Works councils in the spotlight

Date: 13/03/1997

By Simon Coss

TRADE unionists remain guardedly optimistic about the impact of the EU directive on works councils, despite the current furore surrounding Renault's failure to consult employees over the closure of its factory in Vilvoorde, Belgium.

But Social Affairs Commissioner Pádraig Flynn this week expressed concern that the carmaker's behaviour might “do much to poison the positive and non-legislative attitude” which has surrounded the implementation of the directive until now.

Even before the directive came into force six months ago, some 440 firms had voluntarily set up the required worker consultation bodies.

The European Trade Union Confederation (ETUC) says the rate at which they are being created has fallen considerably since then, but it is not unduly concerned by the slowdown.

“The directive was doing very well until September, with many organisations setting up voluntary bodies. Now companies have to follow a formal procedure set out in the directive, so things are moving a bit more slowly. Only four or five works councils have been set up since then,” said an official.

Under the terms of the directive, the estimated 1,200 companies which fall under its scope are required to set up work councils by September 1999. “If that does not happen, we have the power under the directive to oblige employers to set up consultative bodies,” said one official.

The ETUC says most firms seem to be responding well, although there are one or two 'black sheep' - notably soft-drinks giant Pepsi-Cola and carmaker Honda - which, it claims, set up works councils without consulting their employees.

In the case of Renault, which ironically was one of the first companies to conclude a voluntary agreement with workers' representatives in 1995, the unions argue that the firm clearly failed to use its European works council before announcing the Vilvoorde closure.

“Our member organisations, along with the Commission and the Belgian government, are currently investigating whether we have the possibility to take legal action under the works council directive as well as European laws on collective redundancies,” explained one expert.

Although Renault seems to have paid scant regard to the rules governing the use of European works councils when it decided to close the plant, the unions claim the directive gives them more bargaining power than they might previously have had.

“When the Belgian workers went to see the managing director of Renault, he said he would only speak to the French works council. But we now have the opportunity to oblige him to speak to the European consultative body,” said an ETUC spokesman.

Just how much difference this will ultimately make is debatable, as Renault appears determined that Vilvoorde will close.

Flynn this week stepped up the attack on the company when he addressed the European Parliament in Strasbourg, saying Renault had “provoked outrage because of its abruptness and through its lack of concern with the rights of employees”.

He added: “Renault management - in a manner which I can only describe as irresponsible - has not complied with its obligations as regards information and consultation of representatives of the workers prior to its decision. In this respect, the provisions of the European Works Council Directive and the Collective Redundancies Directive have clearly been ignored.”

The ETUC points to other companies where workers and employers have used works councils to reach agreement on restructuring and factory closures.

“When Ford wanted to close its Halewood plant in the UK recently, we managed to negotiate a solution which saved 900 jobs,” said one expert. The organisation also points to recent restructuring and closures at French yoghurt-makers Danone and electronics firm Thomson, which were agreed through negotiation.