Hitting the mark

On 17 May thousands of employees from Marks & Spencer's (M&S) European outlets descended on London to protest against the company's plans to close its 38 stores in continental Europe.`When the plans were announced earlier this year they were met with vehement opposition, not only from the workforce and the French public, but also from the French prime minister Lionel Jospin, who described the way in which the announcement was made as “brutal”.`The closure decision was successfully challenged in a French court on the grounds that M&S had failed to consult and inform its employees of the impending collective redundancies. Closure of the French stores had to be suspended until full consultation between the management and workers' representatives had taken place.`Had M&S announced that it was closing its UK outlets in a similar manner – French staff claim that they were told by email after the announcement had been made to the stock exchange and the media – employees would not have been afforded the same legal protection as their French counterparts. In Belgium, the company seems to have avoided court action, but again the legal regime is tighter than in France. A proposed EU directive may lead to the removal of this anomaly.`The M&S case is illustrative of the effect of the labour law provisions of the French Civil Code. Under these provisions, injunctions are available to workers to halt collective redundancies where there has been an absence of adequate consultation and information. Similar laws are in place in Belgium and they were highlighted when, in 1997, Renault sought to close down one of its Belgian plants without first informing the Belgian works council. An action brought by the trade union led to an injunction preventing the closure until the consultation and information requirements had been met.`The equivalent consultation and information requirements in England and Wales can be found in Section 188 to Section 198 of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA). Under TULRCA employers who plan to make 20 or more employees redundant at one establishment within 90 days are obliged to consult and inform representatives of affected employees. To fulfil its information obligations under TULRCA, an employer must write to employees' representatives to inform them of a number of issues including the reasons behind the redundancy plans, the number and type of jobs that are likely to be made redundant and the proposed method for selecting employees for redundancy. In terms of consultation, employers should discuss possible ways of avoiding or limiting the number of redundancies and whether the effect of redundancy can be minimised. In cases of non-compliance with these requirements, employment tribunals can make protective awards of either 30 or 90 days pay for each employee who is dismissed. The maximum penalty was increased in 1999 in an attempt to persuade employers to take their obligations under TULCRA more seriously.`In November 1998, the European Commission proposed a directive establishing a general framework for informing and consulting employees. If adopted, Article 7 of the directive would introduce the sanction of “non-production of legal effects” in cases of termination of employment where there had been a serious breach of the consultation and information requirements. If implemented in the UK, the directive would bring the sanction for failing to consult and inform in English law into line with France. Employers could not breach their obligations if they were happy enough to pay the protective awards, as they would be legally incapable of terminating contracts of employment until those obligations had been met. The procedures for consultation and information are set out in Article 4 of the directive. Article 4.2 states that member states “shall ensure that information and consultation are effective and useful… and shall determine the information and consultation procedures”.`The M&S case has revived the debate between the Trades Union Congress (TUC) and the Confederation of British Industry (CBI) as to whether the proposed directive is necessary or desirable in the UK.`Following last December's announcement that General Motors was closing its Vauxhall plant in Luton, John Monks, general secretary of the TUC, wrote to the Prime Minister Tony Blair arguing that domestic employment law “makes it quicker, cheaper and easier to sack workers in the UK” than in other EU member states. Similar sentiments were expressed when BMW announced that it would break up and sell Rover, which was likely to result in mass redundancies at its Longbridge plant.`The countervailing argument as propounded by the CBI is that there is already an adequate legal framework to safeguard workers' rights given the “stiff penalties” that may be imposed under TULRCA.`On the day of the London protest, the CBI's deputy director general John Cridland issued a press release claiming that the proposed directive “would not improve redundancy consultation, but could artificially strengthen the role of trade unions”. Cridland went on to claim that it was absurd to suggest that businesses across Europe should deal with consultation in the same way and that the directive would “duplicate existing UK requirements and cut across existing workplace requirements”.`There is currently no agreement between representatives on the Employment and Social Policy Council of the EU as to the adoption of the proposed directive. The UK, Ireland, Germany and Denmark have formed a blocking majority to reach a common position on the directive based on their “general reservations”. Further discussion has been scheduled for the meeting of the Social Affairs Council on 11 June and is supported by Sweden, which currently holds the EU presidency.`It seems that it may only be a matter of time before the directive is adopted. Despite the lack of agreement so far, discussions between member states are said to be progressing towards reaching a common position. The UK Government has expressed reservations about implementing further regulation in the employment sphere, although whether these reservations continue beyond the general election, in which Labour continues in its attempts to woo business leaders, remains to be seen. The influence of the TUC, the Industrial Society and a number of cabinet ministers, coupled with growing pressure from within the EU, may well lead to the ultimate adoption of the directive.`According to Cridland, businesses “need and want to consult staff over redundancies”, but workers at Rover and Renault may beg to differ. What is clear is that in certain situations an employer may see its obligations towards its shareholders as overriding its duties towards its staff. TULRCA effectively allows employers to buy their way out of their duties towards employees. Rather than forcing employers to consult and inform, it merely attaches a financial sanction for non-compliance, which multinational companies may see as an unavoidable cost of restructuring. Unless the proposed directive is adopted, British workers will continue to be susceptible to less favourable treatment than their French counterparts. n