period 1995-2000, according to the Thomson financial data, small firms with 1-49employees joined 440 deals (140 in manufacturing, 300 in services) medium firms with50-249 employees participated in 1 360 deals (490 in manufacturing and 870 in services).

34 Kentaro Sakai « Global industrial restructuring implications for small firms »


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Cross-border alliances involving SMEs, 1998-2000

92

358

0

50

100

150

200

250

300

350

400

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Num

ber

ofde

als

Manufacturing alliances involving SMEs with 1-249 employees

Services alliances involving SMEs with 1-249 employees

Source OECD based on Thomson financial data’s

The restructuring in companies’ formal or informal networks brings up new problems:how to anticipate the risks for the human resources who are confronted with transnationalcharacteristics and informal and inflexible type of partnership. The crisis the firms of thenew economy have to face since the bursting of the speculative bubble, reminds us, ifnecessary, that social risks are directly linked to the restructuring and far from beingvirtual. To the « Social Corporate Responsibility » concept, it would be interesting to addthe one of « Social Network Corporate Responsibility »


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2. Enterprises Questioned about their External Responsibility

We were able to establish this comparative analysis from the results of thequestionnaire (see appendix) relative to the external responsibility.In this questionnaire, we intended to enhance the points that seem to present the biggerinterest for our subject, in particular: « How do the labour laws or the industrialpractices implement the companies’ social responsibility in the context of thesubcontracting or outsourcing strategies? ».In order to get the answer, we considered different types of subcontracting oroutsourcing situations, susceptible to involve the external responsibility of theenterprises.

a) First situation: the enterprise hires external labour meaning from another enterprise(for instance, enterprise of temporary workers).b) Second situation: the enterprise that outsources one of its activities (socialresponsibility of the industrialist towards the employees and the one of the order placertowards the subcontractor).c) Third situation: the companies involved in networks.


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3. Major Results’ Analysis

A global remark has to be made: the member states labour laws dispositions, supposedto manage the enterprises’ external responsibility, are quite rare except for those that domaintain the rights of the employees in case of a transfer to a different enterprise.

New issues and social risks linked to the outsourcing strategies lead some of themember states, such as France and the Netherlands, to create new rules and regulationsand new applications between social partners

Sometimes the governments of several state members (i.e.: the United Kingdom, TheNetherlands, France, Germany, Belgium), in cooperation with the social partners (i.e.:The Netherlands) see to expand the enterprises social responsibility outside their ownnational field.

1. Generally, the member states benefit of a regulation relative to the temporary workor the transfer of the workers. These concepts are normally included into specific legalcategories. Several regulations (in Italy, Belgium, France, Greece, Austria) foresee theobligation for the enterprises to regularly deliver to the worker’s representatives theinformation relative to the number of employees coming from an external company, (orthe right for them to regularly benefit of it) or concerning the political views of thehuman resources in managing the transfer of external employees.

Such regulations (in Belgium or in France) are registered in the employment-anticipated management, in particular, the temporary workers or the transfer ofemployees whose jobs are very often exposed to the social consequences of therestructuring. In fact, some companies, in order to avoid the implementation of socialplans, do, at first, reduce or suppress, the number of its external employees. The socialadvantages and protection are then taken away from them (see chapter about collectiveredundancies)

The state member regulation, in case of unlawful use of the employees transfer, (i.e.:non declared employment) highlights the companies' liability. The same happens if thesubcontractor fails to comply with its obligations concerning the wages or the socialsecurity (see Italy or France or the Netherlands). Such interdependent liability does notexist in Greece or in Belgium or theoretically in Austria, The company’s liability isnormally shown, when the external employees safety at work is called into question.


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2. If the concept of transfer and subcontracting enters into legal categories in themember states regulations (in Belgium however, the subcontracting concept is notlegally defined), the outsourcing concept belongs to the company’s managementvocabulary but is not legally defined in the member states regulations. The nationaldispositions, relevant to maintain the worker’s rights in case of a transfer, find theirapplications in many outsourcing situations that imply a transfer as described in theEuropean Directive in 1977 and revised (briefing and consultation of the workers’representatives, employment continuation…).

It is less frequent to find national dispositions that are meant to manage the relationshipbetween the order placer and the subcontractor in case of a restructuring conducted bythe company who is the order placer. France is the only country that implements theobligation to inform the subcontractor in case of a restructuring that is likely to have animpact on the worker’s job of the subcontractor. It is also France that implements therealisation of a study about the impact of the social consequences after a restructuringaffecting the employment on a territorial level.

One thing is to protect the employees when transferred; the other one is to protect theirinterests during the months or years following the transfer.

Well, too often, the outsourcing organised by multinationals (see above the badpractices in the I.T sector) looks more like a way to give to another part (thesubcontractor) the responsibility of making redundant the employees during the periodthat follows the transfer: such or such group subcontracts part of its activities,sometimes selling off the given-up firm. (Some groups even pay-see the I.T sector- togive up their assets); a social convention shows the responsibility for the group tomaintain the workload in a digressive way over three years. It is a mutual agreementbetween the group and the purchaser. After one year, the group is unable to complywith its obligations and the subcontractor’s book order is getting empty. He begins toregister losses and soon becomes insolvent.

None of the examined national dispositions deals with the problem of the order placer’sResponsibility in case he does not honour his economics’ commitment towards thesubcontractor: what measures can be taken? What compensation can be given? How toreintegrate the workers into the group? What to do when the breach of the contract isjustified by reasons independent from the group’s will?

In order to avoid that the economic outsourcing becomes a way of displacing thecollective redundancy process, the member states rights, and especially the case law,are keen to: ignore the application of the transfer’s dispositions, by mentioning the lackof « autonomous economic entity » (in that case the transfer is not supposed to havetaken place) like in Italy or in France.


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Or by acknowledging the right to the employee to decline a transfer, like in Germany,exceptionally in Austria, in Italy and in some rare cases in Belgium (intuiti personae orin the situation of a take-over). This opposition right is not recognised by France orGreece.

The existence of this opposition right does not mean that the employee benefit of a rightto be relocated to such or such group of the company. Collective agreements, like inGermany, have the ability, however, to foresee this transfer.

In a specific case that took place in France, the judge of of the industrial tribunal,considered that in case the transfer was not demonstrable, according to the articleL.122-12 of the employment legislation, the employees who were made redundant afterthe bankruptcy of the subcontractor, should be relocated in the group.

Many member states try to find new ways to extend the company’s social responsibility(multinational) outside of the head office of the member states. For instance, Belgium(see introduction of a label), France, Germany, the Netherlands and the UnitedKingdom. The member states generally intend to promote the application of theUniversal Conventions of the ILO in the developing countries where multinationalshave established subcontracting activities.

In the Netherlands, the law of 1979 concerning the work council established the right ofthe company’s work council order placer to give their opinion during the planningphases of the subcontracting project. The negative answer of the work council mightlead to court decision that might decline the decision of the subcontracting by the firm.

While the company’s group concept is well defined by the member states’ rights, thecompany’s network concept is still legally vague. Even if this concept is not legallydefined in the member states’ jurisdiction, some of them intend to apprehend these newnetwork growth through notions developed by the internal right. Such as the« Economic and Social Union » in France or the « Social Cohesion »and « «SameEconomic Entity »in Belgium, or the « Outwork Enterprise » in Greece. Such actionsare profitable to the employees who work in these networks, as they then benefit of acollective representation.In Germany, the collective representation that opened a field of possibilities within thecorporate networks, have improved since the « Industrial Constitution Act » (seeGermany survey’s answers).

In so far as the growth of the « Network Company » produces realities that cut acrossthe traditional structure of the national system of industrial relations and collectivebargaining, new experiences, particularly in the automobile sector, have been led bysocial partners to make sure that the organisation of the collective work would adaptitself to the new realities (see Italy, France and Austria survey’s answer).


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In the member, states new forms of responsibility are coming to life between thecorporate networks (more over between the order placers and the subcontractors) :introduction of quality standards, and/or ISO norms, or new measures that ensure thecoordination of dispositions relative to the employee’s safety see comparative graphic).

2. The importance of the collective negotiation

The collective negotiations between social partners play a key role in the restructuringof the social consequences of the subcontracting and outsourcing phenomena. Theymight foresee, like in Spain (Eiro : the subcontracting and the industrial relations in theautomobile sector) an active participation of the workers representatives in thecompany’s order placer as well as the right to supervise the subcontracting process(social sectorial convention). They are normally established at an enterprise level toprotect the work conditions and the employment in case of an enterprise transfer, or toinput new measures in the management of change, between order placer andsubcontractor. They might play an important part in the corporate network system, likein Italy, to guarantee a conventional protection to the employees.


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Austria

Questions Answers ReferencesII General InformationDuty to provide informationregarding supplierrelationships

Only as far as general rights of financialinformation, intervention and consultationaccording to §§ 108, 109 Labour ConstitutionLaw (ArbVG) are concerned.

Ref.: §§ 108, 109Arbeitsverfassungsgesetz (ArbVG).

InformationOnce a year/more frequently

§ 108 ArbVG: quarterly resp. monthly ondemand of the works' council,§ 109 ArbVG: only in cases of transmission ofenterprise ownership, then "as soon as possible".In practise, however, non-compliance with theserules can be observed quite frequently. Theworks' council encounters significant difficultiesto enforce these regulations in court.

Ref.: §§ 108, 109Arbeitsverfassungsgesetz (ArbVG).

ResponsibilityNon-payment of wages

No, only in cases of liability of the generalcontractor according to § 7c Labour ContractAdjustment Law (AVRAG).

Ref.: § 7cArbeitsvertragsrechts-Anpassungsgesetz(AVRAG).

III Outsourcing procedures -interests of employees

a. Legal definition None.b. Regulations of labour lawin cases of transmission ofenterprise ownership

Implementation of EU Guideline onTransmission of Enterprise Ownership isachieved in general by §§ 3 – 6 AVRAG

Ref.: §§ 3 – 6AVRAG

c. Implementation by theadministration

In cases of transmission of enterprise ownership,claims can be sued for by means of civil law(Labour Courts and Social Courts).

d. Right to object onpart of the employees

Generally none. Exception: Right to objectaccording to § 3 Par 4 AVRAG and special rightof notice in cases of substantial deterioration ofworking conditions according to § 3 Par 5 and 6AVRAG.

Ref.: § 3 Abs 4, § 3Abs 5 und 6AVRAG


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e. Court decisions Austrian case law is tending to correspond todecisions of the European Court of Justiceregarding the Guideline on Transmission ofEnterprise Ownership.

f. Rights of co-determinationof employees'representatives

Generally none; only in the framework ofemployees' co-determination in the board ofdirectors (§ 110 ArbVG, § 95 Companies Act -AktG, § 30j Law on Private Limited Companies- GmbHG).

Ref.: § 110 ArbVG,§ 95 Aktiengesetz-AktG, § 30j Gesetzüber Gesellschaftenmit beschränkterHaftung-GmbHG

g. good/bad practices See Attachment: Report of a Works' Council in:Sinn-Macht-Arbeit, Chamber for Workers andEmployees for Vienna (Kammer für Arbeiterund Angestellte für Wien), Vienna 2000.

IV Social responsibility ofsuppliersSocial responsibility duringoutsourcing proceduresa) Rules § 109 Par 3 in connection with Par 1 No 4 and 5

ArbVG (social redundancy plan).There are no legal or contractual agreements tosafeguard suppliers' orders.

Ref.: § 109 Abs 3 inVerbindung mit Abs1 Zif 4 und 5ArbVG

b) Regulations holding theordering party responsiblealso for suppliers' employees

None.

c) Responsibility in cases ofinsolvency

In cases of transmission of enterprise ownership:§ 6 AVRAG

Ref.: § 6 AVRAG

d) Regulations - connectionswith labour law/commercelaw

§ 109 Par 2 and 3 ArbVG (labour law)§ 70 AktG (commerce law)

§ 109 Abs 2 und 3ArbVG(Arbeitsrecht)§ 70 AktG(Handelsrecht)

2. Social responsibility andsuppliers' situatione) Obligations regardinginformation, consultation,negotiation

In cases of company group relations: (see § 15AktG) particularly in the framework of duties toprovide information according to § 108 Par 2ArbVG.

Ref.: § 15 AktG, §108 Abs 2 ArbVG.

f) Rules on a regional levelregulating surveysresearching consequences

There are no relevant legal norms or otherregulations that we know of.

g) Social responsibility inother countries also

None

h) Quality safeguardingregulations (ISO)V. Corporate SocialResponsibilitya) Legal definition of Only the definition of groups (of companies): § Ref.: § 15 AktG (§


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company networks 15 AktG (§ 115 GmbHG) 115 GmbHG

b) Regulations applying topartnerships

See the answer IV.2.e.

c) Company networks andnew types of representationof interests, collectivenegotiations

Particularly activities of the Austrian Employees'Union (GPA), see www.interesse.at

http://www.interesse.at/


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Belgium

Questions Answers Ref.Generalities/use of thepersonal of thesubcontractor1. Definition ofsubcontracting

Law is not explicitly defining subcontracting.According to the National Labour Council it isthe activity by which a subcontractor commitsitself by contract to the main contractor as tohave certain works executed by his workers atthe cost of the main contractor1)

The employment contract for interim work2) isan agreement by which the interim workersubmits itself to perform a temporary workagainst wages3). This kind of labour is onlyadmitted4)

- when a regular worker is temporary replaced(e.g. in the event of illness or pregnancy);

- in the event of a temporary increase in theworkload;

- in the event of an exceptional work.

In the case of a personnel shortage an employercould call upon workers of other entrepreneurswith whom he may or may not have a certaintie5). In principle this is prohibited, unless –under very specific conditions - the lawauthorises it expressly.

An employer can – besides his normal activities– make his workers available6) (this is referredto hereafter with the notion ‘displacement’) for alimited time if he receives the approval for this inadvance from the labour inspectorate and theapproval from the trade union delegation7).The prior approval of the administration is notrequired when the worker is exceptionally madeavailable to a user within the framework of the

1) Advice of theNational Labour Councilno. 450 25 July 1974

2For more elaborateinformation ofregulations concerninginterim work anddisplacement, see P.HUMBLET,“Employment throughtemporary staff agenciesin Belgium. A briefoutline”, EuropäischesArbeits- und Sozialrecht2002, no. 10, 183-190.3Art. 7, 2° Law of 24July 1987 concerningtemporary work,employment throughtemporary staff agenciesand the makingavailable of workers tomanpower users,Belgian Official Gazette(Moniteur belge)20August 1987 (hereafterabbreviated as the


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cooperation between undertakings of the sameeconomic and financial entity with a view to abrief performance of special assignments whichrequire a special professional skill8). In suchcase, the user notifies the competent official atleast 24 hours in advance.

Temporary Work Law).4) Art. 1 § 1 TemporaryWork Law.5) In the case ofsubcontracting thesubcontractor himselfexercises the authorityon the workers whereasin the case ofdisplacement theauthority lays with themain contractor.6) Translation of “miseà disposition detravailleurs à ladisposition d’utilisateurs7) Art. 32 TemporaryWork Law.

8)ibid.

2. General informationto the employee’srepresentative on the useof subcontractingAttention, ces élémentsconcernent l'interim ouautres sociétés assurantune fourniture de maind'oeuvre et non ce qu'onentend habituellementpar sous-traitance

The employer is obliged to provide regularinformation on the economic, financial,organisational and future policy of the companyat the level of the bipartite works council.In case of displacement of workers very specificinformation should be provided to the tradeunion delegation.

The works council should be informed on thenumber of workers that are employed through atemporary work agency or that work underdisplacement. By lack of work council, thatinformation should be given to the trade uniondelegation

Art. 5 CollectiveBargaining Agreement(hereafter abbreviatedC.B.A.) as C.B.A. no. 9of 9 March 1972. Theseinformation items haveto be taken into the‘Social Balance’ (onbehalf of art. 44 andfollowing, Act 22December 1995,BelgianOfficial Gazette30December 1995)

3. Information one timea year or more

The information has to provided (at least) once ayear.

4. Responsibility of themain enterprise in caseof non payement ofwages by thesubcontractor-otherscases

The user is not responsible if the subcontractordoes not pay his workers

Temporary workers work under the authority andsupervision of the user company. There is adistinction between the legal employer and theactual employer. The obligations normallyincumbent on the employer are shared. Theactual employer has no right unilaterally andsignificantly to modify the working conditions of


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temporary workers (for instance, sendingworkers to different workplaces.

Co responsibility also exists in the field of healthand safety at work.

Regarding the principleof safeguardingemployee’s rights5 Definition ofoutsourcing

The Belgian legislation does not contain adefinition of the notion ‘outsourcing’ althoughthis technique is quite often being applied.

In a judgement of 14 February 1983, the Court ofCassation stated that the activity exercised by theenterprise itself constitutes the main criterium todefine the parity committee to which a companyshould belong. Activities executed by thesubcontractor are left out of consideration. Fourcarpenters who perform similar work on a sitecan thus receive a different hourly rate ofremuneration if the company-subcontractor towhich they belong resorts under different mainactivities.

The salary of a temporary worker (i.e. who isemployed via a temporary staff agency) may notbe lower than that to which he would have beenentitled if he had been taken into service underthe same conditions as a regular worker by theuser

Journal des tribunauxdu travail 1984, 132

Article 10 TemporaryWork Law

6. Nature of the relevantlaw/outsourcing

A majority of legal scholars consider theTemporary Work Law of public order.

7. Key conditions for theapplication of theprinciple in case ofoutsourcing (transfer ofenterprises)

The respect of the workers’ rights after anovertake of enterprise is settled by the CollectiveBargaining Agreement no. 32quinquies.

CCT 32 quinquies

8. Application of theprinciple in case ofoutsourcing by a publicauthority

A Collective Bargaining Agreement of theNational Labour Council such as the CollectiveBargaining Agreement no. 32quinquies is onlybinding employers of the private sector. Thepublic sector should, in case of a takeover, haveto rely upon the Directive concerning takeovers.


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9. Right to oppose to thetransfer of employmentcontract35?

In Belgium the legal position of a workerrefusing to accept a takeover is still not clearlysettled1), - except in the case of a contract intuitipersonae-. The legal scolars2), however, seem toconsider that such a worker should resign. Whena worker refuses the work of a new employer, hecommits an “acte équipollent à rupture” andterminates as such his employment contract.

1) In this case theworker could possiblybe in a position to objectto a takeover.2Cfr. C. WANTIEZ,Transfert conventionnelsd’entreprise et droit dutravail, Bousval, E.D.S.,1996, 86

10. Trend of thejudicial decision

See above

11. Is there anyreal power ofanticipatingchange throughnegotiation?

First of all one should remark that theemployment contract does not change even afterthe takeover. This implicates e.g. that

- no new probation clause can be agreedupon- the seniority remains- etc.

Besides, the takeover cannot be a ground fordismissal, except for gross misconduct or foreconomic and technical reasons1). Certainindustrial tribunals will consider a resignationthat departs from these reasons as irregular andwill require to compensate the damages ex aequoet bono.

As a rule, the collectively obtained employmentterms of the former employer are maintained2).It is, however, possible that the potential newemployer may wish to alter these, which he cando by means of reaching a Collective BargainingAgreement with the workers. By lack of suchnegotiations or if the parties do not reach anagreement, the collectively settled employmentterms of the previous employer will be respectedwith regards to the new employer3).

If there is no works council or trade uniondelegation active in the enterprise, theworkers have to be informed upon theeffects, which are likely to affect theirinterests by the takeover, and upon themeasures, which are considered to betaken.

The workers can of course always usecollective actions to ensure their rights.

1) Article 9 C.B.A. no.32 quinquies.

2) Article 13C.B.A. no.32quinquies.

3) Article 15 C.B.A.no. 32 quinquies

12. Example of goodpractices related to

Conventional law provides that when anenterprise is partly or completely transferred, the

CCT 32, article 20Eiro


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negotiation (result ofnegotiation)

new employer must continue to respect theCollective agreement that was binding on theprevious employer, until it is no longer effective.

When a transfer of personnel accompaniesoutsourcing to a company that has another mainactivity and thus falls in the sphere ofcompetence of another Joint Committee(implying other sectoral work and wageconditions), the existing sectoral collectiveagreements are no longer in execution.Nevertheless, trade unions negotiate withemployers at the company level to obtain thebest possible conditions for outsourcedpersonnel.Le comité conjoint de l'industrie automobile estparvenu à un accord en vue de maintenir le plusgrand nombre possible d'entreprises sous-traitantes dans le champ d'application de laconvention (50% des entreprises exécutant destravaux en sous-traitance pour l'industrie de laconstruction automobile ne sont pas couvertespar la convention de la métallurgie).

SocialResponsibility/Economic responsibility of themain enterprise in theprocess of outsourcing13. Method ofanticipating risks: legalor contractuelarrangements forsecuring orders for thesubcontractors?

As a result of the re-organisation the workers canbecome temporarily unemployed or can bedismissed on economic or technical grounds.

The Belgian legislation anticipates the possibilityof temporary unemployment for blue-collarworkers (not for employees) 1). In the event,they will be entitled to unemployment benefitsduring a certain period. In specific sectors theemployers also have to pay a surplus upon theunemployment benefit.The dismissal of a substantial number of workerscan be considered as a “collective dismissal”2).In this case the employer has to pay a surplusabove the unemployment benefits3).

1) Article 51 Actrespecting Contracts ofEmployment

2) For details see C.B.A.no. 24 of 2 October1975.3) For details see C.B.A.no. 10 of 8 May 1973

14. What are theconsequences of afailure of thesearrangements

See above

15. Responsibility of the The seller and buyer in a takeover are boundin Article 8 C.B.A.no. 32


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company if insolvencyof the subcontractoroccurs after the transfer

solidumto settle all debts at the moment of thetakeover except for those debts that arise fromsupplementary of social security regimes.

quinquies

Social Responsibility asregard the situation ofthe subcontractors of thecompany16. Obligation of thecompany to inform thesubcontractor in case ofrestructuring withimpact on employmentfor subcontactor’employees

The employer is bound to inform the workscouncil whenever events occur that canconsiderably affect the company. It is evidentthat a re-organisation or takeover can beconsidered important enough.This obligation of information is restricted to theown workers. The subcontractors do not have tobe informed.

Royal Decree. 27November 1973,Belgian Official Gazette28 November 1973

17.Information of theemployee’srepresentative of thesubcontractor

See above

18. Intervention of theboard of directors orConseil de surveillance

NO

19.Impact studiesconcerning therestructuring decision ata territorial level (bassind’emploi)

NO

20. SocialResponsibility regardingsubcontractors orsubsidiaries situated inothers countries

Depuis le 27 février 2002, existe une « loi visantà promouvoir la production socialementresponsable » en créant un label social selon cinqcritères (normes des conventions OIT). Le labelest en principe octroyé à une entreprise quiproduit ou investit à l’étranger dans le respectdes normes universelle de l’OIT (abolition dutravail forcé, droit syndical et aux négociationscollectives ; interdiction de pratiquer desdiscriminations en matière d'emploi ou derémunération et interdictions des formes les plusaliénantes du travail des enfants). Le contrôle durespect de ces cinq critères devrait se faire pardes organismes agréés en Belgique ou reconnussur le plan européen ou international. Des décrêtsd’application sont attendus.

Parallèlement le débat sur la responsabilitésociale des entreprises s’inscrit dans desexpériences de développement durable danscertaines entreprises. Ainsi, le groupe belgeKBC (assurance) a annoncé la création d'unecellule interne chargée d'analyser le respect decritères de « développement durable » afin

Loi du 27 février 2002


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d'aider ses « gestionnaires de fonds éthiques » àsélectionner des actions et des obligationsd'Etats.

21. Existence ofstandards whichguarantee quality ofproducts or employment(health and safety)between the mainenterprise and thesubcontractor(s)

An employer employing subcontractors orinterim workers1) has to ensure the security ofthese workers2). The obligations in these mattersare quite severe. In short one can state that theworkers of the subcontractor are, as far assecurity is concerned, entitled to the sameprotective rules as the regular workers. If theworkers of the subcontractor do not dispose ofthe required safety material (e.g. helmets etc) themain contractor has to provide these himself.The employers will avoid subcontractors whowork unsafely. In order to have guarantees inregard with minimum safety rules, certaincertificates are de facto required (such as ISO).

1) For interim workerssee Royal Decree. 19February 1997,BelgianOfficial Gazette18December 1997.2) See Art. 8 andfollowing. Act 4 August1996,Belgian OfficialGazette18 September1996

Social Responsibilityand the networkenterprise (supply chain,standing partnershipbetween subcontractors,cluster e.g.)22. Legal definition ofthe network enterprise

The Belgian legislation does not know anexplicit definition of network enterprises.References to it do however sometimes occur. Itthen concerns companies that belong to the samefinancial structure. Article 14 §2 B of the Act of20 September 1948 determines that severaljuridical entities who together employ more than100 workers are obliged to create a workscouncil when they (in short resumed) belong tothe same economic group and if there areelements pointing to a certain social coherence(e.g. a common personnel policy).

23. What responsibilityrules apply?+ santé-sécurité (cf. 21.)

The regulations, which were explained hereabove concerning safety matters, are also to berespected by network enterprises (cf. Question21).

24. New type ofrepresentation ofemployees in case ofnetwork enterprise?New form ofnegotiation?

The processes of outsourcing and multiplyingsuppliers force the trade unions, organised on asectoral basis, to co-operate and communicatemore at the intersectoral level

The emergence of the “network company” andthe “network economy” produces realities thatcut across the traditional structures of theBelgian collective bargaining system. In thisperspective, the sector of the motor

EIRO


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manufacturing industry, characterized by a highand still increasing degree of outsourcing, is atextbook case. Both employers’ and employees’organisations are trying to adapt the traditionalstructures and are searching for more adequatebargaining levels.A significant amount of supplier companies(estimates range from 25 to 50%) belong to asector different from the traditionalmetalworking one. For their personnel, other(often worse) wage and working conditions areapplicable.


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France

Questions Answers Ref.Generalities/use of thepersonal of the subcontractor1. Definition ofsubcontracting

Subcontracting is providing a service orcarrying out work following the conclusion ofa contract, by which one company engagesanother company to perform a given task andfor which it is paid an agreed sum inproportion to the work carried out

PermanentSocialDictionary

2. General information to theemployee’s representativeon the use of subcontractingTake note, these should referto interim or othercompanies ensuring theprovision of labour, and notto those which normallyperform the role of sub-contractorAlternatively, detailsrelating to sub-contactingand ordering are given in ArtL 432-4

The head of the company notifies the WorksCommittee on the employment situation,which is the result of a month-by-monthanalysis of developments in the workforce….the number of employees belonging to anoutside company.The Supreme Court of Appeal considers thatthe employer should specify to the WorksCommittee the number of employees belong toan outside company, as well as the reason ithas for employing them.

Article L.432-4-1 of theLabour Laws

Crim App., 19June 2001

3. Information one time ayear or moreSame as 2.

Each quarter for a company employing at least300 employees, six monthly for others.

Same

4. Responsibility of the maincompany in case of nonpayment of wages by thesubcontractor-other cases

Excluding the dual-responsibility inherent in acase of concealed labour (undeclared work forexample), the main employer's takes, in theevent that the sub-contractor fails to pay,responsibility for salaries, holiday pay andsocial security commitments. When work iscarried out on premises other than thosebelonging to the main company, the sub-contractor must display the name and addressof the main employer in these premises, whichwill become responsible in the event of afailure to pay (salaries, holiday pay, social

Especially:L125-1 &L125-2Soc. 21st

Jan.1987

L200-3


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security contributions) on behalf of the sub-contractor. Article R.

125-1 of theLabour Laws

Regarding the principle ofsafeguarding employee’srights5 Definition of outsourcing Outsourcing is an economic solution: for a

company, it consists of entrusting a serviceprovider, with or without an undertaking interms of specific results, the responsibility forcarrying out all or part of a function (by youraccounts or administrative departments) with,when this exists and on the customer's request,the taking over of all or part of the personnel orproduction resources concerned by this saidfunction.With outsourcing, the customer companytherefore retains overall control of its functionwhilst the service provider holds responsibilityfor fulfilment. Nonetheless, the economicsolution offered by outsourcing refers tosituations that are covered by law (see No. 6below)


The outsourcing solution is not in anywaylegally exempt and can be, depending on thecase, be tried under civil law (mandatecontract) or Labour Laws (sub-contractcontract or the transfer of companies). InFrance, Article L.122-12 of the Labour Laws isaimed at safeguarding workers rights in theevent of company transfer, sale of companiesfor example).

Art. L.122-12of the LabourLaws

7. Key conditions for theapplication of the principlein case of outsourcing(transfer of companies)

A Supreme Court of Appeal ruling states thatin order for Article L.122-12 to applied, it notsimply enough to transfer an economicactivity, an"autonomous economic entity"must be maintained. (in compliance withEuropean Court of Justice jurisprudence)

8. Application of theprinciple in case ofoutsourcing by a publicauthority

The Supreme Court of Appeal has performedan about-face in jurisprudence by consideringthat the only circumstance by which theassignee of a private law company, being apublic administration organisation due to thepublic law rights linked to its personnel is notexempt from the application Article L.122-12of the Labour Laws. From this point of view,France henceforth complies with thejurisprudence of the EEC Court of Justice

Social Appeal25 June 2002


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Due to the public order nature of the Article L.122-12 provisions under French law; a workerdo not have the right to oppose the transfer oftheir work contract. If the employee refuses,this will be considered to be a resignation.

Alternatively, if the transfer criteria "of anautonomous economic entity" is lacking, thesale of a company's business does not comeunder Article L.122-12 of the Labour Laws(safeguarding workers rights in the event oftransfer), and the workers are considered asbeing still employed by the main company(Perrier Vittel Decrees).

In other European countries, the employee canrefuse their transfer, especially when thecollective status of the new company is lessfavourable than that of the original company.This is in line with European Court of Justicejurisprudence

Soc. App.Decree of 17th

October 198929th May 1985& 5th Nov.1987

Soc. App.Decree of the18th July 2000

EuropeanCourt ofJustice.,Decree of the7th March1996, caseenclosed, C-171/94 and C-172/94,MERCKX &NEUHUYS

10. Trend in judicialdecisions

The Jurisprudence of the Supreme AppealCourt submits to the influence of CommunityLaw (revision of the 1977 Directive andEuropean Court of Justice Decrees) (seejudicial rulings No. 8 and No. 9)

11. Is there any real powerof anticipating changethrough negotiation?

The Works Committee must be notified andconsulted concerning any companyreorganisation and any modification to thecompany's legal structure

36 A more alarming question arises during this period when the phenomena of outsourcing is on the increase en(look at the electronics sector). We know that in certain cases the transfer, unless it is accompanied by thenecessary adequate measures to protect the employment prospects of the workers transferred to the assignee, canquickly lead to an instability, or even the disappearance of the jobs transferred to the assignee. Moreover, thesale of a company within the framework of outsourcing does not constitute a transfer (and appears as a disguisedtransfer) under the terms of Article L.122-12 of the Labour Laws (see Perrier Decrees). In other words, theautomatic transfer of work contracts between the assignor and the assignee resembles more a transfer ofredundancies between the assignor and the assignee and therefore a way of eliminating the company's socialresponsibility at the same time as outsourcing its business. From this point of view, the application of ArticleL.122-12 to such situations calls into question the fundamental objective of this article, being the protection ofworkers.


310

If only one legal entity is involved, this WorksCommittee will be consulted.If the transfer involves several legal entities,the Works Committees of each should beconsulted.The French system does not oblige the partiesto negotiate and collective agreements(applicable to the assignee's company) are ingeneral annulled by the transfer of the entity.This is the system for terminating a collectiveagreement.

12. Example of goodpractices related tonegotiation (result ofnegotiation)

In practice, even though the French systemdoes not enforce negotiation, negotiationsaimed at anticipating the risk to workingconditions and jobs due to the transfer do takeplace (most certainly in the major companies)-see No.13 following and the practicalexamples.

SocialResponsibility/Economicresponsibility of the maincompany in the process ofoutsourcing13. Method of anticipatingrisks: legal or contractualarrangements for securingorders for thesubcontractors?

There are no legal provisions forcing the orderplacers to continue ensuring a sufficientquantity of work or orders aimed atguaranteeing the employment of its exemployees at the new employers. However,practice has demonstrated that business take-overs have sometimes given rise to agreementcontaining ordering commitments on the partof the order placer (See practical examples likeTenovys)There are also others examples relating to thetreatment of sub-contractors in the electroniccomponent sector (Flextronics, Solectron,Celestica) which managed the reorganisationsof Alcatel & others, generally after a period oftransitionThe problem is the length of the transitionperiod (Ex. HP with SCI in Grenoble or Xeroxwith Cerplex in Lille): after 1 to 3 years ofguaranteed orders, these often fall away toalmost nothing leading, if there is not sufficientmeans of diversification, to insolvency orclosure.

14. What are theconsequences of a failure ofthese arrangements

See practical examples

15. Responsibility of thecompany if insolvency ofthe subcontractor occurs

In at least one instance, the Labour RelationsTribunal judge (during a case in Ales) ruledthat in the framework of an outsourcing project

Judgement bythe AlesLabour


311

after the outsourcing by a major French Group, the handover of acompany that is put into liquidation after thesale does not come under the terms of ArticleL.122-12, and ordered the reintegration ofredundant employees back into the group.

The judge ask also for reintegration in a casewhere IBM was involved: Example ofemployee reintegration into IBM (MontpellierAppeal Court 1.4.99): the DSIE Company intowhich 45 IBM employees were transferred inMay 94 closed down in February 95. As IBMknew about DSIE’s lack of commercialviability, this transfer was judged to be an"unfair breach of work contract ", and bothreintegration and compensation were orderedThe new company must offer the sameemployment prospects

In fact, outsourcing without a rigorousmanagement of change can often lead to thesubcontractor company: Example of theCerplex factory in Lille (600 employees)which went into liquidation in 99 following thewithdrawal of Xerox, its previous owner up to96.

RelationsTribunal 2002

Soc 9 May 74:Bull civ VNo.298; 8th

Feb. 84:D.1984. 321,1st hearing,concl. Piccaand Ecoutin;9th April 1987:Bull civ.VNo.198

Social Responsibility asregard the situation of thesubcontractors of thecompany16. Obligation of thecompany to inform thesubcontractor in the event ofa reorganisation having animpact on the employmentof the subcontractor’semployees

The order placing company which submits areorganisation and staff reduction project to itsWorks Committee is obliged to immediatelynotify the sub-contracting company should thisproject be liable to have an affect on the sub-contractor's volume of business or workload.

Article L.432-1-2 of theLabour Laws

17.Informing the sub-contractor's employee'srepresentatives

As soon as a sub-contracting company isnotified of a reorganisation project affectingthe order placing company, it must"immediately" inform its own WorksCommittee and give it "all relevantinformation on the probable effect this mayhave on business and employment prospects".Nothing is laid down as to the form thisinformation should take: in the absence ofinformation, the employee representatives canclaim their rights are being flouted, with all theinherent risk of having to prove this is the case.

18. Intervention of the Boardof Directors or the

Any total or partial sale of the business activityof an organisation or autonomous legal entity

Article L.239-1 of Company


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Monitoring Committee "resulting in the loss of at least 100 jobs", mustbe the result (when this sale is not the due tothe liquidation of the company on which theorganisation depended) of a decision by theBoard of Directors and the MonitoringCommittee.This provision in Company law is especiallyaimed at making the management structure,and not simply the head of the company, awareof their responsibilities when making what aresometimes brutal decisions.

law(applicationsubordinatedto theapplicationdecrees)

19.Impact studiesconcerning the restructuringdecision at a territorial level(employment catchments)

The Board of Directors and the MonitoringCommittee make a decision (see No. 17 above)on presentation of a social and territorial reportdrawn up by the head of the company on thedirect and indirect consequences arising fromthe closure of the organisation or autonomouseconomic entity, and on the resulting joblosses.

L.239.1 ofCompanyLaw

20. Social Responsibilityregarding subcontractors orsubsidiaries situated in othercountries

An application decree of the new ArticleL.225-102-1, paragraph 4 of Company Lawcovers the obligation to notify the GeneralMeeting of the Shareholders (Public StockCompanies) of employment conditions:the workforce and the types of provided,redundancies, the use of outside personnel,redundancy schemes and the efforts madetowards job reclassification.The decree also contains a reference tothetransnational scope of the socialresponsibilities of companies: "In addition, itindicates the manner in which the company'sforeign subsidiaries take into account theimpact of their business on regionaldevelopment and local populations".More and more enterprises have elaboratedcodes of good practice (Suez, Auchan, AirFrance, Carrefour, etc)

Or Arcelor: Group common purchasingpolicy that takes into account varioussocial criteria, such as safety

Decree 2002

21. Existence of Standardswhich guarantee quality ofproducts or employment(health and safety) betweenthe main company and thesubcontractor(s)

Development of the ISO 9002 and ISO 14001quality StandardsIn terms of subcontracting (health & safety):the main company (user company) is expectedto ensure, and is held responsible along withthe heads of the other associated companies,for the general co-ordination of the preventivemeasures taken by itself and the othercompanies. The drawing up of a preventionplan can be made obligatory (in the event of

ArticleR.237.1 andfollowing ofthe LabourLaws


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dangerous work for example). The WorksHealth and Safety Committee of the usercompany and the other associated companiesissue a report on preventive measuresundertaken.One example is that of Usinor at Fos: systemof conditions relating to sub contractors interms of health-safety and linked to a qualityrequirement, in exchange for a undertaking toprovide work for a period of 7 years; includinga system of indicators, audit procedures andworking in conjuction with the Works Healthand Safety Committee

Social Responsibility andthe network company(supply chain, standingpartnership betweensubcontractors, e.g. cluster)22. Legal definition of thenetwork enterprise

The network is characterised by theinterdependency between both the companiesit is composed of (which sometimes conflictswith the autonomy) and companies linked bythe same business activity. The main objectiveis to contribute to growth in the commoditysector (work optimisation, more efficient co-operation, responsiveness to innovation,development of trade expansion programmes,the diversification of products and theenhancement of strategic alliances).Occasionally these companies form employergroupings, or economic interest associations orgroups.

