CEO of Mandriva says employee lawsuits put the company out of business

http://www.businessinsider.com/ceo-employee-lawsuits-killed-mandriva-2015-5

by mahouse • 11 years ago

60 55 11 years ago

imrehg• 11 years ago

What a strange thing to force the payout due to the lawsuit to commence right away, and not after all the legal avenues were exhausted (appeals and such). E.g. they were basically denied of appeal because of being forced into bankruptcy...

I cannot imagine the feeling of the employees either: those who were fired are the ones who walked away with money + take away everyone else's job.

I'm really conflicted about labour laws. On one hand, having gone through some (IMHO) very unfair treatment at a previous job I'd like those laws to have some effect. On the other hand, I don't think many current forms have unintended, serious consequences, which favour the wrong people/wrong outcomes... No wonder that I hear from entrepreneurs these days, that don't hire people until really really positively absolutely have to.

MCRed• 11 years ago

I've dealt with unfair employers as well... but labor laws don't really help you. The cost of taking someone to court far exceeds the likely result if you win the case... so the risk reward, even when you've really been wronged, is bad.

This is why transparency (check glass door reviews, and post them!) is important... so the market can work.

jarofgreen3• 11 years ago

Depends on the offense and country. UK has Small Claims Court, specially designed for easy small claims. I know some ppl who got a succesful judgement out of that when their employers didn't give them their last pay packet fairly. (Tho it has to be said, Tory goverment is making access to justice harder, mostly by changing the fee structure of who pays.)

Tho I do think a more transparent work culture would be very interesting (especially in our industry where workers have a fair amount of choice), laws do have their place. Many people in other industries find themselves in positions where they know a employer is shit but they are desperate for a job so apply anyway.

pgeorgi• 11 years ago

The cost of taking someone to court far exceeds the likely result if you win the case

This depends a lot on the legal system.

For example, German's labor laws and related procedures differ from "regular" German law in many little ways to prevent the employer from making lawsuits against them impossible (since they're typically the much more powerful side of the dispute).

Examples:

- We have relatively employee-friendly laws to begin with.

- There's no requirement for attorney representation in the lowest labor court.

- The lower labor courts are quite lenient when it comes to formal requirements for paperwork (so you _really_ don't need a lawyer to file your lawsuit)

- There are a bunch of safe guards to prevent the employer from driving up costs for the event that you lose. We usually have a weak "loser pays" system, but in the lowest tier the only costs are court fees and certain travel costs of the opposite party if you lose.

On the other hand German law doesn't know punitive damages, which makes such lawsuits less risky for the employer side as well.

developer1• 11 years ago

The forced upfront payout is probably a good thing in most cases - large companies can play games with the court system for years, purposely drawing out proceedings for no valid reason. Most companies can afford to pay up front, they just don't want to. To force a company into bankruptcy is tough, but then again it's a warning to companies not to make such major mistakes with their employees. The strange aspect is this: what happens if the appeals result in a change of outcome? Would the employees be required to pay back the money?

I'm also curious as to what exactly the lawsuit claims were. Surely it's not just "he didn't need to lay people off because he had money" - if that's the case, I believe the outcome was too harsh. I am wondering if what really happened is something I've seen over and over again: the company lays people off, and then starts massive rehires only months later. This is illegal in many places, but companies often get away with it anyway. They just want to improve the bottom line for the current quarter to appease shareholders, and then go back to hiring at the beginning of the next quarter after shareholders are no longer looking at expense reports.

gpvos• 11 years ago

Most companies are not large, I would think.

Menge• 11 years ago

I cannot imagine the feeling of the employees either: those who were fired are the ones who walked away with money + take away everyone else's job.

Given Mandriva is not a new start up in a new market that could go any way, I would hope they realized that they would be the laid off employees eventually and would apparently get an illegally bad deal unless the plaintiffs won.

"Mandriva is making a come back," says management. But they recently needed lay offs to get to those numbers. If you shut down a plant you will have great numbers until the shelves are depleted..

Management wants to put themselves in the best light to get the next job but the reality from the perspective of employees is usually quite different.

CrLf3• 11 years ago

The payout probably doesn't start right away, at least not to the employees. The money is probably put under court control until appeals are resolved.

tajen3• 11 years ago

France labour laws are on one extreme. For example the notification period for quitting is 3 months for "cadres" (most software engineers are cadres). In Luxembourg and Australia it is 1 month, in Spain it is 15 days. There is probably a middle ground.

It has an impact on the whole society, because everything is modelled after those lifetime employment usages. If you need to leave a flat, you also need to show a 3 months notice. See the link? Now what happens when you don't have a stable employment? You pay 2,5 month too much. Our society is split between those who succeed to get a lifetime job ("CDI") and those who have an unstable life, entrepreneurs and lowerclass people included. It encourages staying far too long in a company you're not made for, which creates depression, hence France being the 1st consumer of Prozac in the world, the one with most sick leave and the country known for grumpy people.

