BRAIN FOOD: Workplace Rights - Misgivings on smoother mergers

The EC's recent draft directive on cross-border company mergers is the latest measure in the Brussels pipeline to create angst for UK and Continental businesses. Aimed particularly at SMEs, its purpose is to facilitate cross-border mergers by removing barriers created by differing national laws.

by Michael Burd and James Davies, Lewis Silkin solicitors, e-mail:
Last Updated: 31 Aug 2010

Such mergers are unlawful in some European countries, and expensive and time-consuming to achieve in others. An initiative to smooth the way might be useful. So why the heebie-jeebies? The bugbear is the extent of employee influence in the management of any company created when businesses from different countries merge. The draft directive says that if no agreement on this is reached, the most extensive worker-participation regime would apply. There are fears that the German model of 'co-determination' - in which employee representatives have a hand in high-level decisions and even sit on the board - could spread throughout Europe. The upshot predicted by some business organisations (including the CBI) is that an EU law designed to encourage mergers will, in fact, deter them. The Commission looks intent on pressing ahead in face of the opposition.

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