23. What responsibility rulesapply?+ Health-safety (see 21.)

Embedded in the locality37 (a trump card forthe localities), which can be transnational,these network companies are called upon toemphasis their social and societalresponsibilities, alongside those of the localauthorities and the NGOs. This is aresponsibility that is increasingly reflected innew behaviour in terms of environmentalconstraints, social responsibilities, fair trading,etc.

24. New type ofrepresentation of employeesin case of networkenterprise? New form ofnegotiation?

The trend among network companies is toexpand their scope of representation by takinginto account the role of actors outside thetraditional collective work organisation (Localauthorities, NGO's, etc.).Some regulations try to enlarge the “perimeter”of the group committees (new definition of L

37 On this subject, the problems linked to a company’s external responsibilities are closely joined to those linkedto responsibilities to the locality.


314

439-1) or to promote the notion of “UnitéEconomique et Sociale”(L.431-1 which islimited in its application by case law) orrecognise the notion of “sites” or “chantier”.However it is difficult for these nationalregulations to deal with the network enterprise,especially when this network is transnational.

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Germany

Questions Answers Ref.I GeneralInformationDuty to provideinformation regardingsupplier relationships

The interests’ representation has specific informationrights only in the case of operational changes (cf.collective redundancies). Otherwise and within thescope of its regular tasks, the economic affairs jointcommittee has the right of access to all economicinformation in connection with the company’srelationships to suppliers.

In companies with fewer than 100 employees, theemployee council has restricted information rightsconcerning economic affairs. Within this context, it canalso acquire information about supplier relationshipsby stating special reasons.

§ 106; § 111 ff.; §80 BetrVG(IndustrialConstitution Act –Betriebsverfassungsgesetz)

Informationonce a year/morefrequently

This information is usually provided solely on requestand once a month at most. This right is exercisedextensively in only a few companies.

ResponsibilityNon-payment ofwages

There is no liability in the case that wages are not paidby the suppliers. However, for five years after realisingan outsourcing there is a general liability provision forthe transferring company for the claims of theemployees in connection with social plans concluded atthe transferring company prior to the splitting.In the case of insolvency of the supplier, substitute paybenefits to the employees are undertaken by the labouradministration in the form of insolvency benefits for amaximum period of three months.

§ 134 ConversionLaw

II Outsourcingprocedures - interests


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of employeesa. Legal definition no legal definitionb. Regulations oflabour law in cases oftransmission ofenterprise ownership

Under certain conditions, an operations transition canalso be a company change (cf. collectiveredundancies). In this case, the stipulations foroperations transition and company change are additive.

The following aspects are governed by law for theoperations transition: Information of the employee,right of objection, disadvantages prohibition on thegrounds of the transition.The employee council has additional information rightsin the case of a company split-up.

It is also usual in larger operations and companies toconclude accompanying company agreements and, insome cases, even tariff agreements (collectiveagreement).

The scope in which a parent company must be liablefor the claims of the employees against its subsidiarycompanies is a matter of dispute. There are decisions inindividual cases that can be interpreted as a welfareduty of the parent company (company pensions,piercing the corporate veil, calculation insight in thesocial plan, binding collective agreement).

§ 613a BGB; §111 ff. BetrVG; §123 ff.Umwandlungsgesetz; § 16BetrAVG; BAG,verdict of23.07.1981 –7AZR 523/78;BAG, verdict of11.09.1991 –4AZR 71/91; §126b BGB(BGB = GermanCivil Code;BetrVG =IndustrialConstitution Act;Umwandlungsgesetz = ConversionLaw; BetrAVG =CompanyPensions Act;BAG = FederalLabour Court)

c. Implementation bythe administration

The provisions must be upheld in the labour courtinsofar as these are entitlements against the employer;the labour exchange and the courts dealing with socialsecurity affairs are responsible for insolvency pay inthe case of insolvency of the supplier.

d. Right to object onpart of the employees

A right of objection is given. If the employee makesuse of the right of objection, then the activity passes inmost cases to the supplier and the employmentrelationship of the employee remains with thetransferring company with the consequence of atermination notice for operational reasons due toshortage of work. The labour courts refuse a severanceentitlement in this case.

In a few instances, company agreements and collectiveagreements include rights to return or severanceentitlements in case of objection.

§ 613a BGB

e. Court decisions Court decisions leave the employee few possibilities ofaction in the case of an operations transition. The samealso applies to the interests’ representation. The basicargument here is that the job remains intact. The courtsdo not regard the transition from an economicallysecure employer to a less secure employer as a

§ 613a BGB; §126b BGB


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disadvantage for the employee.

Enlarged information rights for employees came intoeffect with the amendment of § 613a as from01.07.2002. If the employer neglects these in theoperations transition, then there exists an entitlement toreturn unrestricted in time.

f. Rights of co-determination ofemployees'representatives

Interests representations have information and advisoryrights in the case of company transitions that aresimultaneously company changes. The employer mayespecially only consummate the operations transition ifthe advisory process is concluded. There is no statutoryco-determination as to whether an operations transitionor an outsourcing is realised.

In some cases there are partly very good collectiveagreements on sourcing measures that containessentially further-reaching provisions. These alsodetermine whether value-addition componentscurrently performed internally should be purchasedexternally in future.

g. Good/bad practices cf. case studies

IV Socialresponsibility ofsuppliersSocial responsibilityduring outsourcingproceduresa) Rules It is customary that rules are agreed in a contractual

form between suppliers and principals. The interests’representation participates here in rare cases.Examples:

DASA (today IADS) had a works at the Speyerlocation. This was originally to be closed down. After alabour dispute lasting 18 months, the works was sold tothe employees. This was financed with saved socialplan funds that were transformed into equity capital.The so created Pfalz Flugzeugwerke was given a five-year supply and service guarantee, price fixing and afixed exchange rate. The result of this is that there aretwice as many employees at the Speyer location todaythan at the beginning of the dispute about a possibleclosure.

The company Tally Computerdrucker GmbH in Ulmintended to outsource its parts manufacture to China oranother external supplier. The employee council andIG Metall (metal workers trade union) initiated anemployee buy-out model. The newly founded company


318

PKM GmbH, also financed from saved social planfunds, received a three-year annually decreasingguaranteed order quantity. All jobs remained intact.

The company Levis Jeans had jeans washed in largequantities by Weiss Tex GmbH in Miltenberg using aspecial method (stone wash). Despite realisingextensive investments in 1997, Levi Strauss EuropeS.A. withdrew Weiss Tex GmbH the entire ordervolume at short notice. Written contracts governing thesupply relationship are obviously not usual in thesector. All jobs were lost. Weiss Tex GmbH narrowlymanaged to avoid insolvency.

b) Regulations holdingthe ordering partyresponsible also forsuppliers' employees

Social plans valid for a corporate group exist in a fewcases (voluntary arrangement for employer andinterests representation).

c) Responsibility incases of insolvency

Besides the aforementioned liability for entitlementsfrom social plans in the case of a split-up, there are inmany collective agreements goodwill clauses providingfor a preferential re-hiring of employees who lose theirjob with a supplier and insofar as a workplace with thetransferring company is vacant.

d) Regulations -connections withlabour law/commercelaw

Labour law and economic law

2. Socialresponsibility andsuppliers' situatione) Obligationsregarding information,consultation,negotiation

No statutory obligations; “good“ contractualrelationships between supplier and recipient providefor suitable information to the supplier with increasingdependence of the supplier. However, this affectssolely information of the management. The interests’representation at the supplier is not normally informed.The information flows between supplier and recipientare frequently marked by a unilateral information leadof the recipient.

f) Rules on a regionallevel regulatingsurveys concerningconsequences

No statutory provisions; individual regions attempt todevelop political instruments here. Examples:

Regional economic professorships and researchinstitutions; Innovation and Employment Trust –Saxony (Stiftung Innovation und Arbeit).

Statutory framework conditions for a regional structurepolicy would be a great help.

g) Social No statutory provisions; few employee councils and


319

responsibility in othercountries also

central employee councils incorporate effects in othercountries into their local political initiatives.

May 2002: German Government together with theConfederation of German Employer’ Associations(BDA), the Federation of German Industries (BDI), theGerman Trade Union Federation (DGB) and NGOs,sign a join declaration on International Protection ofHuman Rights and Economic Activity. Reference ismade to the Universal Declaration of Human Rights,OECD Guidelines for Multinational Enterprises andILO Declaration on Fundamental Principles and Rightsat Work.

h) Qualitysafeguardingregulations (ISO)

There are very precise standards for products (ISO;sector-specific; product-specific;...). The same alsoapplies to services (e.g. service level agreements –SLA). Corresponding claims are mostly regulatedcontractually. The quality of employment at thesupplier plays no role in these contracts.

V. Corporate SocialResponsibilitya) Legal definition ofcompany networks

No

b) Regulationsapplying topartnerships

Yes, in as much as supplier networks are the case(vertical networks); co-operations are more likely inhorizontal networks (e.g. between different suppliers).

c) Company networksand new types ofrepresentation ofinterests, collectivenegotiations

The action possibilities of interests’ representationswithin corporate networks have been improved inGermany by the new Industrial Constitution Act. Themain approach here is the creation of bodies andforums for the exchange of information. There is nocoordinated procedure, let alone joint negotiations withthe respective employers of the network in the meaningof a supplier relationship; however, especially the tradeunions attempt to balance out the different localinterests and strengthen the joint negotiating power ofthe various interest representation bodies in corporatenetworks.


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Addendum There are in Germany significant differences betweenthe provisions and effects of outsourcing measures inEast and West Germany. Whereas in West Germanythe key issues for the interests’ representation are theprovision conditions and securement of jobs in thesupplier operation, the economic structure specific toEast Germany implies that an announced outsourcingmeasure often has grave consequences for theemployees. Many operations in East Germany are anextended workbench in high dependency of the centralor subsequent value addition stages in West Germany.The result is that these operations, insofar asoutsourcing is considered, are often closed and/orrelocated, while outsourcing in West Germany mainlyinvolves the legal independence of certain parts of thevalue added chain. The economic difficulties in EastGermany have worsened the regulatory level ofoutsourcing in all Germany. This can be observed, forexample, in connection with the transfer reorganisationin insolvency. In this case, certain employees areoffered employment in a successor operation. Thesecurity conditions of the employees in East Germanyhave worsened significantly compared to the old levelin West Germany, which in turn affects the debate onfurther development of the legal standards in allGermany.

Source: Walter Krippendorf and Michael Erhardt


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Greece

Question Answers Ref.Subcontracting: general issues

1. Definition ofsubcontracting

Procedure covering a contract for a specific peace of work, whichis performed by the subcontractor and is or her own employees.There are no specific regulations regarding employees' rights

EEIRglossary

2-3. Informationon the use ofsubcontracting

-The employees’ side of collective bargaining is entitled to requestany information and documentation on the economic situation andpolicy and on the personnel management policy of the enterprisefrom the employer. Bargaining matters cover general trends in theenterprise to the extent that these are likely to have an impact onemployment relationships.-WCs have the right to be informed annually on the general trendsin the enterprise, the economic sector and the production planning.-The employer must inform WCs, before reaching any decisionabout modification of the legal status of the enterprise and full orpartial transfer-In public utility companies or in state-owned industries("socialized" companies), there are formal rights for employeerepresentatives in the boards to vote on such issues assubcontracting-Global agreement in OTE (telecommunications): managementwill communicate general information on the company'sworldwide activities and on the level and structure of employmentin the various subsidiaries and entities in which the company isinvolved



Law1365/1983

OTE Globalagreement26 June 2001

4.Responsibilityof contractorwhen sub-contractor fails

No specific provisions for the contractorIf wages unpaid, employees may involve the employer'sresponsibility according to "enrichment without cause", lodge acomplaint against him and ask for damagesRemarks regarding insolvency: In contrast to the provisions inother countries, provision is made for the judicial liquidationprocedure only in exceptional circumstances.

The head of enterprise may decide to close the enterprise withoutthe employee representatives, the authorities or the courts beingable to supervise this decision. The industrial restructuring agency

Civil Code,Article 343-346 & 904Law690/1945


322

(OAE)administers private enterprises facing problems5. Definition ofoutsourcing

Greece has no legal framework regulating matters of outsourcing,apart from the transposition of transfer directive

6. Transfer:Relevant law

Transposition Decree of transfer directive in 1988

Collective agreements in the metalworking industry refer to theprotection of specific occupations of workers employed asoutsourced labour

PresidentialDecree572/1988INE in EIRO08/2000

7. Transfer ofenterprises rules

Employment contracts are transferred to the new employer whichis obliged to preserve the conditions of employment as set out inthe work rules.Conditions of transfer’s rules: see European Case LawModification of the employers’ legal situation must be preceded bya procedure of information and consultation of workers’representatives covering the reasons for the transfer, its legal,economic and labour effects and any supporting measures planned.Similarly, when the initial employer and his successor areenvisaging changing the working conditions of personnel, theymust work with the workers’ representatives to reach anagreement, and the content of negotiations must be recorded inminutes. If they fail to comply with these obligations, both partiesto the transfer may be fined.The employer must inform WCs, before reaching any decisionabout modification of the legal status of the enterprise and full orpartial transfer

PresidentialDecree572/1988Article 3,6 &7


8. Case ofpublicauthorities

In public utility companies or in state-owned industries("socialized" companies), there are formal rights for employeerepresentatives, members of the boards, to vote on such issues assubcontractingSubcontracting notably used for cleaning and supplies (hospitals),new technologies (diagnostic centres), etc.

See examples in 12.

Law1365/1983

9. Right tooppose to thetransfer ofemploymentcontract

No right to oppose, unless if the parties concluded the employmentcontract in consideration of the concrete identity of the employer

PresidentialDecree572/1988

10. Trend oflegal rules

Issue not subject of debate

11. Anticipationthroughnegotiation

Trade unions and employers are entitled and have a duty to bargainto conclude a collective agreement. Bargaining matters covergeneral trends in the enterprise to the extent that these are likely tohave an impact on employment relationships. See also 7.Bargaining in "socialized" companies or in companies with strongunion representation, as a rule renders the effects of restructuringas painless as possible for jobs, working conditions and pays.Influence through the political parties with regard to crucialbusiness decisions is part of the culture of industrial relations.


INE in EIRO09/2002

12.Examples -Banking: a large state-owned bank (Ionian and popular Bank) wasbought by a private bank (Alpha credit bank) and there was noserious consequences for employment: Alpha credit bank agreed toabide by a condition of the merger that it would not implement a

INE in EIRO09/2002 &EIRR 316,05/2000


323

major redundancy programme, achieved harmonising terms andconditions of employment, integrating operations and technologyand negotiating change with employee representatives;- Skaramangas Shipyards: job cuts were resulted from anagreement with the workers' representatives during privatisation-Olympic Airways: negotiation related to job security guaranteesin the process of the contracting out of the management of theairline to a subsidiary of British Airways (won by internationalpublic tender);-DEH public electricity corporation: agreement that companyrestructuring as a result of deregulation will take place withoutrecourse to compulsory redundancies-Call centres: coverage by legislation and collective agreements ispatchy due to the high degree of informal flexibility and a lack ofeffective control. The largest call centre is run by the state-controlled telecommunications provider OTE. 1500 young peopleare employed on eight-month fixed-termed contracts, working on apart-time basis of 3 hours per day. When the contract expires, thereis a waiting period of 8 months before renewing it.

INE in EIRO09/2002

EIRR 307,08/1999

EIRR 306,07/1999

EIRR321,10/2000

13. Securingorders and/oremployment

See examples in 12.

14. Failure/enforcement ofcommitments

The process of selling off a company which is under State controlcan be interrupted or cancelled if the buyer is not seen not meet thenecessary conditions of sale set by the government

INE inEIRO02/2001

15. Insolvencyof subcontractor

No provisionsSee remarks regarding insolvency in 4.If wages unpaid, employees may involve the employer'sresponsibility according to "enrichment without cause", lodge acomplaint against him and ask for damages

CivilCode,Article343-346 &904Law690/1945

16-18.Obligation toinform thesubcontractorand itsemployees

No overall obligationIn case of transfers: see 7.

PresidentialDecree572/1988Article 6 & 7

19. Impactstudies

No overall obligationIn case of transfers: legal, economic and labour effects and anysupporting measures planned; see 7.

PresidentialDecree572/1988

Article6

20.Transnationalresponsibility

Global agreement in OTE (telecommunications) for all OTEsubsidiaries and, as far as possible, all contractors, subcontractorsand suppliers: trade union rights, education and training, respectfor the environment, decent working conditions, equalopportunities, etc.


21. Quality


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standardsincluding CSR

Social responsibility and networks22.Definition ofnetwork

Outwork enterprises: name given to subcontracting enterprises towhich a commissioning enterprise entrusts a part of production.Very widespread in Greece, chiefly in the clothing industry(travail à façon)

EEIRGlossary

23.Responsibilities

No provisions

24. Workers'representation

Several WCs may appoint joint representatives in order tocoordinate matters of common interest in groups (singlemanagement of economic policy)

Law1767/1988,Article 16

Remarks25.Remarks Since 1990, there has been increasing use of subcontracting, with

the subcontractor often working exclusively for one enterprise.The practice of installing the subcontractor and his employeeswithin the premises of the main enterprise is also spreading.The external responsibility issues are mainly dealt by negotiationwith the unions for the large, former or still state-owned,companies


325


Holland

Questions Answers RefSubcontracting: general issues1. Definition ofsubcontracting

Subcontractor: one who is not employed but joins into a co-operative to execute (part of) the employ.('oderraannemerError! Unknown switch argument. :degene, die zich jegens een aannemer verbindt om buitendienstbetrekking tegen een te betalen prijs het in onderdeelb bedoelde werk geheel of gedeeltelijk uit te voeren').

Temporary work: Term used to refer to work performed byworkers (uitzendkrachten) hired out by a temporary-employment agency.Temporary work agencies (TWA’s) in the Netherlandssupply a larger share of employment than TWA’s in anyother country

Wet op deloonbelasting1964

2-3. Informationon the use ofsubcontracting

Employer is obliged to ask for advise and the works councilhas the right to render advise on the establishment orentering into, making major modification to or severing apermanent co-operative venture with an other enterprise.Also the employer is obliged to discus the current situationof the company and future plans with the works council in abiannual meeting.

WOR art 25section 1 b

WOR art 24

4. Responsibilityof contractorwhen sub-contractor fails

the contractor can be obliged to pay social securitypremiums and contributions if the subcontractor goesbankrupt.

Referentievolgt viaBIDOC

Outsourcing and safeguarding of employees' rights5. Definition ofoutsourcing

Outsourcing constitutes a legal category . Subcontractor:one who is not employed but joins into a co-operative toexecute (part of) the employ.('oderraannemerError! Unknown switch argument. :degene, die zich jegens een aannemer verbindt om buitendienstbetrekking tegen een te betalen prijs het in onderdeelb bedoelde werk geheel of gedeeltelijk uit te voeren').

Wet op deloonbelasting1964

6. Transfer:Relevant law

development of employees' rights in outsourcing in theNetherlands

WOR art 25section 1a


326

7. Transfer ofenterprises rules

Employer is obliged to ask for advise and the works councilhas the right to render advise on intended managementdecision:a. transfer of control of the enterprise or a section thereof;b. the establishment or take-over or relinquishment ofcontrol of an other enterprise, or entering into, making amajor modification to or severing a permanent co-operativeventure with another enterprise, including the entering into,the effecting of major changes to or severing of animportant financial holding on account of or for the benefitof such an enterprise.

This advisory right also covers outsourcing.

If the works council does not agree with the intendedmanagement decision, management has to postpone theimplementation for one month. During that period, theworks council can go to court, and ask for a court decisionthat the intended outsourcing is not a reasonable decision.A analysis of the relevant cases shows that the verdict`unreasonable’ is given when management has not askedfor advice at all, when it has not done this in due time,when the decision has not been motivated sufficiently, orwhen the interests of the employees have not sufficientlybeen taken into account

Alsoa proposed merger between companies which each have aturnover of more than 30 million euro in the Netherlandshas to be reported tot the Nederlandse MededingingsAutoriteit

Alsoa proposed merger between a Dutch company and an othercompany which each have over 50 employees is to bereported to the SER (SER-fusiegedragsregels); Bothpartners have to have negotiations with the relevantvakorganisaties

WOR art 25section 1a &bDedingeingswetFusiegedragsregels WOR

Eiro

SER-mergercode (SER-fusiegedragsregels) is not alaw, but a setof rules forconducts, butgenerallyfirms obeythe rules

8. Case of publicauthorities9. Right to opposeto the transfer ofemploymentcontract

No, if the company's work is been continued art 7: 663Burgerlijkwetboek

10. Trend of legalrules11. Anticipationthroughnegotiation12.ExamplesSocial responsibility and outsourcing


327

13. Securingorders and/oremployment14. Failure/enforcement ofcommitments15. Insolvency ofsubcontractorSocial responsibility and subcontractors16-18. Obligationto inform thesubcontractor andits employees

In cases of out sourcing, establishes the right of the workscouncil of the subcontracting company to give its opinion atthe planning stage of an outsourcing decision and at thetime of the possible renewal or termination of the businesscontract

Given a sufficient amount of workers, the (sub)contractorhas to set up its own works council that has the same rightsas the works council of the central company. As anexample: if the terms of the contract between the centralcompany and the subcontractor are going to berenegotiated, or when the question arises whether or not acontract will be renewed, both the works council of thecentral company and the works council of the subcontractor(if it is a Dutch company of course), have the right torender advice

the Law onWorksCouncils of1979

Eiro

19. Impact studies20. Transnationalresponsibility

I march 2001, Dutch Government issues a position paperon CSR in the national context, the paper outlines CSR inan international context. The OEC guidelines formultinational enterprises are seen as the proper frameworkwithin which firms are expected to operate. Particularimportance is attached to respect the ILO fundamentallabour rights.

21. Qualitystandardsincluding CSRSocial responsibility and networks22.Definition ofnetwork

"Network of companies". Nedcar for instance aims to esta-blish an industrial park close to its factory with other(independent) companies producing components. Workingtogether with the local authorities Nedcar tries to retain theemployment in their region.

23.Responsibilities24. Workers'representationRemarks25.Remarks


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Italy

Questions Answers Ref.Generalities/use of the personalof the subcontractor1. Definition of subcontracting The temporary work contract is the contract

through which a temporary work agency, hereafter"supplier company", enrolled in the officialregister (see art. 2.1.), puts one or several workers,hereafter "temporary workers ", that it engageswith the contract foreseen in art. 3, at the disposalof a company, hereafter “beneficiary company” inorder to fulfil the temporary work needs identifiedaccording to paragraph 2.

Temporary agencywork (lavorointerinale) wasintroduced in Italyby law 196/97which was later

modified andintegrated bydecrees in 1998 and1999.Bargainingamong the socialpartners was givenresponsibility forthe definition of therules implementingthe introduction oftemporary agencywork

2. General information to theemployee’s representative onthe use of subcontractingThese articles concern temp

agencies or other companiesensuring the provision ofworkforce, and not what wenormally refer to as sub-contracting.

On the contrary, the info onsub-contracting and on orderingis in Art. L 432-4

The user company communicates in advance tothe HR or, by default to the territorial OO.SS.Adhering to the unions (which have undersignedto the nationalccnl, the number of temporarywork contracts to be signed and the reasons whythey are necessary. If there are some reasons ofurgency and necessity, this communication will bemade within the three days following the date thecontract has been signed. Further more, once ayear, also through the company association towhich the user company adheres of gives themandate to, it supplies the same receiversmentioned in this paragraph, the numbers and thereasons of temporary work contracts signed, theduration of these contracts, the number and the

Interconfederalagreement for thediscipline oftemporary workcontract ex. art. 11,comma 4, of law24.6.1997, n. 196

Example;Protocol ofUnderstandingPARMA, 13December 2000

http://www.google.fr/search?q=cache:fr-eeGsgpY4C:www.eiro.eurofound.ie/1997/07/feature/IT9707308F.html


329

qualification of workers interested.

Several agreement or protocols between the tradeunions and the service provision companiesforesee the delivery of information to trade unionorganisations and the provincial labour directorate

3. Information one time a yearor more

id 2.

One year (see n°2)

4. Responsibility of the mainenterprise in case of nonpayment of wages by thesubcontractor-others cases

The user company is jointly and severally liable,beyond the limit of the guarantee of article 2,paragraph 2, letterc), as to the obligation to paythe wage and social security sums which have notbeen paid by the temporary worker suppliercompany.

Towards the user company using dependentworker (by someone different than the subjectmentioned in article 2, that is to say that violatesart. 1, par. 2, 3, 4 and 5 disposals, as well astowards those that supply dependent work withoutbeing enrolled to the register (see art. 2),paragraph 1, the law 23 October 1960, n. 1369 isapplied.Law 1369/60 on the contracting-out of labourforbids the hiring-out of workers. This prohibitionregards only the carrying out of work using labourhired by the contractor. Contracting-out is insteadlegal when a firm is assigned an activity toperform with its own means (capital, machinery,labour, etc.), assuming the employer’s risk

As to disciplinary authority for the suppliercompany, the user company communicates to thefirst one the elements which will constitute theobject of the objection, according to law 7 of thelaw 20 May 1970, nr. 300.

Law nr. 196/1997 considers the following case asbeing a reason of prohibiting the temporary worksupply: the fact that the user company has notdemonstrated o the provincial direction that it hascarried out a risk assessment.

Article 6, law of the24 June 1997n°196

Law No.196 /1997

Idem

Regarding the principle ofsafeguarding employee’s rights5 Definition of outsourcing There is no specific legislation on outsourcing n

Italy, but legal provisions regulating similarphenomena are applied.

The notion is generally used in an economic wayfor describing the economic strategy f somecompanies, especially in the car industry,involving the restructuring of the organisationconcerned around a distinction between its coreactivity and the services or tasks of the


330

production process provided by externalenterprises.

Outsourcing is relatively common at Fiat, in othproduction and services. Overall, outsourcing inthe 1990s at the Fiat Group involved around16,000 employees (the group had around220,000 employees in 1999. There are threelevels of subcontractors:

-subcontractors, which produce more complexcomponents (more strategic level ofsubcontractors);

-second-level contractors, which produce lesscomplex components and which work mainly forcompanies in the motor manufacturing sector;-third-level contractors, which producedstandardized components not only for the motormanufacturing industry.


If a company assigns an activity performedinternally to it to a third party, the provisions ofthe civil code covering the transfer of a companyor a part of a company applies. Article 2112 of theCivil Code provides that the workers mustmaintain all their rights. The acquiring company isobliged to apply the pay rates and conditionsstated by the collective contracts, also company-level (until their expiry), in force at the time oftransfer.See also rules in question n°4

7. Key conditions for theapplication of the principle incase of outsourcing (transfer ofenterprises)

There have been contradictory rulings by courts,owning to different interpretations of the conceptof "part of a business". This is an important pointbecause, as mentioned above, if a transaction doesnot involve a proper and potentially autonomous"part of a business" (i.e. that could be viable as anindependent firm), the worker's consent isneeded for the transfer of the employmentcontracts (and, therefore, he or she can decide toremain with the former employer). This debate isparticularly relevant in case of outsourcingprocesses. It also relates to the EuropeanDirectives 77/187/EEC and 98/50/EC and to therulings of the European Court of Justice, as theEuropean-level definition of transfer of an"economic entity" is usually regarded as broaderthan that of "firm" within Italian legislation

Law 428 of 1998,transfer ofundertakings

EIRO

8. Application of the principlein case of outsourcing byapublic authority

Article 34 of Legislative Decree No 29 of3 February 1993 on rationalisation of the

organisation of the public administrationand revision of the regulations on publicemployment, as amended, provides that in theevent of a transfer or contribution of activitiesoperated by the public administration, public

Article 34 ofLegislative Decreen°29 of February1993


331

entities or establishments or structures thereof toother subjects of public or private law, Article2112 of the Civil Code is to apply to theemployees transferred, without prejudice tospecial provisions


See n°7

10. Trend of the judicialdecision11. Is there any real power ofanticipating change throughnegotiation?

The legislation (transfer of undertakinglegislation) and especially the procedures oninformation and consultation are relevant in casesof outsourcing too, and this was an important areaof application in recent year, namely in the carindustry.Collective agreement at company level (mainly)could be innovativeOne of the company-level agreements consideredmost significant and innovative as regardsoutsourcing was signed in May 1998. Thisagreement concerned the transfer of 1,969workers (logistics operatives) employed in theMirafiori and Rivalta plants in Turin from Fiat toTNT, a Dutch multinational. The most significantaspects of the agreement were the following:

- the application by TNT of themetalworkers’ contract and of Fiatagreements;- the continuation of the benefitsavailable- to the Fiat workers (seniorityallowances, loyalty bonuses, discounts oncar purchases, supplementary sicknessbenefit, health spa cures, entry flexibility,etc.);- job security: the reorganizationprocess did not lead to redundancies;- continuation of all the benefitsavailableat Fiat also as regards union rights. Forexample, the Fiat agreement of 18.3.96setting up joint committees (on accidentprevention and safety, equal opportunities,training) was transposed.

Negotiations are possible, consequently, onthe effects of the company decisions

Eiro

12. Example of good practices A number of examples exist specially in the car


332

related to negotiation (result ofnegotiation)

industry and banking sector. In some casessubcontractors are involved in the negotiation(FIAT example) and the territorial social effects ofthe externalisation is taken account.

Social Responsibility/Economicresponsibility of the mainenterprise in the process ofoutsourcing13. Method of anticipatingrisks: legal or contractualarrangements for securingorders for the subcontractors?

No special regulation for securing orders forsubcontractors? Contractual agreements betweenthe main enterprise and subcontractors may beconcluded in case of outsourcing

Eiro

14. What are the consequencesof a failure of thesearrangements

No regulation on this issue

15. Responsibility of thecompany if insolvency of thesubcontractor occurs after thetransfer

No

Social Responsibility as regardthe situation of thesubcontractors of the company16. Obligation of the companyto inform the subcontractor incase of restructuring withimpact on employment forsubcontactor’s employees

No special regulation provisions provided

17.Information of theemployee’s representative ofthe subcontractor

No specific information (a part in case of transferof undertakings)

18. Intervention of the board ofdirectors or Conseil desurveillance19.Impact studies concerningthe restructuring decision at aterritorial level (bassind’emploi)

No legal obligation

20. Social Responsibilityregarding subcontractors orsubsidiaries situated in otherscountries

No legal provision

21. Existence of standardswhich guarantee quality ofproducts or employment (healthand safety) between the mainenterprise and thesubcontractor(s)

Practices show that companies encourage partnersand subcontractors to adopt rigorous standards forthe management of health, safety in particularthrough training programmes in the plants or byaudit of subcontractors firms

Social Responsibility and henetwork enterprise (supply


333

chain, standing partnershipbetween subcontractors, clustere.g.)22. Legal definition of thenetwork enterprise

Geographical closeness between manufacturer andsubcontractors is distinctive of some bigenterprises like Piaggio, one of the most importantmotorcycle companies in Italy. Around thirtysubcontracting firms have sprung up in thevicinity of its plant at Pontedera (Tuscany), orFIAT in Piedmont, the region in which thecomponents industry is most developed. There arearound 2,500 car component firms in Piedmont,accounting for 47% of Italian firms

23. What responsibility rulesapply?

+ santé-sécurité (cf. 21.)

Bargaining at the local level involvingsubcontracting companies has only just begun. InMay 1998, for the first time in Italy, asupplementary agreement was signed at Melfi,which covered the twenty-two companiesconnected with the Fiat plant.The agreement provided for the creation of threebilateral local bodies:

• the Consulation Body, which concernsitself with all the information that thecompany is obliged to provide theworkforce on investments, vocationaltraining, etc.

• the Inter-Company Committee, whichhas the task of forestalling and/or settlingdisputes;

• the Integrated Factory Committee, whichhas the task of monitoring aspects of theproduction process.A Committee for the Environment, Safetyand Accident Prevention is established ineach plant.

The contract also deals with social servicesin the area surrounding plants (for example,the problem of public transport). The othercontents of the agreement are moretraditional and concern job grades and wageincreases for overtime. Definition ofworking hours is left to the individualcompany.

• A reduction in the coverage of companyagreements?

A reduction in the effectiveness of sectoralagreements? (e.g. because of more SMEs)

EIRO

24. New type of representationof employees in case ofnetwork enterprise? New formof negociation?

The actual utilisation of the specific toolsintroduced by law must, then, involve socialpartners at decentralised level (company- orterritorial level), through preliminary


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consultations or agreements between trade unionsand employers’ organisations.At the moment, there are no indications of a fall-off in union membership due to outsourcing. Onthe other hand, Fiat is a company in which theunions have always been strongly present. Thisdoes not rule out, however, that outsourcing maymake the unions’ representative action morecomplex, given that it often involves small firms

EIRO


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Portugal

Questions Answers Ref.1. Description

a)Regulationsenterpriseslocalauthorities

Em geral não existem cláusulas específicas em termos delegislação nas relações entre as empresas e a comunidade,exceptuando ao nível da legislação ambiental.

b) Rules Em geral as comunidades locais e até os trabalhadores nãoparticipam nas reestruturações das empresas. Existemalguns casos pontuais em que o Poder Local participa dealgum modo, principalmente quando se coloca o problemado emprego (Marinha Grande, Minas da Panasqueira,Lisnave, Vale do Ave, etc).

c) Legal base Sob ponto de vista ambiental já existem regras muitoconcretas quanto aso dejectos, resíduos etc.

d) Objectives ofregulation

Preservar o ambiente e defender a saúde pública

e) Case study O caso de Souselas com a Cimenteira é suficientementeconhecido sob o impacto ambiental previsível no caso daimplementação da co-incineração.Temos o caso das Minas da Panasqueira a nível ambiental ede emprego

2. Institutions and protagonistsa) Inluence A nível ambiental e de investimentos estrangeiros existem

regras

b) Responsibility Teos verificado algum protagonismo das autarquias e dasComissões Regionais para além da acção da Inspecção doTrabalho e dos Sindicatos.

c) New players Não aparecem novos grupos para além dos tradicionais e jáinstituídos. Mesmo as igrejas raramente entram nestaquestão


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d)Provisions/Measures

Talvez se possam enquadrar aqui os planos do Valedo Ave e da península de Setúbal nas décadas de80/90?

3.Prevention

a) Provisions Não

b) Previousreport

a legislação do trabalho obriga a uma informação dostrabalhadores sobre os impactos a nível do empregodas reestruturações.

c)Partnershipnetworkinvolvement

Raramente acontece

d)Anticipation

A prevenção também aqui seria muito importantepara se limitarem as consequências económicassociais e ambientais dos processos de reestruturaçãoou de deslocalização. A informação e participação dostrabalhadores, do Poder Local e de outros grupos deinteresses existentes na região.Esta questão também deve ser enquadrada nacontratação colectiva

4.Measuresa) Publicfunds

Não é usual. Apenas conheço os Planos dedesenvolvimento de regiões em crise (Ave,Setúbal,Covilhã, Alentejo etc).

b) Mostcommonmeasures

Um bom sistema público de segurança social éfundamental bem como um sistema de formação eapoio ao novo emprego. Estas questões deveriam serintegradas nos acordos de empresa e de sector.Apoios à economia social (cooperativas, associações,fundações, mútuas,etc) da região para integraremtrabalhadores oriundos desses processos dereestruturação.

c)Alleviationof negativeconsequences(economicmeasures)

Nos acordos territoriais a estabelecer deveriam estarincluídas indemnizações da empresa que deveriamreverter para um fundo de apoio a iniciativasambientais, de formação e de emprego.

d)Institutionsandqualification

Os centros de emprego locais desenvolvem e aindapoderiam desenvolver melhor um papel decoordenação das entidades de formação erequalificação. As associações de desenvolvimentolocal e alguns sindicatos também estão a ter um papelcrescente nesta área.


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e) Rules andregulationsfor start-upsandrepaymentf) Courtdecisions

5. Goodpractices

6. Strategya)Acceptanceofstrategies?

É necessário estabelecer um quadro legal que definaas condições de implantação das empresas numalocalidade. Não basta localizar os chamados “Parquesindustriais” nos arredores das cidades. É necessárioestabelecer o que fazer ao nível da informação dostrabalhadores , instituições locais e população emgeral; que medidas implementar ao nível darequalificação e emprego e como enfrentar aseventuais consequências ambientais; quais asobrigações fiscais, ambientais e sociais da empresaque se reestrutura ou se deslocaliza.

b) moreextensiveregulation

O Movimento sindical deveria integrar esta temáticaao nivel da contratação e ao nível dos acordos geraisno âmbito da concertação social.

7. Furtherremarks

É fundamental que dos processos de reestruturaçãonão venha a degradação social nem ambiental .Deveria ser equacionada a questão do interior e litoralou região mais desenvolvida e região mais pobre.


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Spain

Questions Answers Ref.Subcontracting. General issues1. Definition ofsubcontracting

Contractual relationship according to which a contractorfirm agrees to carry out a certain piece of work or servicewithin the production ativities of the main enterprise,which is obliged to pay a certain price. This can berepeated in a chain pattern.

Several legalexperts.

2. Generalinformation on theuse ofsubcontracting

Work Councils are to be informed about enterpriseprecautionary measures on subcontractors assumptions.Must be informed about:� Name and identification of sub-contractor

enterprise.� Aim and duration of subcontracting� Location of subcontracting� Number of employees belonging to the sub-

contractor that will be occupied in the workplace ofthe main enterprise

� Precautionary measures as regard of coordinationof activities from the perspective of prevention oflabour risks.

Furthermore, before the work starts, thesubcontracontractor must inform the legal representativesof the employees in written form about the details on themain enterprise that appear above. Likewise, theemployees always have to be informed about the identityof the main enterprise in written form.

