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Damaging myths?

4 May 2001 - Digby Jones, Director-General of the Confederation of British Industry criticised a number of "damaging myths" about the consultation rules that govern company plant closures. He said that is was untrue that multinational companies:

* choose to shut British plants before other European sites simply because of UK redundancy law
* deliberately tell the media about redundancies before informing their staff.

He also rejected claims that British redundancy legislation:

- do not require meaningful consultation at present
- need to be overlaid by a proposed EU directive on information and consultation.

He said: "Nobody likes to see factories close down and people losing jobs - no employee, no trade unionist, no politician and certainly no employer. But it will not help anyone if we allow damaging myths to become accepted facts.

"So let's be clear. It's naive to believe one-off redundancy costs are the main reason for closing one factory over another. Firms have many other long-term issues to consider like skilled labour, productivity, taxes, proximity to market, transport, communication, exchange rates and capacity."

Digby Jones argues that UK redundancy rules are actually challenging and do offer meaningful consultation - contrary to perception. "In reality, firms must discuss timing and implementation of redundancies plus the decisions behind them. Failure to consult leads to stiff penalties.

"Of course, companies take making people redundant extremely seriously so consultation rarely reveals startling new facts. But the possibility of changing the original decision does exist and that means meaningful consultation can and does take place."

He added that it was nonsense to argue that companies deliberately tell the media before telling staff. "It must be appalling to hear about redundancy on the radio, but let's not pretend this happens at the instigation of management - they are equally appalled.

"With the best security in the world, organisations can still fall victim to a leak. But the first priority for an employer will always be to comply with the law of the land and inform both the workforce and shareholders as soon as possible."

The CBI and the TUC are participating in a government review of UK redundancy law and Digby Jones will urge ministers to continue resisting pressure for a European Directive on information and consultation.

"When it comes to UK redundancy rules, the EU directive is a red herring because it would simply overlay the existing rigorous requirements and add yet another raft of red tape. The vast majority of companies consult happily with employees in any event.

"Naturally, trade unions support the proposed directive because it offers consultation rights on a range of day-to-day management decisions, not just plant closures. But a one-size-fits-all rule is not the way to get the unemployed into work or more productive businesses creating better jobs."

He concluded: "Of course people get angry and frustrated about redundancies - we're talking about their livelihoods and futures. But we risk even more jobs and much-needed inward investment if we prevent companies from reacting quickly to changing market conditions."

Responding to the CBI's claim that UK redundancy rules have not played a part in a succession of recent closures in the UK TUC General Secretary, John Monks, said,

'There is no doubt it is easier, cheaper and quicker to sack staff in the UK. Just ask anyone who works for Marks and Spencer hit by their recent round of redundancies in Britain or France.

'It is a shame to see UK business leaders describing minimum decent standards for employers to keep their staff informed about their business and to take their views into account as red tape. No doubt there were nineteenth century employers who said ending child chimney sweeps imposed intolerable burdens on business.

'There are two main differences between the limited consultations that occur in the UK and elsewhere in much of Europe. First information and consultation is continuous elsewhere not just after the event when it's generally too late to consider real alternatives.

'Secondly, as Mark and Spencer discovered, the courts elsewhere get tough with companies that do not consult their staff.

'Of course there are other factors behind recent redundancies such as exchange rate problems and our continuing exclusion from the Euro as the TUC has often said. But there can be no doubt hire and fire is easy in the UK.'


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