EC workers' rights ruling defies Blair

TONY BLAIR faced an embarrassing new rift with Brussels last night after the European Commission brought forward controversial plans to force companies to consult with their workers.

The measures, which have been attacked publicly by Mr Blair and by Peter Mandelson, the Secretary of State for Trade and Industry, were backed yesterday by Neil Kinnock, the European Commissioner and former Labour leader.

The directive, which remains one of Britain's few outstanding differences with the EU, is intended to cover companies with more than 50 employees. But it is an embarrass-ment for the Government at a time when ministers are anxious to reassure business leaders, already worried by the economic slowdown.

Because the issue will be decided by ministers under qualified majority voting, Britain will not be able to block the plan without support from other nations. Chances of doing that have reduced since Helmut Kohl lost the German elections, as the former Chancellor was Mr Blair's most powerful ally on the issue.

The Department of Trade and Industry yesterday reiterated its opposition to the directive which, it said, "would cut across existing practices in member states to no benefit and would place an excessive burden on small business".

However a spokesperson for Mr Kinnock pointed out that earlier plans to include all firms with 20 or more employees had been watered down.

The proposal, made by the Social Affairs Commissioner, Padraig Flynn, would require companies to inform and consult their employees in "good time" about issues affecting work organisation and employment contracts. If companies fail to comply, employees made redundant would be able to claim increased compensation - in some cases national governments would be liable if companies go bankrupt.

The commission's initiative follows a decision last month by the organisation representing European employers not to try to negotiate their own deal on consultation with the unions. That would have avoided the need for a directive.

Mr Mandelson, who is seen as pro-European, has opposed the measure in principle leaving little room for compromise.

He told The Independent the directive was "not appropriate", adding that worker consultation "is a matter for national governments".