THIS ISSUE  Restructuring-related legal regulations in focus: Staff information and consultation on collective dismissals Case in focus: Brexit vote creates jobs uncertainty in the UK Case in focus: UK department store chain BHS closesEF_ERM_Quarterly_0716.pdf: 28 downloads, before Oct. 1, 2020

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European Restructuring Monitor

THIS ISSUE   Restructuring-related legal regulations in focus: Staff information and consultation on collective dismissals Case in focus: Brexit vote creates jobs uncertainty in the UK Case in focus: UK department store chain BHS close

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7-2016 
ERM Quarterly, Quarter 2, July 2016 
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European Monitoring Centre on Change 
European Restructuring Monitor 
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ERM Quarterly, Quarter 2, July 2016 
Abstract 
THIS ISSUE 
• Restructuring-related legal regulations in focus: Staff information and consultation on 
collective dismissals 
• Case in focus: Brexit vote creates jobs uncertainty in the UK 
• Case in focus: UK department store chain BHS closes 
Keywords 
European Union, restructuring, job creation, job loss 
Comments 
Suggested Citation 
European Foundation for the Improvement of Living and Working Conditions, European Monitoring Centre 
on Change, & European Restructuring Monitor (2016, July). ERM Quarterly: Quarter 2. 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/intl/566 
ERM quarterly July 2016
IN THIS ISSUE
•	 Restructuring-related	legal	regulations	in	focus:	Staff	information	and		
consultation	on	collective	dismissals
•	 Case	in	focus:	Brexit	vote	creates	jobs	uncertainty	in	the	UK
•	 Case	in	focus:	UK	department	store	chain	BHS	closes
Macroeconomic trends and prospects
The principal political event of the quarter has been the decision of the UK electorate in favour of ‘Brexit’ from the 
European Union in a referendum held on 23 June. The outcome was a surprise and went against the counsel of most 
economists, policymakers and international organisations as well as the majority of elected UK politicians. Business leaders 
had made it clear that Brexit could necessitate significant restructuring of UK-based operations (see the article on p. 3), 
as the prospect of a UK departure from the single market could jeopardise market operations. To date, very few concrete 
announcements of job loss explicitly citing Brexit have been made. Nonetheless, a long period of uncertainty is in store 
as exit negotiations are unlikely to be concluded before 2019 – and this will have implications for investment, jobs and 
growth in the UK, principally, but most probably also in the EU as a whole.  
Potential Brexit is one factor contributing to more downbeat growth forecasts in recent months. In the latest OECD	
economic	outlook (June 2016), the OECD has lowered global growth estimates by 0.3 percentage points to 3.3% in 
2017. Growth in developed economies including the EU is forecast to be lower still. It comments that ‘the prolonged 
period of low growth [post-2008] has precipitated a self-fulfilling low-growth trap’ and urges a policy shift away from a 
reliance on monetary policy to more growth-oriented fiscal policy. 
Job creation and job loss at a glance
The ERM recorded a total of 327 cases of restructuring between 1 April and 30 June 2016. Of these, 146 were cases of 
announced restructuring involving job loss and 167 were cases involving announced job creation; 4 cases involved both 
job loss and job creation. These cases comprised a total of 79,525 announced job losses and 67,549 announced job gains. 
In addition, the ERM recorded 10 large transnational cases. 
Internal restructuring accounted for 45% of the announced job losses, a decrease from 72% in the last quarter. 
Bankruptcy and closure accounted for 45% of job losses, while those attributable to offshoring and relocation decreased 
to 2% from 4% in the first quarter. In terms of geographical distribution, the UK recorded the greatest number of job 
losses (17,477 jobs), followed by Greece (14,400) and Germany (14,371). The UK also recorded the greatest job gains 
(12,000), followed by Romania (10,022) and Poland (9,589).
* Comparing the quarter to the four-quarter moving average; ++ = >100%; + = >50%; 
excludes country or sector if quarter average and 2016 Q2 <1,000 job losses or gains. 
