Union row threatens to derail MMI rescue

LOCAL authorities insured through the stricken insurer Municipal Mutual Insurance (MMI) are worried that the long- awaited rescue of the company by Zurich Insurance, due to be finalised in the next fortnight, could be derailed by a legal row between Zurich and trade unions at MMI.

MSF, the union representing skilled and professional people, plans legal action against Zurich's proposed derecognition of MSF when it buys most of MMI's operations. MSF claims 1,100 members among MMI's 2,300 employees.

The union is furious that Zurich has written to MMI saying 'it is not Zurich's policy to have written agreements with any recognised trade unions and such will be the case for all (MMI) staff who transfer (to Zurich)'.

The possibility of a row between Zurich and the workforce has disturbed local authorities insured through MMI. When the company suspended paying claims last October it was insuring more than 400 local authorities - nine out of 10 of all those in the UK.

The local boroughs are keen for the Zurich rescue bid to succeed, and succeed quickly, following an abortive approach from a French company last autumn. MMI sources say the Zurich deal could be signed by the end of the week.

Martin Pilgrim, spokesman for the Association of Metropolitan Authorities, said last night: 'The first priority of the local authorities is to see the deal go through. A number of our members would have concerns about employees' rights, but it is unlawful to take that into account when they choose an insurer, according to the advice we have got.'

MSF plans to fight Zurich through two main routes: the European Community's Acquired Rights Directive, and OECD guidelines on takeovers. The union also hopes to pursue Zurich using the EC Social Charter.

A spokesman for MMI said the company would await MSF's proposals before reacting. Zurich was unavailable for comment.