British Unions Demand Consultation Before Insurance Mergers

MSF, a union for skilled and professional people in the manufacturing, science and finance sectors, representing approximately 80,000 insurance employees, and the Confederation of Insurance Trade Unions (CITU), have challenged the UK insurance industry over its handling of recent takeovers and mergers.

In a statement issued to the Association of British Insurers (ABI) for distribution among its members, the unions demanded proper consultation with employees before any merger is announced. Approximately, 23 percent of the UK insurance industry is unionized.

In recent years, the insurance industry has been subjected to a wave of large-scale mergers. In particular, the mergers of domestic insurance companies, such as Royal Insurance and Sun Alliance; United Friendly and Refuge Group; and most recently, General Accident and Commercial Union, have prompted the unions into action.

Although MSF and CITU do not, in principle, object to mergers and takeovers in the insurance sector, there is a concern that, despite the oft repeated claim by insurance companies ''our staff are our greatest asset'', too often large numbers of these assets are disposed of without any prior consultation. An ABI spokesperson was unavailable for comment.

MSF is now demanding, in conjunction with CITU, insurance companies initiate such consultation with employee representatives, including trade unions. Until now, companies have managed to hide behind the City's Takeover Panel, claiming prior consultation about mergers and job cuts is not permitted under Stock Exchange rules.

Bill Walsh, MSF national secretary finance and CITU chair, said, "The unions have examined these explanations closely and rejected them. The Director General of the Stock Exchange Takeover and Mergers Panel, Alistair Defriez, has confirmed to us that (a) there is nothing in the code which prevents prior consultation with trade unions - indeed it is specifically provided for, and (b) there is nothing in the code requiring the announcement of job cuts. To be frank, our view is that announcing job losses has more to do with the likely effect on share prices than with the effect on staff or their morale."

MSF and CITU believe at least one, and possibly two, EU Directives have been breached, namely the Acquired Rights Directive and, where job losses have been announced, the Collective Redundancies Directive. This directive demands that where an employer is contemplating collective redundancies, he shall begin consultation with the workers representatives in good time with a view to reaching agreement. It also states that "these consultations shall, at least, cover ways of avoiding collective redundancies or reducing the numbers of workers affected and of mitigating the consequences by recourse to accompanying social measures aimed at, inter allia, at aid for redeploying or retraining workers made redundant."

The unions intend to take action against any company that fails to meet its legal obligations to consult properly about redundancies, and to campaign to strengthen the union's case for consultation in both UK and European law.

Bill Walsh said, "The CITU position has been submitted to the ABI for circulation amongst its members in the hope that we can avoid any more cases of this kind arising. It is quite clear that it is possible to consult unions before mergers are announced, albeit in conditions of strict secrecy, and that it is not necessary to announce details of job losses when mergers are announced."

CITU is an alliance of all TUC-affiliated unions organized in the insurance sector, namely MSF, NUIW, BIFU, UNIFI, IUHS, USDAW and T&GWU.