Estatuto de losTrabajadores(ET) Art. 64 , 1ºand Art. 42, 4º

Art. 24Ley 31/1995 dePrevención deRiesgosLaborales(LPRL). Healthand Safety risksPrevention Act

Art. 42.3 y art42.5 ET

3. Information onetime a year or more

Every three months Art. 64,1º ET

4. Responsibilitywhen sub-contractor-fails

Responsibility is regulated as employee right, whensubcontractor enterprise performsthe same activityas themain enterprise. In this case, the main enterprise respondsmutually with sub-contractors after one year fromtermination of the assignment.The subcontractor's responsibility towards the employeesincludes wage obligations, which are extended to SocialSecurity contributions - in this case, only for as long as the

Art. 42, 2º ET

Art. 104.1 y art.127.1 de la LeyGeneral de la


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subcontracting is in effect-.There will be no responsibility at all when the contractedactivity is exclusively construction or repair workcontracted by the head of a family for their own home.

According to the Social Security Law, when the owner ofa building site or an industry subcontracts outside thebusiness activity, they enter into asubsidiaryresponsibility with respect to Social Security obligations ifthe subcontractor is declaired insolvent - but not withrespect to wage responsibilities-.

In any case, the main enterprise must check that thesubcontractor is up-to-date in Social Securitycontributions. To this effect, the main enterprise mustrequest a certificate from the Social Security, which must,in turn, forward it within 30 days. If the main enterprisedoes not fulfil this requisite or,even if it fulfills it, if itcontracts with a company which is not up-to-date incontributions, they will become subsidiary responsible forthis specific debt with the SS - not for other debts.

Seguridad Social(texto Refundidode 1994). LGSS

Art. 24.3 y 24.4y art. 42.2 de laLey 31/1995 dePrevención deRiesgosLaborales

Regarding the principle of safeguarding employee’s rights5 Definition ofoutsourcing

No legal definition in a specific way.

6 – 7Transfer: relevantlaw and rules

The transposition of the Directive was aimed atensuring maintenance of the jobs and their conditions.New employer in charge is obliged to maintain labourand Social Security rights and obligations of previousenterprise.Unless there is an agreement otherwise, labourrelations are still governed by the collective agreementapplicable to the company when the transfer takesplace.In the transfer process employee representatives havethe right to be informed by the initial employer and thefollowing (each of them to their respective employees)about the date assigned and reasons of transfer, legal,financial and social consequences affecting employeesand precautionary measures as regard of these.A consultation period must be established about statedmeasures and consequences.Regarding labour obligations previous not satisfied,the initial employer must respondmutually duringthree years.If transfer is declared crime, must respondmutually toobligations born after transfer process.

Art 44 ET

8. Case of publicauthorities

In stated-owned enterprises, Labour Law provisionsare applied to labour contracts and not to civilservants.


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9. Right to opposeto the transfer

No

10. Trend of thejudicial decision

The trend is to addressed to limit responsibility to sub-contractor’s activity assumptions coinciding with afundamental part of the activity of the main enterprise.

Sentencias delTribunal Supremo(STS) 1995 and1998

11. Anticipationchange throughnegotiation?

No

12. Example ofgood practicesSocial Responsibility and outsourcing13 Anticipatingrisks

No

14. Failure of thesearrangements

Under Employment Regulation Proceedings – seecollective redundancies - if production diminishes, ispossible that the Labour Administration authorizes thetemporary suspension of the contracts and toemployees to receive unemployment subsidies.

Real Decreto43/1996 Reglamentode procedimientosde Regulación deEmpleo

15 Insolvency ofthe sub-contractor

No

Social Responsibility as regard the situation of the subcontractors of the company16,17 and 18Obligation toinform the sub-contractor and itsemployees

No

19.Impact studies No20. Transnationalresponsibility21. Existence ofstandards

More and more, some large enterprises – banking,textile –are ruling norms (ISO and UNE) related toproduct quality, environmental quality and enterprisemanagement.

Social Responsibility and the network enterprise22. Legal definitionof the networkenterprise

No

23. Whatresponsibility rulesapply?

No

24. New type ofrepresentation ofemployees in caseof networkenterprise?

No


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United Kingdom

Questions Answers Ref.Regarding the principle ofsafeguarding employee’s rights5. Definition of outsourcing There is no legal definition of outsourcing.

In the literature “outsourcing” can beloosely define as the contracting out ofactivities that were previously performedwithin a firm, to subcontractors outside thefirm

The TUPE (see above) does not apply incase of change in the management of acompany following a buy-up of shares. Itdoes not amount to a relevant transferbecause a share acquisition does not alterwho the legal owner of the company is.

LabourResearchDepartmentBoocklets2002


Law

There are some cases where outsourcing hasfeatured in negotiations, for example in themotor manufacturing industry. For instance,the 1998 agreement signed betweenVauxhall UK (part of General Motors) andthe trade unions (TGWU, AEEU and MSF)dealt with work organisation. The unionsaccepted the potential for ‘resourcing’ work,which could involve production being re-routed to other General Motors subsidiariesor outside GM. In return, the trade unionsreceived a commitment of no compulsoryredundancies.

The TransferofUndertakings(Protection ofEmployees)Regulations1981 (TUPE)

Eiro

7. Key conditions for the In particular, the undertaking or entity TUPE-


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application of the principle incase of outsourcing (transfer ofenterprises)

“maintains an identity distinct from theremainder of the transferee’s undertaking.This criteria determines for example theapplication of rights torepresentation/transfer.

Regulation 9

8. Application of the principle incase of outsourcing in publicsector

Unions have been demanding improvedrights for transferred workers, in particularthose who have been working to publicsector (poorer terms and conditions of workafter the transfer is mentioned by Unions)

LabourResearchDepartmentBoocklets-2002

9. Right to oppose to the transferof employment contract39?

The assumption is that contractsautomatically transfer. Employees have thelegal right to object to being transferred.TUPE says that where this happens theemployee’s existing contract ends normallywithout any right to claim unfair dismissal.However Chapter 4 shows that in some casethe court have given employees who refusedto transfer the rights to claim unfairdismissal. Employees also have the legalright to resign without notice if the transferinvolves a substantial and detrimentalchange to the employment contract, which ismore than just the fact that the identity of theemployer has changed.

Idem

10. Trend of the judicial decision

11. Is there any real power ofanticipating change throughnegotiation?

Loss of influence of collective agreements.However see question 6.

16. Obligation of the company toinform the subcontractor in caseof restructuring with impact onemployment for subcontactor’employees

No

17.Information of theemployee’s representative of thesubcontractor

In case of transfer, all employees who couldbe affected by a change of employer havethe right to be informed in advance of whatis happening. This includes both employeesworking for the old employer and thoseworking for the new employer. The aim is toprovide enough information to enablegenuine consultation to take place.The consultation takes place “long enoughbefore a relevant transfer” (early aspossible). In a case law, the court held thatRegulation 10 did not require that the

IPCS vSecretary ofState of


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employer had to have a detailed plan of whatwould happen after the transfer.

defence(1987) IRLR373

18. Intervention of the board ofdirectors or Conseil desurveillance19.Impact studies concerning therestructuring decision at aterritorial level (bassin d’emploi)

No

20. Social Responsibilityregarding subcontractors orsubsidiaries situated in otherscountries

March 2000:British government creates aministerial post for Corporate SocialResponsibility (CSR) and coordinate CSRpolicies across the government / In July2000 British Parliament require reporting onsocially responsible investing/November2000 Minister for CSR formsintergovernmental network withcounterparts in Ireland, Netherlands andDenmark on CSR issues and best practices/March 2001: first government report onCSR

21. Existence of standards whichguarantee quality of products oremployment (health and safety)between the main enterprise andthe subcontractor(s)

Co-operation between principal and suppliercompanies involves new technology andforms of working to improvecommunications and productivity. Vauxhalland suppliers interface through SILS (supplyin-line sequence) whereby componentssuppliers receive schedules from Vauxhall atregular intervals daily and transfercomponent assemblies in correct sequence tosmall ‘trains’ on tracks to the preciselocation on the assembly line. A similardevelopment is that of Ford, wherebyseveral hundred suppliers are linked up toFord’s computer-aided design andmanufacturing and computer-aidedengineering system so they can participate ininteractive design process.Moreover, as firms become increasinglyglobal (such as Ford), they endeavour to findgood global suppliers. Such manufacturersare reducing their supplier base, to thosewith engineering capabilities to help designparts and systems. In this way, they can alsoensure consistency in the quality of design,whilst benefiting from a reduction of headcount by relying on suppliers to take care ofdesign, manufacture and assembly

Eiro

Social Responsibility and thenetwork enterprise (supply chain,standing partnership betweensubcontractors, cluster e.g.)


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22. Legal definition of thenetwork enterprise

NO

23. What responsibility rulesapply?

+ santé-sécurité (cf. 21.)24. New type of representationof employees in case of networkenterprise? New form ofnegotiation?


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Case StudySTART Amadeus GmbH

START Amadeus GmbH currently belongs mainly to Deutsche Lufthansa and AmadeusGlobal Travel Distribution S.A. Amadeus in turn belongs to the major Europeanairlines.

While START Amadeus has an operations location in Bad Homburg near Frankfurt,Amadeus owns operative facilities in Erding near Munich, as well as in other locationsincluding Nice and Madrid.

The company group provides a travel distribution system. The enterprise is marketleader in Germany with 85 percent market penetration. The company currently has aworkforce of around 680 full-time employees. The operation of a computing centre wasto be relocated from Frankfurt to Erding in 1997.

The reason put forward for this was insufficient capacity loading in Munich, which thecompany founded on figures supported by an expertise prepared by Arthur D. Little.The employee council resorted to business management experts pursuant to § 80.3 and §111 BetrVG (Company Constitution Act) and commissioned an audit of the company’sreasons for the outsourcing. It was discovered that the costs advantage put forward bythe company management was an extremely optimistic estimate.

In addition, considerable financial risks that could not be quantified had not yetappeared in the discussion. So it was established that the outsourcing measure inconnection with the company’s legal affiliation to the Amadeus Group was a strategicand therefore corporate political decision to use the Amadeus computing centre capacityto the full. The START Amadeus management was bound to a large extent bycorresponding shareholders’ resolutions. However, disclosure of the business risksinvolved in the measure did result in a considerable increase of pressure to take actionsto achieve the best possible socially acceptable solutions in connection with realising theoutsourcing measure.

A balance of interests firstly provided that redundancies for operational reasons inconnection with the measure were excluded. Instead, the approximately 30 affectedemployees were offered employment with Amadeus at another location in the course ofmoving the computing centre.


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Amongst other things, the accepting company had to make a statement on professionaldevelopment possibilities and the intended further education planning. If the employeesdid not agree to a transfer of the employment relationship to Amadeus, then a processwas described to determine employment possibilities with START.

It is important to know that the locations of the two computing centres are 350 km apart.This meant that only some individuals went along with the change to the other location.

The process to determine employment possibilities at the original location was steeredby a clearing entity with parity representation. This body had the task of preparing anew, acceptable job offer. This included finding all situations vacant at the time andthose becoming vacant in the foreseeable future. In order to create situations, it was alsoagreed that the clearing entity could initiate the examination of in sourcing possibilities.

The individual further education planning of the employees was another of the clearingentity’s tasks. The employees were accorded the right to a qualification of up to 6months full time prior to starting work in the new position. The employer financed thesequalification measures.

START obligated itself to first make an offer to those employees who did not go to thenew location. If the employee refused this offer, then a second offer had to be made.Redundancies for operational reasons were excluded for a period of 18 monthsfollowing the job offer.

A so-called retainment bonus was negotiated for the employees who went along withrelocation of the computing centre. A due date was specified until which time thecomputing centre remained in Frankfurt. If the employees employed in Frankfurt stayedat their jobs until this time, i.e. did not serve notice to quit themselves, then theyreceived a bonus of a half-year’s pay. If these employees accompanied the move to thenew location, then they received a further bonus of a half-year’s pay. In addition, theseemployees were granted the right to return to the original location.


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A social plan was also negotiated. As a result, almost all the jobs affected by thismeasure were kept.

Four years after implementing the measure, the operators and system developersthreatened with the loss of their jobs at that time are employed at other workplaces.

This positive example of external responsibility came about under the following specificconditions:

- Labour shortage in the IT sector at the time the agreement was concluded.

- Resources expertise and time to investigate the business management reasons for theoutsourcing measure.

- Higher value attached to further education and employee loyalty in the corporateculture.

- Sufficient time and resources for realising the measures to keep employment(employability).


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Case StudyBombardier Transportation and Computer Sciences Corporation (CSC)

In financial year 2001, the Bombardier Group acquired the German firm Adtranz tobecome the world’s largest manufacturer in the railway industry.

Within the context of this global project, it was decided to sell the Service Deliverysegment of the IT organisation to a specialised, world-wide active outsourcingenterprise.

Amongst others, this affected 37 production locations in Europe. Roughly 150 ITemployees are affected in Germany. Around 100 of these are accounted for byBombardier Transportation GmbH. The corporation justified this measure with loweroverheads, investment costs saving and a higher expertise at the outsourcer.

The central employee council had concluded an agreement (collective agreement) atBombardier Transportation GmbH to regulate third party engagement and outsourcing.

This agreement contained the following key points:

- Absolutely complete information about the economic background of the intendedmeasure.- Obligation to examine alternatives for “modernising” the activities under own efforts.- Concluding protocol of the results of the economic investigations.

The responsible employee councils resorted to economists and legal experts to evaluatethe outsourcing measure. All documents were made accessible in neartime.Commissioned by the employee councils, expert opinions were stated concerning thefinancial effects of the planned outsourcing and the evaluation of possible alternatives.

As a result, the employee councils established that optimising the IT organisation wascertainly possible under own efforts. In spite of this, the management had instructions tocarry out the outsourcing project.


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The question as to whether this measure was a company change in the meaning of § 111BetrVG remained a matter of contention. The employee councils first intended toconclude a so-called tripartite agreement between the outsourcer, the company and theemployee councils.

This failed at Bombardier Transportation GmbH because the employee councils were ofthe opinion that the outsourcer did not want to commit itself sufficiently to theprotection of the employees.

Such an agreement did come about at the sister company Deutsche Waggonbau GmbH.This essentially contains a concrete procedure arrangement for the transition ofemployment to Computer Sciences Corporation Managed Services GmbH in connectionwith § 613a BGB (German Civil Code).

Furthermore, an arrangement to compensate for the disadvantages of changing the placeof work was agreed for a period of two years following change to the outsourcer. And aseverance regulation was agreed for employees served with notice for operationalreasons within a period of two or three years after company transition.

In summary, the following conclusions can be drawn:

- The employee councils had sufficient resources and expertise in this case toinvestigate the economic grounds of the outsourcing measure.

- The worsening prohibition of § 613a BGB works in Germany as a minimum securityfor the working conditions of the employee.

- Regulations going beyond this by way of collective agreements are basicallypossible, but depend strongly on the specific conditions of realisation in each individualcase.


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Case StudyExternalisation in the field of HealthCigogne

The particular context of the shortage of care workers (nurses, nursing auxiliaries,midwives, and certain medical specialities (anaesthetists, emergency medical staff,psychiatrists, etc.)) currently means the threat to their jobs is almost non-existent in theevent of the restructures, mergers, and absorptions that remain the common fate ofprivate health at present.

As regards the highly fashionable outsourcing of related functions (catering, laundry,housekeeping, technical maintenance), the guarantees are rather weak (beyond theprotection provided for by article L122-12 of the Labour Code, of course).

They sometimes relate to the geographical location of the job; but collective receptionagreements and the size of subcontracting companies (EUREST, SODEXHO, forexample) offer a better defensive framework to employees, who are frequentlymarginalized in hospitals.

It is interesting to note the protection against outsourcing offered by the"Cigognes"ruling of the Court of Cassation, which states that "ASH carers" (hospital service staffproviding care, i.e., the housekeeping staff responsible for patients’ rooms) cannot beoutsourced within the framework of L122-12 in as much as these, being in contact withpatients and providing a strong presence, are an integral part of the care function andcannot be separated and therefore externalised: “no service involved in the overall careof patients may constitute a distinct economic entity, even if it can be entrusted to a thirdparty.”


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Case StudyExternal ResponsibilityThe Case of Tenovis & the Appearance of “Social Clauses” with regard toexternalisation

TENOVIS (formerly BOSH Telecom and taken over by Kohlberg Kravis Roberts & Co- KKR is an American investment company) is a telephone installation firm. Thecompany TENOVIS produces PABX (automatic company commutation switches),assembling and installing them, and defining all the internal company networks. Thisrestructuring consists of a transferral of the last French factory (located in Montceau lesMines) to a takeover company, EOLANE.

In-depth transfer of sectorRestructuring at TENOVIS occurs at a point in time when the TELECOM sector isfacing formidable challenges. Amongst these we could mention the technologicalchallenges linked to the objectives of convergence of routes/data/images, or again thesocial and economic challenges related to industrial transfers and to the increase inrestructuring phenomena accompanied by massive, and often brutal, reduction of jobs inthis sector.In particular, the equipment manufacturers in the sector are more and more oftenrelinquishing their factories, primarily to:

• influence the creation of value (with fewer assets on the balance sheet, theremaining assets can yield more)

• increase flexibility (by externalising, it is easier to change supplier quickly andwithout difficulty than to change the activity of the factory)

• favour, as a result of increased flexibility, the conquest of new market shares.

Most companies in the sector suffer from over-investment and over-capacity; they areleaving their factories, even giving them away, and demonstrating a policy of “run foryour life”. What is new is that factories are being sold without encumbrances, a factwhich even more directly raises the question of a possible externalisation of socialresponsibility by the companies.


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This development has passed through several stages, which can be presented as thedifferent phases of externalising social responsibility of companies in the sector.

1. Indiscriminate acquisitions of sites by sub-contractors, such as Flextronics,Solectron (generalisation phase).

2. Now Flextronics or Solectron are beginning to close or sell their units(rationalisation phase).

3. A new type of takeover company can be seen: the opportunists

In this ever more unstable and uncertain context, where the examples demonstrate thatthe social responsibility of companies seems to be disappearing, TENOVIS can be seenas a more responsible company as it implements the externalisation of its activities.

TENOVIS “more” socially responsible.• First of all, TENOVIS undertakes to provide the takeover company with allencumbrances until 2007 (declaratory commitment)

• The takeover company has no risk in the first year

• If the encumbrance commitments are not respected, TENOVIS undertakes to paycompensation

• The takeover company should nevertheless find new clients to be able to face thefuture and the possible withdrawal of TENOVIS. This search for new clients is alsonecessary to re-establish the balance of power on the market and to be in a betterposition to negotiate prices with TENOVIS.

• The assignor leaves a social fund destined to provide the best conditions for thedeparture of certain persons incapable of adapting to the new demands. This fundremains modest (150 K euros), but it is the principle, which is more important than thesum promised, in the case in point.


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The ProcedureThe procedure used is that covered by article L.122-12 of Labour Law (preservation ofworkers’ rights in case of transfer). However, the negotiations which took place betweenthe assignor, the assignee and the workers’ representatives served to complete theformal framework of the law. Such agreements not explicitly allowed for by the lawand aiming to anticipate the risks to jobs during restructuring (in the case ofexternalisation), are not rare in France.

The TendencyPractice has shown that negotiations with labour and management lead to the company’srecognising the existence of a kind of “social debt” with regard to externalisation notonly of the activities but also of the posts of their employees who are suddenly facedwith competition.

It is not rare that, in the shadow of the law, kinds of “social debts” be negotiated: theassignor compensates for the risk to the employees (externalised posts, opening tocompetition). More and more kinds of “social clause” are introduced at the moment oftransfer of the company: just as assets and liabilities are transferred, so social debts arealso transferred (the company’s debts towards the personnel).

Examples such as these of “social clauses” can be found in other companies such asVALFOND or RENAULT: when RENAULT rendered its logistics more flexible, thetakeover company abstained from creating redundancies for a period of 3 years (also asocial debt).


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CHAPTER IV

TERRITORIAL RESPONSIBILITY


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Territorial Responsibility Report

Content

Introduction

Main results

The territorial dimension: a Community focus

Restructuring are still taking place

The relationship between local communities and companies regarding territorialresponsibility

CSR and Territorial Responsibility

Company restructuring and the measurement of local effects

The role of local authorities

Local training

Redevelopment or reallocation of abandoned sites

Conclusions and Guidelines

Annexes

National Tables

Detailed cases


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Introduction

In recent years, the territorial aspect has become one of the newest and most relevantways of applying economic and employment policy. Local and regional territories areideal areas for determining priorities and for taking advantage of potential forinnovation, entrepreneurial undertakings, the creation of new types of employment, andeven for experimenting with new forms of social partnerships.

The territorial discourse and line of thought relating to business and employment hasfocused on two main areas. On the one hand, the more liberal focus, represented by therecommendations made and programmes financed by the OECD on territorialeconomies, based on the idea that employment is the result of economic growth, andtherefore, that the role of the State, and of competent local authorities should be toremove any obstacles to greater market competition. In keeping with this idea, “…theState’s role as a top-down regulator should be changed to that of a listener, gatherer, anddisseminator of information. First and foremost, the central government must be astrategic partner for local and regional actors.”40

Conversely, the European Union has developed a much more socially and economicallyintegrated territorial concept and focus. From the earliest programmes on localEmployment Initiatives, up to the current European Strategy for Employment, andincluding structural policy, the approach to the territorial issue has been much morefocused on achieving the objectives that combine economic efficiency and socialcohesion. The local dimension is defined as a privileged area for the interaction andcooperation of the different social partners; an area that is full of potential and ripe forexperimentation in policy and programmes within the framework of strategies foreconomically sustainable social development.

The policies and programmes encouraged and financed by the European Commissionhave generally addressed these goals. Within this context, local social partners take on amore salient role. Furthermore, in the last decade of the 20th century, significantadvances have also been made in administrative decentralization processes withindifferent European Union states, a reflection of the concern of national-centralgovernments to respond more agilely to social demands –which in turn are theexpression of unsolved problems and unmet needs found most often on theadministrative levels with more direct contact with citizens. Social and employmentpolicies have been the protagonists of this process –devolution —to local bodies,assigning them greater capacity, responsibility and functions, albeit of an extremelyvaried political nature.

40 Marco Biagi “Job creation policies at local level and the role of the social partners in Europe”. Working paper.International Labour Office. 2002


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Thus, political power is shared amongst the different territorial levels (local, regional,national or central) according to different structures in different States of the EU. Thispolitical-territorial diversity constitutes citizen, social and cultural wealth, while itmakes comparative analyses more difficult.

GOBIERNO DESCENTRALIZADO EN LA UNIÓN EUROPEAGobierno del PaísGobierno Local

RegionalIntermedio Gobierno Local

Federal states

Austria 9 Länder 2.351 Gemeinden

Bélgium 3 Regions

3 Communities

10 Provinces 589 Communes

Germany 16 Länder 435 Kreise and kreisfreieStädte

14.865 Gemeinden

Unitary States

Denmark 14 Amter 275 Kommuner

Finland 1 Autonomous region 19 Regions 452 Kommuner

France 26 Régions 10 Départements 36.763 Communes

Greece 13 Regions 1.033 Municipalities

Italy 20 Régions + 2autonomous provinces

10 provinces 8.100 Communi

Ireland 29 Counties 10 Boroughcorportations 49 urbandistrict councils

Luxembourg 118 Communes

Netherlands 12 Provinces 548 Municipalities

Portugal 2 Autonomous regions 308 Municipios

4.241 Freguesias

Spain 17 Regions(ComunidadesAutónomas)

50 Provincias 8.078 Municipios

Sweden 3 Regions (until 2001) 21 counties(län/landsting)

289 Kommuner

United Kingdom 4 Nations

8 English regions

34 Counties 263 shire districtcouncils

Source: OECD, CEMR, COR


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Within this new scenario there is much left to be done, but in cases where the first stepshave been taken from the onset, the territorial dimension has also been assigned greaterimportance in company restructuring processes. In recent years, in addition to the darkerside of restructuring –lowered production levels, company closures, massive layoffs—themost noted cases, and the ones that have captured the greatest attention from the media,have been those relating to the local and territorial impacts of these measures. Theevidence that decisions taken by businesses do have direct and indirect social impactshas been painfully confirmed, and has led to the development of the thesis thatcompanies have a “territorial responsibility”.

This hard to define concept is bound to two other aspects: on the one hand, the conceptthat is already seen in some continental European planning and lines of thought, of theimportance of social function of companies. On the other hand, a more recent conceptimported from Anglo Saxon culture and practices, although developed in its own waywithin the EU, is that of Corporate Social Responsibility.

The territorial responsibility involved in any restructuring process is related not only tothe social, economic and environmental impacts it may cause. Since these are related tothe prior existence of the production structure of a member state, and so, of a region orlocal area, they also affect the lifestyle and “culture” of citizens and workers residingwithin that territory. Territorial responsibility identifies the ties between economicactivities and clearly recognizes the entire group of stakeholders affected. It revealsinterests and notes contradictions. Perhaps the greatest of these latter is the need to adaptand modernize obsolete local industrial production structures that have becomeeconomically unfeasible and in many cases have a negative impact on the environment.

Furthermore, within the EU, citizen and societal perceptions of company restructuringprocesses are changing as stakeholders distinguish between the different aspects ofrestructuring efforts. On the one hand, there is the economic pressure, the needcompanies feel to maximize profits in a global economy, something that only affectscertain types of companies, generally those within the industrial and export sectors.

The trend toward globalisation is a reality that is perfectly compatible with strategieslinked to the local, social and productive environment.

On the other hand, the reasons behind decisions for restructuring more and more arebeing questioned and their true causes investigated. Citizens distinguish intuitivelybetween what are considered reasonable causes, - losses and low profitability- andothers, which are not understood by society, which generate strangeness and generatesocial mistrust. Causes that are rejected by society –strategic decisions or financingdecisions—that lead to measures such as plant closures or collective redundancies or thetransfer of different parts of the production to other countries out of the UE.


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The decision by a multinational company dedicated to speculative investment, to close aprofitable company with several branches located in various EU countries because itprefers to transfer its production site to a third world country with lower labour costs ismuch more arguable than that of a traditionally industrial company that is forced toclose because it become less competitive due to a loss of market share, or because it hasbeen unable to keep up with technological modernization.

Theses differences are assigned increasing importance, not only for workers and theirrepresentatives, but also for citizens in general. In citizen demands that companiesassume greater social responsibility the first approach to the concept of territorialresponsibility is found.

With regard to company restructuring efforts, territorial responsibility offers at least twopoints for reflections. First, the general idea of anticipation of analysing systems andmeasures adopted to prevent an eventual crisis –because a restructuring is, to a greateror lesser extent, the manifestation of a crisis in the company--. In this sense, the bestrestructuring is one that has been foreseen. And, to take this notion one step further,according to modern business management principles, there is the view that avitalcompany is one that is in a constant state of restructuring and reorganization. This focusis based on anticipating change, something that is currently not being done –far fromit—in current enterprise practices.

Second, the concept of restructuring as a structural problem of the business, theresolution of which has an impact on the local area where the company or workplace isestablished. In both cases, from the standpoint of restructuring, territorial responsibilityis part of the company’soutside responsibility, and as such is an entirely new dimensionwhich must be explored, one with clear ties to the so-called external responsibilitywhich will be examined in another chapter of this report.

The purpose of this chapter is to analyse what legal or conventional norms orregulations, what agreements between company management, workers and theirrepresentatives, or in the absence of these, what company experiences and practicesexist or have been developed along the two points for reflection noted earlier. That is,either anticipating change and positioning the company in such a way that restructuringcan be achieved efficiently and at the lowest possible cost, or carrying out therestructuring so as to ensure the lowest possible territorial impact and reduce damage,and even to turn a crisis into an opportunity for the economic regeneration of a specificterritory.

The analysis of the tables that bring together and organise the kinds responses to thespecific questionnaire shows the relative difficulty encountered when trying to defineand isolate territorial responsibility as a concept independent from others – CorporateSocial Responsibility -. In fact, it shares common aspects with so-called externalresponsibility. Thus, certain elements of territorial responsibility cross over other issues,such as employability and even the general treatment of collective redundancies.


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Main results

The territorial dimension: a Community focus

As mentioned earlier, the EU has taken on a particularly active role in underscoring theimportance of the local perspective in the planning and application of employmentpolicies, and on the effect this perspective has on the production and enterprisestructure. Due to their greater proximity to citizens, levels of competence (including themanagement of training programmes, services to the unemployed, and the local fiscalobligations of companies located within their territory) and their own role as publicservice institutions, local bodies are called upon to play an increasingly salient role, notonly within the European Employment Strategy, but also in the application of otherCommunity and national policies.

This approach and this recognition are found in different actions and programmeslaunched by the Commission.This is noted in the April 2002 Communication “Acting Locally for Employment - ALocal Dimension for the European Employment Strategy”41 which states: “Thecompetitive position of the private sector depends to a certain extent on thecompetitiveness of the territory, which in turn depends, inter alia, on having the humanand social resources required by new economic conditions. The issue then is how localpolicies can contribute to the competitiveness of local firms. A "user needs" approachrequires the involvement of the local business community in the design andimplementation of local employment and development strategies.”

However, there is no express mention of the territorial dimension of companyrestructuring along lines specifically linked to local development. It would appear thatthe principle focus is more on the competitiveness of the territories themselves, as if thiswere anex novosituation. And there is a strong tendency to view the new opportunitiesgenerated from a standpoint of fostering entrepreneurial spirit and innovation. Thisperspective appears to be consolidated in the 2001 Communication "Strengthening thelocal dimension of the European Employment Strategy”42, in line with the Guidelinesfor Member States' employment policies43 when it notes, “Member States will take intoaccount, where appropriate, in their overall employment policy the regionaldevelopment dimension and encourage local and regional authorities to developstrategies for employment in order to exploit fully the possibilities offered by jobcreation at local level and promote partnerships to this end with all the actorsconcerned, including the representatives of civil society.”

41 Communication from the Commission to the Council, the European Parliament, the Economic and SocialCommittee and the Committee of the Regions COM(2000) 196 final42 Communication from the Commission to the Council, the European Parliament, the Economic and SocialCommittee and the Committee of the Regions. COM(2001) 629 final43 Guidelines for Member States' employment policies for the year 2002.


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On the other hand, it is significant that within the financing -European Social Fund-allocated for innovative measures to promote innovation and local employment strategy,that no specific mention is made of funding to help deal proactively with cases ofcompany restructuring.44

By contrast, the Territorial Pacts promoted by the Commission do expressly address oneof the possible negative consequences of company restructuring. Specifically, it deemsthat the rehabilitation of abandoned industrial sites be assigned priority status, althoughthis measure is taken as a means of avoiding the creation of new industrial sites,45.

A large number of the Territorial Pacts included in the previous structural fundsplanning period have been linked to the regeneration of areas and territories negativelyaffected by company or sector restructuring. Specifically, the following Pacts have beenvery addressed to solve problems of declining industries on a territorial dimension basis:

Ireland· Limerick: declining of the traditional manufacturing industries· Dundalk-Drogheda: declining of industries such as textiles, engineering and

brewing.France:

· Pays de Valois: the only major industry, Case Poclain, lost 3.000 jobs in 10 years· Pointe des Ardennes

Germany· Zeitz, Burgenland District, Saxony-Anhalt· Braunschweig-Peine: structural change in the coal and steel industry· Amberg-Sulzbach, North Bavaria: crisis in coal and steel

Belgium· Vlaanderen: Halle-Vilvoorde: closure of the Renault car plant.· Bruxelles capital: economic and social decline of districts

44 Budget heading B2-1630: Innovative measures under Article 6 of the European Social Fund Regulation:"Local Employment Strategies and Innovation45 Guide to the Territorial Agreements for the creation of employment 2000-2006. Structural Funds. EuropeanCommission


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For instance, inFrance the impact of territorial pacts can be considered as modest, duewithout doubt to the large number of territorial procedures and structures that alreadyexist and which sometimes overlap each other. However, examples do exist of theterritory being taken into account in terms of re-organisation decisions.

In Italy , some company groups (particularly in the automotive industry) are beginningto see some validity in the participation in local development, following the example ofFIAT in the Piemontese region: during the preparation of the “regional employmentpact” between communes in the province of Turin, players (in particular trade unions)have tried to implicate FIAT in this, by proposing to associate local entities (inparticular the university) to the FIAT programme aimed at promoting quality standards(know-how, innovation, training) in its relations with suppliers, the “crescita guidatafornitori” programme.

Defence sector and urban-territorial impact

In terms of the defence sector, taking the territorial development into account wasintegrated into the re-organisation of supports, command structures and trainingbodies: an analysis per employment basin of the weight of defence in the local economy,the effects of professionalism over the period of the scheduling law and the military andcivilian professional jobs restructured over the 1997-2002 has been carried out.

For the command structures, a re-occupation of the joint staff headquarters locationshas been researched in order to restrict the impact of their closure on the localeconomy. For the support organisations, urban development considerations have beenreconciled with the necessary neighbourhood support for the units, a warranty ofefficiency on the operational plan.

The defence presence in the Paris region has been considerably reduced. In total,outside the Ile-de-France, only two Normandy regions will lose their professional force,however only in moderate numbers, between 1997 and 2002; out of the 224 employmentbasins with an armed forces presence or general delegation for state armament in 1997,only 4 will, due to professionnalisation, see a reduction in their higher executiveworking population.


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At this moment, the EQUAL programme sometimes intervenes as a support onterritorial initiative.

Finally, on March 2002, the Committee of the Regions, in its opinion issued on theGreen Paper on Promoting a European Framework for Corporate Social Responsibilitypoints out that “Special attention should be paid to the impact of company restructuringon the local or regional community. Local and Regional authorities should help to set up“strategic monitoring groups” to evaluate the impact of likely changes in businessactivity and create the conditions needed to accompany them in a manner that isacceptable to all stakeholders.”

Territorial pact for employment: Sangro-Aventino in Italy

This is in the region of the Abruzzi in Southern Italy is an area of great contrast. Thecoastal strip and the neighbouring lowlands have a relatively low unemployment rate(13.1%). In the more mountainous hinterland, by contrast, unemployment averages22.4% and in some places is as high as 35%. Young people are particularly affected bythis scarcity of jobs, and there is a movement of migration of people from the interior tothe coast.To narrow the gap between the coastal and inland areas, the province of Chieti, whichis responsible for coordinating the Territorial Pact, has decided to promote a new localdevelopment dynamic based on the utilisation of indigenous resources, the developmentof a culture of projects, and the networking of the different initiatives undertaken.

Key elements:- The establishment of a global strategic framework for Sangro-Aventino thatincorporates the initiatives developed.- A long preliminary phase of consultation involving all the parties concerned.- 52 partners, including representatives of employers and trade unions, are workingwithin the Pact.- A method of integrated local development, coordinating interventions in the sectors ofthe economy, tourism, and agriculture.- The sharing of good practices and the networking of initiatives.- Emphasis placed on strengthening local SMEs through collaboration with a majorcorporation.- The involvement of local banks to supply venture capital for SMEs in addition to otherservices


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Restructuring are still taking place

In recent years, there have been plenty of restructuring cases that have had a negativeterritorial impact. Some of them are still very recent or their effects are still being felt.On the other hand, during the economic cycle in which this report is written, businessexpectations in the EU are still uncertain. In the current economic period there areregularly new restructuring cases, either being announced or taking place, which havevery hard territorial consequences. For instance, inFrance the closure of the MoulinexCompany's sites in Calvados and Basse Normandy, in October 2001, a zone already thesubject of 2 regional development plans.

In Germany, Bielefeld's economy underwent structural changes in the last years. Forinstance, massive job reduction took place in the engineering industry. About one thirdof all jobs in the metal industry were lost during the 1990s. This loss of employmentfocused on large companies, particularly in the engineering industry, with specialemphasis on the machine tools industry, which - apart from 2-3 enterprises - entirelydisappeared. As far as particular enterprises are concerned, Mannesmann Tube Factory(now MAP) for instance cut 1300 jobs from 1990 to 1999; today only 300 workers areemployed in the Bielefeld factory. In Ost-Westfalen's biggest engineering company(Dürkopp Adler AG) the number of employees was reduced from 3000 to about 1200.

In Greece, areas hit by unemployment, which have entered the stage of de-industrialisation are mainly located in northern Greece (Kozani-Florina zone, Dramaand Imathia prefectures), Magnesia, Viota and Achaia Prefectures, western areas ofAthens and Piraeus where many companies engaged in traditional industrial activityhave closed down.

In Italy , recent restructuring in the automotive, banking, and insurance industries havehad a significant impact on the local labour market. In the case of the Intesa Group oneof the major banking groups in Italy, which was progressively created in recent years byway of mergers and acquisitions. The latest company reorganisation plan envisagedsome 5,400 redundancies (to be added to a reduction of 2,500 workers through transfersof single retail-banking outlets) out of a total of about 70,000 people. A special sectoralfund for managing restructuring is intervened.

Even if this only records a fact, some of these cases come together with a partial or totalmove of industrial production from current EU countries to countries that are on theprocess of joining the EU. New markets and lower labour costs are, amongst otherfactors – like the settlement in countries which have an industrial tradition and qualifiedworkers – the reason why some companies decide to undertake restructuring processesof different magnitudes.


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In Spain, at this moment there are several relevant cases with serious industrial disputes.For instance, Fontaneda factory in Palencia, - a small province in the north of Spain -, afamous traditional Spanish brand of biscuits is going to closure by a strategic decision ofthe multinational United Biscuits. There is a strong involvement of the regionalgovernment of Castilla-León, not authorizing the administrative procedure of collectiveredundancies and looking for new investors in the same sector. A lot of examples,including the transfer of part of the production to the candidate countries in theautomobile sector (SEAT).

The relationship between local communities and companies regarding territorialresponsibility

Two conditions are necessary for us to be able to approach territorial responsibility. Onthe one hand, the existence of relationships and involvement between the company andthe local community. On the other, the existence of regulations, either legal or generatedby voluntary agreements which can define territorial responsibility and regulate theirfunctioning.

