Fujitsu-Siemens employees finally win in court
Case could prove major EU precedent
By Jaakko Lyytinen
Everyone at the Paasitorni building in Helsinki is whispering about the news. It was the summer party of the Finnish employees at the Kilo factory of Fujitsu ICL in 1999.
The people just heard that their Japanese bosses at Fujitsu had decided to merge their computer production with that of the German Siemens. With the merger the employees in Kilo were to become part of a gigantic Japanese-German concern with ten thousand employees - the fifth-largest computer manufacturer in the world.
Salli Hedberg, head shop steward at the Kilo factory, wanders among the crowd, wondering where the German managers of Siemens are. Hedberg has been waiting for the new bosses to come and greet their Finnish employees.
“This is a bad sign”, Hedberg says to a colleague.
“Don’t be silly. There’s nothing to worry about at our factory. We’re so skillful”, the colleague answers.
The matter continues to bother Hedberg. Soon after the party, the factory’s head of personnel asks to meet with her. The director shows German press clippings concerning the merger.
The future concern is to have three factories in Germany and one in Kilo. The managers of the concern have declared that the company wants to be one of the world’s three largest in the field. To reach this end, it wants to increase efficiency and cut costs.
In one of the clippings a representative of Germany’s IG Metall union insists that the merger must not affect the employees at Siemens plants.
“What will happen to us?” Hedberg ponders.
When Salli Hedberg returned from her summer holiday in August 1999 everything still looked good. With the merger, the factory at Kilo is supposed to start manufacturing home computers, in addition to office computers.
However, talk about greater efficiency in output haunts Hedberg, and she sends an e-mail to the British personnel manager of Fujitsu. The curt response that she gets strengthens Hedberg’s suspicions.
Hedberg asks for help from the Metalworkers’ Union, whose head of research Eero Hovi is able to get an answer through his contacts in Germany: the mother company has decided to close down Kilo and move operations to Germany.
The information is from a reliable source but it is impossible to confirm. The managers of the Kilo factory do not seem to know anything about it. Salli Hedberg has to bear the grim secret on her own. If she were to report the unconfirmed information at the factory, the result would be complete chaos.
Now at the age of 69, Salli Hedberg sits at home in Karakallio in Espoo, and recalls the events of 11 years back. The memories weigh heavily on her, but now and then her story is interrupted by loud laughter. The Kilo case deprived her of her health, but not her sense of humour.
“We weren’t supposed to have anything to be afraid of”, Hedberg says. She had come to the factory in 1985, when it was called Nokia Data. In the depths of the recession, in 1991, Nokia sold the factory to ICL Data, a subsidiary of the Fujitsu concern.
New flags went up on the roof of the building in 1996 when Fujitsu took control of the factory. In the same year, Hedberg was chosen as the head shop steward, which is a full-time job in such a large factory.
The goods produced in Kilo were of high quality, and methods had been developed at the factory that Fujitsu had copied for its other installations. The factory had achieved its goals, but would it be enough?
In Augsburg, Germany, two million corporate computers were manufactured in a year, whereas Kilo’s output was half a million. Besides, Finland was far away from the main market area of the company.
When the merger came closer in 1999, rumours were rife in Kilo.
In September 1999 the factory’s occupational safety officer Irja Huhta travelled to Norway for a course. During the trip she heard that Kilo was in jeopardy. Huhta worked on the factory’s assembly line as a machinist.
An employee on the production side had started to wonder why head office was no longer interested in reports from Kilo, which had previously been examined very closely.
But the only one to know the ugly truth was Salli Hedberg.
The merger took effect on October 1st, 1999. A large sign went up at the gate of the factory with the new name: Fujitsu Siemens Computers. The Finnish bosses started flying back and forth to Germany. In November one of them came to see Salli Hedberg.
“Damn it, Salli, I would have plenty to tell you, but I went and signed that paper”, he says, referring to a confidentiality agreement.
