In favor or against the revision of the “Renault Law”?

Each time several companies announce collective redundancies, as was the case in early 2021, the debate flares up again : trade unions and politicians alike question whether, after 20 years, the time has to come to finally review the infamous “Procédure Renault” or Renault Act? 

The Act of 13 February 1998 was adopted in response to the closure of the Renault assembly plant in Vilvoorde. In February 1997, the French car maker was forced to hastily call a press conference to announce the closure of its Belgium plant under pressure from the Flemish Minister-President. This situation created two major stumbling blocks: the decision was deemed irrevocable and was not open to discussion with union representatives and the workers found out about the plant closure through the media. 

To avoid similar situations in the future, a labor law was passed the following year requiring employers who are contemplating a collective redundancy to inform the workers’ representatives in advance and consult with them; in other words, employer must communicate the intention, rather than the decision to lay off workers and must first inform workers or their representatives of this intention. 

Although the law establishes the framework for the procedure, with its information, consultation and negotiation phases, it also has many shortcomings, both in terms of communication and in the way it is organized. 

• The provision about the duty to inform workers first is often misunderstood: while the concept informing workers first is commendable, it does not de facto give the company an opportunity to warn a number of political, trade-union or economic decision-makers in advance. As a result, they complain, wrongly, about being taken by surprise and not being informed beforehand.   

• Announcing the intention to proceed with a collective dismissal is perceived as artificial: because the procedure requires that a consultation must take place with worker’s representatives, all written and verbal communication must be conditional. The result is vague, complicated and even artificial communication. Letters to workers and press releases have been known to include such complex phrases as “assuming that this intention should be confirmed, the project could impact the employment of XX people“. For their part, the trade unions consider this approach hypocritical: an intention is merely a decision by another name. 

• The number of people who are potentially affected by the announcement is sometimes exaggerated: the law stipulates that the company must announce a maximum number of people whose employment is potentially impacted, without taking into account any agreements resulting from the consultation and negotiation with the trade unions. These sometimes significantly reduce the number of compulsory redundancies: retention of certain roles, separation bonuses for workers who quit voluntarily, early retirement, redeployment or transfer to another company. Take the example of a company that originally announced that 400 people could be potentially affected. At the end of the procedure, “only” 80 workers were laid off. People, however, only remember the initial figure. 

• The consultation phase with the trade unions is not limited in time: this is an ongoing point of conflict between employers and the trade unions when the topic of a revision of the Renault Act is raised. The law provides that the consultation phase (rationale behind the plan and impact on employment) is unlimited in time, while the next phase, the negotiation (terms for departure or severance within the framework of the social plan) is limited in time. Unlimited consultation may cause the trade union to drag out the process, by slowing down the meeting rhythm and submitting multiple questions or counterproposals. Sometimes the consultation tends to be more focused on defending sectoral interests or an ideological debate rather than on the reorganization itself. Moreover, the absence of a time frame is not an incentive for the trade unions to move on to the negotiation phase, which is limited in time. As a result, the two phases soon end up running parallel in time, with the trade union delegations only accepting to sign off on the end of the consultation phase when they feel that good progress is being made or that the negotiations are successful.  

While the “Renault Act” continues to be a solid procedure, it can, however, be improved in many ways to facilitate communication, while also leaving room for social consultation. Ultimately, what matters is that the workers who are impacted by the plan are well informed and know as soon as possible whether they will be able to stay on or must leave the company, and under which (financial) conditions.