Monday, August 2, 2010

More -- On The Basis For the Dutch Works Council Suit?


This just in -- from another kindly anonymous commenter, below. I will try to match it to the published reports of the recently-disclosed Dutch Work Council's suit. I do think these are one and the same. We'll see.

. . . .It appears Merck failed to get approval from the Organon Biosciences NV Supervisory Board for the job cuts, a legal obligation due to the size and structure of the legal entity still in place.

As major shareholder Merck can of course fire the board but they in turn can (and probably will) appeal that in court, case law does exist as a multinational had to rescind a decision to relocate labour to the UK.

Merck might just have to be prepared to present a solid business case in order to be allowed to relocate the work to the US, where lower cost will not be a likely way out.

Interesting to see how this piece of info will be spun as I believe it was already announced that they are on track with cost cuts.

Reductions will not be avoided but a serious delay is quite likely. . . .

August 2, 2010 5:30 PM

I'll let you know what turns up -- to connect this to that earlier suit.

1 comment:

Anonymous said...

In an additional note; This is definitely a case separate from the works council suit, which in theory might even be not appliccable yet because of the fact that the supervisory board has not (yet) approved; meaning it would be too early for the works council anyway.

The process of mandatory approval by the supervisory board, to be obtained for changes that could potentially endanger the continuity of a legal entity (above a certain size and value, was installed as per Dutch Law years ago, in an attempt to improve corporate governance.

Merck has informed that they will follow required law and procedures, but it seems fair to say that they were either poorly informed or that they handled this matter poorly. After all; the cuts were announced to the people in Oss as an irrevokable decision but that would only be submitted to works council in Sept, probably more timed towards the release of the less than brilliant Q2 financial data than that it was timed to the steps required by local law.

As a side note; Merck has also informed that they are looking to sell (parts of?) API production and several other departments, potentially further endangering the existance of the legal entity N.V. Organon BioSciences. The works council suit is also aimed at preventing that from happening prior to their processing of a proposal.

http://www.dutchnews.nl/news/archives/2010/08/organon_supervisory_board_refu.php