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Coats Viyella to set up `Euro' work council

Pressure on British companies to establish continental-style industrial relations systems will increase this week when Coats Viyella, the textile group, becomes the second British company to set up a European works council.

The decision by Coats follows a similar move by United Biscuits and comes in the wake of a study by Industrial Relations Services estimating that 326 UK-based businesses may be forced to set up works councils under European law.

Despite Britain's opt-out of social legislation, management consultants are advising clients to include UK workers in the new structures. Those refusing to set up voluntary consultation and information systems will be forced to introduce procedures prescribed by Brussels. The companies affected are those with at least 1,000 employees in one of the 11 EU states and at least 150 in each of two member countries. Employees in the UK are not taken into account.

Neville Bain, Coats chief executive, said the works council would operate in the best interests of the company and employees. "It will involve both union members and non-union members. It will inform them in advance of our plans and will help drive the company ahead of our competitors.

"Management shouldn't be afraid to set up works councils. Three years down the line they could have something foisted on them whether the government is Labour or Conservative," he said. Coats has 34,000 employees throughout the EU.

After 22 September a company that qualifies must set up a works council within three years of employees requesting one. Peter Booth, textile group national secretary of the Transport & General Workers' Union, said there should be no distinction between UK workers and those in the rest of Europe. "Companies with good industrial relations will increasingly find the UK Government's position untenable and impractical."