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CBI chief rejects redundancy ‘damaging myths’


The Confederation of British Industry (CBI) last night (Tuesday) criticised a string of “damaging myths” about consultation rules governing company plant closures.

Digby Jones, Director-General, said that it is untrue to say multinational companies:

  • choose to shut British plants simply because of UK redundancy law
  • deliberately tell the media about redundancies before telling staff.

He also rejected claims that UK redundancy rules:

  • do not currently require meaningful consultation
  • need to be overlaid by a proposed EU directive on information and consultation.

Digby Jones made the remarks in Edinburgh when he addresses a dinner for some of Scotland’s most senior business leaders.

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 argued that UK redundancy rules are challenging and 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 pretend 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 is participating in a government review of UK redundancy law, alongside the Trades Union Congress (TUC). But Digby Jones urged 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.”

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