·        Working Time talks fail

·        New GDF Suez EWC agreement “sets benchmark”

·        Global union campaign forces World Bank to end use of labor indicator

·        Irish social partnership model collapses

·        UK government published new Equality Bill

Upcoming BEERG events:

·         BEERG Meeting – Prague June 10/11

Working Time talks fail

Earlier this week, after months of negotiations between the European Parliament, the Council and the Commission, talks on the revision of the Working Time Directive finally broke down, with the parties failing to agree to end the 48-hour opt-out. This means that the original 1993 Working Time Directive stays in force. It will now be up to the incoming Commission, which will take office in the latter part of this year, to decide how to handle the matter. Apart from the 48-hour opt out the other major issue involved in the revision of the Directive is how time spent on-call at a worker’s place of employment is to be regarded. A series of European Court of Justice (ECJ) decisions held that time spent on-call at the place of employment is to be regarded as working time and should count against the 48-hour limit. For many governments complying with these on-call rulings means significant cost increases in health service budgets because of the extended use that hospitals make of on-call working. Most European Union Member States are in breach of the EWJ rulings but the Commission held off taking legal action pending the outcome of negotiations on the revision of the Directive.

 The opt-out to the 48-hour week rule was originally inserted into the Directive at the behest of the British government, and has attracted the support of successive UK administrations. A significant number of other countries now also avail of the opt-out.

The original 1993 Directive was adopted before the use of mobile phones, laptops and other mobile communication devices became widespread. In 1993 neither the internet nor e-mail was widely used. Practically all work was done at the place of employment, within tightly regulated time schedules. “Mobile working” away from the office was unknown. To a large extent, the Working Time Directive is build around a model of working time which for ever increasing numbers of people no longer squares with reality. This creates difficulties of deciding what is, and what is not, working time. The breakdown of the talks on the Directive might offer an opportunity for a fundamental reappraisal of how working time in today’s connected world should be regulated.

New GDF Suez EWC agreement “sets benchmark”

A Special Negotiation Body has finalized a new draft European Works Council (EWC) agreement for GDF SUEZ. Following the merger of GDF and SUEZ, the EWCs of both companies agreed in September 2008 on a procedure to renegotiate and integrate their existing EWC agreements. The new agreement is to be signed at a meeting in Paris on May 6. The full text of the agreement should be available during the coming week and we will carry a link to it in our next issue. Already European trade union federations are saying that the agreement sets a new benchmark for other EWC agreements.

The agreement says that transnational issues are to be understood as including questions concerning a subsidiary located outside France falling within the scope of a decision of the dominant company, or which are a direct consequence of one of the strategies of the Group. Consultation with the EWC is understood to mean the establishment of dialogue and an exchange of points of view between employee representatives and management, at a time, in a manner and with content to enable employee representatives to express a relevant opinion, based on the information provided. Consultation debates must be such that employee representatives can express their opinion and management can respond. In case of exceptionally circumstances, the employee side secretary has the right to call for extraordinary meetings of the EWC.

Companies in which GDF SUEZ only holds between 10 and 50% of the shares can be represented in the EWC by an observer or additional members. This arrangement will give the Spanish company AGBAR two EWC representatives.

Other features of the new agreement include:

·         The new EWC will have 63 Members. They will represent a work force of close to 200.000 workers in energy, water, waste and energy services companies like Electrablel, Gas de France, Suez water, SITA, GTI, Cofely, Fabricom. There will be observers for Agbar, the Spanish water company in which Suez Environment holds a dominant stake.

·         A secretariat of 13 Members

·         3 social working groups on issues such as social reporting, employment and health and safety

·         3 working groups dealing with the activities of the company (Suez Environment, Energy and Energy Services)

·         2 full meetings per year of the EWC, 2 meetings of the sector working groups as well as 2 meetings of the social working groups. The EWC can request additional meetings.

·         A meeting of the secretariat each month

·         Permanent secretarial assistance (1/2 time)

·         5 training days per year

·         The use of experts paid for by the company

·         An annual budget of 80.000 Euros for experts

·         Strengthened definitions of information and consultation. Issues for information and consultation include the usual ones (as referenced in the EWC Directive) as well as: research and development policy, environmental policy, public service issues, equal opportunities, training and mobility policies, health and safety, working conditions, Group social policy in the area of restructuring

·         A communication work group to consider how the EWC can communicate with members and the workforce

·         Communication facilities for members

·         Representation of European Trade Union Federations

·         EWC members will have the possibility to visit other sites in other countries with a maximum of 35 visits per year in total.

