BusinessBusiness RecoveryEU directive threatens company rescues

EU directive threatens company rescues

The move towards more 'continental style' employees' rights as proposed in the new European Union Directive could jeopardise company rescues, insolvency practitioners have warned.

Link: EU invoicing directive draws concern

Last week, the government launched a new consultation on the implementation of a European Directive on employment law. The proposals say employees must be consulted on any ‘changes in work organisation or contractual relations, including redundancies and transfers.’

According to the DTI the new plans mean ’employees have the chance to be informed and consulted on management decisions affecting their future.

But insolvency practitioners are worried the directive will cause serious problems at exactly the point when decisions need to be made and implemented quickly in order to save a company and to save jobs.

Colin Wiseman, head of business recovery Wilkins Kennedy told AccountancyAge.com: ‘This is moving towards a more continental style and could make rescues more difficult. Formal consultation may stall things at a time when you need to act quickly. Also, in my experience if you get too formal you open the process up to manipulation.

He added that although employees were normally very helpful, the new formal consultation process could erode workers’ goodwill. ‘The directive may drive efforts to rescue failing companies into quicksand. Achieving swift turnaround is vital to keep the confidence of customers, suppliers, lenders, and staff.’

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