The director gives a hint, although cannot say it straight out. Now it’s the real thing, and Hedberg is asking for help form the Metalworkers’ Union. A letter is written in the name of the union’s chairman Per-Erik Lundh to the management of Fujitsu Siemens. The letter is signed by the leaders of three other unions which have members working in Kilo. The letter demands that the head shop steward of the factory be kept up to date about plans of the mother company.
That same evening Hedberg’s telephone rings. At the other end there is someone who is quite familiar with the situation, and who has not signed a confidentiality agreement. “The factory will be closed, and co-determination talks will begin on January 5th, 2000", the deep throat says.
Kilo’s fate starts looking worse than ever after the end of November, when Fujitsu Siemens sells its factory in Paderborn, Germany.
Hedberg cannot tell anyone at the factory about her fears. The responsibility weighs so heavily on her that she finds it hard to sleep. Hedberg’s daughter tries to calm her mother by burning aromatic candles at home.
On Tuesday, December 14th, 1999 the sky falls.
“Fujitsu Siemens plans to close the Kilo computer factory in Espoo”, is the main headline in the business & finance section of Helsingin Sanomat.
Salli Hedberg had learned about it the previous evening, but Irja Huhta and the others had to read about it in the newspaper. A briefing is held at the factory, where the news is confirmed. The employees are told that production in Kilo will be moved to Augsburg, and that a marketing section of just 40 people will be left in Finland. This would mean the termination of up to 450 employees.
Representatives of Fujitsu Siemens give assurances that there will be attempts to arrange work elsewhere for as many as possible, and that the continuity of work in Kilo, even scaled down, is also possible.
Salli Hedberg demands that the co-determination talks must include the heavyweights from the mother company, production director Robert Hoog and marketing director Winfred Hoffman, who were the ones who decided on the fate of Kilo. However, Hedberg is told that Finnish co-determination legislation does not apply in this case, because the company’s main headquarters is in Germany.
On the Monday of Christmas week, the talks begin. Irja Huhta, Salli Hedberg, and the shop stewards of the various sections are there, but on the other side there is only local management, and no real decision-makers from the mother company.
At the end of the year the employees march out in protest at the absence of the German bosses.
In January 2000 Salli Hedberg and a couple of representatives of the unions travel to Germany for a quick visit. At Munich Airport they meet with Wolfgang Müller of IG Metall, who says that he heard about plans to close down the Kilo factory at a meeting of the Siemens corporate council already in June.
The Finns also meet a few managers of the mother company, who said that there is no possibility to keep the factory open. One of them says that it will soon not be worthwhile to manufacture computers in Europe, as production is moving ti the Far East.
The negotiations end in late January. Salli Hedberg manages to get approval for a demand that all of the fixed-term contract employees will be given open-ended contracts, which entitle them to be paid during their notice period. It is small comfort.
On the next day the board of the Finnish subsidiary announces that it will close down the Kilo factory, and the company’s research and development, and terminate 450 employees. Most of those who are let go are women, many of whom have worked at the factory for more than 20 years. There are some among them who have been there for more than 30 years.
Irja Huhta is over 50 years old. She had already thought that she would be at Kilo until retirement. She ponders whether or not she would be acceptable anywhere. Huhta is full of righteous wrath. “Damn Germans, coming here and doing this to us.”
“The co-determination talks were pure theatre. It is clear that the matter was decided in advance, and that nobody even wanted to ponder genuine options”, Salli Hedberg says at home, shaking her head. She is still angered when recalling the negotiation situation.
This was globalisation at its starkest. Nevertheless, there were no attempts by the state to intervene. Hedberg tried to get an appointment with Minister of Trade and industry Erkki Tuomioja before the notice of the co-determination talks, but the Social Democratic minister was too busy. The meeting could not be arranged before it was too late.
The 11 labour unions representing the employees filed a complaint in court in early 2001. They demanded damages for their more than 200 members equivalent to more than 8.5 million euros for breaking the law on co-determination.
