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Outsourcing redundancy is becoming a business

16.5.2013 15:45

"Transferring business to another company is not a legitimate reason for the new employer to start making people redundant. "

Helsinki (15.05.2013 - Heikki Jokinen)

Recent measures taken by Nokia have prompted many people to ask whether it is using other companies to do its dirty work when it comes to firing employees. "There is a pattern where employees are outsourced with some part of the business to another company, which will then quickly fire them on the grounds of re-organising production. One has to ask whether redundancy has become a business", says Maria Löfgren, director of Akava, the Confederation of Unions for Professional and Managerial Staff.

Finnish labour legislation only sanctions workforce redundancy when there is a deterioration in the employer’s financial situation or in cases where there is a need for re-organisation of production with the result that the employer no longer has sufficient work to offer its employees.

The most recent case is the announcement by Tata Consultancy Services to cut some 290 jobs in Finland. The Indian based company had only six weeks earlier taken on 460 employees from Nokia, when Nokia outsourced its IT administration.

According to the newspaper Taloussanomat another Indian based IT company HCL Technologies is also set to begin mandatory consultation with regard to possible personnel cuts. Nokia recently outsourced 255 employees from IT administration to HCL Technologies.

The companies have a contract with Nokia to continue the same tasks as performed by the people transferred from Nokia. Many are afraid that the amount of work will not be diminished, but the companies will want to change the people who do it.

The shop steward Aune Jääskeläinen from Tata Consultancy Services believes that part of the work will be transferred to people working in Finland with foreign employment contracts. "According to my information we have 450 employees with Finnish contracts. With Indian or other contracts work several hundred people, they sit here just as our neighbours", she said to Taloussanomat.

"I do not know what kind of contract they do have, but it is not Finnish. They have completely different terms and salary than we and they do not pay taxes to Finland."

Taloussanomat went on to say that right after Nokia outsourced their employees that they were not given mobile phones at Tata Consultancy Services. They had to bring their own phones. Now this indicates that redundancy plans already existed at this stage, says Pertti Porokari, chairman of the Union of Professional Engineers UIL. "The company didn't even bother to provide tools for the employees."

In spring 2011 Nokia transferred 1.200 of its employees working with the Symbian operating system to the management consulting and technology services company Accenture. Most of them have since lost their jobs.

Antti Rinne, chairman of trade union Pro, said that moving the Nokia employees to Accenture did not result in a real job for many of them. "They were just kept on the gallows with the nooses loosely around their necks until the new employer did the dirty work and announced lay-offs."

The phenomenon of first outsourcing and then firing is used in other businesses, too. One of the earlier cases was when Otava publishing house transferred its graphics department to the Aste company in 2009. One third of the former Otava employees were let go soon after that.

Director Maria Löfgren from Akava reaffirms that transferring business to another company is not a legitimate reason for the new employer to start making people redundant. "This does not, however, offer protection to the transferred employees, as firing people on the grounds of re-organisation of production is as easy as boiling water. This outsourcing of redundancy does nothing to enhance a company’s image or commitment to corporate social responsibility."

Akava claims that the employers should bear responsibility for the jobs of those moved to another company. This should be written into the business contract. "Employers can either improve their redundancy morality themselves or else it will be made healthier by legislation. There could be, for example, better protection against redundancy for a couple of years after the business has been sold", Löfgren says.