EU Insolvency rules: employees must be properly protected

The European Commission’s  review of EU insolvency rules provides an important opportunity to improve the law and ensure that workers are properly protected says the European Trade Union Confederation (ETUC).  

 Speaking today at the Slovak Presidency Conference on ‘Convergence of insolvency frameworks within the European Union – the way forward’, Esther Lynch, ETUC Confederal Secretary, highlighted the lack of recognition of the vulnerable situation of employees.  

“Throughout Europe, workers are feeling the consequences of unfair insolvency rules that leave them high and dry, dismissed without notice, prior consultation or payment of outstanding wages, redundancy or any other monies owing to them” said Esther Lynch.

 “The European Commission needs to look at the reality on the ground and understand the problems experienced by employees when unscrupulous employers misuse insolvency rules and deprive them of their rights provided under a number of EU Directives.”

“Formulating EU rules on restructuring of businesses without meaningful reference to the interaction between insolvency law and employment law is unacceptable, but it is not too late to rectify. A number of safeguards can be put in place to save viable businesses and jobs, and provide the proper protection of the employees interests.”

Today the ETUC called on the Commission improve EU insolvency laws by

1.      Requiring member states to provide a realistic mechanism for recovering outstanding pay, redundancy and other outstanding monies in all types of insolvency situations;

2.      Outlawing the practice of ‘engineering’ insolvency to dispose of staff on long-established terms and conditions of employment;

3.      Preventing employers from reducing the company’s assets below the level necessary to discharge accrued liabilities to employees;

4.      Reinforcing consultation rights, to provide that employees have a right to be informed and consulted with a view to reach an agreement on restructuring plans regardless of how many people are at risk of losing their jobs;

5.      Making it obligatory to inform and consult employees when a company is contemplating a decision on an asset of significant value that may lead to the redundancy of workers.

The ETUC rejects any proposal interfering with employees ranking as preferential and secure creditors, and will not accept the erosion of existing employee protections in any revision of the rules on insolvency.