EurWORK European Observatory of Working Life

German-based Tesa converted into a European company

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In mid July 2008, the annual shareholders’ meeting of German-based Tesa AG approved a plan to convert the company into a European company (Societas Europaea). In December 2008, after about six months of negotiations, the agreement between the special negotiating body and the company management was concluded. The agreement provides for rights going beyond the legal provisions.

Tesa is one of the world’s leading manufacturers of self-adhesive product and system solutions for industry, trade and consumers, with about 2,700 employees in 25 European countries. According to the company management, the new corporate structure is a response to the increasing internationalisation of Tesa’s operations. The conversion process started on 16 July 2008 when participants at the Tesa AG annual shareholder meeting approved the plan to adopt the legal form of a European company (Societas Europaea, SE) under the 2001 Statute for a European company as set out in Council Regulation 2157/2001. In the case of Tesa SE, the management decided to keep the existing dual corporate structure, consisting of a management and a supervisory board.

Agreement on worker participation

In December 2008, in accordance with Council Directive 2001/86/EC (116 Kb PDF) supplementing the Statute for a European company with regard to employee involvement, the special negotiating body (SNB) and the enterprise management concluded an agreement on worker participation. As Tesa had never set up a European Works Council (EWC), the agreement sets out a framework for worker participation rights at European level for the first time ever. In particular, the agreement defines co-determination rights at supervisory board level, as well as the composition and competences of the future SE works council.

European company works council

The composition of the SE works council is the result of a differentiated allocation formula guaranteeing a balanced representation of countries, production sites and regions. Countries with more than 200 employees appoint one representative, while those employing more than 1,000 employees appoint two representatives. Company representatives are appointed where production sites employ more than 175 employees. Finally, each of the four European regions appoints three representatives. As a result of this allocation formula, the 18 members of the SE works council include three country representatives, three company representatives and 12 regional representatives. In this way, it is assured that the SE works council will be a genuine European body of interest representation, although at present about three quarters of the workforce are employed in Germany.

According to the agreement, regular meetings will be held twice a year. The SE works council has an annual budget at its disposal to cover the costs of its activities. In addition, the members of the works council will be given training with no wage loss. In order to carry out their activities of interest representation, the members of the works council have access to all sites belonging to Tesa SE.

In 20 of the 25 countries falling within the agreement, the establishments of Tesa SE employ fewer than 50 workers. Interest representation structures cannot be taken for granted in these small establishments. Thus, the SE works council will have the right to address social problems in such establishments if there is no statutory or trade union interest representation present.

Moreover, the SE works council and management can decide by mutual agreement to undertake initiatives in order to define guidelines with regard to cross-border issues and topics that are of general interest.

Co-determination at enterprise level

The agreement on worker participation also provides for co-determination at enterprise level. Before converging into an SE, the German-based Tesa AG had 1,947 employees in Germany. As a consequence, the enterprise was covered by the provisions of the 2004 One-Third Participation Act (Drittelbeteiligungsgesetz (15Kb PDF)), under which employee representatives occupy only one third of the seats on the supervisory board. The same provision has been included in the agreement on worker participation of Tesa SE. It is also stipulated that in the event of growing employment levels this provision will, however, remain unaltered. This means that two of the six seats on the supervisory board are allocated to the employee side. As 72.1% of the workforce is employed in Germany, the two seats are covered by German workers’ representatives. Unlike other cases, such as Allianz SE (EU0611019I) or MAN Diesel SE, in the case of Tesa SE, trade unions are not represented on the supervisory board.

Commentary

Tesa has changed its corporate governance structures to better reflect its European dimension. From the employees’ point of view, the agreement on worker participation introduces a high degree of Europeanisation of interest representation. In several points, the agreement extends the powers of the SE works council even beyond those set out by law. As a whole, the negotiation process and its outcome seem to be in line with the traditionally cooperative and trust-based industrial relations at Tesa.

Volker Telljohann, IRES Emilia-Romagna, Bologna

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