Source: ERM, April–June 2016
2016 Q2 Announced job loss Announced job gain
EU28 + Norway 79,525 67,549
EU28 + Norway, 
change on 
previous quarter
- 10% - 2%
Big increases* by 
country
Greece ++, Finland ++,  
Italy ++
Netherlands ++, Romania ++,
Spain ++, UK +, Hungary +
Big increases* by 
sector
Public administration ++, 
Retail ++
Accommodation and food 
service activities ++, Human 
health and social work  
activities ++, Construction ++, 
Public administration ++
European Monitoring Centre on ChangeEMCC | 
Reasons	for	announced	job	losses
ERM quarterly July 2016Page 2
Sectoral distribution of job losses and gains
The figure below plots the top NACE Rev. 2 one-digit sectors in terms of announced job loss and job creation, as 
reported to the ERM in the second quarter of 2016. The retail and manufacturing sectors reported the most job losses 
(-28,708 and -19,602 respectively). However, manufacturing also recorded the biggest increase in absolute numbers 
(22,107), followed by accommodation and food service activities (10,282) and information and communication (9,465). 
The retail sector also features in the top five sectors for job creation, with 8,756 new jobs. 
Announced	job	gains	
Manufacturing  22,107
Accommodation and food services 10,282
Information and communication 9,465
Retail  8,756
Public administration 5,275
Announced	job	losses
Transportation and storage -2,805
Mining and quarrying -4,700
Financial and insurance activities -15,191
Manufacturing  -19,602
Retail -28,708
Source: ERM, April–June 2016
European Monitoring Centre on ChangeEMCC | 
Top 5 cases of job loss and job creation
Date Company   Job losses Location   Sector Type of restructuring
28/06/2016       Marinopoulos   13,000 Greece   Retail  Bankruptcy 
02/06/2016        BHS      11,000 UK   Retail Bankruptcy  
16/05/2016        Banco Popolare di Milano   2,600 Italy   Financial services Merger or acquisition 
05/05/2016 Monte dei Paschi di Siena   2,500 Italy   Financial services Internal restructuring 
01/06/2016 Ergo   1,800 Germany   Financial services Internal restructuring
The biggest individual case of job loss during the quarter arose from the bankruptcy of the Greek supermarket chain 
Marinopoulos, where 13,000 jobs were lost. The second biggest case was also in the retail sector, with the bankruptcy 
of the British department store chain BHS (see the Case	in	focus below). The third and fourth largest cases occurred 
in the troubled Italian banking sector. Banco	Popolare	di	Milano announced 2,600 redundancies due to a merger and 
acquisition process. Monte	dei	Paschi	di	Siena cut 2,500 jobs in an internal restructuring; the management stated 
that the reduction of personnel was requested by the European institutions in relation to its 2013 bailout by the Italian 
state. Finally, Ergo, a German insurance company, which is undergoing internal restructuring to adapt to market changes, 
announced the loss of 1,800 jobs. The company is currently negotiating with the trade unions.
Date  Company   Job gains Location Sector 
07/06/2016 Domino’s Pizza   9,400  UK          Accommodation and food services 
08/04/2016 Carrefour   4,400  Spain  Retail 
02/05/2016 Magna Steyr   3,000  Austria              Manufacturing 
14/04/2016 Ministry of National Defence 2,725  Romania  Public administration 
22/04/2016 Buurtzorg   2,554  Netherlands Human health and social work
The biggest case of job gain reported during the quarter was that of Domino’s	Pizza, which has launched a campaign to 
recruit 9,400 staff. The chain is embarking on business expansion, with plans to open new outlets in the UK and Ireland. In the 
retail sector, Carrefour will hire 4,400 workers in its supermarkets in Spain on indefinite contracts; the company has set a 
target to have 85% of its Spanish staff on indefinite contracts. Third place belongs to the Austrian automotive manufacturer 
Magna	Steyr, which is expanding its Graz site and plans to create 3,000 jobs. The Romanian	Ministry	of	National	
Defence announced that it is recruiting 2,725 new staff via public competition. And the fifth largest case of announced job gain 
was the creation of 2,554 jobs by the Dutch home-help agency Buurtzorg, as a result of business expansion. The agency hired 
workers dismissed by the large home-help agency TSN, which was declared bankrupt in March 2016.
ERM quarterly July 2016
Page 3
rESTrUcTUrINg-rElaTEd lEgal rEgUlaTIoNS  
IN focUS 
Staff	information	and	consultation	on	
collective	dismissals
EU	Directive	98/59/EC	on	collective	redundancies 
requires employers to inform and consult workers’ 
representatives in the case of collective dismissals and 
details the information to be provided and the procedures 
to be followed. The directive foresees various thresholds of 
announced job loss above which companies are obliged to 
notify relevant public authorities, but only cases involving 
fewer than 10 redundancies are exempt in all circumstances.
