European Union: European Cross Border Restructuring – Clyde’s Join Up With L&E Global To Advise

Last Updated: 2 April 2013
Article by Nick Dent

Nick Dent, Partner and employment law specialist based in Clyde & Co’s London office reports on a recent panel session at Clyde’s London offices with L & E Global, a worldwide network of employment lawyers.

On 24 January 2013, 82 attendees from HR and the world of employment law descended on Clyde & Co’s London office to attend a seminar hosted by Clyde & Co and their colleagues at L&E Global. The seminar took the form of a case study Q&A, with the HR Director played by Nick Dent (Clyde & Co) seeking advice from a panel of experts from seven European jurisdictions on the pan-European restructuring of BigPharma, a US multi-national pharmaceutical company. John Sander (L&E Global, USA) took on the role of the President Europe of BigPharma.

Proceedings kicked off with President Europe giving his orders to HR Director on how he wants the reorganisation to work.

John: “Nick, I know you and these top-notch attorneys from Clyde’s and L&E Global have all this covered, and we’ll bring this in on time and within budget. Just keep me posted on how we’re doing, so I can report the good news to headquarters.”

John’s demands:

  • Solid projections of time and cost

  • Business can’t be disrupted

  • No changes to be made to the restructuring strategy

  • No loss of confidential information

  • Reduce number of US-expats

  • No adverse publicity

The restructuring plan: slashing about a third of the workforce across six European countries, including total closure of one of two plants in Turin, Italy.

John: “Oh, and Nick, don’t forget: I want all the staff in Europe informed about the restructuring of the European operations at the same time. I don’t want my valuable senior executives being poached because they feel insecure about their jobs.”

Nick sought the assistance and advice of his panel of legal colleagues across Europe.

Having had some previous knowledge that France may be difficult, Nick talked first to Florence Aubonnet of L&E Global, France. His suspicions were confirmed.

Currently there is no certainty in French law. The time limits set for consultation with the works councils are not binding and even where an agreement on the plan is reached with the unions, employees have five years to bring a claim. The key is preparation in advance of the announcement. A ray of hope came with Florence’s reassurance that the law is changing and a new law giving more certainty, security and visibility is expected in June 2013. Florence reassured Nick that the management’s kidnapping by the workforce happens quite rarely, and in practice only happened on one particularly sensitive restructuring consisting of the total closure of the sites.

Nick then turned to Italy for some encouragement that not everywhere was going to be so tricky. Olimpio Stucchi of L&E Global, Italy advised that since both plants in Turin were part of the same group, Italian law required cross-selection in order to close one plant. However, one way to get around this is to create a new company, transfer one of the businesses into that company, and then you should be able to shut it down. No cross-selection necessary.

Interesting thought, not the simplest, but food for thought and a possible way round.

Next to Germany, where Kara Preedy also drilled that preparation ahead of any announcement of a final decision is key. The better prepared, the shorter the consultation, and the lower the cost.

Christiaan Oberman explained that the Netherlands was a consensus based society, meaning cooperation between the government, employer and employees is key and that a deal is always reached, in the end. No stress there then.

Belgium too, operating a rule of proportionality, as Filip Corveleyn explained, may not be so bad. However, beware protected workers elected to be works council representatives; even the candidates up for election are protected for these purposes.

Finally the UK, which offers a relatively short consultation period, Nick Elwell-Sutton of Clyde & Co, London advised it is best to kick off early, so that key employees don’t start leaving.

Not so bad in the end. As long as we can delay France by six months (to wait for the new law to be implemented), do lots of work upfront before the announcement and become comfortable with sharing information with the works councils because we have a coherent rationale for the restructure, everything should go smoothly.

The speakers:

  • Florence Aubonnet, L&E Global, France

  • Filip Corveleyn, L&E Global, Belgium

  • Nick Dent, Clyde & Co, London

  • Nick Elwell-Sutton, Clyde & Co, London

  • Christiaan Oberman, L&E Global, Netherlands

  • Kara Preedy, L&E Global, Germany

  • John L Sander, Jackson Lewis LLP, US member of L&E Global

  • Olimpio Stucchi, L&E Global, Italy

  • Stephan Swinkels, L&E Global, Executive Director

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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