Readers will recall that the GDF Suez merger was held up for close on two years when the GDF EWC accused the company of failing to comply with the information and consultations provisions of the then EWC agreement. The union challenge was upheld by French courts which put the merger on hold until the information and consultation process was completed to the EWC’s and the French central works council’s satisfaction. Eventually the company had to take the works councils to court to get them to provide the opinion which French law requires before a company can close the information and consultation process.

Global union campaign forces World Bank to end use of labor indicator

A global union movement campaign to end the World Bank’s use of a labour indicator, which the unions say the Bank uses to pressurise developing countries to deregulate labor markets, has ended after the World Bank announced that it would stop using the indicators. The World Bank announced the decision to stop using the Employing workers indicator (EWI) on 28 April; managers stated that the EWI, promoted by the bank’s publication Doing business, did not represent World Bank policy. It would no longer be used as a basis for policy advice or in country programme documents, outlining or evaluating a recipient country’s development strategy or assistance programme. The EWI would also be removed from its country policy and institutional assessments, used to establish countries’ eligibility for loans and grants allocated by its concessionary lending arm. Appropriate weight would be given instead to "issues as diverse as political stability, social safety nets to shield vulnerable parts of society from intolerable levels of risk and protection of rights for workers and households as well as for firms".

The International Trade Union Confederation (ITUC) has long criticised the EWI because it rates highest countries with the lowest level of worker protection. "In the context of the current global economic crisis, where 50 million more workers could become unemployed this year and pressures to decrease wages and workers' living standards are intensifying every day," said ITUC General Secretary Guy Ryder, "it is significant that an important development institution like the World Bank is turning the page on a one-sided deregulatory view on labour issues and proposing to adopt a more balanced approach where adequate regulation, improved social protection and respect for workers' rights will be given a higher profile." The IMF took a similar step concerning the Doing business labour indicator in August 2008.

More information: http://www.doingbusiness.org/documents/EWI_revisions.pdf

Irish social partnership model collapses

The Irish centralised social partnership model, which has regulated pay and working conditions over the past 20 years and which was widely seen as a key component of the early success of the so-call “Celtic tiger” looks certain to come to an end during the coming week.  Both the government and the unions have scheduled separate meetings at which it is likely they will decide that there is no prospect of a deal. It will now be up to managers and unions to negotiate at individual enterprise level. Prospects for a deal dimmed dramatically when an informal May Day deadline for talks expired with unions and employers signalling a deal will not be struck. Sticking points include pension protection proposal, as well as unions' demands for €1bn for employment and retraining initiatives and a two-year stay before banks moved to repossess the homes of people who lose their jobs.

Earlier in the week the government had announced the establishment of PIPS (Pensions Insolvency Payment Scheme) to cover situations in which a company is insolvent and a deficit exists in a defined benefit (DB) pension scheme. In insolvency situations, annuity contracts are purchased from insurance companies, whereby the pension fund gives the insurance firms a lump sum, in return for providing pensions to the workers involved. Under the new PIPS proposal, where a pension deficit exists at an insolvent employer, the State will provide this annuity rather than private insurance firms. It is argued this since the State does not require the same profit margin or administrative costs, the annuity can be provided up to 20% cheaper than any private provider. These savings can then be used to increase the assets in the pension fund. While this will help to reduce any deficit that has emerged, in most cases a significant deficit is likely to remain and the PIPS proposal is not designed to guarantee the affected workers the full pension they had been expecting to receive.

The unions want, as a first step to a second-tier pay-related State pension, that existing DB pension schemes could be taken on by the State, in return for providing a guaranteed level of pension in the future. This may not be as high as what the original DB guaranteed pension would have been if the equity markets had stayed strong, but the lower pension payable by the State would at least be guaranteed for the pension fund members involved. However, the Government and the employers’ organisation, IBEC, are understood to be very wary of such a scheme. While there would be some upfront assets provided to the State, these would be unlikely to meet the long-term liabilities to pensioners over the coming decades and the State would have to make good the difference. Such a scheme would amount to the nationalisation of all DB pension schemes, which would be a major undertaking for the State. It would also be likely to mean a net transfer to DB pension scheme members from taxpayers – some of whom only have the less advantageous DC schemes, and many of whom have no pension scheme at all.