The unions said that the mother company had decided to close the Kilo factory and research and development already before the legally mandated negotiations had been held with the employees. According to the unions, the executive of the mother company had made a final decision by December 14th 1999 to close down the Kilo factory. In doing so, the subsidiary had violated Finnish co-determination legislation.
This question expanded to become one of the longest disputes of Finnish labour law, which was ultimately handled in the EU Court of Justice.
Salli Hedberg feels nervous when she steps before some of the top lawyers of the country. It is September 2003, and a trial is beginning at Espoo district Court, which has serious implications.
The case is being followed closely, because one of the issues that is being determined, is whether or not it is cheaper to close down subsidiaries in Finland than it is in other parts of Europe.
Standing in a united front are unions from all central employee organisations. There are also a few unions which have had just one member working at the Kilo factory. Also about 30 non-union employees at the factory are in court demanding restitution.
Sitting next to Hedberg are union counsel, lawyers Heikki Laitinen and Jari Hellsten, who has drawn up the complaint - a bundle of paper 231 pages long.
Salli Hedberg sits through the whole three-week process. Hedberg takes the witness stand herself. Fujitsu’s lawyer is so aggressive that Hedberg loses her temper and the judge orders the lawyer to calm down. On that day Irja Huhta has also come to follow the session. After losing her job at Fujitsu Siemens, she has again received work at the Instrumentarium factory.
The unions also call Wolfgang Müller of IG Metall to the witness stand. He says that it was made clear to him in the summer of 1999 that the operations in Kilo will be closed down in the concern. A Siemens director denies the testimony, saying that it was just talk, but that no decisions were actually made.
In December 2003 the court rejects the complaint. It conceded that subsidiaries should start co-determination talks before the mother company makes decisions. However, the court finds that the mother company had not made a decision to shut down the factory before the negotiations took place, and that the talks were real and properly organised, and that options for shutting down the Kilo factory were discussed.
The court had swallowed the theory according to which the subsidiary itself would have been allowed to decide on the closure.
The unions decide to continue the fight and to appeal the decision.
In April 2006 the Court of Appeal gives its decision: the ruling of the district court is kept in force. According to the appeals court, a decision made under the law on co-determination could only have been made by the employer - that is, the subsidiary.
The court has interpreted the language of the law literally, even though the labour unions had tried to argue that the interpretation of the term “employer” should be equivalent to the conditions of decision-making in the concern.
The appeals court adds humiliation by stating that the complaint was obviously without merit in light of the evidence.
At this point the non-union employees throw in the towel, as the court costs threaten to spiral out of control.
“It was a complete knock-out”, says Jari Hellsten of the decision by the Court of Appeals. His office window opens on top of Hakaniemi Square in Helsinki, which is grey from rain. Hellsten, 57, is currently a labour union lawyer with EU labour law as his speciality.
The decision of the appeals court did not crush Hellsten. Instead, it raised his adrenaline level, and on the strength of that, he began a five-week writing spree. According to the ruling, the other side had made reference to legal literature that had been considered by the court, so Hellsten dissected it and made interpretations of the law on the basis of decisions of the EU court.
Hellsten drew up an application to the Supreme Court for an appeal, saying that the decision of the appeals court could not be implemented without a decision from the EU court. If the case were not to go that far for some reason, Hellsten wanted a decision on whether or not the EU directive on cutting personnel to be interpreted in such a way that the mother company is not allowed to make decisions leading to personnel cuts before co-determination talks have been completed in the subsidiary.
Hellsten thought that if the Supreme Court felt that the mother company can make any decisions paying no heed to subsidiaries, then the Finnish law on co-determination would be worthless.
The only place that could offer a solution to this would be the EU court.
Salli Hedberg’s telephone rang on Christmas Eve 2006.
“The Supreme Court has granted us the right to appeal”, Jari Hellsten says.
Hedberg had stopped thinking about the whole matter after the decision of the Court of Appeals. Now hope starts rising again.