There are four main phases in the process: notification 
of the workforce; information and consultation with the 
worker representatives or the workforce; approval of the 
agreement by a third party (required only in a small number 
of Member States); and implementation of the dismissals.
When notifying the trade unions, works councils or 
workers, the directive specifies that the employer should 
explain in writing the following: the reasons for the 
redundancies; the period during which the redundancies will 
be made; the number and categories of workers normally 
employed; the number and categories of workers to be 
made redundant; the criteria used to select those workers 
to be made redundant; and the method used to calculate 
compensation (where applicable). In some countries, only 
some requirements have been made compulsory. For 
example, in Croatia there is no obligation to outline 
possible mitigating measures. In Slovakia, the employer is 
not obliged to explain the reason behind the decision to 
dismiss workers.
As regards consultation, this is supposed to start 
immediately after notification, although in Portugal there 
is provision for an interval of five days between notice 
and start of consultation. In France, Germany and 
Norway, trade unions can avail of external expert advice 
during consultation, the cost of which will be borne by the 
employer. In several countries, such as Italy and Poland, 
there is no obligation to reach an agreement between 
parties, and the employer is not bound by the outcome 
of the consultation. Collective bargaining agreements may 
amend the minimum legal requirement for consultation 
procedures, as is the case in France and Belgium, for 
example.
When the consultation is completed, in Greece and 
in the	Netherlands the labour inspectorate and the 
public employment service respectively must approve the 
dismissals. In Austria, if the employer provides a sound 
justification (for example, establishment of a social plan or 
economic necessity), the public employment service can 
authorise the dismissals before the 30-day period set out in 
the directive. 
The ERM database on restructuring-related legislation 
provides an overview of selected national legislative rules 
related to restructuring. You can browse the database, leave 
comments on specific legislation or give general feedback at:	
www.eurofound.europa.eu/observatories/emcc/erm/
legislation. 
caSE IN focUS 
Brexit	vote	creates	jobs	uncertainty	in	the	
UK
The referendum vote in favour of leaving the EU is expected 
to have significant implications for employment in the UK. 
To date, there have been very few concrete announcements 
of Brexit-induced restructuring, but the signals from 
companies that these may happen in the not-too-distant 
future have been plentiful. 
There is a general fear that business uncertainty as a result 
of Brexit could lead to another recession, with negative 
employment consequences. Sterling has fallen sharply against 
the euro and the US dollar since the vote, and the economic 
outlook is pessimistic.   
Although it is early days, the main repercussions are likely 
to be felt in finance, manufacturing and food production. 
A number of announcements have come from the finance 
sector, particularly the City of London, which employs 
more than 360,000 people in financial services. There are 
fears that investment banks might move staff out of the 
UK: HSBC and Goldman Sachs had both stated before the 
referendum that they were likely to do so if there were a 
leave vote. HSBC had said that it could move up to 5,000 
jobs from London to Paris. However, both banks have now 
declined to confirm these plans, and HSBC has confirmed 
that it will retain its headquarters in London. Barclays has 
indicated that it will not transfer jobs away from the UK, 
although it has stated that if leaving the EU means restricted 
access to the European market, it may need to hire new 
employees and boost its presence in another location. 
However, the US bank JP Morgan has warned that between 
1,000 and 4,000 UK jobs at the bank could move overseas. 
Fellow US bank Morgan Stanley is also looking at moving 
jobs to other locations in Europe.
In car manufacturing, Nissan and Rolls Royce have stated 
that the UK’s withdrawal from the EU is likely to affect 
future investment in the country, but that the precise 
outcome would depend on the nature of the future 
relationship between the UK, the EU and the rest of 
the world. The German company Siemens stressed its 
commitment to the UK, although it noted that Brexit might 
affect future UK investment. The US carmaker Ford, which 
European Monitoring Centre on ChangeEMCC | 
ERM quarterly July 2016
Page 4
About the ERM 
The European Restructuring Monitor (ERM) is a unique EU-wide dataset on larger-scale restructuring events. It monitors 
the announced employment effects of restructuring in the EU28 and Norway.  The ERM is updated on a daily basis 
and data can be used for statistical analysis. It relies on reports in selected media titles. The data for this report were 
extracted on 8 July 2016. For more, visit the European	Restructuring	Monitor	web	page.
