The UK government found itself isolated in Monday's meeting of the Employment and Social Affairs Council in Luxembourg.

The stalemate came over a Consultation of Workers directive which requires businesses which employ more than 20 workers in one place, or more than 50 across several sites, to consult their employees about key business decisions.

In a compromise deal the UK and Ireland negotiated a seven-year period before the law will be implemented.

Those in favour of the directive claimed its main aim was to create a dialogue between employers and employees to ease the social consequences of restructuring companies.

The UK argued that the directive would place too much burden on companies.

John Cridland, the CBI's director-general, said: "This is a major shift away from the modern European labour market signalled by the summits at Lisbon and Stockholm."

The agreement came against the background of French protests at the decision of Marks and Spencer to close all its European branches.