The termination of large numbers of employees is among the most disruptive actions DFI clients can take. Some DFIs require an evaluation of alternatives to retrenchment and a process of consultation with workers when DFI-financed projects consider mass retrenchments. Performance Standard 2, which most other DFI labor safeguards reflect, provides that:
“Prior to implementing any collective dismissals, the client will carry out an analysis of alternatives to retrenchment. If the analysis does not identify viable alternatives to retrenchment, a retrenchment plan will be developed and implemented to reduce the adverse impacts of retrenchment on workers. The retrenchment plan will be based on the principle of non-discrimination and will reflect the client’s consultation with workers, their organizations, and, where appropriate, the government, and comply with collective bargaining agreements if they exist.” --- IFC Performance Standard 2.
The mass retrenchment provisions of Performance Standard 2 reflect the international standard established in the 1982 ILO Termination of Employment Convention (No. 158):
When the employer contemplates terminations for reasons of an economic, technological, structural or similar nature, the employer shall:
(a) provide the workers' representatives concerned in good time with relevant information including the reasons for the terminations contemplated, the number and categories of workers likely to be affected and the period over which the terminations are intended to be carried out;
(b) give, in accordance with national law and practice, the workers' representatives concerned, as early as possible, an opportunity for consultation on measures to be taken to avert or to minimise the terminations and measures to mitigate the adverse effects of any terminations on the workers concerned such as finding alternative employment.
-- ILO Termination of Employment Convention, 1982 (No. 158)
During the pandemic, DFI-financed hotels terminated large numbers of workers without evaluation of alternatives, meaningful consultation with workers, and without observing the requirements of law.
Case Study: Moorhouse Properties, Nigeria
At the peak of the pandemic, Moorhouse Properties Limited (MPL) fired almost all of the workers at two Nigerian hotels where the IFC provided nearly $15 million, half in equity and half in debt. In making its plan to terminate the workforce, Moorhouse did not consult with the employees’ unions, the IUF-affiliated Hotel and Personal Services Senior Staff Association and the National Union of Hotels and Personal Services, as Performance Standard 2 requires. No collective bargaining agreement was in place to regulate the circumstances at the two hotels because the company refused to bargain a new agreement for a decade after the old agreement had expired. During that long period, MPL deducted union dues from employees’ paychecks but withheld the money from the union.
Some former employees were rehired, but on temporary, three-month contracts that denied them job security at the two hotels. The unions’ repeated offers to negotiate compensation for terminated workers and a collective bargaining agreement for current workers, among other matters, have received no response.
[Photo of Moorhouse Workers]