   This issue is based on contributions from Eleonora Peruffo, Wendy Jacobs, John Hurley and Andrea Broughton (EU-level correspondent).       EF/16/40
European Monitoring Centre on ChangeEMCC | 
employs 14,000 people in Britain, said it ‘will take whatever 
action is needed’ to remain competitive. Airbus, the maker 
of the A380 superjumbo, has said that it will review its UK 
investment strategy ‘like everyone else’. The company makes 
wings for its aircraft in Wales and employs 15,000 people in 
the UK.
In the steel sector, Tata Steel has decided to halt the sale 
of its loss-making UK plants after many potential bidders 
withdrew following the referendum vote. The plants employ 
some 11,000 people, and these jobs have been considered 
at severe risk as the Indian conglomerate tries to sell its UK 
interests.   
The future of sectors relying on low-paid, often migrant, 
labour is also likely to be affected by UK departure from 
the EU. One of the key demands of those advocating a 
Brexit vote was restrictions on the free movement of 
labour guaranteed in the EU treaties.  But agricultural 
employers are warning that if restrictions are placed 
on migrant fruit-pickers, they may move production to 
countries such as the Netherlands and Portugal. The UK 
Food and Drink Federation also warned that the food 
and drink industry faced huge uncertainty following the 
vote. The organisation says its members employ 130,000 
people from eastern Europe – more than a quarter of its 
450,000-strong workforce.
caSE IN focUS 
UK	department	store	chain	BHS	closes
British	Home	Stores, otherwise known as BHS, 
announced in June 2016 that it was winding down all 163 
of its UK-based stores following a failure to come to an 
agreement with creditors over the massive debts that 
the company has incurred over the past seven years. The 
company entered administration in late April. The chain 
of mid-market department stores has been a prominent 
feature of the UK high street for almost 88 years but 
has been loss-making for the last seven. The company’s 
management is facing criticism as questions are raised about 
how and why the retail giant, which in 2000 was listed in the 
FTSE 100 index of top British companies, has collapsed and 
left almost 11,000 employees jobless. 
BHS, which began as an entrepreneurial venture by 
American investors in 1928, was bought and privatised 
by British billionaire Philip Green in 2000 and was later 
merged with his larger retail holding company Arcadia. In 
2015, Green sold BHS to a group of investors known as 
Retail Acquisitions, headed by ex-racing-car driver Dominic 
Chappell for the nominal sum of GBP 1. Despite its name, 
the group had almost no experience in the retail sector. It 
is estimated that the Green family earned around GBP 580 
million (around €700 million) in dividends from BHS during 
its 15 years of ownership, while company funds fell from 
a surplus of GBP 5 million (€6 million) to a deficit of GBP 
225.6 million (€270 million) over the same period. 
On 2 June 2016, less than one year after its purchase, 
Retail Acquisitions announced that BHS was to enter 
receivership, and many of its least profitable stores were 
closed that same day. In many cases, staff became aware of 
their imminent redundancies via the media. The company 
has debts of GBP 1.3 billion (€1.6 billion), GBP 571 million 
(€685 million) of which relates to pension deficits. The 
closure is the subject of separate inquiries by the UK 
Parliament’s Business, Work and Pensions Committee, the 
Pensions Regulator and the Insolvency Service. 
The collapse of BHS is the largest in the UK retail sector 
since the demise of its competitor Woolworths in 2008, 
but it is not an isolated event. Another large British 
retailer, Austin	Reed, closed its doors just a few days 
prior to the BHS collapse. Phillip Green has offered GBP 
80 million to reduce the BHS pension deficit, but it has 
been reported that the Pensions Regulator may ask Green 
for up to GBP 300 million to support the government’s 
Pension Protection Fund. Green has also offered to hire 
up to 1,000 BHS employees in stores associated with 
Arcadia such as Dorothy Perkins, Miss Selfridge and Wallis. 
The shop-worker’s trade union USDAW has called on 
the government to re-examine legislation surrounding 
companies entering administration to secure the best 
interests of the company and its workforce and not just the 
financial interests of the company’s creditors. 


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