UK government published new Equality Bill

The UK government has published a new Equality Bill which will consolidate nine major pieces of legislation and around 100 other measures.  The government said that the Bill will also strengthen equality law by:

·         Introducing a new public sector duty to consider reducing socio-economic inequalities;

·         Putting a new Equality Duty on public bodies;

·         Using public procurement to improve equality;

·         Banning age discrimination outside the workplace;

·         Introducing gender pay reports;

·         Extending the scope to use positive action;

·         Strengthening the powers of employment tribunals;

·         Protecting carers from discrimination;

·         Offering new mothers stronger protection when breastfeeding;

·         Banning discrimination in private clubs; and

·         Strengthening protection from discrimination for disabled people.

Parts of the new Bill are intended to come into force in 2010.

We plan to schedule a meeting of our UK/Irish group for June. We will have a detailed presentation on the Equality Bill at the   meeting.

http://www.equalities.gov.uk/equality_bill.aspx

·         EWC Directive formally adopted

·         Brussels wants cap on bank bonuses

·         Unions push for IFA in DHL

·         France: ‘Bossnapping” spreads as protests turn   violent

·         Improving execution is top pre-condition for strengthening the impact of HR on the business

Upcoming BEERG events:

·         EWC Workshop – London, April 29. Fee for attendance Euro 390. To book a place just e-mail us at: tom.hayes@beerg.com

·         BEERG Meeting – Prague June 10/11

EWC Directive formally adopted

The recast EWC Directive was formally adopted at a meeting of the Agriculture Council of Ministers earlier this week. It will now be published in the Official Journal of the EU in about 20 days time. Member States will have two years from the date of publication to transpose it into national law. Contrary to earlier reports it appears that there is no great pressure to transpose the Directive before the May 2011 deadline though it is possible that the expert group of national labour ministry officials who are to coordinate the transposition may publish their conclusions as early as possible so that EWC actors – companies, members of existing EWCs and trade unions – will know what the legal landscape will look like after 2011. We hope to have the final text of the recast Directive available next week and we will circulate as soon as we do.

Article 13 agreements

Over the past few weeks we have been asked a number of times about the position of Article 13 agreements, in particular whether they need to be revised in light of the recast Directive. The short answer is no. The original 1994 Directive defined Article 13 agreements as agreements in force on or before September 22 1996 which provided for the transnational information and consultation of all employees. Such agreements were exempt from the terms of the Directive. In other words the Directive did not apply to them. The recast Directive cements this exemption. Article 14 of the recast directive says:

 Without prejudice to Article 13, the obligations arising from this Directive shall not apply to Community-scale undertakings or Community-scale groups of undertakings in which, either

i)                                                                          an agreement or agreements covering the entire workforce providing for the transnational information and consultation of employees have been concluded pursuant to Article 13(1) of Directive 94/45/EC or Article 3(1) of Directive 97/74/EC, or where such agreements are adjusted because of changes in the structure of the undertakings or groups of undertakings;                                        

2.       When the agreements referred to in paragraph 1 expire, the parties to those agreements may decide jointly to renew or revise them. Where this is not the case, the provisions of this Directive shall apply.

This makes clear that there is no obligation on companies to renegotiate Article 13 agreements to take account of the terms of the recast Directive. Whether companies choose to do so is another matter and, no doubt, there will be pressure from the employees’ side of Article 13 EWCs, and the unions where they are involved, to do so. What happens if a company does not want to change its Article 13 agreement but the employee side does? If push comes to shove then the Article 13 agreements collapses and a new agreement will have to be negotiated through the SNB mechanism. Such negotiations can take up to three years to reach a conclusion. To put it another way: the price the employee side pays for collapsing an Article 13 agreement is a potential three year moratorium on European-level information and consultation while a replacement agreement is being negotiated.

However, we are not convinced that it is wise for companies with an Article 13 agreement to reject requests out-of-hand to review the agreement as a result of the adoption of the recast Directive. A stubborn resistance to all and any changes may not be helpful to the general employee relations climate in the company, especially if the climate is already be under strain as a result of painful restructuring. We think it is probably better for companies to analyze the difference between their existing agreement and the recast Directive, to identify where they think they can make changes, and then to offer a package deal to the employees’ side. Such a deal should include precise language on how the information and consultation process should work, particularly in exceptional circumstances. The proposals should pin down what information is to be given, when it is to be given and how long the employee side has to consider it before they have to offer an opinion. Crucially, the proposals should make it clear that if the employee side does not offer an opinion within the required time-scale then the consultation is to be considered closed. Other issues that need to be covered in the proposals are the linkage between European-level and national-level information and consultation processes and what happens to the EWC in the vent of mergers or acquisitions. If there is no deal available on terms acceptable to the company then either the Article 13 agreement stays as it is or the agreement collapses and the SNB mechanism is initiated.

