European Employment Update: Gainful Employment

By Anastasia Hancock – With the uncertainties that characterise the current financial situation, it is no surprise that companies are very cautious in the inevitable face of increasing lay-offs, changes of benefit programs and discrimination issues that predictably come hand with the cost-cutting innate to a recession.

Fredrik Dahl, partner at Stockholm-based Vinge confirms that his firm has seen an increase in the level of employment work, especially in respect of new EU-directives. ‘Upcoming issues are anti-corruption matters following the UK Anti-bribery Act and proposed amendments in Swedish law. Employers are realising that they need to review their internal policies regarding business ethics and actions are taken against employees. Even more interesting is the current political discussion around the need to make amendments to the employee protective legislation; a legislation that has been part of the so called Swedish Model and which has been more or less taboo to amend or even discuss’.

This rise in activity can be seen across the majority of major EU markets. With the secondary dip and recent turbulence in the Eurozone, this can also be put down to companies preparing themselves for the worst. Kara Preedy at German labour and employment law boutique Pusch Wahlig Legal says the firm has seen a hike ‘due to the reluctance of companies to solve HR issues through generous packages and their willingness to invest instead in protecting themselves adequately in advance and engaging in litigation, if necessary, to ensure that such protection is upheld’.

Often dubbed an practice area, it is no surprise that litigation and protection are top of the agenda. So while factors that influence the employment market on an everyday basis have not necessarily changed, the after-effects of the global crisis are certainly being felt, specifically in response to liquidity problems. ‘The recession had a great influence. Clients were seeking cost cutting advice as well as deregulation of formerly introduced solutions favourable for employees. There were plenty of matters related to collective redundancies. There were huge amount of performed negotiations with trade unions in order to handle and soften the recession effects’ explains Arkadiusz Sobczyk, name partner at A. Sobczyk & Wspolpracownicy.

Chris Van Olmen of Belgian labour and employment boutique Van Olmen & Wynant agrees, stating that clients are more interested in prevention than cure. ‘The level of advice seems to increase due to the need of the companies to anticipate and try to avoid issues in these times of economic uncertainty’.

As history has proven, dispute resolution work quickly follows a downturn, although the uptick in litigation that flew on the tailcoats of this recession was not as signilicant as first predicted. Gìeneke van Wulfften Palthe and Christiaan Oberman, founding Partners of Palthe Oberman, points out that it largely depends on the issues involved. ‘In certain areas, there is a definite increase in litigation, such as termination cases, discrimination cases, compliance issues. In other areas, such as disputes with works councils, the level has remained relatively stable. We do see an increase in matters that are solved by mediation’.

For employment issues, there is a growing trend toward settling disputes before the issue reaches court or arbitration- thanks, in no small part, to the costs inherent in the process. ‘Our litigation practice has grown’ says Dahl, ‘but certainly most companies are looking to settle any employment cases outside of court, which is most often beneficial to both parties.

The trend also points in the other direction, and in a few years’ time most major companies will have settled cases both outside and inside court’.

However, Iván Suárez Telletxea of Spanish labour and employment law boutique Bufete Suárez de Vivero states that he does not foresee the future of employment law becoming more Iitigìous, in fact, he predicts a drop in levels of litigation thanks to governmental intervention in Spain. ‘The tendency in the future is to decrease litigatìon and increase internal negotiations with the Works Council and Employees. The measures that need to be implemented by the government before 2012 should seriously consider, in our opinion, the possibility of avoiding litigation in certain dismissals’.

This article was originally featured at American Lawyer – Focus Europe, Winter 2012.