In the first case there are the existing relationships among companies and thelocal/territorial areas in which they conduct their enterprise activities. This active andpassive interaction between the company and the local environment would generate asense of correspondence, some kind of moral duty born from the social role, which thecompany also fulfils. Responsibility isowed– by a company – and it can be demandedby somebody – in this case by all the stakeholders in a territory – for a reason, that is,based on the previous existence of links and involvement. These relationships tend toarise naturally and reflect mutual interests.

In the Netherlands, for the enterprises, the principle is: a good reputation has marketvalue for a company. Trust is becoming more and more important. This is reinforced bythe fact that companies impose requirements on their suppliers not only as regardsproduct quality and reliability of delivery, but also with respect to production methods.Some companies make an effort outside the framework of collective agreements, forexample by supporting projects for coaching difficult target groups in the reintegrationprocess. Other companies take part in neighbourhood improvement projects or dosomething about the unemployment problem about the weaker groups in the localcommunity. For the company, this is a win-win situation. Improving the quality of lifein the neighbourhood can enlarge the market for its products and services and improvethe functioning of the local labour market


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In Germany, Volkswagen AG in the "auto city" Wolfsburg may serve as an example, aswell as ThyssenKrupp AG, which participated actively in the «Dortmund Project»,dedicated to the creation of new leading branches of industry after the closedown of theformer Hoesch steel factory. (www.dortmund-project.de).

Beyond administrative measures, - opening centres and facilities, public orderregulations regarding security or urbanism – and environmental measures, no generaldispositions have been found that regulate the relations between a company and thelocal community where it is located. In most countries, these are legal regulations oflower rank – of administrative nature and at local level, like those related to theregulation of urbanism or services – or of state rank, when they refer specifically toenvironmental issues or issues directly related to restructuring, such as legislation oncollective redundancies.

In practice, the strength, intensity and type of links established in relationships betweencompanies and the local environment vary significantly from one country to another andeven from one region to another within the same country.

As for the second condition mentioned above, we can say that, at least nominally, thereis no specific legal definition of territorial responsibility as such, nor of the conceptincluded in the legislation of the Member States.

In general, there are several regulations on territorial competencies (regions, localities,areas, etc.) - asFrance - with regard to Directives for Urban and SustainableDevelopment, Laws on State-Regional Scale Contracts and Law on Decentralisation.These provisions are applicable, especially in their articulation with the authorities on anational level are applicable.

In other countries, such asSpain, no specific regulations exist, although inAdministrative Law and Environmental Law several requirements are established toregulate the opening of workplaces and installation and functioning of specificactivities; these are norms linked to administrative control and do not regulate stablecommunication procedures between local authorities and enterprises regardingrestructuring.

Nevertheless, we can detect regulations, which are indirectly related to certain collateralaspects of territorial responsibility. Thus,in Italy at national level it can be mentionedthe tripartite agreement of 1993, which strengthen the role of these bilateral bodies indealing with the effects on social aspects, levels of employment and working conditionsassociated with processes of technological innovation, company reorganisation andrestructuring. In addition, within the context of administrative decentralization,Italy hasdifferent regional regulations on certain aspects of territorial responsibility.

http://www.dortmund-projekt.de/


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However, the most significant regulations are found in collective bargaining and othertypes of agreements, and agreement protocols.

Some collective agreements between big enterprises and trade unions give priority to"Joint Consultative Committees" at various levels: group, territory, sector, and companygrouping. The general tasks of these committees are as follows:a) prior examination and investigation of the strategic options for industrial andeconomic policy, of restructuring and development projects and of relevant aspects oflabour and industrial relations policy;b) evaluation of and formal, obligatory but non-binding advice on these matters;c) verification and monitoring of the implementation phases;d) presentation of proposals on work organisation, industrial relations, and the labourmarket.

But the most significant case is that ofFrance, the only EU country with regulations inplace as to the relations and procedures to be implemented in cases where companyrestructuring negatively affect the employment basin's economic equilibrium. Francestands out as an example due to the recently enacted French law that is practically theonly regulation in Europe specifically regulating certain aspects of territorialresponsibility.

In the Labour Modernisation Laws (Article 118), different measures have been foreseenfor companies having more than 50 employees (meeting arranged by the region's seniormagistrate (optional for region's senior magistrate) covering training initiatives andresources for revitalising business activity). As for companies with more than 1000employees, these should take the necessary steps aimed at creating employment withinthe employment basin faced with full or partial site closure, a measure that can thereforeaffect companies having a European Works Committee (at least 1000 employees).

An agreement is signed between companies having more than 1000 employees and theregion's senior magistrate specifying the nature of the actions to be undertaken toreactivate the employment basin. Prior to the signature of this contract, the region'ssenior magistrate arranges consultations between unions, employers, elected officialsand representatives from the consular bodies, and which are also involved in theimplementation of the agreed measures.

For the company held to implement these measures, the financial ceiling is set at amaximum of 4 times the monthly value of the legal minimum wage per redundantposition. The State's representative (senior magistrate) sets the amount applicable to thecompany in accordance with its financial capability, the number of positions maderedundant, the situation within the employment basin in terms of business economy andthe level of unemployment


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Corporate Social Responsibility and Territorial Impact

CSR and socially correct territorial practices

Territorial responsibility is closely related to practices associated to CSR. Manycompanies establish relationships of cooperation and support with the local communitywhere they are located. These relationships arisenaturally, they are part of theneighbourhood logic and they are marked by employment and the direct and indirectwealth, which is generated in the area (local taxes, subcontractors and suppliers...).

However, these actions can be part of a company policy based on a CSR, which isaimed, amongst other dimensions, at the local community. Responsible practices are nolonger considered in isolation, but as part of a principle of business action, which isrelated to sustainability, in this case, territorial, social and environmental. Thus,territorial responsibility takes the shape of a stakeholder which is external to thecompany and which is becoming ever more important, both from the point of view of“social image” and also in terms of the necessary cooperation with the rest of externalstakeholders – local trade unions, local authorities, suppliers, etc.

BASF is the world's leading chemical company. It aims to increase and sustain itscorporate value through growth and innovation. BASF's distinctive approach tointegration, known in German as "Verbund," is its strength. The company offers foryoung people to carry out their apprentices not only within the company but within theregion (“Ausbildungsinitiative Pfalz”). It was founded in 1998 by chamber of commerceand BASF with 18 Mio. DM for new apprentices in the region as a start up financing.Additionally a Venture Capital foundation for new companies (for example Biotech) inthe region and Start up capital for those that leave the company to found something ontheir own have been set up.)*

Labour intensive industrial companies, which recruit their employees in the community,are the typical example of a strong relationship between a company and its localenvironment. This vision contrasts with that of other companies which act as mereholders of shares – shareholders - with no links, and, apparently, no need of them, withthe territory or territories where they carry out their activities. An example of this isinvestor groups of risk capital, removed from traditional exploitation of industrialbusinesses, which purchase and sell companies in order to benefit from appreciation.

The specific application of CSR by companies varies greatly between EU countries. Theimposition of this type of “voluntary self-regulation” entails practices at local levelwhose evaluation can be very different from one country to another. Thus, usualpractices of social cooperation with the environment of the local community can beperceived as strange in the business/territorial culture of other countries. On the otherhand, in other countries where this tradition does exist and these practices are carried out


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regularly, it may be that they are not even considered CSR actions, but rather actionswithin a logic of common cooperation.

In The Netherlands exists the concept of corporate citizenship: a company shouldbehave like a good citizen in business. Essentially, there are two elements thatdetermine whether one can speak of corporate social responsibility:

� sufficient focus of the enterprise on its contribution to public prosperity in the longerterm, the relationship with its stakeholders and society at large.� corporate external/social responsibility can be described as the conscious direction ofbusiness activities towards creating value in three dimensions: profit, people and planet(the Triple P bottom line).

Also, Employers' associations and trade unions also have drawn up Corporate Codes.In 2000 for instance, the employers' association VNO-NCW published a handbooksetting out how enterprises can handle issues concerning human rights. An example ofthe trade unions is the manual of the FNV, the 'Socially responsible enterprise', 1999,which includes criteria for a code of conduct based on a model developed by theInternational Confederation of Free Trade Unions (ICFTU).

Stakeholders can hold companies accountable for their code of conduct, albeit not at law(adopting a corporate code does not lead to legally binding obligations). But non-compliance with its own code will naturally harm the public reputation of an enterprise.

Headquartered in Basel, Roche is one of the worlds's leading research-orientedhealthcare groups in the fields of pharmaceutics, diagnostics and vitamins. The Rochelocation in Mannheim is specialised in the diagnostic business with all its facets and isat the same time one of the most multifunctional plants worldwide. The Mannheimemployees also have an enormous know-how in the fields of chemical production oftherapeutic effective substances as well as of production and packing of medicine. Themanagement of Roche is part of the “Förderkreis Rhein-Nekar”, supporting the areaMannheim and Ludwigshafen. This is a management-initiated project to make sure thatthe region is strong enough to be able to support Roche and its employees and to keepthe region attractive. *

In this sense, whether these practices are considered CSR or not will depend on thereporting of the companies themselves. In the Netherlands, Corporate socialresponsibility also focuses on the company's own employees and the position of theenterprise on the labour market. This is partly reflected in the social goals to whichmany companies commit themselves (in negotiations with the trade unions) in collectiveagreements. These goals include the combination of work and care, part-time work, non-discrimination, employability, childcare, training and education leave. Dutch companiescan earn the quality label 'Investors in people' for their efforts in this area


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The Compliance audit by C&A, a long-established family-owned fashion retailer. TheC&A code of conduct sets out the standards for commercial dealings that this companyregards as fundamental for contacts with suppliers of goods.

Since 1995 there exists an Association of Investors for Sustainable Development. Itsparticipants include a number of institutional investors. The objective of the associationis to represent the interests of institutional and private investors who wish to contributeto sustainable development.

CSR and territorial responsibility in the case of restructuring

In this context, the CSR approach, both in terms of responsible attitudes and of sociallyacceptable practices in the territory represents an alternative path, different to that oflegal regulations, to confront the restructuring of companies. These practices are alsorelated to two approaches to this phenomenon: on the one hand, the possible generationof a set of actions in favour of “the territorial” that can promote anticipation to crises.On the other, the need for them to become a strategy that can express specific resultsfrom the point of view of reducing and palliating the negative effects that companyrestructuring can have on the territory.

In the first case, anticipation, we could consider the existence of company actionsaimed, amongst other things, at cooperating in the organisation of work with tradeunions and employee representatives, investing in training and qualifying humanresources or at establishing quality relationships with subcontractors. That is, what hasbeen called permanent restructuring aimed at preventing crises or their effects. Measureslike these, within this anticipation premise, put into practice voluntarily and with stableperiodicity, are difficult to find.

On the other hand it is more frequent for the application of CSR to take the form ofactions aimed at taking into account the territorial dimension of a restructuring processand reduce its negative effects on employment, labour and professional disqualificationand on the local economy.


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In the United Kingdom, Tesco is the UK’s, and one of the world’s, largest food retailers.The company operates more than 900 stores worldwide, with the majority, over 750, inthe UK. It employs over 240,000 people worldwide, over 190,000 of these in the UK.Tesco shows a CSR awareness across a range of external and internal activities.External activities include local regeneration and employment projects, a long-runninginitiative to link sales to donating computers for schools, and establishing ethicaltrading practices with different suppliers.

In terms of handling any issues relating to restructuring, a central mechanism for this isthe partnership agreement that Tesco signed in 1998 with its recognised trade unionUSDAW (Union of Shop, Distributive and Allied Workers). More recently, the focus hasbeen on providing jobs and regeneration through partnerships between localauthorities, USDAW and Tesco to guarantee jobs in new stores to local unemployedpeople who completed specially run training courses.*

Generally speaking, there is a group of countries in which it is more usual for companies– particularly large companies – to incorporate CSR practices applied to territorialimpact in cases of crisis. Germany, The Netherlands and northern countries belong tothis group. These voluntary practices are also usual in the UK. In France, CSR actionsbelong to another tradition and another logic of company responsibility, driven by theexistence of a growingcorpus of regulations on the matter. In Italy, the territorialapproach is very much connected with the informal networks created in some regions,whereas in the rest of EU countries, the concept of CSR has hardly caught on.

Apparently, there is no relationship between the existence of regulations, either legal orproduct of an agreement on territorial responsibility and the application of measuresevolving from CSR. These are developed independently from the previous ones and,therefore, they can coincide or not. As we have seen, there are hardly no regulations onthe territorial responsibility of companies. Thus, CSR applied to cases of restructuring isa new reference, which cannot substitute them in any case. More likely, CSR seems todepend on the tradition of systems of industrial relations, productive culture, the typeand size of the company and the specialisation of its business, not forgetting about theimportance of social marketing.


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ACOME is a medium-sized enterprise supplying products and systems to thetelecommunications, motor and building industries. Based in a rural region of westernFrance, employs about a thousand people and has an annual turnover of some€ 200million, of which exports account for 37%. ACOME is the biggest workers’ productioncooperative in France. Employees are required to become sociétaires (partners) afterthey have been with the company for three years. Its executives are elected each year ata general meeting. Employee turnout at the general meetings is very high, reflecting thevalue they attach to this prerogative. ACOME pays a substantial dividend to theseshareholding employees (equivalent to several months’ wages in some years), while thewages it pays are themselves higher than is customary in the local region. Apart fromthis financial aspect, which of course plays its part in ACOME’s attractiveness to itsstaff, the company also tries, by means of a set of ‘good practices’, to ensure localsustainability of employment and a high-quality internal social dialogue.

ACOME was seriously affected by this economic reversal – so violent that it resulted inlarge-scale redundancies and plant shutdowns by ACOME’s French competitors – andstill was at the time of our study. To date, the company has been able to avoid anydismissals among its permanent workforce. On the other hand, and this indicates the‘economic’ limitations of a strategy of social responsibility, ACOME has not renewedthe hundred or so (10% of the total) limited-term contracts (LTCs) which it hadconcluded a year earlier. In the present crisis situation, the LTC staff therefore playedtheir ‘traditional’ role as a shock absorber at ACOME, obviously to the detriment ofthose young people with previous training who had been recruited locally and were thechildren of existing personnel or young members of the local community.Thecompany’s management is certainly far from satisfied with the ‘solution’ adopted, ahighly symbolic illustration not only of the changes that have taken place in the world ofemployment within one generation but also of the extent to which a medium-sizedindustrial enterprise is dependent on its largest customers. They hope that businessactivity will pick up again, making it possible to ‘recover’ as many of these youngpeople as possible. *


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Company restructuring and the measurement of local effects

Beyond the general regulations on procedures for collective redundancies, there are norules regulating preventive steps to avoid the consequences of restructuring on a localcommunity. Here, only France pronounces itself clearly, in its Labour ModernisationLaw that establishes a mandatory for a company's management to create "a territorialand employment impact study" to be presented to the Board of Directors and theMonitoring Committee, "for all strategic development projects (...) that are likely tohave a major effect on the company's work and employment prospects conditions ".

The obligation to measure the local effects of a restructuring process has not been foundin any other regulation. Only some company agreements provide measures of limitedscope and regarding labour for cases of crisis. An example could be the case describedbelow on the conditions, which the geographical movement of the company AzucareraEbro must observe.

On the contrary, when the restructuring process takes place, and taking into account thefact that, except for the case of France, there are no specific regulations regardingterritorial aspects, usually a varied set of measures is applied with the aim of reducingnegative local effects.

In principle, most measures adopted have as common aims, keeping the company orwork centre within the town and maintaining the level of local employment. From aterritorial, rather than a labour perspective, the most common measures applied could beclassified roughly in the following categories:

- only financed by the company and, therefore, aimed exclusively at the labourand social aspects, with less or no consideration, in general, for the territorial impact.- co-financed with public funds and, therefore, there is usually publicparticipation, central or local, both in the design and in their application andfinancing. There are different variations, from direct subsidies to social complementsto the agreed compensations, tax relief, etc.− defensive measures, exclusively aimed at reducing the social and territorialeffects of the restructuring process.− active measures, also aimed at directing a possible business, productive andlabour regeneration of the territory, which is suffering the effects of the restructuringprocess.

Measures vary from one region to another, as do the instruments used, like inAustria ,for example, where there is an Employee’s Promotion Fund in Vienna.


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A strong influence of the Territorial Pacts developed in recent years can be perceived inthe application and financing of measures. In some countries, particularly northerncountries, TPs have been integrated organically in the functioning of local and nationalinstitutions. In others, like Italy and Spain, they have reinforced and give a definiteorientation to the culture of partnership and consensus in identifying problems anddeveloping bottom-up solutions. The new approach of the EQUAL initiative alsointends to reinforce the creation of networks, improving the efficiency of actions.

However, in order to obtain useful inputs from these experiences regarding territorialintervention, from the point of view of restructuring processes in companies, it isnecessary to have a detailed evaluation of the impact results, both quantitative andqualitative, of the Territorial Agreements and of the future development of EQUAL.

On the other hand, regulated systems and procedures applied in a standard fashion toissues of territorial responsibility applied to restructuring processes are exceptional. InItaly there is a procedure, which is applied to promote workers’ return to the labourmarket, which is based on mobility. The “mobilitá” was introduced by law 223/91.When workers are made redundant following a company restructuring process, they canenter ‘mobility’. This status can last for a period that goes from a minimum of one year(for workers below 40) to a maximum of three year (for workers over 50).

Workers in mobility receive a benefit and enter a regional ‘mobility list’ that has thepurpose of helping them find a new job. In fact, companies that hire workers put onthese mobility lists receive a set of benefits in terms of social contribution reductions,economic incentives, and tax reductions. In order to start the mobility procedure, aconsultation between trade unions and the employer is required. The parties have toconsider options alternative to mobility (i.e., dismissals) for reducing redundancies, evenif only partially. If an agreement is reached on the mobility procedure, the costs ofdismissals that bear on the company are reduced by 50%.

Italy: prior information to a restructuring

In the insurance industry-wide agreement, a specific article (article 14) provides for aninformation/consultation procedure in case of relevant company restructuring, also dueto technological innovations, mergers, combinations, and break-ups, which may entailimpacts on employment and working conditions or lead to territorial mobility. Bothinformation and consultation (to be activated upon union request) must take placebefore the implementation phase. The consultation procedure should aim at reaching anagreement and it should last no longer than 30 days. During this period, a specialclause forbids unilateral actions and conflict.


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In Germany there is a federal regulation, which supports financing of measures relatedto the restructuring of sectors and companies at territorial level. Measures are linked toseveral instruments which can be attached to two areas of policy: to institutions of localeconomic promotion on the one hand and labour market policy operating close to theenterprise on the other. These instruments target the preservation of the company orimprovement of the labour market opportunities of employees facing unemployment.

In the consolidation process, the crucial factors include capital, management and time.From the enterprise's point of view, instruments can be classified according to function:

− Increase of equity or loan capital of the company,− Support for management, including mediation, co-ordination, moderation, counselling,

suggestion of concepts, even co-management along with taking over responsibility.− The objective of these instruments targeting capital and management is to create a time

corridor, which gives the enterprise the chance to re-organise and find a new position onthe market.

These instruments targeting the enterprise directly are supplemented by another group ofinstruments, which is at least as significant. Utilised during corporate crisis as well, theyare targeting primarily the situation of the employees concerned. These more labourmarket policy oriented instruments are - if varying in degree - part of the tool box ofprotagonists on a local and regional level. Especially the unions demand and supporttheir activities because they improve the opportunities of employees facing or sufferingunemployment by accomplishing either an abandonment or a reduction of planned jobcuts or subsequent employment via suitable measures (qualification measures,outplacement).

So-called transfer companies, on the enterprise level as well as on an inter-enterpriselevel, play a crucial role in the regions surveyed in both East and West Germany.Funding of these transfer companies is based on Social Security Code (SGB) III, whichprovides two new instruments for both East and West Germany since 1998: subsidiesfor social redundancy plans according to § 254 and structurally caused short hoursaccording to § 175 (which is limited up to the end of 2002). Furthermore, FreeAssistance according to § 10 SGB III provides the opportunity to develop innovations inthe field of employment promotion close to the enterprise.

However, in most countries, the positive measures which can accompany restructuringprocesses with the objective of reducing their negative effects are found within the moregeneral framework of local development. They are usually integrated in programmesrelated to local Agreements or to policies of regional incentives. They usually includemeasures and instruments for the return of workers to the labour market, start-up grantsfor the creation of their own businesses, subsidies that are co-financed by structuralfunds and other community initiatives.


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Thus in France, under the title of Technical Assistance, the European Commissionoffers financial support to each selected site, (200 000 euros per pact on average, inaccordance with highly specific methods). Incidentally, these, once their action plan isrecognised by the European Union, may benefit from funding priority within theframework of existing organisational programmes, this decision coming down to theappropriate Monitoring Committee. Most of the schemes set up foresee theimplementation of economic measures combined with training or re-insertion measures.The PLIE scheme, established for 5 years, stands as a platform to coordinate themiscellaneous public interventions for employment at a local level. It aims to reinforcethe existing insertion bodies, and to render them more consistent, without taking theirplace. By simplifying the existing tools and making them more efficient, the PLIEenables the people with the most problems to integrate into the working world. In thecurrent climate of growth, numerous economic sectors need to recruit.

In Austria , “Labour Foundations” have been set up, which are co-financed according toterritorial employment Pacts. In Italy again, the territorial pact projects (localdevelopment in conjunction with general orientations of regional programmes) can beinitiated by “local entities”, other public authorities operating and representing them atthe local level with companies, workers, and private citizens. Financing is carried out forthe most part by a governmental organisation, the CIPE.-private enterprise must contribute at least 30% of the investment required for economicactivities included in the projects;-infrastructural investment must not exceed 30% of total investment; and-the maximum contribution by CIPE to any pact is ITL 100 billion.

In the tradition of those pacts, there are other variants such as “regional pacts for thedevelopment of employment”, but also trade union agreements in terms of localdevelopment. More generally, action in terms of local development is financed byinternal as well as external resources. If it involves revitalising an industrial area,players will have a tendency to first resort to local resources. If it involves a region,external resources (state, Europe, etc.) will first be called on.

In Spain, regional governments are very active, as they are in charge of managingcertain territorial aspects of economic and employment policies (most AutonomousCommunities have the competence to authorise collective redundancy cases). Therefore,it is easy to find regional regulations that provide aids for local development and themodernisation of companies in their region. Furthermore, the political role of regionalgovernments as mediators in company crises is very active, particularly in cases ofclosure and changes in location. Apart from acting as mediators, they also have a strongcapacity to intervene with support in kind, as can be seen in the AGFA-Gevaert case,which is described below.


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An example of this type of indirect but very active support at teritorial level inrestructuring processes isGreece, where a 90' Law divides the country into 4 zones,according to their economic and regional development significance, and providesenterprises operating in each area with different incentives for productive investments.Less developed regions, islands and borders are treated more favourably. Incentives(which vary among other criteria according to workplaces created) include investmentsgrants, interest subsidies, tax allowances deductible from the gross revenue, increaseddepreciation rates (Law 1892/1990 as amended per Law 2234/1994). The “IntegratedProgramme of Intervention” also supports the territorial dimension of potentialrestructuring processes. It is 80% co-funded by the ESF and it is a list of measuresaimed at the re-integration of dismissed workers through active support for a period of37 months. It includes training allowances, subsidised jobs and start-up grants for thecreation of own business. There were 17 local actions for the period 1998-2000. Thenew programme attempts to create the right conditions for the re-integration of theunemployed into active life. It is expected to play an important role in supporting thecurrent privatisation process (Greece NAP 2002).

It is also worth highlighting the development of a "Programme of local action plans foremployment" carried out by the Central Association of Municipalities and Communes ofGreece as part of the EC initiative "action for the promotion of employment on the locallevel", funded by Line B5-503 (5 pilots in 2001). On the other hand, local employmentpacts may include job-creation measures using public and Community aid, in SMEs andinvestment sectors and the development of specific labour and cultural economicactivities for which particular pay and working conditions may be set. (Law 2639/1998Article 4)

In other countries, likeItaly , one can see the consolidation of partnership, not only as aninstrument of development, but also as a model. The tendency is to expand corporateindustrial relations to the territorial level. An example is the agreement of 28 May 1998in the Melfi area, which extends social provisions in effect at FIAT-SATA toautomotive OEMs (20 sub-contracting companies in the area), and broadens the subjectof negotiations to include public transport problems.


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Local training

One of the most usual measures - included or not in social plans – which accompanyemployees in restructuring processes, is training in different forms. In this sense, the roleof the local level has grown considerably in recent years to become a relevantprotagonist.

On the one hand, local authorities finance or co-finance training actions or they lendtheir facilities – Training centres owned by municipal powers or institutions where theyparticipate together with other stakeholders, mainly employers’ associations and localtrade unions. The forms which training can take at the local level, from the point of viewof organisation, financing, management – including the existence of systems to detecttraining needs, subsidies for students, etc. are very varied.

In Austria , the Vienna Employees' Promotion Fund provides and organises its owntraining courses, playing a crucial role in restructuring.

The existence and participation of public services for employment and training has animportant influence. The role of companies, in their demand for qualifications, isessential. The management of local training facilities-Centres also offers the wholerange of possibilities. InSpain this management is usually the direct competence oftown councils, although it is sometimes entrusted to specialised private firms. In othercountries, particularly northern countries, but also in the United Kingdom and Italy, it isthe entitlement of a partnership, which includes public presence.

In Greece, Italy (Law 2639/1998 article 4), Spain and others, local employment pactsmay include training measures linked to the local production system. In Italy as well,provisions of regional law (in particular in the context of decentralisation) deal withterritorial responsibility. For example, in Italy regions are responsible for trainingprogrammes (Decreto legislativo 28 agosto 1997, n. 281)

However, it has not been possible to appreciate any proportionality between formalparticipation (information in advance, consultation) of local authorities and even ofother territorial agents in processes of crisis and the capacity of local training, despitethe importance it has as an instrument associated to the re-generation of employment.Apparently, there is no correspondence between the capacity that local agents have tointervene in the effects of crises at territorial level, and the small role that they formallyplay in restructuring processes.


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The Role of Local Authorities

a) Emergence of new actors in the territorial dimension

Given the growing importance of the territorial dimension in the formulation of regionaldevelopment strategies, many new social and civil actors are logically becominginvolved in these processes. These new actors, unlike traditional agents –enterprises,management, and unions—represent a variety of interests and seek different end results.Cooperative partnering is gaining acceptance as the ideal working and associativeformat for conducting development projects, or for problem solving.

The density of these networks, and their true strength and effectiveness varies amongmember states, depending on cultural traditions and on the degree of institutionalinvolvement. In general, the basis of legitimisation and agreement for the formulationand application of measures at local level has grown. From this point of view, localawareness has increased in the face of the risks that restructuring processes bring withthem and which can affect the territory. This awareness, together with more instrumentsused more efficiently, have all strengthened the basis for social consensus in cases ofcrises.

In Germany, three groups of protagonists can be distinguished:

a) Internal on the enterprise level: Owners, management, staff and, if in existence,the works' council have to be mentioned.b) Close to business: Institutions of local economic promotion, chambers ofcommerce, employers' associations and banking institutions are included in this group.c) Labour oriented: describes local labour administration, institutions ofemployment promotion and the unions.d) Subordinate protagonists include insolvency trustees, management consultants,technology consultants of the union, transfer companies of various types or personsestablishing or managing these companies (e.g. the union's advanced vocational trainingorganisation). These are labelled subordinate because they are instructed by otherprotagonists to perform particular functions in procedures of company restructuring.However, they do have substantial influence. This can best be described regarding theinsolvency trustee: he decides during insolvency procedures whether a continuation ofenterprise operations is attempted or a closedown of the enterprise is forthcoming.

These protagonists include several organisations and institutions, which are not perdefinition concerned with companies suffering corporate crises, e.g. institutions of localeconomic promotion, chambers of commerce, unions and labour administration.Additional to fundamental differences regarding functions, target groups and territorialscope of authority, internal differentiation concerning restructuring and consolidation isprevalent due to the discourse, which is in part quite ideological, in part extremelypragmatic.


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Hence, occurrence and type of activity of any particular organisation is dependent on therespective persons involved locally or regionally, how they conceive of their ownidentity, their evaluation of the situation, their strategy and involvement.

Germany: territorial consultancy

Institutions of local economic promotion hold strictly limited capacity to offer assistanceto companies suffering corporate crises. These limits are of legal, political as well asfinancial nature. In addition to financial assistance, soft factors including counselling,mediation and moderation play a crucial role concerning crisis management. Given thedire financial situation of local governments, these instruments are gaining even moreattraction and institutions of local economic promotion can occupy themselvesparticularly in this area. However, institutions of local economic promotion suffer fromlegal restrictions regarding counselling as well. The Trier County Court held thatinstitutions of local economic promotion must not commence counselling activitiesconcerning companies directly. Especially, institutions of local economic promotion arenot allowed to provide management consulting which is covered by local consultants.Institutions of local economic promotion can only supply counselling regardinglocational factors, subsidy problems or help with tackling the bureaucracy (seeLandgericht Trier Akz 7 HK.O 228/99 of 25. May 2000). If the limited possibilities ofcompanies suffering corporate crises to hire expensive consultants are taken intoaccount, this strict regulation is prone to diminish the opportunities of problem solvingsignificantly.

In Italy , the social dialogue model has few legal bases but rather draws legitimacy fromthe players themselves: regional government, local entities, associations representingvarious interests, research institutes, companies, chambers of commerce, etc. Socialdialogue has become a kind of legitimate way of regulating local economic systems. Thetendency is to call local dialogue from now on “concertazione locale“. Which designatesincreasingly widespread partnership practices characterised by the individualisation ofgoals to be reached and means to be implemented, all of it being formalised in publicdocuments. Territorial pacts are part of these practices.

The players in social dialogue are many and varied. Sometimes the Church can be aplayer in local dialogue. In some cases “assessorati” (assistance) to territorial dialoguehave been set up. This is a tendency (technical assistance) and improves the efficiencyof the dialogue.


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Role of trade unions

In Italy, the trade unions' commitment to fostering employment creation led inDecember to an agreement between Cgil, Cisl and Uil on the “guidelines to follow innegotiations between the social partners to support the growth of investment and jobcreation in the Mezzogiorno”" This document identifies the means that may be used atlocal level to sustain employment - "work-entry" policies, training, bargaining onworking time, and wage levels.

In France, the social partners do not only exercise an influence on policy choicesthrough the negotiation process, their inclusion within many territorial bodies orauthorities enables them to help in carrying out changes. However, there are a largenumber of actors involved within the concept of re industrialisation, revitalisation andsustainable development of the employment basins: trade unions, elected officials, alllevels of official bodies (European –Regional Development Schemes, programmes suchas EQUAL –national, territorial) as well as development agencies such as SODIE(Société pour le Développement de l’Industrie et de l’Emploi), a subsidiary of theFrench USINOR Group.

On the other hand, there are also the organisations located at a territorial level, such asthe Interdepartmental Commission for Inter-community Co-operation, the EconomicDevelopment Agency, the Regional Conference for Regional Improvement andDevelopment and the CBE's (Employment Basin Committees).

Dialogue with local authorities

In this context, local and regional authorities play an important role. However, strictly interms of company restructuring, local authorities generally tend to act as politicalmediators, as an institutional stakeholder with noteworthy capacities in some cases, suchas their competencies to manage, zone and develop industrial land sites within the area,or provide training services.

In Italy , the experience gained from territorial pacts has made it possible for CNEL(National Council for Economic Affairs and Labour) to attain an important co-ordinating role in social dialogue on local development policy. In fact, CNEL hasprovided technical and bargaining support, giving assistance at all phases of the pacts'specifications and of the related operational development projects. In this way, thoughstarting off with a consultative role, CNEL could acquire an "operational" one, which,might lead to far-reaching results in term of development policies for crisis-hit areas andof social dialogue.


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In France, the role of the region's senior magistrate has become decisive in therestructuring processes, calling the meeting, signing the agreement with the company,etc… On the other hand, for several years, area or urban contracts have been applied.An area is a territory, which is characterised by a geographical; economic, cultural andsocial cohesion. The area or urban charters develop and express mutual projects betweenthe local representatives and the territorial representatives of sustainable development.

In Spain, under state Law and territorial power distribution, regional –autonomous -authorities are responsible of implementing Labour Law and elements of economicactivity in employment promotion. Therefore, diverse roles in these processes can bedeveloped. However, in addition to already mentioned authorisation powers,interventions are limited, in some cases of large restructuring processes, to supportemployment pressures in order to avoid enterprise de-localization and facilitate contactswith enterprises that could substitute enterprises out of the region.

Regeneration of abandoned sites

Factories and abandoned industrial sites in general represent one of the greatestterritorial impacts when they are left behind in extreme restructuring cases, that is,closure of a company or work centre. In fact, in some rural areas the impact is very high,although the harm can also be great in urban areas.

In some cases, the decision to close a work centre can even be related to the depreciationof the facilities or to the revaluation of the land on which the industrial centre is builtand the possibility of converting it into a more profitable business (housing, etc.).

Apart from complying with environmental regulations and the French LabourModernisation Laws, no other obligations have been found for a company that closesdown and abandons the site or industrial facilities. InThe Netherlands, in cases ofradical organisational changes with important (possible) environmentalconsequences, companies have to provide all relevant information on the changes and(possible) environmental effects, and they can be obliged to ask formal permission('wijzigingsvergunning'). In some practices companies have been confronted withrestrictions in enterprising/restructuring for environmental reasons.

Likewise, no experiences have been found of national governments demandingterritorial responsibility from companies, in the sense of reimbursing possible aids(subsidies, facilitation of urbanisation and services, tax relief…) which may have beengranted at one point to encourage companies to set up in less developed territories.

From the point of view of regeneration, there are many cases, which are related toTerritorial Pacts, programmes and actions aimed at the recovery of territories, whichhave suffered processes of industrial desertification.


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These are general actions, which have a very specific sectorial and territorial approachand which develop slowly, due to high regeneration costs. InFrance, the strategy beingpursued combines the re-industrialisation of the employment basins, measures tostrengthen R&D capacity, diversification initiatives (advanced services, tourism,logistics) and a policy aimed at increasing responsibility of enterprises and solidarity(combating social exclusion, promoting equal opportunities, urban cohesion).

In the case of strong industrial reconversion, as is the case in territories of the formerEastern Germany or in very specific areas of industrial monoculture (mining areas in theUnited Kingdom or the north of Spain), community programmes and State aids havehelped palliate the negative effects of the restructuring process.

Conclusions

From a territorial point of view, a restructuring process can have a very negative impacton the local community, especially if it is a case of monoculture or over dependence of aterritory on a company or a work centre, or if the relationship and links establishedbetween the company which is undergoing restructuring and the local community,including suppliers, purveyors and the active local population, are very close.

Very often, the restructuring process undergone by companies represents an unavoidableprocess of territorial and sectorial adjustment. In this sense, a restructuring process is theexpression of the dynamism of a territory. It is an element of change, which cansometimes be traumatic.

In territorial terms, certain restructuring processes have a particularly negative impact.These are closures of work centres or cuts in production, which have a negative effecton the local equilibrium. The damage is not only economical and does not only affectthe level of employment, but it also affects symbolic capital – in the case of oldindustrial centres with marks that are linked to the territory – and the cohesion of thelocal community. Sometimes, it is not only the natural environment that is damaged, butalso the principle of social sustainability of the local environment.

Just like companies look for flexibility and employees look for flexibility, the aspirationis for the territory to enjoy a stable equilibrium between different interests. The territoryis considered to be all social, economic and environmental stakeholders who haveinterests in an area. The concept of sustainability and territorial equilibrium is the basisto demand territorial responsibility.

The concept of territorial responsibility is not included in the legal regulations ofMember States. Only in France does it play a significant role by means of a recentregulation (Labour Modernisation Law of 17th July 2002), which shows innovativeapproaches and perspectives.


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Territorial responsibility depends to a large extent on the relationships establishedbetween the company and the local community. The links between the company and thelocal environment usually develop on voluntary, informal and unstable bases.

The intensity of territorial responsibility depends to a large extent on factors such as thesize and level of specialisation of the company, industrial tradition in the area. socialorganisation and the productive fabric.

As is the case with other aspects of a restructuring process, time plays an important role.The time with which a crisis and its impact can be anticipated is time that can beinvested in reducing its effects and finding constructive solutions. However, no signshave been found revealing mechanisms of anticipation for crises from a territorialperspective.

With the exception of France, no tools exist to prevent and measure the impact of thecrisis, nor is there any obligation to conduct prior studies. The territorial impact ofcompany crises and company restructuring is only considered after the fact. There are noformal/legal instruments in place to encourage anticipation of or prevention of theseevents.

When a restructuring process has negative effects, the territorial impact is an added cost,which is difficult to quantify on top of social and labour costs. From the point of view ofcost-benefit analysis, the more that is invested in advance to ameliorate the territorialimpact of a restructuring process, the smaller the economic cost will be. Usually, thiscost is finally covered by public expenditure, both directly – regeneration of industrialsites – and indirectly – reduced tax revenue. Prevention is always cheaper than tacklingthe crisis.

Apart from quantitative data on the number of jobs lost and the number of companiesthat have closed, in general there is no systematic monitoring or evaluation of theterritorial impact that restructuring processes have. Neither is there a rigorous evaluationof the impact generated by actions carried out to regenerate the territorial equilibrium.

Certain voluntary practices relating to Corporate Social Responsibility are followed indifferent Member States, and by certain companies. In general, these do not includepreventive measures, or information on these cases. Voluntary practices based on CSRwith respect to restructuring processes in companies take place after the crisis. They arepalliative, not preventive, measures.

Different types of territorial social Pacts have developed interesting cooperation toolsand programmes for industrial regeneration. In any cases these have been funded by theEuropean Commission (Territorial Pacts, Local employment Pacts, Initiatives andStructural Funds)


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Local authorities continue to play an important role, although it is overly linked toinformation or to the political environment. However, there is no proportionalrelationship between institutional and private agents operating in the territory, theircapacity to intervene and the role they play formally in cases of restructuring processesundergone by companies. In general, local authorities and the rest of stakeholders do nothave a recognised social and economic function in the legal restructuring proceedings,which affect the territory.