One final point: What happens to an Article 13 agreement when a company with such an agreement acquires another company which has either an Article 13 or an Article 6 agreement? Where the acquired company has no EWC there is no issue as such a situation should be dealt with in the company’s own agreement. (Confusingly, the protection of agreements with Article 13 status under the 1994 Directive is to be found in Article 14 of the recast Directive, while Article 13 of the recast Directive deals with the procedures to be followed in the event of mergers or acquisitions). The recast Directive (Article 13) says that where two companies with EWC agreements are involved in a merger or acquisition then such agreements continue in force, unless there is an agreement to the contrary between all the parties, while an SNB negotiates an agreement to cover the combined entity. However, the question needs to be asked: if Article 13 agreements are exempt from the terms of the Directive does this requirement apply to them? If Article 13 agreements are protected by the recast Directive why should their continued existence be put at risk because the company acquires another business with an EWC? Agreements negotiated by SNBs can only be Article 6 agreements, because they are agreements negotiated after September 22 1996, the cut-off date for Article 13 agreements. So if the procedural requirements set out in Article 13 of the recast Directive come into effect when a company with a 1994 Article 13 agreement acquires another company which also has an EWC agreement then automatically the Article 13 agreement would disappear as a result of the SNB negotiations. If the recast Directive unreservedly protects the status of Article 13 agreements then that protection cannot be undermined because of a merger or acquisition. Logically, Article 13 of the recast Directive cannot apply to agreements with 1994 Article 13 status. No doubt, however, there will be contrary interpretations and this may well be an issue to be tested in the courts in the future. Until then, we believe our interpretation of the position of Article 13 agreements in the events of mergers and acquisition is valid and companies with Article 13 agreements are not required to set up an SNB in such circumstances. The EWC agreement of the acquired company simply lapses and its employees and then covered by the acquiring company’s Article 13 agreement.

We will be putting together a position paper on Article 13 agreements in the next week or so. We will also be examining this issue at the EWC workshop in London next Wednesday, April 29.

Brussels wants cap on bank bonuses

A draft Recommendation from the European Commission, currently circulating in Brussels, suggests that the bonuses and golden parachutes paid to bankers should be capped in all European Union countries.  Recommendations are not legally binding but in the current climate, and following the conclusions of the G20 in London, any such suggestions from the European Commission would have significant moral and political authority. We understand that the Recommendations are to be published in the next couple of weeks.  The Recommendation will propose that the 27 EU countries bring in tougher remuneration rules for financial institutions with an office within their borders, covering all staff whose activities affect the firm’s risk profile. The rules would also apply to subsidiaries of EU-based parents, including those in offshore centers. Directors’ termination payments would be limited to no more than two years of their fixed remuneration and they would also face a minimum three-year vesting period for share options. Financial companies would be able to withhold bonuses entirely or partly when performance criteria were not met and a major part of bonuses should be deferred, the policy says.

While the Recommendations are focused on the banking sector they are likely to have a “spillover’ impact on other sectors in so far as they will be seen as setting European Union “headlines” on executive pay and compensation. 

Unions push for IFA in DHL

In our last two issues we have reported on union campaigns to persuade both Nokia and Kimberly-Clark to open negotiations on International Framework Agreements (IFAs). This week saw a concerted union attempt to get the global logistics company, DHL, to commit to such negotiations by raising questions at the company’s annual general meeting. What is particularly interesting in this case is that UNI Global has posted on-line the speech its representative made to the DHL meeting, setting out the reasons why it, and the International Transport Workers Federation, believes the company should open talks with them for an IFA. Bottom line: the union argument turns on the proposition that talks between the unions and the company will lead to greater engagement by the company’s employees which in turn will boost the company’s economic performance. The day after the company’s AGM UNI posted a further comment saying how disappointed it was at the company’s unwillingness to take up the offer to negotiate a global agreement. To the best of our knowledge, this is the first time the unions have posted on-line, in such detail, the case they make to companies to negotiate IFAs. It also shows that if companies do not voluntarily engage in such negotiations there is not a great deal the unions can do to force them to the table unless, as in the case of Group 4 Securicor, the company appears to have a corporate social responsibility exposure. In Group 4’s case a report from the UK-based NGO War on Want questioned the company’s employment practices in Africa and put at risk the company’s bid for the security contract for the 2010 soccer world cup in South Africa. Our piece on Nokia two weeks ago reported that the company’s use of minerals from the Democratic Republic of the Congo was being called into question by a union/NGO coalition as potentially contributing to political instability in the regions.

