Europe gears up for full employee consultation

Staff shock at the sell-off of a firm may be a thing of the past – thanks to
BMW, says Philip Whiteley

Within three years, employee relations in Britain could be transformed, with
freedom to manage sharply curtailed by a fresh European directive. Where the
European Commission has failed, BMW will inadvertently succeed.

Stephen Byers and Tony Blair were as much in the dark as Rover employees
about BMW’s plan to dismember and sell the British car group right up until the
day of the announcement last month.

The significance of this is that Blair has, with German government support,
blocked the proposed directive, which would make it a requirement for all
employers with more than 50 staff to consult over any business restructuring.

Sanctions for failure to consult could be severe, including nullifying the
effect of the change on employment contracts.

The blocking minority now looks weaker than at any time since it was put
together two years ago.

Rally cry

German commitment is uncertain. And while everyone had assumed UK opposition
was solid Rover has changed that. Unions lacked a rally cry for this
obscure-sounding but profound European law. Now they have one.

"People have a right to know when their lives are being turned upside
down," said Sir Ken Jackson, general secretary of the AEEU. "Most
people accept that with Rover losing so much money BMW had a perfect right to
close it. What they do not have the right to do is to keep people in the
dark."

He pointed out that the draft law, while ambitious in scope, is flexible. It
does not set a prescriptive model for the kinds of employee forums that would
have to be set up, and allows for each member state to specify details in
domestic legislation.

Even if the Government keeps its opposition to the European law, it faces
domestic pressure.

The Industrial Society has called for tightening existing UK law, under
which consultation on redundancies is not compulsary where a transfer is
effected through a sale of shares.

But business complains it is not practicable to have meaningful consultation
if this means breaking Stock Exchange rules on market-sensitive information.

The CBI encourages its members to have open communication with employees but
argues that confidentiality is sometimes essential.

"I agree that the Rover situation creates an extra factor, but I do not
think that it swings the logic," said John Cridland, HR policy director at
the CBI.

"There are very real reasons why a directive on consultation is not
necessarily positive, and could even be harmful to the way in which we operate
employee relations in this country. It is not the real world to imagine that companies
will speculate about their own future in advance of making their own
announcements."

A requirement to go public over plans to sell could scupper a deal to save
jobs, as the potential buyer will be deterred if not offered confidentiality in
negotiations.

Cridland maintains the blocking minority remains in place, and in the
absence of statements to the contrary, that is the case. The commission and the
trade unions’ however, are equally determined.

The paper by senior commissioner Franz Burger, leaked to Personnel Today
last month, gives a glimpse of commission strategy. While it does not make the
decisions, it influences which decisions are voted on.

Burger brought together all the European initiatives to give more say to
staff. First there is the European company statute. To register as a European
company a firm would have to have employee consultation or participation
arrangements, although the latest proposal offers a lower level of staff
involvement for employers from countries without a tradition of works councils.

Progress

He also proposes progress on the draft directive on consultation. "If
there would be no progress concerning those two initiatives, an immediate
revision of the European Works Council directive would become much more
urgent," he writes.

The significance of this is a review is likely to see more powers for
existing staff forums for international companies, and to see the threshold for
firms affected reduced from 1,000 staff to 500.

There are many routes by which employees in UK enterprises can gain more
rights to information and consultation. The Government cannot block them all,
and its bedrock supporters are urging it not to.

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