The Supreme Court began hearing oral arguments in the autumn of 2007. Called into testify were Adrian von Hammerstein, CFO of the mother company, who later became its director-general. He had taken part in the telephone conference of the mother company on December 7th, 1999. It was at that meeting that a decision was made to propose to the Board of Directors that the Kilo Factory and research and development in Kilo should be dropped.
The board of directors of the mother company had convened in Tokyo on December 14th, on the same day that the mother company had announced that it would start co-determination talks. According to the minutes of the meeting, no precise decision had been made about shutting down Kilo.
The court case is further drawn out when the Supreme Court asks for a decision form the EU court. At a session in Luxembourg in January 2009 a statement is made by Jari Hellsten, who had defended his doctoral dissertation on EU labour law in December 2007. Hellsten feels that the issue at hand is whether or not the EU’s personnel cutback directive applies to business decisions by the mother company. If they are not within the realm of the directive, then concerns would have what amounts to free hands to operate as they like with no regard to the rights of personnel.
The EU Court of Justice gives its decision in September 2009. It finds in favour of the unions: co-determination talks need to be completed before the mother company can made decisions that lead to mass redundancies.
After getting the decision, Hellsten again calls Salli Hedberg, who is picking mushrooms at her cottage in Inkoo. Hellsten does not want to raise too many hopes, but promises to mail the papers to Hedberg.
Hedberg immediately calls Irja Huhta. She had lost touch with most of her former colleagues some time ago, but Hedberg has maintained contact with Huhta. They hesitate to celebrate or to tell about it to others, lest unfounded hope spread.
On Tuesday, March 9th 2010 the Supreme Court gives its final decision.
The decisions of the Court of Appeals and the District Court are overturned.
Salli Hedberg went shopping in the morning to the Sello shopping mall. When he comes home at ten, she turns on the television. The decision of the Supreme court is already on the news.
Hedberg is incredulous. She calls Jari Hellsten, who is in a meeting. Hellsten had picked up the decision at the record office of the Supreme Court.
“I have to take this”, Hellsten says, seeing the name of the caller on his display.
“Is it true?” Hedberg asks.
“It is.”
The Supreme Court ordered the Finnish subsidiary of Fujitsu Siemens Computers to pay the union members who had gone to court six months’ back pay. With interest, the sum grew to a level equivalent to nearly a full year’s pay. The company had to pay out more than EUR 4.5 million.
However, the decision has even wider implications. As a result, the Labour Court has already given one equivalent decision, and currently there are cases pending involving the closure of the Kemijärvi pulp mill and the Summa paper mill of Stora Enso. In the future, the mother companies of multinational concerns might think twice before making decisions in EU territory for which their subsidiaries will answer for.
Salli Hedberg and Irja Huhta both got about EUR 20,000, about a quarter of which went into taxes, however.
The victory came, but it came with a price. In the spring of 2000, soon after the co-determination talks, Salli Hedberg started showing heart symptoms. In the following autumn, she was found to have coronary heart disease. It is hard to say if the Kilo case had much to do with her illness, but it could well have been a triggering factor. Hedberg went on disability retirement at the age of 58.
“Nobody can imagine what it was like. The first year went in a fog”, Hedberg says.
The compensation remains untouched on her bank account.
“It’s good to have coffin money, so the municipality won’t have to bury me”, she says with a laugh.
At the age of 61, Irja Huhta is still working at the same factory where she got a job after Kilo was shut down. Next year Huhta also retires. Quite a few people from Kilo died before the final decision came.
Salli Hedberg’s heart disease has stayed in check with the help of medications. This summer she has taken care of her garden at her cabin in Inkoo. It is a good place to ponder the decision.
“Evil got its just deserts”, she says.
Helsingin Sanomat / First published in print 29.8.2010
Previously in HS International Edition:
Fujitsu-Siemens to close PC plant in Espoo (14.12.1999)
See also:
The cheap goodbyes (3.9.2002)
JAAKKO LYYTINEN / Helsingin Sanomat
jaakko.lyytinen@hs.fi
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| 31.8.2010 - THIS WEEK |
Fujitsu-Siemens employees finally win in court
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