Union comments at DHL meeting  

Union reaction to DHL meeting

France: ‘Bossnapping” spreads as protests turn   violent

Over the past several weeks we have reported on the growing phenomena of “bossnapping” in France, with employees holding managers hostage in order to secure improved severance packages or even to try to force companies to abandon plant closures or downsizings altogether. 3M, Cat and Sony have all experienced “bossnapping”, with managers being held captive in their offices overnight. This week saw the first such “bossnapping” in Belgium when the employees of the US-based chemical company Cytec blockaded managers in their offices for several hours in order to exert pressure on severance negotiations. Up until now the police have not intervened in such actions, seemingly regarding them as just another tactic used by workers in industrial disputes. However, this may be about to change with the government denouncing such actions and also threatening to take legal action against workers in the gas and electricity industries who have cut supplies to consumers as part of a wage campaign.

The past two weeks have seen workers in EdF and GdF, the French electricity and gas utilities, cut power and gas supplies to consumers in order to push a claim for a 10% pay increase and an end to the outsourcing of jobs. While the workers cutting the power supplies have been denounced as industrial saboteurs by the government and face disciplinary action and prosecution, press reports in France quote the workers involved as saying that “they are determined to press ahead with the struggle against free-market forces.” After failing to prevent the partial privatisations of EdF and GdF (we have reported over the past two years on the attempts to block the GdF/Suez merger) they believe that the tide has turned in their favour because of the recession. According to Stéphane Miliadis, a representative of the CGT at the EdF plant in Saint-Ouen-l’Aumône, near Montigny-lès-Cormeilles, the situation offers “a golden opportunity”. “The Government is losing control,” he said. “So now is the moment to push back the capitalist logic which has crept into the company.” The movement got off to a slow start. “We’ve been on strike for three weeks but at first no one paid any attention at all,” he said. “It was only when some of the guys started cutting the electricity and gas that things got moving.”

This week also saw workers from the German automotive supplier, Continental, ransack company and local authority offices after a court rejected their claim that the company was in breach of its information and consultation obligations when it announced its intention to close plants in France and Germany without first consulting its EWC. The court said that there was nothing in the EWC agreement requiring prior consultation with the EWC before announcing such closures locally. When they were told of the court decision the workers smashed windows at the factory in Clairoix and at a regional administrative office in nearby Compiegne, pulling up lamps and breaking desks and cabinets. Citing the steep drop in demand in the automobile sector, Continental announced in March plans to shutter the factory in Clairoix, north of Paris, which employs 1,120.

In a sign of hardening attitudes on the management side, the  American automotive company Molex filed a lawsuit for sequestration after two managers were held for two days by workers — a departure from the other  "bossnapping" cases, when managers and workers agreed to keep the affair in-house and avoid going to court.

Improving execution is top pre-condition for strengthening the impact of HR on the business

A study designed and carried out for the European Club for human resources (EChr) by Hewitt Associates, the global human resources consulting and outsourcing company, reveals that the economic downturn is accelerating organisational change within HR departments. This will involve the acquisition of different skills and competencies, the need to attract new talent, establishing a leaner HR organisation, and identifying more effective tools to measure HR's value to the business. This year's HR Barometer covered 53 organisations, employing a total of 3.5 million people and explored the emerging business practices and priorities of the HR function across countries and sectors in Europe.

Leonardo Sforza, head of EU affairs and research at Hewitt Associates and author of the study, said: "This year's HR Barometer is inevitably influenced by the general deterioration of the economic climate, with seven out of 10 respondents expecting a work force reduction in 2009. However, the results show that leading HR professionals are facing the downturn not just by scaling down employment, but also by thinking ahead to the ways they can help their organisation and its workforce to implement structural changes and to prepare them for economic recovery. "The on-going crisis will have a transformational rather than a cyclical impact on business and HR can be a crucial contributor in this process. To make this happen, HR needs to balance short term market and operational needs with longer term strategic people issues such as talent and leadership development – and fix them promptly."

Hewitt Press Release on the Study

For a full set of the key findings of the study please contact Marleen Van De Velde at m2vandev@hewitt.com