Advocacy for a real and fair consultation process
As of 2014, a stronger protection of the employees in case of mass dismissal shall apply. Will be concerned companies employing more than 250 employees which will no longer be allowed to carry out a mass redundancy without proposing a social plan. This is part of the trade unions’ requirements which are also requiring punishments, such as the nullity of the mass dismissal process for companies which proceed to dismissals not clearly arising out of a critical financial situation. Requirements also include the general obligation to draw up a social plan, the commitment to substantially motivate any refusal of the employees’ proposals, and the wide reinforcement of the local employment authority’s power.
In view of these requirements, it is worth trying to assess whether the current provisions on mass dismissal can still be considered as sufficient or if a new stronger protection is needed.
For the past months, the economic situation has resulted in many companies restructuring, relocating their production or services, or modifying their organisations.
Such restructuring situations unfortunately bring significant workforce reductions and lead to important mass dismissals.
Under Swiss Law, the provisions on mass dismissal apply where the employer terminates an important number of employment agreements within a given period (30 days) for reasons unrelated to the person of the employee.
The number of dismissals required for the redundancy process to be considered as a mass dismissal, depends on the size of the company (at least 10 workers must be concerned in a business normally employing between 20 and 100 employees; at least 10% of the workers of a business normally employing between 100 and 300 employees; at least 30 workers in a business normally employing at least 300 employees).
The employer who anticipates carrying out a mass dismissal is obliged, before taking any firm decision, to consult the employee representatives, if any, or the employees themselves.
The aim of this consultation is inter alia to enable employees to submit proposals to the company’s management on how to avoid redundancies, limit their number or mitigate their magnitude.
For this purpose, the employer must provide the employee representatives, if any, or the employees themselves, with all appropriate information, in particular the reasons for the envisaged mass dismissal (financial aspects should be included), the potential number of employees concerned, the number of employees currently employed and the timeline within which the terminations will be notified.
The employee representatives or the employees themselves must be granted the necessary time to thoroughly study the situation and submit the company with constructive proposals.
The Swiss Code of Obligations does not specify the duration of the consultation procedure. The extent will essentially depend on the circumstances, taking into account the size of the business, the existence or not of employee representatives and the envisaged consequences.
Some Swiss scholars consider the duration of the consultation as satisfactory when respecting a period of at least seven to ten days for a medium-sized company (fewer than 300 employees). The principle being that the duration of the consultation must allow in good faith each party to exchange constructive proposals to find a solution so as to mitigate the consequences.
The employer must additionally notify the local employment authority of the envisaged mass dismissal; the latter being available to assist the company in the resolution of any problematic in relation to the envisaged redundancies.
If the employer does not satisfy its duty of prior consultation, the notified dismissals remain nonetheless valid, although considered as wrongful. In this situation, the impacted employees may raise a claim for compensation in reason of the wrongful termination.
The obligations having to be respected by the employer are considered as of low encumbrance and are therefore challenged by the unions and some scholars who consider that the protection against mass dismissal is inadequate and requires a stronger legal framework. In particular, these unions and scholars consider that the duty of consultation is often artificially exercised, the mass dismissal having been widely decided prior to the consultation process. In these circumstances, proposals that may be submitted by the employees have obviously no chance of success and the consultation is thus only considered as an alibi.
Admittedly, there are cases where the whole restructuring seems to have been planned, not to say decided, before the consultation takes place.
Recent restructuring cases tend however to show that the consultation procedure plays its role fully if exercised in accordance with the spirit initially wanted by the Swiss legislator, i.e. an open back and forth exchange between the parties.
It is not unusual that a company fully or partially gives up the considered relocation, reduces the number of terminations initially announced, proposes intra-group transfers or provides the terminated employees with more generous redundancy packages after an in-depth consultation process.
For memory, in spring 2010, Sapal announced the dismissal of 45 people and the partial relocation of its activities in China; after consultation, eventually only 12 positions were made redundant, and the company retained its know-how in Switzerland.
In September 2010, DHL announced the dismissal of 86 employees; after consultation, a third of the positions were saved, and the social plan adopted by the company was considered as generous by trade unions.
In October 2011, Novartis announced the closure of its Prangins site and 1100 layoffs in Switzerland. After consultation, the group eventually maintained its site and reduced the dismissals to 250 positions. The workforce in Prangins has since increased by 15% and the group has even decided to invest in the development of new products onsite.
Admittedly, in each of these cases, a strong determination of the employees and their representatives, as well as a heavy involvement of the cantonal authorities and, not least, a solid flexibility of the company, were observed.
These examples show that the consultation process as envisaged by the Swiss legislator is sufficient inasmuch as all involved parties – in good faith – play the game.
Thus it appears not necessary to toughen the rules, but rather to strictly carry out the existing ones.
Although a genuine consultation process can appear as a constraint, we believe that it is worthwhile, in the long term, for all parties to not only grant each other sufficient time and information but also to seriously consider each other’s proposal while actively involving the authorities.
A thoroughly respected consultation process leads all parties to a win-win situation by not only allowing the company to save positions but also by considering innovative solutions which had not arisen before the process. In addition, it of course highly reduces the risk of strike, protest and eventual litigation. Finally, it also has a positive impact on the non-terminated employees who will have been actively involved in reducing the consequences for themselves and for their colleagues. This aspect should not be neglected as every mass dismissal leads to a loss of confidence and motivation, a reduction in innovation and creativity, a reduction in the employees’ support for the company’s objectives, an increase in stress and absenteeism, as well as the eventual departure of employees whom the employer wishes to retain despite the restructuring thus possibly generating an important loss of revenue and know-how.
It appears that the current legal framework probably does not need to be amended but essentially all parties should, in good faith, apply the legal provisions in the spirit initially wanted by the legislator. This allows carrying out mass dismissals while reducing the burden on the workers, preserving the interests of the company, actively involving the authorities and not least respecting the legal framework.
Article by Stéphanie Fuld & Sara Rousselle-Ruffieux