A positive perspective of a restructuring process should take into account the need toturn the negative aspects of its impact into improvement opportunities for localcompetitiveness and the standard of living of citizens and neighbours. Territorialresponsibility should not only concentrate on ameliorating negative aspects, but shouldalso adopt pro-active measures to generate a new territorial space for social andeconomic cohesion.

Guidelines for action

Progress should be made towards building a shared concept of territorial responsibility,which allowed for a definition and a delimitation of its scope. Some principles whichcould inspire this concept might be:• The obligation for companies in certain circumstances – type of company, specificterritory, etc. – to behave like another “neighbour-citizen” in the local community, withrights and responsibilities.• The obligation for companies in certain situations, to repair the damage done andeconomically compensate for the alteration of the local equilibrium and economic andsocial cohesion.• Compensation must be proportional to the negative impact.

Adopt a more proactive role within the focus of community programmes for the nextStructural Policy programming period. It may be advisable for the future regulations ofStructural Funds to detail concrete objectives and specific measures with respect torestructuring processes, including an integrated approach to the treatment of differentdimensions of these processes.

Monitoring should be carried out, as well as an evaluation including statistics on theterritorial impact of restructuring processes, in their different dimensions.Simultaneously, the analysis models should be homogenised so that the effects ofregeneration measures can be studied.

In the case of aid to promote restructuring processes in companies, reconversion ofsectors and/or with regional aims, it would be advisable to reinforce the criteria appliedfor the approval of this state aid granted by Member States.


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The need for these incentives to be related to a monitoring of their impact at territoriallevel, including the environment, must also be reinforced.

Local authorities, which give incentives to companies, including SMEs, should receiveadvice on attitudes and actions, which take into, account the local equilibrium and socialand economic cohesion. Consideration could be given to the homologation ofcompanies, which carry out socially and territorially responsible practices, by means ofthe concession of territorial labels that make the social function of the company visibleand transparent.

Include “territorial responsibility clauses” in all types of local aid packages; especiallyState and Regional aids, stipulating that the aid/funding must be returned should theclosure have negative territorial effects. Local authorities might consider the possibilityof incorporating in their public procurement “territorial clauses” while respecting thefreedom of the company, the market and competition. These clauses would obligecompanies to refund the public aid received, both for their set up or for any other reasonin the case of an unjustified closure or move. If the company modified its status or itsownership, the content of these clauses would be transferred as an obligation to the newowners.

The anticipation of potential negative territorial effects, in terms of loss of localequilibrium, is unpredictable. In this sense, prevention mechanisms and alert systems forthe local community should be tried out. Under certain conditions and according tocertain requisites, representatives of local authorities could share all or part of theinformation that companies are obliged to give to employee representatives and tradeunions.

Formally include municipal authorities in negotiation and crisis solving processes, incertain types of restructuring where specific conditions arise. Even taking into accountthe existing diversity in terms of distribution of territorial power in the EU MemberStates, community and national programmes should legally reinforce he role played bylocal authorities in managing crises, overcoming the passive role played by some statesor their limitation to strictly passive measures – realisation and financing of localtraining.

Recommend that crises be subject to a period of territorial maturation process, which islonger than the deadline for authorisation of collective redundancies. That is, require alonger period of time between the announcement of a company closure, for example,and the final closure date. Foster the rational planning of company closures so as to gaintime for the management of other territorial alternatives.

It would be advisable, outside the heat of crisis, negotiate contingency protocols forcases of corporate restructuring, incorporating principles, criteria and expected/desiredresults.


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From a preventive point of view, it would also be advisable to establish territorial funds.These funds would serve to finance tools with which to solve situations of crisis andtechnical instruments for an appropriate territorial management of the restructuringprocess, including resources for expertise and systems to search for investors. Thesereserve/anticipation funds, similar to those agreed between company management andemployee representatives, could be built out of the proportional contributions of themain local stakeholders and be co-managed by a local partnership. These funds wouldserve to maintain the local equilibrium alert in a permanent consensual restructuringprocess.


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Territorial Responsibility and Restructuring

Austria

Questions Answers Ref.1. Description

a)Regulationsenterpriseslocal authorities

b) Rules Political responsibility is frequently called for, but thereis no legal relationship between local governments andenterprises regarding restructuring.

c) Legal based) Objectives ofregulation

Preservation of the enterprise's location, value addedand as many jobs as possible.

e) Case study2. Institutions andprotagonistsa) Influence There are negotiated forms of co-operation which differ

regionally.

b) Responsibility Political responsibility; Role: Assistance and party innegotiations. Financial assistance as far as permitted bycompetition law.

c) new players?d) Measures Yes, for example "labour foundations", which are co-

financed according to territorial employmentagreements.

3. Preventiona) information noneb) Regulationregarding alleviation ofnegative consequencesc) Partnership networks


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d) Limitations bymeasures

More information, diversification of local economicactivities etc., migration of labour, unemployment.

4. Measuresa) Funds/financialmeans

Differs regionally, e.g. the Employees' Promotion Fundin Vienna.

b) most usual measures Re-training, social security, unemployment benefit,labour foundations, implacement foundations.

c) Alleviation ofnegative consequencesd) Institutions andqualification

Differs regionally. The Vienna Employees' PromotionFund provides and organises its own training courses. InVienna, the Fund plays a crucial role in restructuring.

e) Rules andregulations for start-ups and repayment

There are national as well as regionally distinctassistance structures benefiting various types of start-ups.

f) Court decisions

5. Good practices6. Strategy

a) Acceptance ofstrategies?b) more extensiveregulation7. Further remarks


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France

Questions Answers Ref.1. DescribingterritorialresponsibilityExistence ofprovisions

-Various regulations relating to territorial capabilities(regions, localities, areas, etc.) and their articulationwith the authorities on a national level are applicable,such as:-Directives for Urban and Sustainable Development.-Laws on State-Regional Scale Contracts-Law on Decentralisation

-Labour Modernisation Laws (See question 1b and 1c)Measures have been foreseen for companies havingmore than 50 employees (meeting arranged by theregion's senior magistrate (optional for region's seniormagistrate) covering training initiatives and resourcesfor revitalising business activity). As for companieswith more than 1000 employees, these should take thenecessary steps aimed at creating employment withinthe employment basin faced with full or partial siteclosure, a measure that can therefore affect companieshaving a European Works Committee (at least 1000employees).This means that there is an agreement is signedbetween companies having more than 1000 employeesand the region's senior magistrate specifying thenature of the actions to be undertaken to reactivate theemployment basin. Prior to the signature of thiscontract, the region's senior magistrate arrangesconsultations between unions, employers, electedofficials and representatives from the consular bodies,and which are also involved in the implementation ofthe agreed measures.

For the company held to implement these measures,the financial ceiling is set at a maximum of 4 times

Article 118 ofthe LabourModernisation Laws


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the monthly value of the legal minimum wage perredundant position. The State's representative (seniormagistrate) sets the amount applicable to the companyin accordance with its financial capability, the numberof positions made redundant, the situation within theemployment basin in terms of business economy andthe level of unemployment

1b. Territorial effectsof restructuring

Possible serious consequences for the employmentbasin's economic equilibrium.

1c. Kind of rules Mainly Commercial Law, the Directives forSustainable Development, and the Right to Work. Inaddition to the previously mentioned provisions of theLabour Modernisation Laws (Question 1a), this lawalso makes it mandatory for the order givers to warnsub-contractors of any "reorganisation and workforcereduction project" which could have an effect on both"business activity and employment levels".The Works Committees concerned can offer counterproposals to "any reorganisation and workforcereduction project" by calling on the services of amediator.All of these legal provisions not only enable a level ofanticipation, but also, should it prove necessary,provide an essential base for inciting the mobilisationof the population and elected officials within theemployment basins and the area concerned in order tomake it obligatory to find another way.

The Government's monitoring authorities arestrengthened inasmuch as it can assess the contents ofthe plan to save jobs in accordance with the group'sfinancial resources and the Judge can, in the event thatthis process is cancelled, order that the redundanciesare declared null and void.

Article L.431-1-2 ofthe LabourLaws

Article L.432-1 of theLabour Laws.

1d. Purpose of rules The strategy being pursued combines the re-industrialisation of the employment basins, measuresto strengthen R&D capacity, diversification initiatives(advanced services, tourism, logistics) and a policyaimed at increasing responsibility of enterprises andsolidarity (combating social exclusion, promotingequal opportunities, urban cohesion)

1e. Examples ofterritorial impact

Example of the closure of the Moulinex Company'ssites in Calvados and Basse Normandy, in October2001, a zone already the subject of 2 regionaldevelopment plans.

2. Institutions andagents at territoriallevel2a. Rules at regionallevel

-Laws on State-Regional Scale Contracts-General Code for Local Government-Directives for Sustainable DevelopmentLabour modernisation Laws


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2b. Role oflocal/regionalauthorities

-On occasion the State directly intervenes (example ofMoulinex in October 2001: this intervention consistedof paying the unpaid salaries and, with expert help,looking for a company to take over Moulinex).

-The role of the region's senior magistrate has becomedecisive (see question No.1a) (calling the meeting,signing the agreement with the company, etc.)

-For several years, area or urban contracts have beenapplied. An area is a territory, which is characterisedby a geographical; economic, cultural and socialcohesion. The area or urban charters develop andexpress mutual projects between the localrepresentatives and the territorial representatives ofsustainable development.

-Craft and trade reorganisation operations (O.R.A.C.)are local authority preventive operations aimed atstimulating local commercial and craft structures inthe smaller rural employment basins that arethreatened by depopulation or economictransformation.

-See also Territorial Employment Pacts (question 2d)2c. New actors There are a large number of actors involved within the

concept of re industrialisation, revitalisation andsustainable development of the employment basins:trade unions, elected officials, all levels of officialbodies (European –Regional Development Schemes,programmes such as EQUAL –national, territorial) aswell as development agencies such as SODIE (Sociétépour le Développement de l’Industrie et de l’Emploi),a subsidiary of the French USINOR Group.

There are also the organisations located at a territoriallevel, such as:-The Interdepartmental Commission for Inter-community Co-operation.-The Economic Development Agency-Regional Conference for Regional Improvement andDevelopment-CBE's (Employment Basin Committees) (see 2c)-PLIE (see 4c)

The social partners do not only exercise an influenceon policy choices through the negotiation process,their inclusion within many territorial bodies orauthorities enables them to help in carrying outchanges.

The aim is to create employment development projectpartnerships at a territorial level by involving local


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actors such as elected officials, the heads ofcompanies, unions, etc.In 2001, 10 Territorial Employment Pacts (PTE) forFrance were retained by the European Commission:Alsace, Aquitaine, Champagne Ardenne, FrenchOverseas Territories, Languedoc Roussillon,Limousin, Nord Pas de Calais, Picardie, Rhône-alpes.Pays de la Loire. Out of these 10 PTE, 4 wereproposed by Employment Basin Committees (CBE)which are local development structures organised atemployment basin level by the initiative of electedofficials and local socio-economic actors, with Stateand local trade union support. These work for thecreation of employment and business prospects, thetraining and insertion of personnel and theimprovement and development of their territory. Thecomposition of the CBE is, at a minimum, tripartite:elected officials-companies-unions. In general termsthese have shown positive results and it appears thatthe PTE are far more effective when the targetedterritories already have an existing partnership culturebetween the various socio-economic actors (thesehave the advantage of a social link being alreadyestablished on a territorial scale between the variousactors involved within a CBE framework). TheEmployment Basin Committees Liaison Committeesfacilitate the network of ten French Pacts, inagreement with DATAR and the Ministry ofEmployment and Solidarity. The facilitation of theseexisting Pacts enables the information issuing fromthe field to be capitalised upon in order that the know-how gained on other territories can be transferred, andthus encourage the creation of new Pacts.

3. Prevention3a. Prior informationof territorial bodies

No system of authorisation but notification to theadministrative authorities when redundancies occur.Organisation of meeting by the region's seniormagistrate (Companies of at least 50 employee-seniormagistrate's intervention -see question 1)

LabourModernisation Laws

3b. Impact study -the information and consultation procedure (thesearch for alternative solutions in particular) inrelation top collective redundancies tends to take intoaccount the impact that economic decisions can haveon the implementation of employment basinrevitalisation methods (see the practical case ofUSINOR with the intervention of SODIE)

-the Labour Modernisation Laws. In principle, thesemake it mandatory for a company's GeneralManagement to create "a territorial and employmentimpact study" to be presented to the Board ofDirectors and the Monitoring Committee, "for all

ArticleL. 239-2 of theCommercialCode


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strategic development projects (...) that are likely tohave a major effect on the company's work andemployment prospects conditions "

3c. Territorialinvolvement inprevention

See (2b) and territorial pacts (2d) . See also the newFrench “Labour Modernisation Laws” (1a).

3d. Examples The impact of territorial pacts is modest, due withoutdoubt to the large number of territorial procedures andstructures that already exist (see 2c) and whichsometimes overlap each other.However, examples do exist of the territory beingtaken into account in terms of re-organisationdecisions.

In this way, in terms of the defence sector, taking theterritorial development into account was integratedinto the re-organisation of supports, commandstructures and training bodies:

An analysis per employment basin of theweight of defence in the local economy, the effects ofprofessionalism over the period of the scheduling lawand the military and civilian professional jobsrestructured over the 1997-2002 has been carried out;

• For the command structures, a re-occupation ofthe joint staff headquarters locations has beenresearched in order to restrict the impact of theirclosure on the local economy;

• For the support organisations, urbandevelopment considerations have been reconciledwith the necessary neighbourhood support for theunits, a warranty of efficiency on the operational plan;

• The defence presence in the Paris region hasbeen considerably reduced.

In total, outside the Ile-de-France, only twoNormandy regions will lose their professional force,however only in moderate numbers, between 1997and 2002; out of the 224 employment basins with anarmed forces presence or general delegation for statearmament in 1997, only 4 will, due toprofessionnalisation, see a reduction in their higherexecutive working population.

4. Measures4a.Public findings -DATAR finances a large number of the pacts

-The European Commission has decided to offerfinancial support to each selected site, under the title ofTechnical Assistance (200 000 euros per pact onaverage, in accordance with highly specific methods).Incidentally, these, once their action plan is recognised


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by the European Union, may benefit from fundingpriority within the framework of existing organisationalprogrammes, this decision coming down to theappropriate Monitoring Committee. The EQUALprogramme sometimes intervenes as a support onterritorial initiative.-The European Commission technical assistance officepointed out some operational problems with the pactsin 2000.

4b. Usual measures4c.Economicmeasures

Most of the schemes set up foresee the implementationof economic measures combined with training or re-insertion measures; a layout that interests PLIE.The PLIE scheme, established for 5 years, stands as aplatform to coordinate the miscellaneous publicinterventions for employment at a local level. It aimsto reinforce the existing insertion bodies, and to renderthem more consistent, without taking their place. Bysimplifying the existing tools and making them moreefficient, the PLIE enables the people with the mostproblems to integrate into the working world. In thecurrent climate of growth, numerous economic sectorsneed to recruit.

4d. Training and re-qualificationmeasures

See 4c

4.e Support tocreation of newsenterprises4f. Examples5. Good practices6.Prospects6.a Strategies Anticipation of restructuring risks in employment

basins, by involving more and more actors andespecially the companies (social responsibility) in theterritories concerned.

6.b New regulations The law on labour modernisation of the 17 July 2002has offered (as is amply demonstrated above)innovative schemes in terms of territorialresponsibility.

7. Remarks


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Germany

Questions Answers Ref.

1. DescriptionRegulations

enterpriseslocal authorities

Yes, there are, but on a voluntary basis only and frequentlywhen large companies are concerned. Volkswagen AG in the"auto city" Wolfsburg may serve as an example; as well asThyssenKrupp AG which participated actively in the"Dortmund Project" dedicated to the creation of new leadingbranches of industry after the close-down of the formerHoesch steel factory. (www.dortmund-project.de).

b) Rules There are no rules based on law. However, in connection withregional alliances for employment agreements betweenprotagonists do exist, but these are absolutely voluntary.

c) Legal based) Objectives ofregulatione) Case study Example Bielefeld:

Bielefeld's economy underwent structural changes in the lastyears. For instance, massive job reduction took place in theengineering industry. About one third of all jobs in the metalindustry were lost during the 1990s. This loss of employmentfocused on large companies, particularly in the engineeringindustry, with special emphasis on the machine tools industry,which - apart from 2-3 enterprises - entirely disappeared. Asfar as particular enterprises are concerned, Mannesmann TubeFactory (now MAP) for instance cut 1300 jobs from 1990 to1999; today only 300 workers are employed in the Bielefeldfactory. In Ost-Westfalen's biggest engineering company(Dürkopp Adler AG) the number of employees was reducedfrom 3000 to about 1200.

2. Institutions andprotagonists

http://www.dortmund-projekt.de/


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a) Influenceb) Responsibility Institutions of local economic promotion hold strictly limited

capacity to offer assistance to companies suffering corporatecrises. These limits are of legal, political as well as financialnature. In addition to financial assistance, soft factorsincluding counselling, mediation and moderation play acrucial role concerning crisis management. Given the direfinancial situation of local governments, these instruments aregaining even more attraction and institutions of localeconomic promotion can occupy themselves particularly inthis area. However, institutions of local economic promotionsuffer from legal restrictions regarding counselling as well.The Trier County Court held that institutions of localeconomic promotion must not commence counsellingactivities concerning companies directly. Especially,institutions of local economic promotion are not allowed toprovide management consulting which is covered by localconsultants. Institutions of local economic promotion can onlysupply counselling regarding local-national factors, subsidyproblems or help with tackling the bureaucracy (seeLandgericht Trier Akz 7 HK.O 228/99 of 25. May 2000). Ifthe limited possibilities of companies suffering corporatecrises to hire expensive consultants are taken into account,this strict regulation is prone to diminish the opportunities ofproblem solving significantly.

c) new players? Principally, three groups of protagonists can be distinguished:

Internal on the enterprise level: Owners, management,

staff and, if in existence, the works' council have to be

mentioned.

Close to business: Institutions of local economic

promotion, chambers of commerce, employers' associations

and banking institutions are included in this group.

Labour oriented: describes local labour administration,

institutions of employment promotion and the unions.Subordinate protagonists include insolvency trustees,management consultants, technology consultants of the union,transfer companies of various types or persons establishing ormanaging these companies (e.g. the union's advancedvocational training organisation). These are labelledsubordinate because they are instructed by other protagoniststo perform particular functions in procedures of companyrestructuring. However, they do have substantial influence.This can best be described regarding the insolvency trustee:he decides during insolvency procedures whether acontinuation of enterprise operations is attempted or aclosedown of the enterprise is forthcoming.These protagonists include several organisations andinstitutions, which are not per definition concerned withcompanies suffering corporate crises, e.g. institutions of local


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economic promotion, chambers of commerce, unions andlabour administration. Additional to fundamental differencesregarding functions, target groups and territorial scope ofauthority, internal differentiation concerning restructuring andconsolidation is prevalent due to the discourse, which is inpart quite ideological, in part extremely pragmatic. Hence,occurrence and type of activity of any particular organisationis dependent on the respective persons involved locally orregionally, how they conceive of their own identity, theirevaluation of the situation, their strategy and involvement.

d) Measures Yes, in a survey put forth by WSI and IFR we discoveredvoluntary agreements like that in Bielefeld and Chemnitz.Dortmund (see above) presents another example.

3. Preventiona) public funds The Chemnitz Consensus Model. See case studyb) most commonmeasures

In our survey, we discovered several instruments which canbe attached to two areas of policy: to institutions of localeconomic promotion on the one hand and labour marketpolicy operating close to the enterprise on the other. Theseinstruments target the preservation of the company orimprovement of the labour market opportunities of employeesfacing unemployment.

In the consolidation process, the crucial factors includecapital, management and time. From the enterprise's point ofview, instruments can be classified according to function:

Increase of equity or loan capital of the company,

Support for management, including mediation, co-ordination,moderation, counselling, suggestion of concepts, even co-management along with taking over responsibility.

The objective of these instruments targeting capital andmanagement is to create a time corridor, which gives theenterprise the chance to re-organise and find a new positionon the market.

These instruments targeting the enterprise directly aresupplemented by another group of instruments, which is atleast as significant. Utilised during corporate crisis as well,they are targeting primarily the situation of the employeesconcerned. These more labour market policy orientedinstruments are - if varying in degree - part of the toolbox ofprotagonists on a local and regional level.Especially the unions demand and support their activitiesbecause they improve the opportunities of employees facingor suffering unemployment by accomplishing either anabandonment or a reduction of planned job cuts or subsequentemployment via suitable measures (qualification measures,outplacement). So-called transfer companies, on the enterpriselevel as well as on an inter-enterprise level, play a crucial rolein the regions surveyed in both East and West Germany.Funding of these transfer companies is based on SocialSGB III §


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Security Code (SGB) III, which provides two new instrumentsfor both East and West Germany since 1998: subsidies forsocial redundancy plans according to § 254 and structurallycaused short hours according to § 175 (which is limited up tothe end of 2002).

Furthermore, Free Assistance according to § 10 SGB IIIprovides the opportunity to develop innovations in the field ofemployment promotion close to the enterprise. In our casestudies, we were able to identify two different approaches. Onthe one hand, there is systematic reduction of overtime by theemployment office, on the other hand a fund to supportenterprises suffering corporate crises is supplied comprisingof financial means provided by Free Assistance (e.g.Chemnitz).

254 und §175

SGB II §10

c) Alleviationof negativeconsequences

See b)

d) Institutionsandqualificatione) Rules andregulations forstart-ups andrepayment

See above

f) Courtdecisions

See above

5. Goodpractices

a) See the description of Chemnitz Consensus Model casestudy.

b) As corporate crises typically impose a rather strict timeframe, which limits severely the development of soundalternatives regarding both management and employmentpolicy, in Bielefeld and surroundings a close co-operation ofall protagonists developed in cases of corporate crises. Theapproach is target-oriented. An essential condition is theexistence of well-adjusted communication and co-operationstructures on both the enterprise and the regional level.

Hence, four protagonists (institutions of local economicpromotion and employment promotion, chamber ofcommerce, IG Metall) are working jointly on a project"Opportunity Management" of the team "Service andSafeguarding of Resources". This team is concerned withimproved utilisation of the existing capacities for crisismanagement in the region and assessment of possibleinterfaces between existing counselling offers and a potentialearly warning system. This is based on the protagonists'experience that corporate crises do not emerge out of the blue.In most cases, it is a slow and stealth process characterised byignoring warning signals. Consequently, many enterprises are


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too late to seek external help. Thus, scope for action tomaintain enterprises and jobs is narrowed. Protagonists hopeto achieve an earlier call for help on part of the enterprises. Asan additional problem, very small enterprises are frequentlynot covered by current instruments of crises management.

As a first step, the protagonists agreed to assemble an analysisof existing resources. This analysis should provideinformation about existing regional programs, which typesand forms of counselling are intended for which stage of thecrisis and for which enterprises and employees theseinstruments are most suitable. Subsequently, existingprograms targeting companies suffering corporate crisesshould be improved and extended. Another approach targetsthe protagonists in this process directly, e.g. via qualificationmeasures in order to improve communication in cases ofcrises by acquiring moderation and mediation techniques etc.Furthermore, protagonists should be enabled to pick upwarning signals of enterprises in due time and assess themrealistically.

6. Strategya) Acceptanceof strategies?b) moreextensiveregulation7. Furtherremarks


401


Greece

Question Answers Ref.1. Describing territorial responsibility1a. Existence ofprovisions

-System of administrative authorisation whencollective redundancies: the concertation withemployee reps starts with an invitation from theemployer and takes place over a 20-day period. Theemployer shall forward to the local office of theMinistry of labour a copy of the writtencommunication given to the employee representativeswithin 8 days of the beginning of the procedure. Ifthere are establishments in different regions, thedocuments are to be sent to the Ministry of Labourand to the relevant Employment organisation(OAED) of the most affected establishment. Theauthorities are also to receive the minutes of theconcertation procedure. If agreement is reached, theredundancies are carried out in accordance with itsterms. If there is no agreement, the Prefect or theMinister of Labour decides whether to authorise orreject all or part of the planned redundancies, within10 days of receipt of the minutes of the concertationprocedure. Thereafter, the employer may implementredundancies only within the limits specified by theadministrative decision, and if the order is not issuedwithin the time period, he may implement thecollective redundancies in accordance with the lastconcessions made to the workers’ representativesduring the concertation procedure. See2b-Involvement of the local authorities in the companyorgans of enterprises from the “socialised” sector(public sector, telecommunications, public services,transport, banking and insurance). See 2a

-Possibility to conclude "Local employmentpacts". See 2d

Law 1387/1983Article 3 & 5

Law 1365/1983


1b. Territorialeffects ofrestructuring

Information on effects when collective redundancy ortransfer. See 3b

1c. Kind ofrules

Mainly Labour LawAlso public utilities and services, pacts, incentives


402

and funding1d. Purpose ofrules

Control over important companies, economicdevelopment in poor areas, treatment ofunemployment, and promotion of social services.

1e. Examplesof territorialimpact

Areas hit by unemployment, which have entered thestage of de-industrialisation are mainly located innorthern Greece (Kozani-Florina zone, Drama andImathia prefectures), Magnesia, Viota and AchaiaPrefectures, western areas of Athens and Piraeuswhere many companies engaged in traditionalindustrial activity have closed down

OMED inEIRO01/99

2. Institutions and agents at territorial level2a. Rules atregional level

-In the “socialised” sector including the public sector(called DEKO: telecommunications, public services,transport, etc.) and banking and insurance (private orpublic) there is up to one third of participation by theState, local authorities, consumers and personnel inthe boards of enterprises. A “representative assemblyfor social control” (ASKE) of 27 members including9 State representatives, 9 local authority andconsumers’ representatives and 9 members electeddirectly by the personnel of the enterprise, in theoryhas the power to decide investment, price,procurement and employment policy in theenterprise, within the budget decided by thegovernment, and to examine and approve the annualaccounts and report. Application is not alwayseffective.-"Local initiatives for employment", "integratedinterventions for urban development in local small-scale zones" and "development of human resources"under Regional Operational Programmes-"Regional plans for actions on employment" aimedto link employment policy to Regional developmentPlans overseen by Regional Councils with .theRegional Councils including representatives of theEmployment agency and of the Work InspectionA directorate of the Regional Directorate of Planningand Development being responsible for employmentissues in every Region

Law1365/1983

NAP 2002

Lawn°2874/2000Ch.1-1

2b. Role oflocal/regionalauthorities

-In practice, the system of administrativeauthorisation for redundancies in cases where noagreement is reached at company level means thatthe administrative authorities have ultimateresponsibility to consider the extend of therestructuring projects. The unions prefer to takelabour disputes involving staff cuts to the"conciliation" procedure carried out through anagency of the Ministry of Labour. Employers tend toavoid becoming involved in the legal procedure forcollective redundancies and usually resort topractices of voluntary redundancy, early retirement,phasing dismissals, use of non-permanent work…

Researchby EIE in1999

INE inEIRO09/2002


403

-Influence through the political parties with regard tocrucial business decisions is part of the culture ofindustrial relations. Main employment tools arebased on law and action of institutional, mainlytripartite, bodies in a globally centralized system-The "Local employment pacts" must involve thelocal actors and the local employment office in orderto be valid. See 2d.


2c. New actors Changes in company ownership: more private andinternational actors

2d. Pacts -Local employment pacts: the 98' Law states that it ispossible to conclude “local employment pacts”(TSAs). These are collective agreements of a specialtype, which may be concluded by employers, tradeunions, the public authorities, chambers of commerceand local authorities in regions in industrial declineor with high unemployment. They receive nationaland Community funding. These (mainly tripartite)pacts may include:

.measures to stabilise or develop employment,

.training measures linked to the localproduction system,.job-creation measures in SMEs andinvestment sectors,.the development of specific labour andcultural economic activities for whichparticular pay and working conditions may beset. The validity of these provisions, such asmonthly and daily wage minima, depends onthe signature of the locally most representativetrade union and ratification by the Ministries ofLabour and the Economy. These specialconditions, which must be specified incontracts of employment, take priority over allother provisions, especially those set out inindustry-wide or occupational agreements.

They cannot, however, derogate from the statutoryprovisions on health and safety or theminimum protection thresholds set out in lawand national general agreements (applicableto all Greek workers).

-"Programme of local action plans for employment"


NAP 2002

3. Prevention3a. Prior informationof territorial bodies

System of information and administrativeauthorisation when collective redundancies. See 1a

Law 1387/1983Article 3 & 5

3b. Impact study -Collective redundancies require prior concertationbetween the employer and workers’ representativesin respect of potential ways of preventing orreducing both the number of redundancies plannedand their effects-Modification of the employers’ legal situation mustbe preceded by a procedure of information and


PresidentialDecree572/1988Article 3,6 & 7


404

consultation of workers’ representatives covering thereasons for the transfer, its legal, economic andlabour effects and any supporting measures planned.

3c. Territorialinvolvement inprevention

-Local employment pacts. See 2d

-Usual information and influence through politicalparties

Law 2639/1998Article 4INE in EIRO09/2002

3d. Examples -Little prevention unless in restructuring of the large,former or still state-owned, companies, without realterritorial dimension (See examples in externalresponsibility 12).-Global agreement at OTE (telecommunications) forall subsidiaries and, as far as possible, allcontractors, subcontractors and suppliers: educationand training, environment, decent workingconditions, equal opportunities,...


4. Measures4a. PublicFunding

-The “Integrated Programme of Intervention” is 80%co-funded by the European Social Fund-Development partnerships under EQUAL funding(40 in 2002)-The development of a "Programme of local actionplans for employment" carried out by the CentralAssociation of Municipalities and Communes ofGreece as part of the EC initiative "action for thepromotion of employment on the local level" isfunded by Line B5-503 (5 pilots in 2001)

NAP2002

4b. Usual measures The “Integrated Programme of Intervention” consistsof a list of measures aimed at the re-integration ofdismissed workers through active support for aperiod of 37 months. It includes training allowances,subsidised jobs and start-up grants for the creation ofown business. There were 17 local actions for theperiod 1998-2000. The new programme attempts tocreate the right conditions for the re-integration ofthe unemployed into active life. It is expected to playan important role in supporting the currentprivatisation process. Around 25 000 beneficiaries in2001 in 9 prefectures.

NAP 2002

4c. Economicmeasures

-Local employment pacts may include measures tostabilise or develop employment, job-creationmeasures and the development of specific labour andcultural economic activities for which particular payand working conditions may be set. See 2d-Subsidised jobs through the “Integrated Programmeof Intervention”. See 4b-Industrial restructuring agency(OAE) administersprivate enterprises facing insolvency problems


NAP 2002

4d. Training andrequalificationmeasures

-Local employment pacts may include trainingmeasures linked to the local production system. See2d-Training allowances through the “Integrated


NAP 2002


405

Programme of Intervention”. See 4b-In 2001, 130 000 private sector employeesparticipated in various types of vocational training, ,mainly through Public Employment Services (OAEDand KPAs) and the Employment and VocationalTraining Found programmes (LAEK), which havedecentralised agencies-Remark: only 1.1% of adults participated totrainings in 2000, the lowest level over EU (EUaverage 8.0%), according to Eurostat.


4. Measures con't4e. Support tocreation of newenterprises

-Local employment pacts may include job-creationmeasures using public and Community aid, in SMEsand investment sectors and the development ofspecific labour and cultural economic activities forwhich particular pay and working conditions may beset. See 2d-Start-up grants for the creation of own businessthrough the “Integrated Programme of Intervention”.See 4b-90' Law divides Greece into 4 zones, according totheir economic and regional developmentsignificance, and provides enterprises operating ineach area with different incentives for productiveinvestments. Less developed regions, islands andborders are treated more favourably. Incentives(which vary among other criteria according toworkplaces created), include investments grants,interest subsidies, tax allowances deductible from thegross revenue, increased depreciation rates


NAP 2002

Law 1892/1990as amended perLaw 2234/1994

4f. Examples Local employment pacts (TSAs) in Achaia andKozani prefectures include creation of cooperativeenterprises, undertakings to provide social serviceslike guarding of schools

5. Good practicesExamples

6. Prospects6a. Strategies Development of the "local action plans for

employment" planned in NAPNAP2002

6b. Newregulations

The "local employment pacts" are quite new (1998)and have sparked a public debate

7. RemarksRemarks -Influence through the political parties and State

regulation with regard to crucial business decisions-Main level still national


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Italy

46Questions Answers Ref.1. Describing Territorial Responsibility(1)

1a. Existenceof provisions

Provisions of regional law (in particular in the contextof decentralisation) deal with territorial responsibility.For example, in Italy regions are responsible fortraining programmes

In general provisions in this area come from, protocol,collective agreements

Some collective agreements between big enterprisesand trade unions give priority to" Joint ConsultativeCommittees" at various levels: group, territory, sector,and company grouping. The general tasks of thesecommittees are as follows:

a) prior examination and investigation of the strategicoptions for industrial and economic policy, ofrestructuring and development projects and of relevantaspects of labour and industrial relations policy;

b) evaluation of and formal, obligatory but non-bindingadvice on these matters;

c) verification and monitoring of the implementationphases;

d) presentation of proposals on work organisation,industrial relations, and the labour market.

Among the enterprises that have signed suchagreement or protocol for the setting-up of suchbilateral committees: IRI , ASAP , ENI

At national level we can also mention the tripartiteagreement of 1993, which strengthen the role of these

Example:Decretolegislativo28 agosto1997, n.281(Region/State)

EIRO-EMIRE1993

Tripartite

46 The article of Angleo Picchieri „Concertazione e sveluppo locale“ was very helpful for collecting the information


407

bilateral bodies in dealing with the effects on socialaspects, levels of employment and working conditionsassociated with processes of technological innovation,company reorganisation and restructuring

See also labour law (collective redundancies, transferof undertakings, wage guarantee funds law) wheresome rules are relevant in this field (see above 1c).Competition law is also relevant

agreementof 23 July1993

Law223/91

1b. Territorialeffects ofrestructuring1c. Kind ofrules

The ‘mobility’ procedure (mobilità), introduced by law223/91. When workers are made redundant following acompany restructuring process, they can enter‘mobility’. This status can last for a period that goesfrom a minimum of one year (for workers below 40) toa maximum of three year (for workers over 50).Workers in mobility receive a benefit and enter aregional ‘mobility list’ that has the purpose of helpingthem find a new job. In fact, companies that hireworkers put on these mobility lists receive a set ofbenefits in terms of social contribution reductions,economic incentives, and tax reductions. In order tostart the mobility procedure, a consultation betweentrade unions and the employer is required. The partieshave to consider options alternative to mobility (i.e.,dismissals) for reducing redundancies, even if onlypartially. If an agreement is reached on the mobilityprocedure, the costs of dismissals that bear on thecompany are reduced by 50%.

Law223/91

1d. Purpose ofrules1e. Examplesof territorialimpact

Recent restructuring in the automotive, banking, andinsurance industries have had a significant impact onthe local labour market. In the case of the Intesa Groupone of the major banking groups in Italy, which wasprogressively created in recent years by way ofmergers and acquisitions. The latest companyreorganisation plan envisaged some 5,400redundancies (to be added to a reduction of 2,500workers through transfers of single retail-bankingoutlets) out of a total of about 70,000 people. A specialsectoral fund for managing restructuring is intervened.

2. Institutions and agents at territorial level2a. Rules atregional level

The social dialogue model (see 2b) has few legal basesbut rather draws legitimacy from the players themselves:regional government, local entities, associationsrepresenting various interests, research institutes,companies, chambers of commerce, etc. Social dialoguehas become a kind of legitimate way of regulating localeconomic systems

2b. Role of The tendency is to call local dialogue from now on


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local/regionalauthorities

„concertazione locale“. Which designates increasinglywidespread partnership practices characterised by theindividualisation of goals to be reached and means to beimplemented, all of it being formalised in publicdocuments. Territorial pacts are part of these practices.The experience gained from territorial pacts has made itpossible for CNEL (National Council for EconomicAffairs and Labour) to attain an important coordinatingrole in social dialogue on local development policy. Infact, CNEL has provided technical and bargainingsupport, giving assistance at all phases of the pacts'specifications and of the related operational developmentprojects. In this way, though starting off with aconsultative role, CNEL could acquire an "operational"one, which, might lead to far-reaching results in term ofdevelopment policies for crisis-hit areas and of socialdialogue in Italy. In this way, territorial pacts constitutean important experience that could help in overcomingthe" institutional weakness "which still characterisessocial dialogue and discussion, and to some extent thewhole industrial relations system, in Italy.

FromRobertoPedersini,FondazioneRegionale PietroSeveso

2c. Newplayers

The players in social dialogue are many and varied, inaddition to players as described above (2a), sometimesthe Church can be a player in local dialogue. In somecases “assessorati” (assistance) to territorial dialoguehave been set up. This is a tendency (technicalassistance) and improves the efficiency of the dialogue.

2d. Pacts The territorial pact projects (local development inconjunction with general orientations of regionalprogrammes) can be initiated by “local entities”, otherpublic authorities operating and representing them at thelocal level with companies, workers, and private citizens.These pacts preceded “territorial employment pacts”launched in 1996 by the European Commission in orderto, among others; increase the impact of structural funds.Financing is carried out for the most part (see below:financing) by a governmental organisation, the CIPE. Inthe tradition of those pacts, there are other variants suchas “regional pacts for the development of employment”,but also trade union agreements in terms of localdevelopment. The trade unions' commitment to fosteringemployment creation led in December to an agreementbetween Cgil, Cisl and Uil on the “guidelines to followin negotiations between the social partners to support thegrowth of investment and job creation in theMezzogiorno”" This document identifies the means thatmay be used at local level to sustain employment -"work-entry" policies, training, bargaining on workingtime, and wage levels.