I've lived in Australia. My flatmate grew up in an orphanage in Thailand. Today he makes $1000 a week as a waiter. He quit to start his studies, at 24. That's when I started to think that we've overvalued job stability in France.

raverbashing5• 11 years ago

And that's why you can expect less investment in some countries and more in others.

But to be fair, this was merely the straw that broke the camel's back, it was not the main reason while Mandriva went under (which has been a long and drawn process)

threeseed2• 11 years ago

Sure. And equally why you can expect more worker exploitation in some countries and less in others.

raverbashing5• 11 years ago

Of course.

However, it's funny how worker migrations usually run opposite to that (from more regulation to less regulation).

jarofgreen3• 11 years ago

Odd article, only giving one side of the story. What exactly were the employee law suits about? It doesn't say, and the effect is just to implicitly smear France's worker laws. Because while some laws are rubbish and cause problems, lets be clear, sometimes companies are shit, we have laws to protect workers for a reason and lawsuits are very justified and deserve to win.

keithpeter3• 11 years ago

If a judgement has been made, especially one that requires an immediate payment, then some documentation should be available publicly surely?

Anyone from France able to comment?

ajnin• 11 years ago

Yes judgments are being made in the name of the French people, and thus are public (although this does not mean they are publicized on a website, you may have to go to the court to consult them). Decisions regarding the work code can be appealed, and in that case the execution of the sentence is suspended until the second judgment. If they had to pay immediately then it means they didn't appeal. That combined with their refusal to show the actual court decisions is fishy and looks like a spin to make the fired employees look bad and use them as an excuse for Mandriva's demise just coincidentally when they were on the brink of becoming profitable.

girvo• 11 years ago

The details of the suits, including names of employees involved, are confidential, he told us, and he declined to offer details

That's in the article, but how true that is I don't know. You'd assume the details would be public record somewhere, but I don't know enough about France's laws to tell.

jarofgreen3• 11 years ago

Yes, that seems odd to me but then I don't know French law at all. Any french commentators?

empressplay• 11 years ago

I expect (and this is just conjecture) that he laid off staff and then rehired for the same (or similar) roles at a lower rate of pay, which is a common tactic when a company needs to reduce costs but typically runs afoul of labour laws.

tracker12• 11 years ago

While I don't know anything about these cases specifically, or regarding Mandriva's internal structure... I think changing your name to be a rather obvious trademark infringement is a pretty bad place to start (Lindows), and then trying to grab any attention possible to increase market share from there.

In any case I think that legally, sometimes it is appropriate for businesses to come to an end... and not in the, lets separate our assets from our liability so that we can sell off everything, and keep the brand around kind of way, but in that corporations have more rights than living entities in a lot of ways.

I'm very pro business... but despite the spin, I'm unconvinced that anything that has happened in this case is necessarily a bad thing.

Bill_Dimm• 11 years ago

I think changing your name to be a rather obvious trademark infringement is a pretty bad place to start (Lindows)

Uhm, what? Lindows became Linspire. Mandriva was originally Mandrake (renamed after merging with Conectiva). As far as I know, Lindows never had anything to do with Mandriva.

rwallace• 11 years ago

Beware of assuming that every law passed with the intent of protecting workers actually has that effect. Yes, some laws really do protect workers (e.g. banning noncompete employment clauses). But laws that make it very difficult to get rid of employees (either because they're not doing a good job or just because you can't afford them anymore) act as strong deterrents to hiring, and that tilts the power balance strongly in favour of employers over workers - which is exactly what causes so many problems in the first place.

Frozenlock• 11 years ago

I would add to this that looking at the 'intent' of a law is the worst possible way to look at it.

There's no law out there with the disclosed intent of killing children, or making sure some people stay poor, or protecting a market from competition.

Every law is always 'for the good of the Universe and it's a wonder we survived this long without it'.

The only way we can judge a law is by its REAL consequences, not the PR surrounding it.

keithpeter3• 11 years ago

"Mandriva offered a Linux operating system for PCs that was doing well in some developing nations."

Anyone know which developing nations? And why Mandriva was especially appealing in those countries?

droithomme• 11 years ago

There's been various articles over the years discussing their strategy. They were targeting the third world market with customized distributions for inexpensive educational computers, and focusing on making the installer easy to use.

http://www.olpcnews.com/software/operating_system/mandriva_c...

Mandriva, a France-based Linux distributor, spent eight months customizing its operating system for the Classmate, and adapting education applications specially developed for Intel's World Ahead program. In addition, these Linux-based Classmates will be produced in Brazil, part of Intel's local laptop assembly manufacturing plan, for delivery to Brazil, Mexico, India, and other assorted developing countries.

http://www.linux-magazine.com/Online/News/Nigeria-Puts-Mandr...

