European Commission Green Paper May Have Huge Implications for HRO World

By Staff Report

Dec. 29, 2006


The November 23 “green paper,”  “Modernising Labour Law to Meet the Challenges of the 21st Century,” discusses the need to establish some uniformity in the European Union member countries’ labor policies.

The Commission wants to find a compromise between the need for flexibility in labor law and the promise of security to its workers, the paper says.

“European labour markets face the challenge of combining greater flexibility with the need to maximize security for all,” according to the paper. “The drive for flexibility in the labour market has given rise to increasingly diverse contractual forms of employment,” which result in added costs and administrative burdens on employers, the report says.

In particular, the paper discusses the need to clarify the role and treatment of temporary workers and full-time workers.

Legislation in this area could significantly affect HRO providers and staffing firms, analysts say.

“The paper focuses a great deal on ‘non-standard labor contracts,’ which could have implications for temporary labor and outsourced labor,” says Tim Palmer, HR practice leader in the London office of EquaTerra.

While the paper doesn’t offer specific proposals, it does pose several questions for companies to consider, and multinational companies and HRO providers should take the opportunity to make their views known, analysts say.

“It would make perfect sense for HR outsourcers to get involved in these discussions because any harmonization of labor law is going to have significant impact on how they manage their workforce processes throughout Europe,” says Helen Neale, business process outsourcing analyst in the London office of consulting firm NelsonHall.

In Palmer’s opinion, the paper is somewhat limited in its focus. “There are many other issues that could be addressed,” he says. For example, multinational companies and HRO providers would benefit greatly from some standardization in how severance is treated and how companies consult with work councils, he says. Currently there is no uniformity in how these issues are handled by companies, which makes it very difficult for an HRO provider that works with several clients in Europe.

“I suspect HRO providers would want to have this paper expanded to look at other elements of the labor law,” he says.

But although HRO providers should get involved in these discussions, they shouldn’t expect things to change anytime soon, says Simeon Spencer, partner and head of the labor and employment practice in the London office of Morgan, Lewis & Bockius.

The Commission states it hopes to have an outline set of common principles by the end of 2007. But Spencer says that given the bureaucracy involved with the EU he would be surprised to see any legislation within the next two years.

“Executives excited about this proposal will probably be retired and enjoying a barbecue and a martini by the time this happens,” he says.

Jessica Marquez

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