3. Prevention3a. Priorinformation ofterritorial

No particular information except that which prevails interms of collective redundancies: notification andcommunication of information to the competent local

See 3b


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bodies public authority; if there is no agreement during theconsultation procedure, on the means to avoidredundancies, a meeting takes place before thecompetent local public authority (see 3b below). Thefirm may also ask for the intervention of Wagesguarantee funds.

3b. Impactstudy

No obligation to carry out a territorial impact study isprovided for in the texts. However, worker informationand consultation procedures in case of collectiveredundancies or corporate transfers can lead to the socialimpact analysis of restructuring in the territories.In the insurance industry-wide agreement, a specificarticle (article 14) provides for aninformation/consultation procedure in case of relevantcompany restructuring, also due to technologicalinnovations, mergers, combinations, and break-ups,which may entail impacts on employment and workingconditions or lead to territorial mobility. Bothinformation and consultation (to be activated upon unionrequest) must take place before the implementationphase. The consultation procedure should aim atreaching an agreement and it should last no longer than30 days. During this period, a special clause forbidsunilateral actions and conflict

Inparticularin terms ofcorporatetransfers:Law 428/29December1990-Law223/71 forcollectiveredundancies

3c. Territorialinvolvementin prevention

Some groups (particularly in the automotive industry)are beginning to see some validity in the participation inlocal development, following the example of FIAT in thePiemontese region: during the preparation of the“regional employment pact” between communes in theprovince of Turin, players (in particular trade unions)have tried to implicate FIAT in this, by proposing toassociate local entities (in particular the university) to theFIAT programme aimed at promoting quality standards(know-how, innovation, training) in its relations withsuppliers, the “crescita guidata fornitori” programme.

3d. Examples The recent tendency is to expand corporate industrialrelations to the territorial level. An example is theagreement of 28 May 1998 in the Melfi area, whichextends social provisions in effect at FIAT-SATA toautomotive OEMs (20 sub-contracting companies in thearea), and broadens the subject of negotiations to includepublic transport problems.

4. Measures4a. PublicFunding

For territorial pacts-private enterprise must contribute at least 30% of theinvestment required for economic activities included inthe projects;

-infrastructural investment must not exceed 30% of totalinvestment; and-the maximum contribution by CIPE to any pact is ITL100 billion.More generally, internal as well as external resourcesfinance action in terms of local development. If it


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involves revitalising an industrial area, players will havea tendency to first resort to local resources. If it involvesa region, external resources (state, Europe, etc.) will firstbe called on.

4b. Usualmeasures4c. Economicmeasures4d. Trainingandrequalificationmeasures

Local employment pacts may include training measureslinked to the local production system. See 2d

.


4. Measures cont'd4e. Support tocreation ofnewenterprises

Italy is strongly characterised by the wide diffusion inthe economic environment of the entrepreneurship modelembodied in the thousands of small/medium Italianfirms. Close to this successful model - which representsthe history of Italian economic development - a new oneis emerging. Small and medium enterprises operating athighly competitive levels or having highly qualifiedprofiles are opting for a professional approach ratherthan the traditional one.

4f. Examples5. Good practicesExamples Territorial pact for employment: Sangro-Aventino. This

is in the region of the Abruzzi in Southern Italy is an areaof great contrast. The coastal strip and the neighbouringlowlands have a relatively low unemployment rate(13.1%). In the more mountainous hinterland, bycontrast, unemployment averages 22.4% and in someplaces is as high as 35%. Young people are particularlyaffected by this scarcity of jobs, and there is a movementof migration of people from the interior to the coast.

To narrow the gap between the coastal and inland areas,the province of Chieti, which is responsible forcoordinating the Territorial Pact, has decided to promotea new local development dynamic based on the utilisationof indigenous resources, the development of a culture ofprojects, and the networking of the different initiativesundertaken.

Key elements:

The establishment of a global strategic frameworkfor Sangro-Aventino that incorporates the initiativesdeveloped.

• A long preliminary phase of consultationinvolving all the parties concerned.

• 52 partners, including representatives ofemployers and trade unions, are working within the

Inforegio1997


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Pact.

• A method of integrated local development,coordinating interventions in the sectors of theeconomy, tourism, and agriculture.

• The sharing of good practices and the networkingof initiatives.

• Emphasis placed on strengthening local SMEsthrough collaboration with a major corporation.

The involvement of local banks to supply venturecpital for SMEs in addition to other services

6. Prospects6a. Strategies There is an important debate in the Italian legislation on

transfer of undertakings: if a transaction does not involvea proper and potentially autonomous "part of a business"(i.e., that could be viable as an independent firm), theworker's consent is needed for the transfer of theemployment contracts (and, therefore, he or she candecide to remain with the former employer). This debateis particularly relevant in case of outsourcing processes

Eiro

6b. Newregulations7. RemarksRemarks Economic regulations based on cooperation between

local players are not a novelty in itself in Italy, playerswho of course, share values of common interests andgoals. The “new” tendency is to institutionalise thesetypes of cooperation or of “governance” at the territoriallevel, due in part to the European Union initiatives to thateffect (example of territorial pacts). Principalcharacteristics: the territory has a variable geometry(region, locality, industrial district, etc.), themesdiscussed through social cooperation are varied:employment, public politics, infrastructure, transport, butalso professional training, innovation, technologytransfer; themes that are liable to increasingly involvecompanies in the dialogue (see the FIAT example and itsnetwork of sub-contractors). The number of players in thesocial dialogue is also increasing (public entities,companies, trade unions, civil society, Church, etc.)


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Portugal

Questions Answers Ref.1. Descriptionc) Regulationsenterpriseslocal authorities

Em geral não existem cláusulas específicas em termos delegislação nas relações entre as empresas e a comunidade,exceptuando ao nível da legislação ambiental.

b) Rules Em geral as comunidades locais e até os trabalhadores nãoparticipam nas reestruturações das empresas. Existemalguns casos pontuais em que o Poder Local participa dealgum modo, principalmente quando se coloca o problemado emprego (Marinha Grande, Minas da Panasqueira,Lisnave, Vale do Ave, etc).

c) Legal base Sob ponto de vista ambiental já existem regras muitoconcretas quanto aso dejectos, resíduos etc.


Preservar o ambiente e defender a saúde pública

e) Case study O caso de Souselas com a Cimenteira é suficientementeconhecido sob o impacto ambiental previsível no caso daimplementação da co-incineração.Temos o caso das Minas da Panasqueira a nível ambientale de emprego

2. Institutions and protagonistsa) Influence A nível ambiental e de investimentos estrangeiros existem

regras

b) Responsibility Temos verificado algum protagonismo das autarquias edas Comissões Regionais para além da acção da Inspecçãodo Trabalho e dos Sindicatos.

c) new players Não aparecem novos grupos para além dos tradicionais e jáinstituídos. Mesmo as igrejas raramente entram nestaquestão


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d)Provisions/Measures

Talvez se possam enquadrar aqui os planos do Vale do Avee da península de Setúbal nas décadas de 80/90?

3. Preventionb) Provisions Não

b) Previous report a legislação do trabalho obriga a uma informação dostrabalhadores sobre os impactos a nível do emprego dasreestruturações.

c) Partnershipnetworkinvolvement

Raramente acontece

d) Anticipation A prevenção também aqui seria muito importante para selimitarem as consequências económicas sociais eambientais dos processos de reestruturação ou dedeslocalização. A informação e participação dostrabalhadores, do Poder Local e de outros grupos deinteresses existentes na região.Esta questão também deve ser enquadrada na contrataçãocolectiva

4. Measuresa) Public funds Não é usual. Apenas conheço os Planos de

desenvolvimento de regiões em crise (Ave,Setúbal,Covilhã, Alentejo etc).

b) Most commonmeasures

Um bom sistema público de segurança social éfundamental bem como um sistema de formação e apoioao novo emprego. Estas questões deveriam ser integradasnos acordos de empresa e de sector. Apoios à economiasocial (cooperativas, associações, fundações, mútuas,etc)da região para integrarem trabalhadores oriundos dessesprocessos de reestruturação.

c) Alleviation ofnegativeconsequences(economicmeasures)

Nos acordos territoriais a estabelecer deveriam estarincluídas indemnizações da empresa que deveriam reverterpara um fundo de apoio a iniciativas ambientais, deformação e de emprego.

d) Institutions andqualification

Os centros de emprego locais desenvolvem e aindapoderiam desenvolver melhor um papel de coordenaçãodas entidades de formação e requalificação. As associaçõesde desenvolvimento local e alguns sindicatos também estãoa ter um papel crescente nesta área.

e) Rules andregulations for start-ups and repaymentf) Court decisions

5. Good practices6. Strategy


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a) Acceptance ofstrategies?

É necessário estabelecer um quadro legal que defina ascondições de implantação das empresas numa localidade.Não basta localizar os chamados “Parques industriais” nosarredores das cidades. É necessário estabelecer o que fazerao nível da informação dos trabalhadores , instituiçõeslocais e população em geral; que medidas implementar aonível da requalificação e emprego e como enfrentar aseventuais consequências ambientais; quais as obrigaçõesfiscais, ambientais e sociais da empresa que se reestruturaou se deslocaliza.

b) more extensiveregulation

O Movimento sindical deveria integrar esta temática aonivel da contratação e ao nível dos acordos gerais noâmbito da concertação social.

7. Further remarks É fundamental que dos processos de reestruturação nãovenha a degradação social nem ambiental .Deveria ser equacionada a questão do interior e litoral ouregião mais desenvolvida e região mais pobre.


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Spain

Questions Answers Ref.1. DescriptionRegulationsenterprisesLocal authorities

No legal provision exists. In Administrative Law andEnvironmental Law several requirements areestablished to regulate the opening of workplacesand installation and functioning of specific activities;these are norms linked to administrative control anddo not regulate stable communication proceduresbetween local authorities and enterprises regardingrestructuring.

b) Rulesc) Legal base

Regarding restructuring at territorial level, the onlyregulation is under State, labour and commercialbasis.

See questionnaire regarding collective redundancies.

Art. 51 Estatutode losTrabajadores-RD 43/1996Reglamento deprocedimientosde Regulaciónde Empleo


The aims of labour norms – in case of collectiveredundancies - are to ensure a consultation processwith employee representatives and to protect specificemployee’s rights relative to wages, compensations,alternative measures or to reduce restructuringconsequences.Commercial norms are to be applied under concreteassumptions where company restructuring is due tocorporate crisis (creditor’s non-payment resulting insituations of insolvency or bankruptcy)On the other hand, limited liability enterprises in theStock Market have specific information obligationswith the control entity (National Stock MarketCommission).

Estatuto de losTrabajadores

e) Case study See cases in Spain: AgfaOther cases: At this moment there are severalrelevant cases with serious industrial disputes. Forinstance, Fontaneda factory in Palencia, - a smallpoor province in the north of Spain -, a famous


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traditional Spanish brand of biscuits is going toclosure by a strategic decision of the multinationalUnited Biscuits. There is a strong involvement of theregional government of Castilla-León, notauthorizing the administrative procedure ofcollective redundancies and looking for newinvestors in the same sector.A lot of examples, including the transfer of part ofthe production to the candidate countries in theautomobile sector (SEAT).

2. Institutions and protagonistsa) Influence Spanish Labour Law only treats enterprise

restructuring in case of collective redundancies orwhen contracts are going to be suspended. Thetreatment is based on conditioning these measuresto previous administrative authorization.Authorities that intervene are the autonomous ones,which authorize labour measures. If affectedemployees are in more than one AutonomousRegion, State authority intervenes (Ministry ofLabour and Social Affairs).Wage subsidies that could correspond toemployees in these cases are ensured by Statelevel entity, the Instituto Nacional de Empleo –National Employment Institute-

b) Responsibility Under Spanish Law and territorial powerdistribution, regional –autonomous - authorities areresponsible of implementing Labour Law andelements of economic activity in employmentpromotion. Therefore, can develop diverse roles inthese processes. However, in addition to alreadymentioned authorisation powers, interventions arelimited, in some cases of large restructuringprocesses, to support employment pressures inorder to avoid enterprise de-localization andfacilitate contacts with enterprises that couldsubstitute enterprises out of the region.

c) new players In some cases of large restructuring processes,Municipalities have supported employee’spressures to avoid or reduce collectiveredundancies. There are not other players linked tothese processes.

d) Provisions/Measures There are local employment Pacts, but do notinclude these types of issues.

3. Preventionc) Provisions No

b) Previous report No in Labour and Commercial State Law.

c) Partnership networkinvolvement

No preventive phase legally recognized.

d) Anticipation


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4. Measuresa) Public funds Local or territorial assistance, generally in the form

of training, which in some cases aims to maintainenterprise feasibility.

b) Most commonmeasures

Economic compensation and severance are thegeneral rule, in addition to unemploymentsubsidies and retirement agreements.

Orden de 5 deOctubre de1994 sobreayudas previasa la jubilaciónordinaria, atrabajadoresafectados porreestructuraciones de empresas

c) Alleviation ofnegative consequences(economic measures)

It does not occur always, but public redevelopmentprogrammes in alternative economic sectors can beimplemented by State and regional authorities.

d) Institutions andqualification

Local institutions have a role, but not veryimportant in the case of workers. Generally, theycan implement training measures on behalf theregional or state programmes.

e) Rules and regulationsfor start-ups andrepayment

Not at State level

f) Court decisions No

5. Good practices

6. Strategya) Acceptance ofstrategies?

Preventive management of employment

b) more extensiveregulation7. Further remarks


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Case StudyTerritorial ResponsibilityAgfa-Gevaert

AGFA-GEVAERT has several centres in Spain. One of them is a plant located inAranjuez - a town with 40,000 inhabitants near Madrid - which makes radiologicmaterial for hospitals.

In 1999 the company announced its decision to close the plant in which 196 workerswere employed to take production to Morstel in Belgium. The employees, theirrepresentatives and the trade unions were radically opposed to this measure, which theyconsidered to be strategically motivated rather than based on market reasons.

The Town Council and the regional government were also radically opposed, given theimportance of these jobs for the area, which suffers a high rate of unemploymentamongst young and low-qualified workers.

After conflicts, mobilisations and much pressure which attracted the attention of themedia, finally, in the year 2000, an agreement was reached with the head office.

The main elements were:

- Agreement to close the plant on a fixed date, eighteen months later, on December31st 2001 at the latest, which allowed for an orderly closure in time. This time meant thatthe effects of dismissals could be reduced and that a closure calendar could beestablished.- A principle to keep all jobs, which included the re-employment of all the workers.- A compensation mechanism with compensations well over the legal minimumlevel for those workers who wished to be dismissed, as well as a pension scheme.- The commitment of the regional government to purchase the land on which thecompany was located at a non-speculative price. This land had a high market value asAranjuez is a “Royal Residence”, monumental location of Royal Palaces. The TownCouncil was also to requalify the land, which was meant for industrial use, to make itavailable for housing and public use.- The setting up of a “Table for Employment” with the participation of employeeand company representatives, the Town Council and the regional government, as apermanent settlement body in charge of directing and agreeing on the development ofthe long process.


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The regional government, as competent labour authority, ratified the agreement andauthorised the mass dismissal administrative file.

Experience highlights the following points:

- Putting off the date of closure allowed for certain anticipation and a preventivemanagement of the restructuring process.

- The determined intervention of the local and regional authorities is aimed atmaintaining the level of employment - basin d'emploi - in an area which has sufferedmuch with the decline of industry. At the same time, the speculative operation of buyingand selling industrial land was prevented, and social use is, at least partially, insured.At present, a home for the elderly is being built on part of the land bought by theregional government. This home will be managed as an administrative concession by aprivate company which will have to give preference in certain professional categories toold employees of AGFA-GEVAERT who wish to be employed - including specifictraining. Simultaneously, the regional government is looking for investors interested insetting up companies in the area

- Most employees who did not resort to the dismissal incentives or to retirementhave found or are on the verge of finding employment.


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Case StudyAnticipation in the restructuring of the sugar industryAzucarera Ebro

Spain joining the European Economic Community and the subsequent reform of theCommon Agrarian Policy (1992) brought about the restructuring of the sugar beet sectorand the sugar industry.

The most important company in the sector, Azucarera Ebro (a merger of three otherimportant companies), which had a market share of 75%, employed over 10,000workers towards the end of the 80s. At present it employs over 4,000 workers.

The restructuring process of Azucarera Ebro during the last 10 years has been markedby the gradual closure of plants in different provinces of inland Spain. The closureaffects longterm-discontinuous employees.

The agreement between the company, employee representatives and trade unionsestablishes the following levels:

1. Workers directly employed by the company: a proposal to be transferred to adifferent plant and, therefore, re-employment and/or job continuity. Those employeeswho accepted the mobility to another plant receive financial help for up to 4 years inorder to purchase or rent new housing, as well as travel allowances and othercompensations, including professional requalification by means of training, even if theyusually carry out the same job as they used to. Those who do not accept the mobility canresort to a dismissal compensation over the legal minimum (more than 45 days per yearworked) or to an early retirement plan for workers over 55.

2. Workers indirectly employed by the company (or directly employed but notlongterm): possibility to set up a cooperative or another form of social economy in orderto supply machinery maintenance or to manufacture packaging. Azucarera Ebroassumes the commitment to buy their products or hire their services for a certain periodof time.

3. Raw material suppliers, that is, sugar beet farmers: agreement guaranteeingcollection of the product in the same Centre or a different one.


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This restructuring experience includes two peculiar elements:

a) On the one hand it takes into account, in different agreements and at different levels,practically all the affected parties, therefore including ingredientes of external andterritorial responsibility pertaining to this company.

b) On the other hand, the agreement regulating re-employment conditions or thegeographical mobility of direct employees is reached when cold, that is, not necessarilywhen the plant is closing. This allows for anticipation, regulation and prevention ofconflicts. In fact, the first agreements for the mobility of workers due to closure datefrom 1992 and, currently, they are valid until 2006.


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Case StudyCalseg S.A.

CALSEG S.A. is a company which originally belonged to the French group Jallatte andwhich produces professional and safety footwear. It is located in Artajona, nearPamplona, Spain.

In the last several years, CVC Capital Partners, a group of British financial investorsbuys Jallatte - which had already been sold to the Etex group - and decides in January2001 to restructure the group, a decision which affects factories in Italy, Spain andFrance. The factory of Artajona makes profits, but the decision is not a business one,rather, it is based on investment profitability criteria.

The impact on the local environment is enormous: CALSEG employs 140 peoplesdirectly, 10% of the inhabitants, apart from indirect jobs (sewing, cleaning,maintenance) in neighbouring villages, carried out by women with a low level ofqualification.

The Town Council, trade unions, work council and the regional government becomeinvolved in solving the restructuring and avoiding a drastic drop in the level ofemployment while producing industrial regeneration. Some factory managers, togetherwith other partners and the support of the regional government, offer to buy thecompany, but the owner does not accept the offer. Given the transnational characteristicsof the restructuring opperation, there is contact between regional government authoritiesand French labour authorities in order to coordinate criteria and pool information.

Finally, a strategy is agreed on which includes the following points:

• A dismissal plan with compensations that 85 workers resort to.

• A social plan with lower compensations - the legal minimum - and inclusionin an outplacement scheme, with a small bonus paid by the company.

• A reindustrialisation plan, including:- The handing over by Jallatte of the premises, the facilities and thegrounds- valued in 1.20 million euros - to attract new investors - who can not belong tothe footwear sector.- The creation of Fundación Artajona in order to manage the financial aidreceived and the re-industrialisation plan.


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Finally, an automation company decided to settle in the old CALSEG industrial site,initially creating 50 jobs.

The lessons learnt derive from the involvement of employees, trade unionrepresentatives and factory managers, together with regional and local authorities, inorder to maintain employment and search for solutions - efficient organisation - forindustrial regeneration.


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Case StudyChemnitz - Germany

The Chemnitz Consensus Model is co-ordinated since 1996 by three protagonists - IGMetall (Metal Workers' Union), PWC Deutsche Revision Chemnitz and the Chemnitzemployment office. Enterprises suffering corporate crises constitute the primaryrecipients.

This model is a result of the co-operation of IG Metall, the employment office and PWCChemnitz during corporate crisis of the Union Machine Tools Construction Ltd. In thiscase of crisis the three regional players struggled for a solution to save the Union.

During this process, it was learned that financial assistance provided by the regionalgovernment was not able to help as fast as necessary and therefore, other strategies on aregional level had to be considered. In the Union case, an employee share scheme wasestablished.

As financial means of employees of companies suffering corporate crises are limited,their buying equity capital is not always possible. Hence, the participants of theChemnitz Consensus Model considered establishing a regional fund with support of theFederal Labour Office. These considerations, however, were not realised.

Since the implementation of the so-called "Free Assistance" based on Social SecurityCode III §10 in the beginning of 1999, every employment office can support employeesin the framework of special projects. Chemnitz receives DM 40 million from the FederalLabour Office dedicated to Free Assistance of regional projects, which are usedprincipally to support companies suffering corporate crises. Companies are grantedfinancial assistance on a short-term basis from this budgetary item and this is utilisedprimarily to cover wage costs of employees. The employment office transfers the fundsto a trust account established in favour of the enterprise.

However, the provision of financial means for companies suffering corporate crises issubject to several additional conditions, which are quoted below. If one or more of theserequirements are not met, the enterprise in financial need does not receive financialassistance from the employment office Chemnitz.

1.Requirement regarding branches of industry: Only companies belonging tobranches of industry with high regional relevance for labour market policy are able tobenefit from assistance of the Chemnitz employment office. These include engineeringindustry, electrical industry and services closely connected to industry.


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2.Company's capacity for restructuring: There has to be a chance of the company'srestructuring and consolidation. A first evaluation of the crisis and an analysis of thestatus quo (state of balance and liquidity, analysis of weaknesses) are given by the PWC.In co-operation with the IG Metall's representative, who is typically closely acquaintedwith the enterprise's problems, possible ways out of the crises are analysed. Staff,management and PWC are jointly working at a continuation concept suggesting singleprocedural steps. This concept comprises a new targeting of the enterprise, planning ofrevenue and liquidity.

3.Contribution to restructuring of shareholders/managers: The employment officedoes not provide all necessary financial means. Shareholders or the managing directorhimself have to offer a financial contribution, which should at least amount to, the sumgranted by the employment office. These funds are transferred to a trust accountestablished in favour of the enterprise. Furthermore, the manager has to agree to areduction of his salary. In some (rare) special cases, shareholders can be compelled tosurrender 25% of their shares without compensation. These shares can be bought andtaken over by the employees. Earnings are transferred to the trust account.

4.Contribution to restructuring of investors: Principal banker(s) of the enterprisehave to contribute financially as well and dispense with a substantial proportion of theiroutstanding accounts. The amount of this renunciation is determined by the restructuringcontribution of the employment office. A waiver of 20% of outstanding debts isintended. Furthermore, the co-ordinators of the Chemnitz Consensus Model decidewhether principal bankers sustain their credit limits or whether a waiver of debt serviceshould be introduced. All agreements between the participants of the ChemnitzConsensus Model and the banks are of a contractual nature.

5.Contribution to restructuring of employees: As well as investors, shareholders andmanagers, employees have to accept financial losses. They have to allow additional timefor payment of wages and dispense with payment of overtime.

6.Establishment of an advisory board: The enterprise has to agree to theestablishment of an advisory board, which is to control the management. This board'srole is crucial. On the one hand, it disposes of the financial means transferred by theemployment office, the investors and shareholders to the trust account. The boarddetermines when and how much of these funds are disbursed. The sum deposited is notdisbursed as a whole but in instalments. Normally, payment of another instalment isconditional to the implementation of the several steps stated in the continuation concept.Besides this controlling function, the board serves as a consultant to the enterpriseduring the implementation stage. It provides advice to the management if problems areoccurring and can point out possible strategies.


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The board's composition varies widely matching the different nature of the enterprises.In addition to IG Metall, PWC and the employment office, further members can includethe Chemnitz Economic Promotion and Development Agency, representatives of theRegional Agency of the Engineering Industry or the Chemnitz Savings Bank as well asmanagers of other companies. Advisory care for the enterprise is cancelled only whenthe company managed the turn-around and all board members agree that the enterpriseoperates on a sound basis.

Since 1999, the Chemnitz Consensus Model was able to assist eight companiesemploying nearly 1000 people in total.


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Case StudyDanone – Ulzama ValleyRegional Re-industrialisation Plan

In 1994 Danone announced the closure of its plant located in the Ulzama Valley(Navarra, north of Spain) due to objective reasons of excess production capacity.

The factory employed 175 workers, but there was also indirect employment, as itguaranteed the purchase of milk from farmers in the area and generated important taxrevenue for the Town Council.

Thus, the closure operation had an important teritorial impact from an economic, labourand social point of view. Also, the work council had a very diverse make-up, as itincluded four trade unions, two of which were nationalistic, in an area where there is ahigh risk of labour conflicts becoming poiticised.

The restructuring strategy followed had the following two main axes:

1. Regarding labour, presenting the closure of the company as a transfer of workers.

2. Design of a social plan, differenciating between:a) Employees who accepted the transfer: support for their adaptation to a new job andfor their settlement in a new house, family assistance and a trial period before making adefinitive decision.

b) Employees who did not accept the transfer: participation in an employment aerial(“antena de empleo”), where they could choose between early retirement, a “bridging”job in or outside the company until early retirement (with the payment of an annualamount as risk salary), external re-employment (with a complement for the new salary)or self-employment (with initial capital).


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I. Drafting of a re-industrialisation plan for the Valley, including three essentialelements:

a) Guaranteeing the purchase of the milk produced by farmers, keeping the samecollection centre inside the industrial grounds.

b) Commitment to create 150 jobs in three years. To this effect, DANONE handed overthe factory premises to possible investors and an agency for economic development wascreated. Later on, a Social aim Foundation was set up, managed by the Navarraautonomic government and the company and with the participation of the Town Counciland the trade unions.

c) Independence of the industrial plan with respect to the social plan: the jobs createdwould be new and they would not be related to the lost jobs, with no commitment toemploy DANONE employees.

During the restructuring process, the labour conflict proceeded on reasonable terms. Theconception and execution of this re-industrialisation plan - which included the offer,promoted by the Foundation, to attract investors and the development of an industrialestate - was perhaps the most important key for the smooth development of the process.

One year later, 127 jobs had been created by means of two new industrial projects and,three years later, 450 jobs had been created in the whole Valley.

The territorial approach, aimed at a strategy of economic and social regeneration, is atthe basis of this experience. It is worth highlighting the active role of the autonomic andmunicipal authorities in an enterprising region that enjoys almost full employment andhas a deep industrial tradition.

Taken from FUNDIPE/ MOA Groupe BPI


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Case StudyTEC – Training and Enterprises Council – Experiment

TEC's are independent localised companies that work under government licences orcontracts. Their aim is to encourage local economic growth by means of appropriateindividual and professional training schemes.

There are 80TEC companies covering England and Wales, and 20 in Scotland, wherethey are called "Local Enterprises Companies (LEC)".

The TEC budget is allocated by the DTI (Department of Trade and Industry) but each ofthem is individually responsible for its premises, income and outgoings. TEC's managea budgetary allocation of close to 4 billion euros and employ approximately 5,000people.

TEC's operate within the framework of a government licence contract (this lasts 3 yearswith an option to renew depending on objectives reached). Obtaining this licence isdependent on answering a series of conditions and being able to offer proof that thecompany complies with suchStandards as ISO 9001 and the"Investor in people"Standard (more than 76% of TEC company directors now have their companies coveredby this Standard).

Reinforcing skill sectors and offering help to local companies (development ofcompetitiveness, promoting creative and innovative initiatives) are the TEC's main areasof involvement. Making this strategy work consists of developing partnership networkswith local authorities, schools, universities and the employment and career agencies.

TEC's build up partnerships with the local education authorities thus creating anInterface between the schools, companies and the educational programmes that takesinto account local requirements, and has the aim of enhancing the chances ofemployability on the work market .

Thanks to the main to its abundance of natural resources, in the 19th century, Tyneside(840,000 inhabitants) was one of the principle birthplaces of the English IndustrialRevolution. From the end of the 1970's, this North-east region experienced a deepchange in its manufacturing sector economy, which in 1981 represented 29%, falling, asa result of the rapid expansion in service industries, to less than 19% in 1996.

This transformation in the means of production has been accompanied by a significantrise in the region's unemployment figures.Tyneside TEC came into being in 1994 when the unemployment rate was at 12.3% (thenational average was 7.5%); and by 1996, it had dropped to10%.


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In two years, TEC actions showed positive results:

• 8 young people out of 10 found a job or entered into a long-term educationalprogramme. Education being considered by the TEC's as a worthwhile investment; afterthe intervention of the TEC's, 74% of young people held qualifications that arerecognised on the labour market.

• In terms of mature workers, one third of people having been unemployed formore than one year found a new job and 58% gained qualifications that are recognisedon the labour market.

• In terms of help to companies:- 65,400 new companies were started up with TEC help- 300,000 companies have received support from the TEC's- 80% of companies made it over the 12 month hurdle- 77% of new companies made it over the 18 months hurdle.

• The TEC also attract new investors, such as Siemens, ICL by offering anemployee recruiting and training package (a new specially adapted programme by theUniversity of Northumbria).


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Case StudyUsinor

The two following examples aim at illustrating and comparing the ways USINOR facedthe restructuring situation. One concerns the USINOR site in ARDOISE, where closurecould be envisaged, and the other the case of closing the USINOR factory in BIACHE.

The ARDOISE factory (employing approximately 500 people) and SODIE having beenworking for some considerable time to reduce the social impact of a potential closurethat has been a hovering threat for several years, and to create an equivalent number ofjobs in this isolated town. On the other side of the coin, the closure of the BIACHEfactory (employing approximately 400 people) has not been prepared at all, despite thefact that it was clearly predictable.

BIACHE (approximately 400 employees) was a plant specialising in cold laminating.The downstream conversion of steel (especially galvanising), headed out for the Oise.

BIACHE had a highly sophisticated production plant, capable of manufacturing highlyspecific, high profit products like the Carbon heads marketed mainly to the UnitedStates. The euro coins were also manufactured on this site.

Whilst major investments were made at the end of the 1990s on other sites, like theMartigues plant, and awaiting that these plants reached their full capacity, a large part ofthe workload was entrusted to BIACHE. For this reason BIACHE, which became astandby site during this period, achieved major peaks of activity in 1998, 1999 and2000. This was to be temporary, however, because as the sites that had been the subjectof investment were to reach their capacity, BIACHE was to experience a downswing inits workload: 50 to 60% down on workload in 2001.

On the 14th December 2001 the management announced the closure of the site.According to the Management47 (January 2002) the decision to close was inevitable.The sector was drifting towards a structural erosion of its sales, as galvanised steel wasto be used increasingly in numerous sectors, especially the automobile industry, to thedetriment of cold laminated steel (BIACHE did not have the tools enabling it to processthe bare product downstream (coating).

47 Voir revue ARDNPC n° 140


432

At the same time, competition from the Eastern and South-East Asiatic countries, in thecontext of European overcapacity in cold laminates production, could only aggravate theproblem. Incidentally the Carbon heads market, was crumbling and Americanprotectionism was holding back the buoyancy of sales.

The announcement of the closure triggered legal proceedings relating to the collectiveredundancies. Enough said that accompaniment for restructuring in this case had beenreduced to its simplest expression, with severe repercussions in the field of labourrelations, strongly echoed by the Press: kidnapping of the Managing Director, exactions,violence against the management, severe conflicts, legal battles, individual sackings forsevere industrial misconduct, and also drastic effects on the employment basin.Today, within the framework of a planned redundancy scheme, some employees havebeen reclassified onto other sites, like the Dunkirk one, however 150 to 200 employeesare still on the “touch line”.

The ARDOISE factory is the USINOR STAINLESS STEEL site located close toMarseilles in the commune (local administrative district) of ARDOISE. The companymanufactures STAINLESS STEEL (approximately 500,000 tons per year). The factoryincludes a electric steel mill and continuous casting.For the last few years there has been hovering threat concerning this factory's future, dueto its production being limited to the production of STAINLESS slabs. Here again, thecompany did change over to the downstream conversion of STAINLESS STEEL;although incidentally, such a conversion is not truly foreseeable for this site due to thereason that the laminating presses are located elsewhere (hot laminating at Fos sur mer,cold laminating by Isbergues and Gueugnon).The factory's future can be called into question, the General Management has taken thedecision not to make any major investments in the site, there has been no recruitingcarried out and production capacity has been sustained mainly by the use of workerstaken from the FOS site.In parallel, over the last few years, the General Management has allocated the means toanticipate the social consequences resulting from the possible closure of the factory. Forexample, it has carried out, in concert with the Society for Industrial and EconomicDevelopment (SODIE), a re industrialisation initiative for the ARDOISE area aimed atcreating jobs other than those that are in danger of being lost due to the possible futureclosure of the factory.


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CHAPTER V

COLLECTIVE DIMENSION


434

INTRODUCTION

The involvement of workforce representatives in undertakings in Europe is a question ofcurrent interest:

- Decisions concerning restructuring and the relocation of production have brought tothe fore debates about social dumping and the ways of preventing and protectingworkers from it;- Economic pressure and the effect on employment mean that interest and negotiationshave now “shifted” to company level;- Changes in work organisation and in social life have raised questions about workforceinformation, consultation and participation;- Economic globalisation has led to the globalisation of the centres of decision-makingand the establishment of transnational procedures, which must tie in with the nationalsystems involved;- The adoption and amendment of the Directive on European works councils, of theEuropean company statute, and of the general framework for informing and consultingworkers has placed the question of workers’ representation and participation at the heartof Community debates.

Certain questions about workers’ involvement in company restructuring keep croppingup and these are magnified when operations are on a European or international scale:

- The complex and diffuse nature of the decision-making process means that workers’participation and cooperation between representatives and decision-makers are difficultto achieve;- In order to be able to do their job properly, representatives must be able to rely oninformation, resources and adequate expertise;- Participation affects the balance of power within an undertaking, not leastmanagement prerogatives;- Coordinating the levels and methods of participation throughout Europe is a complexmatter.

In all cases, the aim of workers’ involvement in the restructuring processes at country orinternational level is two-fold, and coordination of the two is a delicate matter:

- One aim is the enhancement of performance (intervention a force of production).Taking the workers’ point of view into consideration may improve the quality ofdecision-making, reduce the time needed for making and implementing decisions,improve employees’ attitude to decision implementation, increase their interest in theundertaking, and make better use of company resources.

- The other aim is the redistribution of power and resources (intervention as ademocratic force).


435

I . LABOUR RELATIONS AND PREVENTION OF INDUSTRIAL DISPUTES

Labour relations reflect the history and culture of each region and country. Their maincharacteristics are stated below.

Industrial relations : main characteristics

Trade union membership Collective bargaining private sector

COUNTRY

Estimatedrate

source-year trend Main levels

Rate ofemployeecoverage source-year

Main typeof Stateintervention

Germany

UnitedKingdomIrelandBelgiumLuxembourgNetherlandsDenmarkItalySpainPortugalGreeceFranceSwedenFinlandNorwayIcelandAustria

30%

30%50%52%43%26%80%37%19%37%24%9%84%79%54%85%45%

ILO 1995

LFS 1997ICTU 1998OCDE 1995OCDE 1995ILO 1995ILO 1995CESOS1996ILO 1995MTS 91-95ILO 1995ILO 1995LO 1998ILO 1995FAFO 1997ASI 1998OGB 1995

Decline

DeclineLevellingoffSteadyDeclineDeclineRise-changeDeclineRiseDeclineDeclineDeclineRise-changeRiseSteadySteadyDecline

industry

undertakingnationwide/undertakindustry/nationwideindustry/ undertakindustryindustryindustryindustry/nationwideindustryindustryindustry/nationwideindustryindustry/nationwideindustryindustry/nationwideindustry

65% West/ 44%East36%

wide60%75%52%

5 Million1,4Million

widehighhigh50-55%highwide

IAB 1997

DTI 1997

(Joint Com.)Schintgen1997AWVN 1998Scheuer1996

MTS 1998MTS 1997

(Extension)

Stokke 1998

(Chambers)

framework/support

abstentionconsultation/tripartismframework/tripartismframework/tripartismframework/tripartismsupport/consultationconsultation/autonomyframework/tripartismframework/tripartismframework/tripartismframework/tripartismframework/consultationframework/consultationsupport/consultationconsultation/tripartismframework/partnership

For details and sources : see E.PICHOT "employee representatives in Europe and their economicprerogatives 2001" European Commission


436

Concerning industrial disputes :

• Strikes and their effects on work contracts (suspension or termination) and lockoutsare regulated differently from country to country. Disputes declined sharply in theeighties and nineties;

• The peace obligation, which prevents the terms of an agreement from being disputedduring the life of the agreement is a principle that is firmly adhered to in the Nordic,Germanic and Benelux countries ;

• Conciliation, mediation or arbitration channels exist in most of the countries ; theiruse is increasing after reorganisation in Spain, Greece, Italy and Sweden. Labour courtsare prevalent, but vary in terms of composition, designation, system of organisation andpowers.


437

Prevention and settlement of disputes

COUNTRY MEDIATION. CONCILIATION and ARBITRATION

Germany

Many sectoral collective agreements make provision for conciliation and mediation procedures.Breakdown of negotiations between a works council and an employer, may or must,depending on the subject, be submitted to a conciliation committee.

UnitedKingdom

Voluntary conciliation undertaken by ACAS (independent service). ACAS can provide voluntaryarbitration; disputes concerning trade union recognition and the information required fornegotiations are submitted to a Central Arbitration Committee (CAC).

Ireland Initial conciliation provided by the Labour Relations Committee (LRC), then recourse to thelabour court.

Belgium Special conciliation committees of the joint sectoral committees ; recourse to thesecommittees compulsory in some collective agreements.

Luxembourg The legislation stipulates conciliation by the national conciliation office ; the parties are free toaccept the proposed solution. Arbitration is voluntary.

Netherlands Settlement through negotiations with the help of mediators from the Economic and SocialCouncil.

Denmark In the event of a breakdown in negotiations, the negotiating parties set the date from which amediator with extended powers can intervene. In the event of failure, intervention by theState or arbitration.

