Violation of SER Merger Code. Trade Unions Notified Too Late
A discussion of the judgment of the Merger Code Adjudication
Committee, 22 October 2009
The SER Merger Code 2000
The SER Merger Code 2000 ("SMC 2000") prescribes - in
brief - that in the event that control over an enterprise is
acquired or transferred ("the merger") and the merger
falls within the scope of the SMC 2000, the trade unions have the
right to express their views on the merger before any public
announcements are made on it. If the SMC 2000 is breached, the
trade unions may apply to the Merger Code Adjudication Committee
("MCAC"). The MCAC will publish its decision, but may
also issue a press release - as a sanction - stating the names of
the infringers, if it decides that the breach is serious in nature
and/or seriously reprehensible.
The Facts
A company decided to transfer its housekeeping activities to a
third party. The Central Clients' Participation Council and the
Works Council gave a positive advice on 3 and 4 March 2009. In a
letter of 5 March 2009, the company invited its staff to an
information meeting on 9, 10 and 11 March 2009. A copy of this
letter was sent to the trade unions. At this meeting the staff was
informed about the transfer of the activities. In a letter of 17
March 2009, the company informed the trade unions of the intended
transaction. On Friday 20 March 2009, both merging parties together
informed the trade unions and the secretariat of the SER (Social
and Economic Council). The trade unions applied to the MCAC,
arguing that the SMC 2000 had not been complied with in the
transaction, since they had been informed too late.
The
Merger Code Adjudication Committee
The MCAC concluded that the announcements made at the staff
meetings qualify as public announcements, since the staff had not
been imposed a duty of confidentiality. As a result, public
announcements had been made before the trade unions had been
informed, and therefore the SMC 2000 had been breached. The SMC
2000 implies that the trade unions have to be informed in good
time, so that they may substantially affect the merger. 'In
good time' means before consensus ad idem is reached and not,
as the company asserts, before the date when the agreement is
signed. Therefore, the announcement on 17 March 2009 was too late
and the SMC 2000 has been breached. By acting thus, the company did
not give the Works Council the opportunity to take cognizance of
the view of the trade unions in order to give its advice, while the
Works Council did not state explicitly that it waived this
opportunity. This constitutes another breach of the SMC 2000. The
company also argued that the trade unions could have acted
pro-actively after receiving a copy of the invitation to the staff.
This argument was rejected. The company itself should have informed
the trade unions actively and should have invited them for
consultations. The argument that the employees' interests are
sufficiently protected was also rejected, because it is precisely
up to the trade unions to judge this. However, the MCAC held that
the non-compliance was not as serious in nature and not as
seriously reprehensible that this should be sanctioned by active
publication of the decision.
Tips
- Always check whether the SMC 2000 applies to a transfer of
control;
- If the SMC 2000 applies, the trade unions should be
informed of the projected decision in good time, that is before
any public announcements on the merger are made, and should be
given the opportunity to express their views on the
merger;
- If the SMC 2000 is breached, the trade unions may apply to
the MCAC, which may publish its decision and the names of the
parties.