At least 11,000 Classmate PCs ordered by Nigeria will run Mandriva Linux, and not Windows, according to a government spokesperson. ... Mandriva will be deployed on at least 11,000 PCs destined for the Nigeria Universal Service Provision Fund (USPF), a government organization.

http://www.wsj.com/articles/SB122332198757908625 (paywall) http://my.ewb.ca/posts/13/46149 https://handyfloss.wordpress.com/2007/11/06/my-opinion-on-ma... (for non-SWJ subscribers, these two summarizes some of the WSJ article's points.)

keithpeter3• 11 years ago

Thanks for posting. So subsidised project from Intel.

raverbashing5• 11 years ago

Funny how nobody seems to remember this: http://en.wikipedia.org/wiki/Conectiva

buster• 11 years ago

I am wondering about the numbers and i bet those are exaggerated... Fired lots of sales, but sales went up 40% and costs went down 60%?

sprash• 11 years ago

No an inferior product put them out of business. The employee lawsuits were just a symptom.

carlosrg• 11 years ago

Exactly. Putting the blame on others is easy, but the reality is that Mandriva couldn't compete with others like Canonical or Red Hat.

weddpros2• 11 years ago

In France, there's a high chance of trial if you lay someone off... A 25% chance! (http://fr.wikipedia.org/wiki/Licenciement_en_France#Statisti...)

From what I've found on the Net, the laid off decided to take their case to court, to ask for greater compensation from Mandriva.

(no authoritative source found, only excerpts from an interviews on http://linuxfr.org/users/kurun/journaux/duval-vs-mandriva-in...)

adekok• 11 years ago

I worked in France for a number of years. One case I saw personally was a sales guy who didn't sell. He went on "trips" every week for 4 days to visit his girlfriend. Then, expensed meals for both of them.

After 4 months of this, he was fired for cause. And sued. And won.

Some things in France are nice (pate de foie gras at the French senate). Employment law isn't one of them.

Ved_• 11 years ago

That's very cliché (no pun intended). I've seen companies in France firing employees simply for making too many typos. Employee sued and company won.

weddpros2• 11 years ago

Sorry you had such an experience with France. I've left the country too (I'm french).

CrLf3• 11 years ago

The article tries to put the blame on the former employees, but the real moral of this story is to follow the law when laying people off or suffer the consequences.

Kiro• 11 years ago

I don't agree. You have no idea how broken the French labor law is.

CrLf3• 11 years ago

I live in the EU. The French labor law is not much different from other EU countries.

Also, the law exists for a reason. Putting the blame on employees in this case is an ideologial opinion, not a fact.

bjourne3• 11 years ago

If my neighbor sues me because of my action $X and wins, most people would conclude that that I did $X was the problem. Not that the laws around $X are to blame. I should have known the laws and should have known that $X is punishable with hefty fines. If I went to the media, I should be laughed at for blaming someone else because I wouldn't follow the laws.

If I drive I must accept and follow all traffic laws (even if I think some are stupid and pointless) and if I do CEO:ing, I must follow the labor laws. If I reject that, then I shouldn't drive or CEO.

sergiosgc2• 11 years ago

If France's laws are like Portugal's (which is typical), there's a flaw in your argument.

It is very expensive to fire people, even when it is entirely justified as a measure to save the company. Companies routinely go under because of this effect.

The response is, typically, that you should be prudent when hiring, and allocate the firing cost so you can face dire straits and come out on the other side. However, companies act in a market. Your competitors either don't have the same laws or act imprudently. If you act too conservative, your company fails.

A partial solution, for domestic competition leveling, is mandatory fund provisioning, for worker compensation. It's not perfect, but it mitigates the problem.

Worker protection, albeit necessary, is not free. It's not free for the companies and it's not free for the society. This was an example of the price to pay.

bjourne3• 11 years ago

Can you tell me what costs firing someone in Portugal incurs to a company?

I know roughly how it works in most Nordic countries (which have relatively employee-friendly labor laws) and it's not very expensive. A small company (Mandriva would be categorized as "small") can cite profitability problems (not enough revenue to cover salary costs) and layoff how many employees they want.

There is a strict protocol to follow, such that those with the lowest seniority must be laid off first and then more senior personnel. The laid off employers unions must be notified two weeks (I think) in advance so that they can verify that the termination protocol is followed and protest if it isn't.

This step is crucial, if the company makes formal errors they will be forced to pay several months extra in severance pay if the union is alerted. An example of a formal error is delivering the termination message orally and not in writing with a date and signatures.

Then there is a severance period of 1-3 months based on the age of the employee. I think 1 month for < 35 years of age, 2 months for 35 - 45 and 3 months for > 45. During that period the employee is supposed to continue working for the employer but for various reasons often can't work 100%.

CEO of Mandriva says employee lawsuits put the company out of business

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