Italy Settlement by negotiation, with court or State mediation if necessary.

Spain National agreement and extrajudicial regional systems for the settlement of disputes since1996. Implemented by the Inter-Regional Mediation & Arbitration Service (SIMA).

Portugal Legal mechanism for voluntary conciliation provided by the Ministry of Labour at the requestof one or both parties. Voluntary arbitration less frequent.

GreeceMediation provided by OMED (independent) since 1990. In the event of failure, voluntaryarbitration.

FranceLittle use of voluntary procedures for dispute settlement, except in the public sector ; informalintervention of the labour inspectorate or the courts.

Sweden Mediation stepped up since 1997. Public mediation system under discussion.

FinlandCompulsory mediation provided by the Conciliation service. State intervention possible.

Norway Compulsory mediation provided by the public mediator. Arbitration compulsory for essentialservices.

Iceland Recourse to public mediator compulsory.

Austria Voluntary conciliation by Federal Conciliation Office.

For details, see study coordinated by Labour in 2002, and synthesis report by Fernando Valdés Dal-Réon "conciliation, mediation and arbitration in the European Union"


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II – EMPLOYEES’ INVOLVEMENT IN COMPANIES' DECISIONS

Three main types of employees’ representation systems in undertakings play a part inrestructuring processes:

• a general representation system such as works councils,• trade union representation,• representation through workers’ participation on the undertaking’s board of directors

or supervisory board.

II - 1. INVOLVEMENT OF WORKS COUNCILS AND TRADE UNIONREPRESENTATIVES

There are two systems of workers' representation a company level

• In the agreement-based “single channel” system, the unions are the only or, at least,the priority channel of communication with the employer. Negotiation is the modusoperandi.

In Sweden, Finland and Ireland, and, generally speaking, the UK, representation issolely through the union representatives.There are also single or joint representation bodies, supplementing the role of the uniondelegates in Norway, Denmark, Italy and, sometimes, the United Kingdom.

Until 1999, union recognition by employers in the United Kingdom and Ireland wasvoluntary, except in certain circumstances, such as collective redundancies. However,the system is changing.

* In the two-tier representation system, based on statutory requirements, representationof all the workers in a company is through an elected body – a works council orequivalent- operating alongside the unions. It essentially performs aninformation/consultation function.

In Germany, Austria, Spain, Greece, Portugal and the Netherlands, this body is made upsolely of employees. In France and Belgium, it is chaired by the employer. InLuxembourg, it takes the form of a joint council.


439

Employees’ representatives’ areas of responsibility and type of involvement inundertakings

Areas of responsibility Forms of involvement

RepresentationEconomicmatters

Socialandoccupa-tional

HSWC*

Social andculturalactivities

Demands

Informationconsultation

Co-determination

Negotiations

GERMANY Works council X X XX XX X

UK Shop stewards (X) X X X (X) XX

IRELAND Shop stewards (X) X X X (X) XX

BELGIUM Works council X X (X) X (X) XX (X)

LUXEMBG Joint workscouncil

X X X (X) (X) XX (X)

NETHER-LANDS

Works council X X X (X) XX X X

DENMARK Cooperationcommittee

X X X XX (X)

ITALY Unitary unionrepresentation

X X X X X X XX

SPAIN Works council X X X X (X) X X

PORTUGAL Workers’committee orunion workplacerepresentatives

X X X (X) X X

GREECE Workers’ councilor unionworkplacerepresentatives

X X X (X) X X

FRANCE Works council X X X X (X) X (X)

SWEDEN Union workplacerepresentatives

X X (X) X X X XX

FINLAND Union workplacerepresentatives

X X X (X) X X X XX

NORWAY Works council X X X (X) XX X

ICELAND Union workplacerepresentatives

(X) X X X XX

AUSTRIA Works council X X (X) X X XX X

*HSWC = Health, safety and working conditions ; For details and sources : see E.PICHOT "employeerepresentatives in Europe and their economic prerogatives 2001" European Commission


440

Along with negotiation, information and consultation form the basis of workforcerepresentation systems:

• On a voluntary basis, except in the case of collective redundancies and transfers, inthe United Kingdom, Ireland and Iceland; this will change with the implementation ofthe 2002 framework directive on information and consultation (2002/14/CE).

• On a compulsory and general basis in the other countries.

OBJECT AND MANNER OF INFORMATION AND CONSULTATION

information Consultation

Germany In performing its tasks, the works councilmust be informed fully and in good timeby the employer. Documents essential tothe performance of its tasks must beplaced at its disposal on request at anytime.

Consultation prior to decisions.Right to be consulted, usually after a period ofthinking time, so that an opinion may beexpressed in full knowledge of the facts.Favourable opinion or agreement needed insome cases.

Information – consultation compulsory in the event of collective redundancies and transfers;other cases: voluntary

United Kingdom

Provision of information to unions with aview to collective bargaining

Other cases: voluntary

Ireland Information – consultation compulsory in the event of collective redundancies and transfers;other cases: voluntary

Belgium Information prior to decisions, coherentand comparable in time, is the subject ofcomments and exchanges of views. Themembers of a works council may ask forfurther information, ask questions,express criticism, make suggestions andgive opinions; the head of theundertaking must say how he/she intendsto follow these up.Economic and financial information mustbe supplemented, where appropriate, bysimilar information on the legal entity andby information on the economic andfinancial entity of which the undertakingis part.A written report is required in certaincases.

Consultation prior to decisions.In event of major changes: information in goodtime and before dissemination, properconsultation in advance, especially on theimpact on employment. Where collectiveredundancies are proposed: a series ofmeetings with representative bodies, possibilityto submit arguments to prevent or limit theeffects, possibility to propose alternativesolutions. The employer must examine andreply to questions, arguments and proposals.

Luxembourg Transmission of information torepresentatives on day-to-day runningand status of the undertaking + annualgeneral report

Regular consultation, also in writingReasoned replies to opinions of the JointCommittee+ consultation prior to decisions likely to have adecisive influence.

Netherlands The head of the undertaking is required, The head of the undertaking must request an


441

on request to provide, in good time, fullinformation and the details the workscouncil needs in order to perform itsfunctions.on request: in writing + specificinformation

opinion in time for it to influence the decision tobe taken, by forwarding details of the reasonsfor and likely consequences of the decisions Aconsultation meeting must take place before theworks council expresses its opinion. Once it hasdone so, the head of the undertaking shallnotify the works council, in writing, of his/herdecision, including, where applicable, thereasons why it is not consistent with theopinion.

Denmark Information must be provided inaccessible form and early enough for anopinion to be expressed and proposalsmade

The parties attempt to reach an agreement

Information – consultation : according to sectoral collective agreement + compulsory forredundancies and transfers

Italy

+ assessment of the situation by theparties to obtain common informationneeded to define objectives forundertaking negotiations”

+ contacts prior to negotiations

Information – consultation: procedures differ depending on the subjectSpain+information for employees on subjectslikely to have direct or indirect effects onlabour relations

Consultation prior to changes likely to affectemployees

Portugal Right to receive all information they needto carry out their duties

Opinion prior to decisions

Greece Regular information+ prior to implementation of decisions

Deliberations with employer.

France Regular information + on certainoccasions + right to carry out studies andresearch needed for performance offunctions.Procedures vary depending on the subject

In order to draw up a reasoned opinion, theworks council must be given accurateinformation in writing, sufficient time toconsider the matter and a reasoned reply fromthe employer to its comments.Consultation must precede the taking andimplementing of decisions.

information Consultation

Sweden An employer must keep the trade unionorganisations regularly informed ofproduction and financial developments, aswell as of the main points of staff policy.The employer must, without excessivecost or inconvenience, provide the unionsat their request with copies of documents,and help them to examine the variousmatters (accounts, economic matters,etc.)

Before deciding on a major change in activity,an employer must, on his/her own initiative,negotiate with the trade union. The employermust suspend his/her decision duringnegotiations.

Finland The information must be submitted in away that permits discussion on thesubject

Prior to any major decision, an employer mustnegotiate with the employees concerned ortheir representatives (...), examining thereasons for the proposed decision, its effectsand possible alternatives. Proposals must besubmitted in writing five days before the start ofnegotiations.


442

The Works Council may request copies ofavailable documents

Consultation on current matters at least onceevery three months or, once a month at theworks council’s request.

Austria

Information – consultation: The employer is required to keep the works council informed andconsult it at its request;Procedures differ depending on subjectIn the event of proposed changes: proposals must be communicated as soon as possiblebut, in any event, early enough to permit consultation. The works council may makeproposals.


In economic matters regarding restructuring, all the representatives have more or lesssystematic opportunities for information or intervention with regard to:• the undertaking’s economic and financial situation,• staff movements and work organisation,• decisions having a significant effect on the workforce.

However, the situations are very different with regard to competition, companyprojections and strategy. France, Belgium, Norway and Denmark have a particularlyadvanced and systematic system for information on these matters, whereas theMediterranean countries apply it on a voluntary or irregular basis. There are rights ofinquiry to reinforce the information and consultation procedures in France (charteredaccountant), Belgium (auditor) and the Netherlands (where maladministration issuspected).

-With regard collective redundancies and transfers of undertakings, the main nationalprovisions governing information and consultation of employees have been harmonizedthrough structural Community directives :

-On other matters, where there has been no harmonisation, the national provisions arelisted below under the following headings: a) economic matters, b) employment and c)projected changes.

Information and consultation is supplemented by co-determination systems in Germany,Austria, the Netherlands, Sweden and Finland.

The German and Austrian formulae are based on approval procedures, the right of vetoand joint decision-making. Co-determination usually follows economic decisions, e.g. inthe event of a major change or plans for collective redundancies in the establishment. Insuch cases, an agreement must then be reached between the management and the workscouncil, in the absence of which, a decision may be taken externally by a conciliationbody.Other formulae under the heading “co-determination”, used in the event of importantchanges, include the system of notice with staying effect in the Netherlands and thecompulsory negotiation with staying effect in Sweden and Finland.


443

SUBJECTS AND PROCEDURES FOR INFORMATION AND CONSULTATION:Economic mattersInformation and consultation of specific workforce representation; does not take account ofany possible participation of representatives on the undertaking’s boardse = establishment/ u = undertaking/n = threshold/- = no threshold

Structure Economic &

financial situation

Progress of activities Production &

Sales

Investment

projects

Germany Immediateinformationand priorconsultationin the eventof structuralchanges e20

Information once/year(assembly) e5Information 4times/year e20

(orally) e1000 (inwriting)

Meeting to discussannual report u100Economic Committeeto be provided with fulland immediateinformation u100

Information:Once/year (meeting)e5

Information 4times/year

- Meetings ofeconomic committeeonce/month u100

Full andimmediateinformation

u100

Full andimmediateinformation

u100

UK Information and consultation voluntaryIreland Information and consultation voluntaryBelgium Basic dossier

every fouryears. Articles,organisation,financialstructuree50

Basic dossier everyfour years:competition position,productivity, costprices, personnelcostsInformationonce/year: balanceover three years;profit and lossstatement + reportin writing + auditor+ meetingInformation 4times/year:projected cost trend,cost prices, budgetmanagement, byobjective if possible.Summary in writing15 days prior tomeetinge50

Informationonce/year: writtenreport + auditor +meetingInformation 4times/year onsituation regardingachievement ofproduction andproductivityobjectives. Summaryin writing 15 daysbefore meeting

e50

Basic dossierevery four years.Production,productivity:informationonce/year onstate of themarket, orderbook.Information 4times/year:projected salestrend, orders,market, stocks.Meeting +written report 15days beforemeetingu50

Informationonce/year:developmentprogrammes

e50

Luxem-bourg

Annual reportWritten reportand

Annual report e15

Information –consultation

Annual report e15Written report andconsultation

Annual reporte15

Written report

Annualreport oninvestments


444

consultationtwice/year ondevelopmentsPriorinformationandconsultation onmajor changese15

once/year: accountsu150

Written report,consultationtwice/year ondevelopmentsu150

twice/year u150

Information onrunning ofundertakingonce/month u150

and consultationtwice/year ondevelopmentsU150

made. e15

Writtenreport andconsultationtwice/yearU150

Priorinformationandconsultationonrepercussions ofinvestmentpolicyu150

Netherlands

Basicinformation inwriting every 2years e35Consultation ontransfer ofauthority e35:reasons andconsequences,consultationmeeting,opinion withone-monthstaying effect

Annual report onaccounts +chartered accountantInformation onforecast documentsInformationtwice/year onundertaking’s results& forecastse10 (direct)e50

Informationtwice/year onundertaking’soperations, activitiesand forecasts

e10 (direct)e50

Informationtwice/year onactivities &forecasts

e10 (direct)

e50

Informationtwice/yearoninvestmentsinNetherlandsand abroad.Statement ofreasons &consequences.Consultationmeeting.Opinion withone-monthstayingeffecte50


445

Denmark Information 6 times/year on situation and forecasts U35Italy As provided for in sectoral and undertaking agreements e15 (5 agricultural sector)Spain Prior

information/consultationon changesin companyarticles.Opinionwithin 15dayse6

Examination ofaccountsRegular informationon sector’seconomic situation

e6

Information 4times/year

e6

Information 4times/year onproduction situation+ programme

e6 e6

Portugal Informationon plannedchangesu-

Information on thesituation regardingaccounts, budget,financingproceduresOpinion on budgetand financial plansu-

Information ongeneral plan ofactivities – plans forchanges

u-

Information onproductionorganisation, rateof use of workforce& equipmentInformation onforecasts, salesvolume andadministration,suppliesu-

Informationand opinionson plans andbudgets

u-

Greece Priorinformation/consultationon reasonsfor andeffects ofplannedchangesu20

Information oneconomic situationand policy may berequested.Annual informatione50

Negotiations u20General operationu20 e50

Annual informatione50

Negotiations, generaloperation u20 e50

Annual informationProposals forimprovingproductivity of allproduction factors

e50

Priorinformation

u50

France Basicdocumentevery twoyears u50

Annualreport oncapitaltransfersInformationto groupcommitteeu50

Annual reportcontaining turnoverand profit figures,breakdown u50Annual accountingdocuments +analysis bycharteredaccountant u50

Basic document everytwo years u50Annual report u50Consultation ongeneral running ofundertaking u50

Annual report: 4times/year trendsin orders andproductionprogrammes:Oral u300

Annualreport oninvestmentsu50


446

Sweden Informationin event ofchanges e-obligation tonegotiatewith stayingeffect inevent ofmajorchange

Regular informationAccounts may beexamined

e-

Regular informationObligation tonegotiate withstaying effect inevent of majorchange

e-

Regular information

e-

Obligation tonegotiatewith stayingeffect inevent ofmajorchange

e-

Finland Immediateinformationin event ofmajorchanges

u30

Information onaccountsReport twice/yearon economicsituation andoutlook + at grouplevel whereappropriate

u30

Report twice/year oneconomic situationImmediateinformation in theevent of majorchanges in economicand financial trendsObligation tonegotiate, on thebasis of writtenproposals, prior toany change inactivities affectingthe situation of theworkforce, stayingeffect 6 weeks if cutsin workforceanticipated u30

Report twice/yearon the situation,indicating outlookin terms ofproduction,markets and coststructure + atgroup level whereappropriate

u30

Obligation tonegotiate, onthe basis ofwrittenproposals,prior to anymajorinvestment,6 weeksstayingeffect if cutsin workforceanticipated

u30

Austria Informationandconsultationin event ofchangese5

Forwarding ofannual report +annex withnecessaryexplanationsInformation/consultation on economicand financialsituation.Access to allavailabledocumentse5

Information/consultation on situation andoutlook, with accessto all availabledocuments.Consultation 4times/year (onrequest once/month)on current matters.Works council mayrequestdocumentation e5

Information andconsultation on theorder situation, andthe nature andvolume ofproductionAccess to availabledocuments

e5

Informationandconsultationoninvestmentplans, accessto availabledocuments

e5


447

SUBJECTS AND PROCEDURES OF INFORMATION-CONSULTATIONEmployment

Situation

Structure Anticipateddevelopments

Anticipatorymeasures

Employability

Training plan

Germany Informationonce/year(assembly)Regularinformatione5

Regular informationCo-determinationon rules ofassessment andremunerationApproval onselection rules &individual measurese5

Full and promptinformation, priorconsultationWorks council maysubmit proposals

e5

Full and prompt information, priorconsultatione5

Co-determination on applicationmeasures: agreement between workscouncil and employer, conciliationcommittee in event of failure to reachagreement e20

UK Information and consultation voluntary

Ireland Information and consultation voluntary

Belgium Annual information in writing,by subject.Consultation on personnelpolicy.

Annual informationin writing, bysubject.Information 4times/year onanticipatedemploymentchanges – Writtensummary 15 daysprior to meetingInformation inwriting 4 times/yearon achievement offorecasts,discrepanciesbetween objectivesand achievements,changes toforecasts e50

Annual informationin writing, bysubjectConsultation onemployment policyConsultation onvocational trainingand re-trainingmeasures

e50

Consultation onvocational trainingand re-trainingmeasures

U50


448

Information/consultation once/year oncurrent and expected labour forcerequirements and on workforce training,further training and re-training measureswhich might resultInformation/consultation in event ofdecisions having major impact onproposed social measuresU150

Information andconsultationonce/yearPriorinformation/consultat-ion ontraining measuresbefore decisionsU150

Luxembourg Workforce delegation: opinionand proposal on improvementof terms and conditions ofemployment

e15

Consultation priorto forwardingrequest forovertime or part-time workingU150

Workforcedelegation: opinionand proposal onimprovement ofterms andconditions ofemploymentU150

NetherLands Annualsocialreport

e50

Annual social reportObligation to reachagreement on rulesfor recruitment,redundancy,promotion andassessment e50

Annual social reportConsultation onrecruitment –opinion with 1month stayingeffect

e50

Annual social reportObligation to reachagreement on rulesfor recruitment,redundancy,promotion,assessment andtraining e50

Obligation todraw up trainingplan.Obligation toreach agreementon training rulese50

Denmark Information/consultation 6 times/year u150

Italy Procedures depend on sector and undertaking agreements

Spain Information on all workcontracts e6

Information 4times/year onprobableemployment trends.Projectionsconcerning newcontracts e6

Information onmobility decisionsInformation andconsultation onassessmentsregarding jobs andrestructuring.Opinion within 15days e6

Information andconsultationOpinion within 15days e6

Portugal Information on personnelmanagementConsultation on social balancesheet u-

Information on personnel managementPrior opinion on classification changes,promotionsu-

Recommendationsonapprenticeships,retraining andfurther training u-

Possible to request information on personnel management policy u20GreecePrior information onchanges u20 e50

Informationu20 e50

Agreement ontrainingu20 e50

Agreement ontraining u20

e50


449

Social balance sheet. Annualsummary of main statistics:information and consultationu50

Meetings oftrainingcommittee u50

Consultation on employment, working and training conditions u50

France

Annual reportu50Productivityu300

Monthlyanalysis ofemploymentsituation: oralu50

Annualreport,includingwage trendsu50

Annual consultationon developments inemployment andskills; annual/multi-annualforecasts;explanations ofdiscrepancies.Written report 15days beforehandu50

Annual consultationon planned andimplemented actionon health andsafety and trainingmeasures.Written report 15days beforehandu50

Information andconsultation ontraining resultsand plans brokendown bycategory, durationand type

u50

Regular information on personnel policy e-SwedenConsultation priorto entering into orterminating workcontractsObligation tonegotiate onmanagementplanning e-

Obligation to negotiate on managementplanning

e-

Regular information on wagestatistics by categoryu30

Group-levelassessment ofproposed changesin number andcategories ofemployees u30

Information on training results andplans, broken down by category inconjunction with employment forecastsu30

Finland

Obligation tonegotiate onrecruitment criteriau30

Obligation to negotiate on employmentand training plans + correspondingemployment and training plans associatedwith cuts in workforce or changes tocontracts. Discussion of the reasons fordecisions, effects and possiblealternatives. Proposals to be submitted inwriting 5 days before start of negotiationsu30

Obligation tonegotiate onvocational trainingbudgetu30

Austria Consultation 4 times/year onrequest;Once/month on topical matters.Works council may ask fordocuments to be madeavailable.e5

Information onrecruitment needsand relatedpersonnelmeasures.e5

Cooperation procedure on training andretraining: agreement between workscouncil and employer. Conciliationcommittee if no agreement reachede5


450

SUBJECTS AND METHODS OF INFORMATION – CONSULTATIONChanges

Work

organisat-ion

Newtechnologies

Transfer of

production

Mergers Cuts - Closure Relocation

Germany Full and immediate information (e-) + consultation (e5) + co-determination (agreement betweenworks council and employer); conciliation committee if no agreement reached (e20)

UK Information/consultationvoluntary

Information/consultation in accordance with transfer and redundancydirectives e20

Ireland Information/consultationvoluntary

Information/consultation in accordance with transfer and redundancydirectives e20Information +comments + writtensummary of figures, ifpossible prior toimplementation e50

Immediateinformation to workscouncil + employeese20

Information +comments + writtensummary of figures, ifpossible prior toimplementation e50

Belgium Information+ comments+ writtensummary offigures, ifpossiblebeforeimplementation

Consultatione50

Consultation3 monthsprior toimplementation

e50

Effective prior consultation on repercussions, employment prospects,work organisation and employment policy. When collectiveredundancies planned: written report, series of meetings, replies toquestions, discussions and alternative proposalse20

Prior to major decisions, information and consultation on employment repercussions u150Luxembourg

Priorinformation/consultatione15

Information and consultation in event of redundancies (e15) andtransfers (U150)

Netherlands Compulsory agreement onemployment conditions e35Information & consultatione10 (direct)e50

Consultation: statement of reasons and consequences, consultationmeeting with 1 month staying effecte50

Denmark Information/consultation 6times/year u35

Information/consultation sufficiently in advance u35 (u20 collectiveredundancies)

Italy Consultation e-

Consultatione-

Procedures depending on Collective Agreement +information/consultation on collective redundancies e20

Spain Prior information/consultation and negotiations in event of changes likely to affect employees. Opinionwithin 15 days e6


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Portugal Opinion priorto changes inclassificationsand workinghours.Recommendations onimprovements to termsandconditions ofemploymentu-

u-

Consultation: opinion prior to all measures leading to significant cut inthe workforce or substantial deterioration in terms and conditions ofemployment

u-

Prior informatione50

Prior information onreasons and effectse50

Prior informatione50

Greece Priorinformatione50

Consultationon changesto workinghoursProposals onimprove-ments toterms andconditions ofemployment

Priorinformatione50

Prior consultation where collective redundancies are planned u20

Information on changes inproduction methods andtheir effects on work andemployment: 4 times/yearu50

Information and consultation prior to changes in economic or legalorganisationu20

Collective redundancies e10

France

Consultation u50

PriorconsultationPossibility ofconsultingexperts u50

u50 Prior informationin event of take-over bids u50

Sweden Information and right ofparticipation in event ofchanges in workorganisation or terms andconditions of employmente-

Obligation to negotiate prior to decisions on major changes inactivities: decision must be postponed during negotiations. If noagreement can be reached at local level, negotiations transferred tonational-level social partner organisations e-

Finland Re-organisation:obligation tonegotiate:discussion ofreasons fordecision,effects andpossiblealternatives;writtenproposals 5days beforestart ofnegotiationsu30

Immediate information on all major changes in undertaking’s economicand financial situationGroup employees to be informed when a decision is planned which willinvolve significant changes in the activities of the group or one of itsundertakings and affect the personnel situationObligation to negotiate: discussion of reasons for decision, its effectsand possible alternativesProposals submitted in writing 5 days prior to start of negotiationsIn event of workforce cuts: 6-week negotiating period, unlessotherwise agreede20


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Obligation tonegotiateUse of sub-contractingu30

Obligation tonegotiatesufficiently inadvance statingreasons,financial andeconomicconsequences +measures.Obligation tonegotiate onemploymentchanges andchanges tocontractsfollowingtransfer ormerger u30

Prior consultation e5Austria Consultatione5

Consultatione5 In groups: information and right to consultation on current and

planned measures by the controlling undertaking concerning changesto establishments or other cases with major implications for employeese5

Cooperation procedure in event of changes: information without delayand sufficiently in advance to permit consultation on the policyadopted. The works council may make proposals.If major disadvantages for employees, there must be an agreementbetween the works council and the employer. Conciliation committee inthe event of failure to reach agreement e20


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II – 2. EMPLOYEE REPRESENTATION ON COMPANIES’ BOARDS

There are two types of limited company in Europe:

- those in which a management body (the board) co-exists with a supervisory board(two-tier structure). This is standard practice in Germany, Austria and the Netherlands ;

- those with a single management body in the form of a board of directors (one-tierstructure). This is the most usual practice in the other European countries.

Provision is made for worker representation within the board of directors or thesupervisory board (i.e. participation), including those in the private sector, in Germany,Austria, Luxembourg and the Nordic countries. These representatives usually have thesame rights and responsibilities as the shareholders’ representatives, except in the matterof industrial disputes. Representation is generally on a minority basis, accounting for amaximum of one-third of the seats, except in Germany.

With the exception of Luxembourg, these countries also provide for participation atgroup level.

There are also forms of participation which are mid-way betweeninformation/consultation of workers’ representative bodies and participation in thedecision-making bodies:

- in the Netherlands : recommendation on the appointment of supervisory boardmembers and joint meetings of the works council and the supervisory board,

- in France : a works committee delegation on the board of directors in an advisorycapacity.

In the public (or socialised sector) in France, Spain, Greece, Luxembourg and Irelandthere are more far-reaching provisions, with joint or minority representation of workerson the social bodies.


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Participation by employees’ representatives on the board of directors or supervisoryboard of a company provides:

- Monitoring and approval of major decisions in Germany : Germany is the onlycountry to make provision, in certain cases, for equal representation (mining and steelsector) or almost equal representation (undertakings with more than 2,000 employees) ofemployees and shareholders ;

- Information and involvement in decision-making in Austria, the Nordic countries,Denmark and Luxembourg where representation is minority-based: in Norway, a jointmeeting, which elects the board of directors and makes decisions concerninginvestments, is made up of one third employees’ representatives; employees’representatives in Sweden also participate within executive committees and, in Austria,within committees chosen from the supervisory board.

Participation also helps develop employees’ representatives, information andconsultation functions and strengthens the ties between the unions and the employees’elected representatives.

Employees’ participation in company boards

Body SectorCountry

BD SB Public Private

Employee representation

Germany x +500 employeesincluding groups

1/3 seats if 500-2000 employees1/2 seats if + 2000 employees, chair with castingvote appointed by shareholders1/2 seats in mining-steel industry if + 1000employees, “worker director” with agreement ofemployees

Ireland x 11 bodies 1/3 seats

Luxembourg x Semi-public.

Limitedliability Co.+ 1000employees

1/3 seats

Netherlands X Ltd/plc + 100 empl.K >22.5 million guilders

Right of recommendation and veto on the

appointment of members to BD and SB

Joint meetings of works council and SB


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Denmark x . ltd/plc + 50 empl.. groups

Two members to1/3 seats1/3 seats for representatives of branches + 2members for parent company if more than 50employees ; total maximum 1/2 seats

Spain x +1000employees

Choice between joint committees and 1 memberper union with over 25% of UD on the BD andworks council members

Greece x Socialisedsector

1/3 seats on BD and 1/3 seats in “representativeassembly for social control”

Companies with BD orSB

2 members of the works council (or 4 if 3 electoralcolleges) attend meetings in advisory capacity.

Possibility of tabling desiderata, with the right to

receive a reasoned reply.

+200employees

2 members if 200-1000 employees; 1/3 seats if+1000 employees.

France x (x)

Possibleunderarticles ofassociation

maximum 4 members (5 if quoted company) or 1/4seats

Sweden x (x) .+ 25 employees.at group level

minority : 2 members (and 2 alternates) ;3 members (and 3 alternates) ; if + 1000employees in Sweden

+ 150employeesin Finland.

Finland x

groups + 500employees in Finland

Depending on agreementOtherwise: 1 to 4 members representing 1/4 seats

Norway x . + 30 employees. possible for groups

2 members to 1/3 seats (+ 1 or 2 observers if+200 empl. and no joint assembly)or, if + 200 empl. constitution of joint assemblywith 1/3 seats which elects the BD and hasdecision-making powers on investments and majorchanges

Austria x Including groups 1/3 seats



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III – EMPLOYEES’ INVOLVEMENT IN DECISIONS AFFECTING THECOMPANY

In the course of restructuring processes, employees’ interests are sometimes seriouslyaffected by operations and decisions taken outside of the undertaking, i.e. decisionsrelating to competition policy or sectoral strategies, on State aid, on dealing withundertakings in difficulty, etc. How can employees protect their interests when decisionsdirectly concerning them are taken “externally” ? We look at national provisionscovering three areas :

- procedures for preventing undertakings from running into difficulties, and for recoveryand liquidation;- operations affecting shareholders ;- the granting of State aid.

III – 1. RECOVERY AND BANKRUPTCY PROCEDURES

In the event of an undertaking running into difficulties, the action available toemployees, apart from that available to them as creditors or through the unions, includesprevention and intervention in accordance with the procedures stated in the table below.

With regard to prevention, there are a number of lines of action:

- Early warning systems may be activated by employees’ representatives in Belgium,Luxembourg and Germany, and a right of inquiry exists in the Netherlands and France;

- Works councils may be consulted in France under amiable settlement procedures;

- Procedures for consulting employees’ representatives on the implementation of specialmeasures for undertakings in difficulty exist in Belgium, Italy and Spain;

- Participation on management boards, co-determination systems and, more generallyspeaking, systems for involving employees, allow for information and interventionbefore the undertaking gets into serious difficulty. The possibility of calling on expertassistance in economic matters is also available;

- Safeguard clauses, exceptions to collective agreements and collective agreementsdesigned to reduce costs, may be negotiated between the social partners, as occurs inGermany and Luxembourg.


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As part of the legal recovery or liquidation procedures:• Half the countries have a system for informing the employees’ representatives.Sometimes this information is limited to the effects of redundancy decisions;• Employees’ representatives may make their views known in Austria, Belgium, Spain,Portugal and Norway;• Negotiation procedures exist in Germany and Finland.

Intervention by employees or their representatives when an undertaking runs intodifficulties (excluding intervention in their capacity as creditors)

COUNTRY PREVENTING DIFFICULTIES PROCEDURES FOR RECOVERY OR

LIQUIDATION

Germany Early-warning systemsEmployees’ representation on Supervisory BoardWorks council informed/consulted on economicsituationSafeguard clauses in collective agreements

Works council and the managementcommittee informed/consulted aboutrecovery planEmployees form a creditors groupNegotiations with Works council-receiverabout changes in the establishment andfast-track social planSafeguards against redundanciesmaintained

UnitedKingdom

Ireland State aid for agreements if there is restructuring

Belgium Works council informed about payment delaysWorks council informed when “early warning”service brought in and data forwardedWorks Council opinion in reply to request forrecognition that undertaking in difficulties or underrestructuringWorks Council + auditor informed-consulted oneconomic situation

Works council informed about recovery planor admission of bankruptcyConsultation with unions about pursuingcompany activitiesWorks council consulted on socialrestructuring plan

Luxembourg Tripartite coordination on undertakings’ situationEmployees represented on Board of DirectorsWR and joint committee informed-consulted oneconomic situationCollective agreements on reduction of productioncosts (crisis law)

NetherlandsUnions have right of inquiry if mismanagementsuspectedJoint meetings of works council-supervisory boardWorks council opinion with staying effect + right toappeal against major financial decisions

Representatives informed about possibleredundancies


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Denmark Employees represented on Board of DirectorsNegotiations with UDs on effects of changesUDs and cooperation committee informed abouteconomic situation

Italy Sectoral agreement provisionsConsultation with unions about use of redundancyfund

Spain Works council informed and consulted on State aidin the event of a crisis

Works council consultedWorks council can be involved inbankruptcy review procedure

Portugal Right to management audit Prior opinion of workers’ committee onfinancial restructuring, dissolution ordeclaration of bankruptcy

Greece Union representation in industrial restructuringagency

France Works council right to early warning : request forexplanation ; advice by chartered accountantExpert legal advice on management operationsrequested by works councilWorks council informed-consulted on amiablesettlement of difficultiesFinancial information to works council + advice bychartered accountant

Works council informed-consulted atdifferent stages of procedure : beforeopening ruling ; during the observationperiod and the implementation phase.Works council may appeal against rulings

Sweden Representation on Board of DirectorsPrior information in the event of a change in activityInformation and negotiations with UDs

Finland Representation on Board of DirectorsInformation-negotiation with staying effect in theevent of major changes

Negotiation with UDs compulsory, withstaying effect, in the case of procedure forreorganisation of undertaking

Norway Representation in workers’ representative bodies inundertakingsProcedure for cooperation with works council

Plans discussed with employees’representatives

Iceland Negotiations with UDs

Austria Representation on Supervisory BoardCo-determination with works council for changesWorks council informed-consulted on economicsituation

Works council informed-consulted as partof procedure

Works council: Works council or equivalent body; UD union delegate; WR: workforce representative.For details on legal provisions: see country analyses in E.PICHOT "employee representatives in Europeand their economic prerogatives 2001" European Commission


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III – 2. OPERATIONS AFFECTING SHAREHOLDERS

In the event of operations affecting shareholders, the action available to employees,apart from that available to them as shareholders or through the unions, may be of ageneral or specific nature(See Table below).Participation on the management boards within the undertaking, co-determinationsystems and, more generally speaking, workers’ involvement systems, are meanswhereby the workforce can be informed before the operations take place and economicexperts can be called in to provide assistance.

In the event of a specific operation affecting the shareholders:

- Most countries make provision forinforming the employees’ representatives,

- Prior consultation is provided for in France, Belgium, Luxembourg, Spain andNorway,

- Co-determination or negotiation procedures are provided for in Germany, Austria, theNetherlands, Denmark, Sweden and Finland, usually focusing on the consequences forthe employees.

- As regards transfers of undertakings or establishments, a Community directive largelyharmonised the procedures for informing and consulting employees.

III – 3. STATE AID

As regards State aid, employees can take action under the general participationprocedures and the institutionalised systems for consultation between the social partnersand the public authorities(See Table below).

In most cases, participation in workers’ representation systems in the undertakings andemployee involvement systems allow workers’ representatives to be informed andconsulted.

Tripartite consultation systems and the possibilities for union representation in the aid-giving organisations ensure that the workers have a say in the granting of aid, i.e. foremployment and training.

Employment pacts provide opportunities for negotiations between the social partnersand the authorities involved in granting State aid.More specifically:Germany, the United Kingdom, Belgium, France and Austria make provision forinforming employees’ representatives about State aid.


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In Belgium, France and Germany, employees’ representatives are consulted about aidrelating to employment or training and their opinion forwarded to the competentauthorities, or negotiations are held.In the countries with co-determination procedures, negotiations must be held when theaid is dependent upon changes or major investments being made.

Participation by workers or their representatives in the case of operations affectingshareholders and the granting of State aid (excluding action in their capacity asshareholders and Community provisions on transfers)

COUNTRY OPERATIONS AFFECTING

SHAREHOLDERSSTATE AID

Germany Transfer: co-determination with workscouncilRepresentation on Supervisory BoardWorks council informed-consulted oneconomic situation

Works council informed-consulted onemployment and training aidEmployment pactsRepresentation on Supervisory BoardWorks council informed-consulted on economicsituationLinks between social partners/regions

UnitedKingdom

Recognised unions informed about aid (code ofpractice)Union representation in employment and trainingprogrammes

Ireland Local partnership arrangementsUnion representation in “aid for training”programmesTripartism

Belgium Takeover bid: position of works councilforwarded to Board of DirectorsConcentration: proof that works council hasbeen informedIncrease in capital: consultation with workscouncil + works council opinionworks council + auditor informed-consultedon economic situation

Detailed information to works council on aid,including employment aidWorks council’s opinion forwarded to authoritiesAgreement within undertaking on employmentmeasuresWorks council and auditor informed-consulted oneconomic situationsJoint institutions on trainingRegional consultations

Luxembourg Financial decision having a decisiveinfluence: prior information andconsultation of joint committee or, ifoperation at risk, information within threedaysJoint committee informed-consulted on

Representation on Board of DirectorsWorkers’ representatives and joint committeeinformed-consulted on economic situationTraining aid managed by occupational chambersTripartism


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economic situation

Netherlands Transfer of authority, including cooperationand participation : works council’s opinionwith staying effect + appeal possibleTakeover bid : unions informed about socialconsequencesMeetings of works council and supervisoryboardWorks council informed –consulted oneconomic situation

Large investments and loans : works councilconsultation with staying effect and possibleappealEmployment pactsMeetings of works council and supervisory boardWorks council informed-consulted on economicsituation

Denmark Negotiations with UDs on effects of changesRepresentation on Board of DirectorsUDs and cooperation committee informedon financial situation

Representation on Board of DirectorsUDs and cooperation committee informed onfinancial situationUnion representation on organisations providingaid for employment, training and prevention

Italy Industrial agreementsLocal pactsUnion representation for training aidTripartism

Spain Transfer or change of ownership : workscouncil informed-consulted if jobs affected ;meeting with union delegates on measures

Territorial pactsWorks council informed-consulted on economicsituation

Portugal Change in capital : workers’ committeeinformedWorkers’ committee or UDs informed-consulted on economic situation

Workers’ committee informed aboutundertaking’s financing, economic plans andresourcesTerritorial pacts

Greece Local employment pacts

France Takeover bid. Purchase or transfer ofshares, mergers, divisions, contractuallinks : prior consulting of works councilSubject of a takeover bid: works councilinformed, works council hears the views ofbidderList of shareholders, capital distribution,shares : works council informed +accountant’s advice

Works council given detailed informationWorks council informed-consulted onemployment aidNegotiations for an agreement on aid for shorterworking hoursUnion representation on aid allocation bodiesTripartism

Sweden Change of activity: Negotiations with UD,with staying effectRepresentation on Board of DirectorsUnion delegates informed-consulted oneconomic situation

Change of activity: negotiations with UDs , withstaying effectRepresentation on Board of DirectorsCooperation on a continuing basis

Finland Transfer, merger: UDs informed ; ifworkforce reduced, negotiations with UDs,with staying effectMajor decision affecting employees :negotiations with URs, with staying effect

Major decision affecting employees :negotiations with UDs, with staying effect.Representation on Board of DirectorsTripartite work premises developmentprogramme


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Representation on Board of DirectorsUDs informed-consulted on economicsituation

Cooperation on continuing basis

Norway Change in shareholding: Union delegatesimmediately informedTransfer, merger, reorganisation, division :works council informed-consultedRepresentation on boards in theundertakingUDs and works council informed-consultedon economic situation

Representation on Board of Directors andsupervisory boardUDs and works council informed-consulted oneconomic situationTripartism

Iceland Union representation on aid-allocating bodiesTripartism

Austria Change in shareholding: works councilinformedChange: co-determination with workscouncilRepresentation on Supervisory BoardWorks council informed-consulted oneconomic situation

State aid: works council informedChange: co-determination with works councilRepresentation on Supervisory BoardWorks council informed-consulted on economicsituationSocial partnership

Works council: works council or equivalent body; UD: union delegate; WR: workforce representative.For details on legal provisions, see country analyses in E.PICHOT "employee representatives in Europeand their economic prerogatives 2001" European Commission


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CHAPTER VI

COMPETITION PROCEDURES


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INTRODUCTION

The action regarding competition is part of the most important and most powerfulCommunity policies. The Consultation document of the Commission "anticipating andmanaging change: a dynamic approach to the social aspects of corporate restructuring"addresses the issue of the link between the social and the economic aspects ofCommunity policies regarding company restructuring, including the competition policy.

Regarding State aids, the guidelines "on state aids for rescuing and restructuring firms indifficulty" and the recent exemptions regarding aids on employment measures take intoaccount these necessary link between Community policies. The block exemptionsregarding antitrust control form a step in the same direction.

The coherence in Community action between the competition aspects of mergers controland the management of the social and economic aspects of these mergers seems moredifficult to address. The consultation document underlines the fact that "where therestructuring operation accompanies a concentration subject to Regulation 4064/89, theanalysis carried out by the Commission looks at the potential effects on the competitionin the internal market In cases where there is a legitimate interest, the representatives ofworkers and institutions or organisations affected have the right to be heard by theCommission or the State competition authority entrusted with examining theconcentration.

In the context of the recent Green Paper on the revision of Regulation 4064/89, theCommission has invited suggestions to encourage and facilitate further the effectiveexpression of these views. Furthermore, the criteria proposed and accepted forauthorising a concentration must be scrupulously respected".

Recent affairs have focused public attention on the mechanisms of the merger control,on the impact of such projects and decisions and on the possible role of the workers'representatives.


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Our aim in this chapter is to bring into the debate some national references relating tothe link between the policy on competition and social policy in terms of mergers onthree aspects:

-The employee involvement upstream of merger notifications,-The employee intervention with the regulatory authorities,-The link between the different aspects in merger control.

I – The employee involvement upstream of merger notifications

Upstream of notifications to the regulatory authorities, national employee interventionsystems within companies, which most especially presupposes a social dialogueconcerning the foreseeable consequences on employment of a merger project, exist inthe majority of member States.

It does however take different forms depending on the country concerned and, whilstwaiting for the transposition of the directive drawing up a general framework forinforming and consulting the workforce, it is not generally applied in the UnitedKingdom or Ireland.

• Participation by employee representatives in administrative bodies (Board ofDirectors or Supervisory Board) which decide on or have knowledge of merger projects.

- Germany, Austria: Employee representatives act as members of the SupervisoryBoard (Germany Montanmitbestimmungsgesetz 1951, Betriebsverfassungsgesetz 1952,Mitbestimmungsgesetz1976; Austria: Arbeitsverfassungsgesetz 1974)

- Luxembourg and Scandinavian Countries: Employee representatives act asmembers of the Board of Directors(Luxembourg: Law of the 6th May 1974; Sweden:SRL Styrelsrepresentation 1976; Finland: Law on personnel representation in CompanyGeneral Management, 1999; Denmark: Laws relating to joint stock and limited liabilitycompanies, 1987)

- France: works councils delegates on the Board of Directors or Supervisory Boardwith consultation rights (Labour Laws L432-6)


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• Prior negotiation obligations

- Sweden: the employee must enter into negotiations with the union to which it isassociated by labour agreement prior to making any major decision affecting itsbusiness, and must hold any decision in abeyance during the negotiation period, thisapplies in terms of economics and employment.

- (Law on co-determination in work MBL 1976: 580 Para. 11, 14, Law on Securityof Employment LAS 1982: 80 Para. 22, 29)

- Finland: An obligation to negotiate before any major decision is taken that affectsthe workforce, holding in the event of personnel cutbacks.

- The employer must give the employee's representatives adequate notice in theevent of cessation or merger, including justifications, and details on the financial andsocial consequences, including the measures to be taken in relation to the employees inadvance.(Law on co-determination in companies LCO 725/78 Para. 6,7,11)

• Right to holding notification, with possible recourse to the Supervisory Board,meeting with the works council and discussion with the Unions: Netherlands

- The head of the company gives the works council an opportunity to give itsopinion, allowing enough time for it to influence any important decision, among whichare included, transfer of authority and long term merger projects; the head of thecompany must also notify its decision to the works council and, if appropriate, givereasons why it is far from being in agreement with its opinion; a one month holdingdelay enables the works council the possibility of appealing against this decision(WORPara.25-26). A take-over bid has already been stopped for not taking into account theemployee's and works council's interests(Amsterdam Court of Appeal 21.10.1997No.21). This provision is not applicable when the other company is registered abroadand the decision is not expected to have any serious consequences for a Dutch Company(Foreign Companies clause).

- Members of the works council can attend the Supervisory Board meeting when thisworks council has the right to give its opinion (WOR Para.25, 27, 30).

- When merger negotiations have reached a stage where, in all probability, anagreement could be reached, the unions must be notified of the reasons for, and theeffects of, the proposed merger as seen by the employer; they should keep knowledge ofthese negotiations secret, and they will be consulted concerning the social consequencesarising from the merger, and the measures expected within this context, and can makeobservations from the point of view of the employees(SER code on mergers).


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• Notification, consultation and co-determination of the Works Council (Betriebstrat)over and above the participation of the employees representatives on the MonitoringCommittee.

- Germany: The law on the transformation of a company's legal status(Umwandlungsgesetz)lays down that details of the contract or project must be notifiedto the Betriebstrat, giving details on the consequences of such a transformation on theemployees and their representatives. When the project could result in significantinconvenience for the establishment’s personnel, or a large number of them, it thenenters into the field of co-determination with the Betriebstrat, which presumes anagreement between the Betriebstrat and the General Management, or failing that, adecision by the Conciliatory Board(Betriebsverfassungsgesetz Art.111).

- Austria: Notification to the Betriebstrat of changes in shareholdings.Prior consultation, at a the earliest possible moment, with the Betriebstrat in the event ofa transfer, merger or acquisition project, detailing the reasons for the project, the legal,economic and social ramifications, and the measures to be taken in relation to theemployees. The Betriebstrat can make proposals aimed at alleviating the consequencesof the changes on the employees. When the project could result in significantinconvenience for the establishment’s personnel, or a large number of them, it thenenters into the field of co-determination with the Betriebstrat, which presumes anagreement between the Betriebstrat and the General Management, or failing that, adecision by the Conciliation Courts (or other Conciliatory or Arbitration bodies)(Arbeitsverfassungsgesetz Art. 89,108, 109, 112).

• Prior (or immediate) notification and consultation with the employees’representatives:

- France: The works council is consulted on the buying or selling of holdings, anyproject involving a transfer, merger, or split envisaged by the company, and during thedrawing up of contractual dependency links. This notification includes the reasons forthe project, the legal, economic and social ramifications, and the measures to be taken inrespect of the workers. The Works council is notified by the head of the company whenthey are aware that a bid to purchase the company's holdings is under consideration, andthe Works council can invite the potential purchaser to discuss their project(LabourCode L. 432-1). The law relating to new economic regulations reinforces theseprovisions, most especially by the prevention of the prospective purchaser's right to voteif they do not comply with the target company's Works council's request for a meeting.

- Belgium: In the event of a take-over bid or a change in control of a company, theWorks Council states, either its unanimous position, or the position of its variousinterested parties, to the Board of Directors considering the offer, which should refer tothis when making its decision(Royal Degree of the 8th November 1989 Art. 4, 5, 15;Royal Degree of the 27th November 1973 Art. 25).


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In the event of an increase in capital the principle of recourse, as well as the way this iscarried out are the subject of discussions with the Board of Directors, with minutes.(Trade Code, Tome 1, Title IX Art.52 septies). In the event of a merger, the WorksCouncil of each of the parties should be regularly informed before officialannouncement(Royal Degree of the 23rd March 1989 Art. D).

- Luxembourg: over and above the possible employee representation on the Board ofDirectors, there is prior notification-consultation with the joint committee concerningany decision of a economic or financial nature, one relating to employment that has aneffect on the number or structure of the workforce, those effecting terms of employmentor working conditions, or social measures such as training(Law of the 6th May 1974,Law of the 18th March 1981).

• Notification-consultation with the representatives of the employees and negotiationswith the unions, varying in accordance with collective agreements and the companiesinvolved: Italy, Spain, Portugal, Greece.


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APPENDICES


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Appendix 1 – Collective Redundancies

Proposal for structuring/list of questionsRegulations and procedures concerning collective redundancies in the EuropeanUnion

Introduction

The numerous restructuring waves washing up clusters of redundancies and plannedredundancy schemes are the talk of the town. These restructurings include Danone,Marks & Spencer, Moulinex, Sabena, Ericsson, Alcatel and Deutsche Telecom. Eventhough the behaviour in each case is different, no Member State or any economic sectorseems immune to these large-scale phenomena. Even the NICTs (New Information andCommunication Technologies) sector, the so-called “New Economy” sector that issupposed to pull growth up and stimulate job creation, has been hit directly by theserestructurings. To such an extent that some observers have started characterising thissector as the “Old economy.”

The ability of collective redundancy legal systems to prevent and/or reduce theserestructurings and the painful impact of economic changes on employment constituteaveritable challenge for all member States.

This is not the first time the European Union finds itself confronted with such anemployment challenge. Beginning in 1975, the serious increase in unemploymentfollowing the various oil shocks led the Council of Ministers to adopt, after longnegotiations, the community directive to align member States’ collective redundancylegislation (Directive n° 75/129/EEC Council, of 17 February 1975). This directive,which underwent minor modifications in 1992, aims primarily to strengthen workerprotection in the event of collective redundancies:collective redundancies, as definedby the text of the directive, may only be adopted after consultation between theemployer and the labour representatives in accordance with a rigorous procedure.The directive also provides a procedure for notifying the appropriate public authority ofany redundancies.

Faced with corporate prerogative, whereby the employer has the power to makeeconomic judgements, regulations have gradually granted workers and theirrepresentatives the collective agreement. In addition, labour relations practices havegiven them the means to anticipate the employment risks of companies’ strategicdecisions in order to avoid or reduce redundancies and to attenuate their effects.


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In several member States today, the right to collective redundancy is matched bythe principle of the right to prevention.

In the European Union, the series of measures launched recently by the Commissionalso aim at better “anticipating and managing change (regarding restructurings andeconomic changes),” by helping companies and workers adapt to industrial changes.These measures are part of achange management risk prevention dynamicbased onactive labour/management partnerships. These partnerships are attached more than everto achieving an essential balance between interests that answer to new labour,environmental and economic logics.

The present questionnaire, which gives priority to legal players’ role, was developedbased on anticipation and prevention. We hope the interest and answers you provide willenhance our knowledge and analyses of collective redundancy realities, especially legalones.

Definition

What is the juridical definition of collective redundancies in your country? (At whichpoint is staff reduction understood as a “collective redundancy”?)

Motivation

• Have the companies to motivate the collective redundancy economically? Onwhich base: Law, collective agreement, other instructions? In which form and towhom? How have the economic reasons to be explained?

• Is there relevant case law? ( e.g. economical / non economical reasons, …)

• Which are the main procedures? How are the different actors involved?


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Employees representatives

• In which case and to which extent are employees representatives entitled toparticipate (negotiate on behalf of the employees) in case of collective redundancies?

• Which rights do the employees representatives have:

o The works council has the right of informationo The works council has the right of consultationo The works council has the right of vetoo The works council has other rights (e.g. time to analyse information, rightto call for experts, …)

• Collective redundancies (or parts thereof) are subject to mutual agreement betweenmanagement and works council

• Are these rights based on law, collective agreement or other regulations? Pleasequote the references in each case.

• Do employees representatives have the power to challenge the company andimpose sanctions or rights of action in case of breach of these rules by management?

Unions

1. In which cases and to which extent are unions entitled to participate (negotiate onbehalf of the employees) in case of collective redundancies? Have they got rights ofInformation, Consultation or Veto? (If so, on which legal base?)

2. Are there measures for the union to influence the restructuring process? Are therepossibilities for the unions in case of collective redundancy to press the companies totake the interests of the employees into consideration for example in form of negotiationabout compensation or other compensational measures?

3. Do unions have the power to challenge the company and impose sanctions or rightsof action in case of breach these rules by the management?


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State (governmental) institutions and public bodies

1. Do state institutions or public bodies have to be informed in case of forthcomingcollective redundancies? If so, which institutions, at which time and in which form?

2. Which governmental measures are available to influence the process of restructuring(Are these measures based on juridical regulations, guidelines etc ?)

3. Do state institutions or public bodies have the power to challenge the company andimpose sanctions or rights of action in case of breach these rules by the management?

4. Which other governmental measures do exist in order to deal with the consequencesof collective redundancies? (based on juridical regulations, guidelines etc.?)

Companies

1.Has the company the obligation to negotiate alternative concepts other than collectiveredundancies developed by the works council, the union or other institutions (e.g.alternative business plan)? Whose is the final decision how to proceed?

2.Is collective redundancy the ultima ratio? Has the company the duty to prove that theytried other measures to prevent collective redundancy? Are they obligated to show this?If so, to whom and on which legal base?

Is there relevant case law?

Which are the main procedures?

3.Have the companies in case of collective redundancy to take into consideration theinterests of the employees? For example that they have to change their economic andstrategic plans, the duty to qualify the employees, to interfere new work etc. If yes, onwhich base: Law, collective agreement other regulations?

4.Does the company have a right to appealif some actor has challenge the company? Ifyes on which legal base?

Is there relevant case law?

5.Which are the main procedures?


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Employees / individual rights

1) How and at which point in time do the employees have to be informed aboutthe forthcoming collective redundancy?

2) Which protective clauses in favour of the employees based on law or collectiveagreement, other regulations do exist (e.g. rules of seniority)?

3) Do individuals have the power to challenge the company ? Which individualrights do employees have to fight actual or forthcoming termination of their workcontracts in case of collective redundancies?

4) In case of compliance with the above mentioned regulations by management?(e.g. with or without social plan)5) In case of failure to comply with these rules by the management?

6) Do compensations (serverance) for the employees in case of collectiveredundancy exist? On which base: Law, collective agreement, other instructions?

a. Is there relevant case law? ( e.g. non economical reasons, …)

b. Which are the main procedures?

c. Which categories and coefficients are relevant(Age, staff membership etc.)?What is fair compensation?

7) If there is a collective redundancy, how are the selection criteria who will bedismissed? On which base: Law, collective agreement, other instructions?

8) Is there a priority right to be rehired if the employee was dismissed in the pastand the firm actual hires employees because the economic situation has changed? If yesduring which period? On which base: Law, collective agreement, other instructions?

Other Procedures

1) Are there procedures to avoid collective redundancy? (e.g. early detection,collective agreements, annual bargaining between social partners, …)

2) Are there other compulsory legalprocedures on a national level or branchprocedures which have to be observed in case of collective redundancies? Pleasedescribe in detail if there is something to add.


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3) Are there other national procedures or branch procedures according tocollective agreement which have to be observed in case of collective redundancies?Please describe in detail if there is something to add.

4) Are there special procedures for SMEs concerning collective redundancy?

5) Has EC directive recent impact on national procedures concerning collectiveredundancy?

Early detection

1) Do there exist systems of early detection for indication of forthcomingcollective redundancies based on observation of economic figures or employmentfigures? Who has access to these information (supervisory board, works council, unions,banks, government, local bodies, ....)?

- Are there legal obligations?

- Is there practise? (e.g. risk management systems, executive informationsystems, .....)

Statistics/Quantitative matters

How many collective redundancies have been taken in the last years (if possible, pleasestate in detail the number of companies by branches of business, the number ofemployees in total, male/female, age)?

Strategy/Opinion/Evaluation

Protagonists:- Unions- Trade associations- Government- Political parties

a) Which concepts, strategies and activities do the protagonists pursue if collectiveredundancies are forthcoming?

b) Are the existing regulations concerning forthcoming collective redundanciessufficient? Are there alternative concepts of the protagonists to amend these regulations?

Further remarks


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II – The employee intervention with the regulatory authorities

• The ability to have representation within a company for the defence of employeeinterests in the face of the appropriate authorities is generalised throughout the memberStates.

• Meetings held between employee representatives and the Fair Trading WatchdogCommittee offer the opportunity to express the employee viewpoint, for example:

- United Kingdom: the courts must take into consideration any initiative carried outby any person (or their representative) that appears to have a substantial interest in thesubject in hand. Such persons have the right to be heard, unless this is judged to be notreally necessary or not possible.(Fair Trading Act 1973, Sec. 8).

- Germany: persons or associations whose interests will be substantially affected by adecision and who, on their own request, are admitted to the procedure by the FairTrading Watchdog Committee are party to the procedure. The Fair Trading WatchdogCommittee should give them the right to express themselves and have their opinionsheard. They have the right to appeal against a decision(Act against restraints ofCompetition, Sect. 54, 56, 63, 67, 74, 77).

- France: the “Conseil de la concurrence” can hear any person who has informationthat it considers will make a pertinent contribution(Order No.86-1243, as modified byLaw No. 95-588, Art. 25). The main representatives of employees concerned meetregularly with the Ministerial Departments most concerned by cases of companymergers.

- Belgium: In the event of a merger, notification should include a document issued bythe Board of Directors of both parties attesting to the fact that each of them has beenregularly kept informed about the operation(Royal Degree of the 23rd March November1989 Art. D). "When the Committee estimates it to be necessary, it will hear anyphysical or corporate body. If the physical or corporate body that can justify sufficientinterest requests that it be heard, it is their right on request. In the case of a merger, themembers of the Executive General Management of the companies taking part in themerger, as well as the representatives of the organisations the most representative of theworkers in these companies, or those selected, are to be considered as justifying asufficient interest; in this case they have access to the file (…)"(Law of the 5th August1991 on the protection of economic competition, Art. 27).

In relation to public grant aid, the minutes of the company's Board meeting iscommunicated to the authority granting this aid, and which can also directlycommunicate information to the Board of Directors(Royal Degree of the 25th MarchSeptember 1972).

• Formal or informal discussions with unions are held in the majority countries,especially the Scandinavian and Southern European countries


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III - The basis of the competition regulation and the links between the various aspectsat stake

• The basis of decisions by the national regulatory authorities is not restricted to thefair trading balance sheet:

• Notion of public interest- United Kingdom: the basis of decisions is the "Public interest" which includes themaintaining and promoting of even distribution of industry and employment within theUnited Kingdom(Fair Trading Act 1973 Sec73, Sec. 75 definition Sec. 84).- Spain: the objective is to avoid modifying the market structure in such a way as tobe against the public interest, links with other legal and economic requirements, of apublic or private nature(ley 16/1989 modificada por RDL 7/1996, exposicion demotivos).- Sweden: the effects on competition related to mergers are only taken intoconsideration if they are carried out contrary to the public interest(Swedish CompetitionAct 1993: 20 Art. 34).

• Economic balance sheet- France: the “Conseil de la concurrence” assesses if the merger project (…) offerssufficient economic progress to compensate for the effects of the merger. The 'Conseil'takes into account the competitiveness of the companies in question in relation toInternational competition"(Order No.86-1243, as modified by Law No. 95-588, Art. 41);proposed law on "economic regulation" per sector of activity.- Belgium: "in its deliberations, the Committee takes into account thecompetitiveness of the sectors concerned in relation to International competition, as wellas that interests of the consumer"(Law of the 5th August 1991 on the protection ofeconomic competition, Art. 10).

• There is a general existence of exemption schemes, based on wider economic,social or political issues of the regulations covering competition:

- United kingdom: promotion of technical or economic , public policy(CompetitionAct 1998; Sch 1.7, Art9)- Germany: Overall advantage for the economy; public interest; improveddevelopment, production, distribution; rationalisation of business with a view towardsincreased efficiency or productivity; small to medium sized company competitive edge;adjustment of capacity to a declining demand(Act against restraints of Competition,Sect. 42, S3-8).- France: Economic progress(Order No.86-1243, as modified by Law No. 95-588,Art. 10).- Italy: Essential national economic interests(Competition and Fair Trading Act No.287. 10.10. 1990, Sect. 25).


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- Spain: General economic situation and especially public interest "sufficientlyimportant elevation of the social and economic level of deprived zones and sectors",improvement of production and marketing, promotion of technical or economic progress(ley 16/1989 de defensa de la competeneia, modificada por RDL 7/1996 Art. 3).- Belgium: improvement of production or distribution, technical or economicprogress, competitive position of small to medium sized companies ((Law of the 5th

August 1991 on the protection of economic competition, Art. 2, 10).- Sweden: Public interest, improvement in production or marketing, promotion oftechnical or economic progress(Swedish Competition Act 1993: 20 Art. 8, 41).

* There is an all round existence of links or possibility of arbitration between thespecialist authorities in terms of competition and the public authorities:

Definition of general directions and the priorities by the Economy Minister, for example:� United Kingdom:(Fair Trading Act 1973 Sec12),� Germany (Act against restraints of Competition, sec 51),� Netherlands (Competition Act 1997/242, art.4)

Final authority of the Government:- United Kingdom:(Fair Trading Act 1973 Sec 1, Competition Act 1998 sch. 1.7),),- Germany (Act against restraints of Competition, sec 8, 42),- France(Order No.86-1243, as modified by Law No. 95-588, Art. 11, 38, 59),- Italy (Competition and fair trading act No. 287. 10.10.1990, s.25)

Integration of other authorities into the procedure or organisations:- Germany: Länder informed/heard during the procedure, members holding sway insocial politics within the Consultative Competition Commission (Act against restraintsof Competition, sec 40,42,45,49),

- France: Government Representative (Order No.86-1243, most recent modificationby Law No. 95-588, Art. 12),

- Other formal and informal systems of taking the various aspects of decisions intoaccount (industrial policy, employment, regional development, etc.) by the nationalauthorities and discussion between the actors.


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Appendix 2 – Employability

Company Restructuring

Definition

1. Is there a common/usual, legal and/or other definition on 'employability' in yourcountry?

2. What are the main goals of employability?

Employability-tools

3. Which are the most used employability-tools in your country:

a) Training to improve employability 0 in-service-training0 retraining1 application training2 target group policy

0 ………..

a) Development to improve employability 0 personal development plans0 regular meetings on personal

functioning0 mentoring and coaching0 job rotation0 job enlargement0 job enrichment0 opportunities to participate

in different projects0 …………….


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b) Internal replacement 0 fitting/suitable functions0 exchangeable functions0 mobility centre0 competence-management0 information on internal vacancies0 stimulation/activation by incentives0 …………….

c) External replacement 0 mobility centre0 outplacement0 work to work mediation/support0 information on external vacancies0 labour market scan0 …………………

4. Have companies the obligation to use (which?) tools to improve employability incases of collective redundancies?

5. Have companies the obligation to use (which?) tools in prevention, in normal times?

6. Which tools are based on legal obligations, collective agreements or otherregulations?

7. Are there national procedures according to employability which have to be observedin cases of collective redundancies?

Company policy

8. Have companies the obligation to formulate a policy to maximize the employabilityof employees in case of collective redundancies?

9. Have companies the obligation to formulate a policy to maximize the employabilityof employees in prevention, in normal times?

10. Has the company the obligation to justify/motivate its employability-policy andused tools?

11. Are there some best-practices of company-policy and used tools? Please describe.


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Employee participation

12. Have the employees or their representatives (trade unions, works councils, others)the right to participate in case of employability measures in processes of collectiveredundancies? Please explain.

13. Which rights do the employee-representatives have to participate in policy-makingon employability?

14. What are the specific rights of the unions? Are these rights based on law, collectiveagreements or other regulations?

15. What are the rights of the works councils or other collective forms of employee-representation? Are these rights based on law, collective agreements or otherregulations?

16. Do the employee representatives have the right to challenge the management in caseof breach of these rules by management?

Individual rights

17. Have individual employees 'employability-rights' in case of collectiveredundancies?

18. Are there any law obligations in your country that regulate employability rights tospecific target groups of employees (like older employees, youngsters, women, foreignworkers etc.) in case of collective redundancies?

19. Do individual employees have the right to challenge the management in case ofbreach of these rules?

Strategy of protagonists

20. Which concepts, strategies and activities do the protagonists (unions, tradeassociations, government, political parties) pursue if collective redundancies areforthcoming, regarding to employability?

21. Are the existing regulations concerning forthcoming employability sufficient?

22. Are there alternative concepts of the protagonists to amend these regulations?


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23. Are there any other specific institutions in your country involved in employabilityquestions?

Other remarks

…………………………………….…………………………………….


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Appendix 3 – External Responsibility

Company Restructuring

I- The Meaning(s) of external responsibility

The European Commission gave us some indications:external responsibilityparticularly covers the obligation to secure orders, consideration of subcontractorsworkers during dialogue and implementation of measures dealing with top downresponsibility or/and employability.

These elements are certainly not exhaustive but give a meaning to this concept ofexternal responsibility and pave the way for the formulation of some questions in thisarea.

The concept of external responsibility, as used by the Commission, does not refer onlyto the responsibility of external institutions, like the State, in restructuring cases. Itespecially concerns the responsibility of the company under restructuring regarding theoutsourcing of its activities and it jobs, and also regarding the social management of itsrelationships with its subcontractors or other economic partners for the fulfilment ofproducts or services.

How can the negative social impact of a company outsourcing strategy be avoided or atleast reduced? How can the social consequences of a restructuring company on thesubcontractors and other economic partners involved in the fulfilment of this company’sproducts or services be managed?

Such questions are deeply rooted in the debate on Social Management of Change andCorporate Social Responsibility.


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II- General Information

� Does the national law provide obligation for the enterprise to inform theemployees’ representative on the situation and the use of subcontracting?

� Is this information provided one time a year? more ?

� Is there responsibility (co-responsibility) of the instructing party (mainenterprise) in case of non-payment of wages by the subcontractor? In otherscases?

III- The process of outsourcing and the application of the principle of safeguardingof employees’ rights

1) Is there a legal definition of outsourcing, subcontracting?

2) Are there any conditions to the application of the labour law provisions on thetransfer of undertakings, in the case of subcontracting?

3) For instance, do these labour law provisions apply in the case of outsourcing bya public authority?

4) Do workers have the right to oppose the transfer of employment contracts?What are the conditions? What are the legal effects of this opposition?(redundancies? reinstatement?)

5) What are the trends of the judicial decision in event of outsourcing?

6) Do the workers representatives, who are informed and consulted in thesecircumstances, have any real power of anticipation through negotiation?

7) Could you give some examples of the results (good or bad practices) of thesenegotiations?


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IV- Social Responsibility and subcontractors

1. Social Responsibility of the main enterprise in the process of outsourcing

1) Are there rules (regulation in a broader sense, collective agreements or othercontractual forms -like the “contrat de méthode” in France) providing ananticipation or prevention of the risks in this context of outsourcing? Forinstance are there legal or contractual arrangements for securing orders for thesubcontractors?

2) In case of failure of these arrangements, are they any rules governing workercompensation, such as financial measures (compensations at the level of thefinancial compensation for “chômage technique” – technical layoff) or othersmeasures: for example accompanying measures for subcontractors workersaffected by a collective redundancy, equivalent to the measures provided for theemployees of the instructing party.

3) Is the company responsible of the outsourcing, considered responsible if theinsolvency of the subcontractor occurs afterwards? What is the sanction?Compensation? Reinstatement in the main company?

4) Do these rules linked to the Social Management of change, relate to labour Law?Commercial Law?

2. Social Responsibility and the situation of the subcontractors of the mainenterprise

1) Is there any obligation for the instructing party (the main enterprise) to informthe subcontractor in case of restructuring with impact on the volume of activityor employment of the subcontractor? In this case; is there an obligation for thesubcontractor to inform? Consult? Negotiate (with) its the works council

2) Are there rules, which provide for impact studies concerning the restructuringdecision at a territorial level? (like in France Art. L.239-1 Of the CommercialCode on territorial social impact study). These rules linked to the CorporateSocial Responsibility, relate to labour law or commercial law?

3) Is there Instructing Party (the main enterprise) Social Corporate Responsibilityregarding subcontractors or subsidiaries in other countries (in particular the thirdcountries), like that provided by a recent French Regulation (commercial law), inFebruary 2002?

4) Are there rules (such as ISO norms) which guarantee quality of products and/orquality of employment (health and safety) between the main enterprises and thesubcontractor(s)


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V- Corporate Social Responsibility and the network enterprise

In this Chapter we’ll try to enlarge the analysis to other situations than instructing party(the main enterprise) - subcontractors, to a network of economic partnerships workingtowards the fulfilment of the same products or services: supply chain, standingpartnership for example.

� Is there a legal definition of the network enterprise in your country?

� Do any of the rules mentioned above for subcontractors apply also in the case ofsuch partnerships?

� Does the development of the network enterprise (including relationship withsubcontractors) give rise to new type of representation of actors on a territorial(transnational included) basis and new ways of collective negotiations on SocialResponsibility in this network?


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Appendix 4 – Employability

Company Restructuring – Territorial Restructuring

Introduction

Territorial responsibility commonly means the relationships between companies orworkplaces and a certain geographic area, usually at local or regional level. Most oftimes, Territorial responsibility has an important linkage to the Corporate SocialResponsibility concept and meanings, taking into account the close influence betweenthe economic activities of the undertakings and the communities.

On the other hand, there is anatural competence between European territorial areas –transborder or even by regions and localities within member states – due to attractiveinvestments and the establishment of productive activities which generate employment,and at the same time being reinforced by the presence of candidate countries. In thiscontext of productive globalization process, there are cases of de-location of businessesor workplaces in the European Union.

Regarding to the territorial dimension, restructuring of companies, especially when theyoccur along to processes of de-location, lay-offs and closure of businesses, can bring outquite important negative social and territorial impacts. These effects are felt in theeconomic/productive structure (network small enterprises, local subcontracting firms),the local labour market, and eventually in case of closure, environmental effects by thedesertion of industrial sites.

It is difficult to consider territorial responsibility only in terms of national regulation,taking into account the presence of businesses and multinational groups in an integratedeconomic area as the European Union. However, several regulations may occur –legalor the result of pacts of diverse nature, at territorial or company level, etc.-which try tomanage ahead possible traumatic restructurings or subsequently, reduce its negativeeffects.

These regulations might foresee obligations to firms specialized in the improvement ofinformation about the scope of the problems or crises of the affected parties –workersand representatives, local and civil authorities, other interest groups, etc-, the elaborationof impact studies –social, environmental, etc.-, or the need to finance all or partially therestructuring of the workplace or workplaces which are abandoned or transformed into acenter with a different activity.


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Nevertheless, these regulations, especially those concerned with legal norms, are notalike to the actions taken by the firm on a voluntary basis, derived from the exercise ofCorporate Social Responsibility

The present questionnaire is addressed to identify national regulations on territorialresponsibility, focussed on legal topics. Particularly interesting are the issues related tomeasures of anticipation and prevention of the impact of restructuring processes, as wellas their development. In these terms, short descriptions of concrete cases, with orwithout regulatory support, will help to understand the dynamics of these processes.


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Questionnaire

1. Describing territorial responsibility

a) Are there any type of provisions concerning the relationships betweencompanies and the communities where they are settled down? On the otherhand, where will they be established?

b) Concerning the effects on communities, are there any rules related to the wholerestructuring company process at local or regional level?

c) Do these rules belong to the Labour Law and/or the Commercial Law? Or tothe Environmental Law or to other legal regulation?

d) Which are the main goals of those rules? In other words, which are the centralobjectives pursued by the regulation?

e) Could you indicate and describe a case in your country, where there has been anegative territorial impact caused by the restructuring or closure of a firm?

(Please, use the outline record-card annexed to help the description. It is not necessaryto carry out every set of information. It can be used more than one record-card).

2. Institutions and agents involved at territorial level

a) Are there specific rules at regional level addressed to manage the restructuringcompany process taking into account the structure of territorial sharing powersin your country?

b) Do the local/regional authorities have some type of responsibility in arestructuring process? Which is the most current role usually played?(Mediation, promoting negotiations between workers representatives andmanagement, funding, etc.)

c) Can be considered the appearance of new actors (public or private bodies, civilgroups, pressure groups, councils, other partnerships) involved in therestructuring companies processes? Which are the most usual?

d) Are there provisions at regional or local level linked to specific agreements,such as Territorial Pacts or Local Employment Pacts?


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3. Preventiona) Are there any provisions related to the compulsory prior information of the

company plans for restructuring to the regional or local bodies?

b) Are there any provisions concerning the obligation by the company to carry out-a previous report of any type or about alternative measures to solve the crises -an impact report on social, labour or environmental consequences of arestructuring process?

c) Do partnership networks, which represent social interests, usually get involvedin this prevention phase?

d) In the practical case or cases described in section I, do you think that theterritorial effects –and damages-, provoked by the restructuring process, couldhave been reduced or limited if measures had been previously considered?Which measures? (More information, diversification of local economicactivities, etc.).

4. Measuresa) Is it usual to allocate or are there regulatory public funds aimed to reduce the

negative territorial impact of a company restructuring?. Are these structuralcommunity funds, national, regional or local funds?

b) In practice, according to collective agreements or territorial pacts, what are themost usual measures aimed to reduce the negative territorial impact of arestructuring company process, especially related to fire workers? Retraining,social protection, unemployment benefits, etc.?

c) Which measures, legal and/or the result of agreements, are adopted from theperspective of the economic activity established, which will lead to reduce theterritorial impact of a company restructuring process or business closure(reactivation, redevelopment, relocation of workers)? Will the firm pay for anycompensation? (In cases such the withdrawal from industrial sites).

d) Do local institutions play an important role in the design and management oftraining and requalification of local workers? Could you indicate an exampleof the activity and how it operates?

e) Are there rules related to the devolution of public supporting (incentives, localbenefits, tax relief, facilities for industrial developing or urban planning) tomake easy the start up? In other words, are there any type of provisions (evenin agreements) related to give back to national, regional or local authoritiespublic expenditure linked to favour the initial settle up of companies?

f) Are there any relevant law cases related to those issues?


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5. Good practices

Could you point out any examples of best practices in Territorial responsibility,especially linking rules and agreements at workplace, company or territorial level?Please, you can use the record card.

6. Strategy/Opinion/Evaluation

1. Which strategies need to be adopted to avoid negative territorial effects ofcompany restructuring processes?

2. Are there any expectations of regulations linked to this issue?

7. Further remarks


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Record Card Outline of Information

1. Name of the company................................................................................

2. Territory (name of the region, locality, city, etc.)……………......................

3. Restructuring cause or closure, …………………………………………..

4. Main effects (including, if known, the number of workers affected or dismissed)

5. Impact on the territory:a) On the productive and economic local structure.

b) On the local labour market.

c) On the environment.

d) In general terms, on social and territorial cohesion.

6. Preventive measures adopted by the company in order to reduce negative effects ofthe restructuring process, especially local or territorial effects:

a) Of previous information.

b) Of negotiations of restructuring conditions.

7. Agents that participated in this phase of the process.

8. Where there any agreements?

9. Ex-post adopted measures:a) Of economic reactivation of the area.

b) On dismissed workers and the local labour market.

c) On the environment.

d) Other measures.

e) Agents, institutions, which promoted and financed the measures.

10. Lessons learned and comments.


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ACKNOWLEDGEMENTS

Thanks to:

Fernando Vasquez,Deputy Chief Unit DG Employment & Social Affairs EuropeanCommissionJari Hellsten,SAK FinlandNadja Salson and Sarah Veale,TUCIsabelle Géligné,Commercial ManagementNiklaas Brunn Professor,FinlandAdalberto Perrulli Professor,Venice ItalyPatrick Humblet Professor,BelgiumAlexia Lallas,logistics Burotel

Thanks to the ALPHA Colleagues:

Serge BouschetAlain SchweitzerPhilippe ArdinJean-Claude RouherCatherine HeurteFrançois PicardJean-DavidDidier GuyotJean-Luc KaczmaLaurent FleurigeJean-Claude LepageEric PinBastien LarcherFrançois SegnorinoMaryvone LomenArthur KnoppThomas GermainABT Aline


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Lisa Schmitt, Stuttgart,GermanyEmployees and Collegues,Arbeiterkammer Vienna, Austria,

In particular:Josef Wallner, Christoph KleinRomain, Binsfeld,OGB-L, Luxembourg;Astrid Ziegler,WSI, Düsseldorf, GermanyWalter Krippendorf, IMU-Institut, Germany

Francisco González de Lena,Director de la Fundación SIMA (Servicio Interconfederalde Mediación y Arbitraje)Raúl Riesco Roche,Subdirector General de Ordenación NormativaJosé Calleja,Gabinete Jurídico de la UGT

Reinhard Naumann,Friedrich Ebert FoundationAntónio Bernardo Brandão GuedesFernando CabralCGTP

Sean Ward,Employment Rights and Industrial Relations Employment Rights SectionIrish Ministry of Enterprise, Trade and EmploymentKevin O´Kelly, European Foundation for The Improvement of the Living and WorkingConditions

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