European Works Councils
European Works Councils (EWCs) are standing bodies providing for the information and consultation of employees in Community-scale undertakings and Community-scale groups of undertakings as required by the 1994 European Works Council Directive (Directive94/45/EC, now updated by the recast Directive2009/38/EC). EWCs are highly significant in terms of European industrial relations since they represent the first genuinely European institution of interest representation at enterprise level. They reflect a growing recognition of the need to respond to the ‘Europeanisation’ of business emerging from the Single European Market by supplementing existing national channels of information and consultation, a goal which was expressed in the Social Charter of 1989 and the accompanyingSocial Action Programme.
The thresholds required for an enterprise to be covered by the Directive are, for a Community-scale undertaking, ‘at least 1,000 employees within the Member States and at least 150 employees in each of at least two Member States’ (Article 2(1)(a)). It is left to Member States to decide on the mechanism for determining the selection of employee representatives, ‘in accordance with the principle of subsidiarity’.
Essentially, the aim of the Directive is to promote voluntary agreements on the constitution and operation of EWCs. This operated in two ways. First, the original 1994 Directive allowed multinational companies (MNCs) and groups covered by the Directive to reach voluntary agreements with employee representatives on the establishment of EWCs before the Directive actually came into force on 22 September 1996. These so-called ‘Article 13 agreements’ were exempt from the provisions specified in the Directive, for the lifespan of the agreement, as long as they covered the entire workforce of the group within the scope of the Directive.
Second, since 22 September 1996, negotiations to establish EWCs have been governed by the procedures under Article 6 of the Directive, which requires the formation of a special negotiating body (SNB). Crucially, it is up to the undertaking’s central management and the SNB to agree on the precise form and function of their EWC. This includes, for example, the signatory parties; coverage, composition, numbers and seat allocation; the terms of office; functions and procedure; venue, frequency and duration of meetings; financial and material resources; duration of the agreement and the procedure for its renegotiation; issues for information and consultation; experts; confidentiality; select committee operations; employee-side pre-meetings; rules on deputies to employee representatives; languages policy and interpretation provided; procedure for agreeing the agenda; procedure for drawing up minutes or other records; and communication to employees generally. Only if there is a failure to agree between the parties, or if they so choose, is the ‘fall back position’ triggered of the provisions detailed in the Annex to the Directive.
Revision of the Directive
A mechanism for revision was included under Article 15 of the 1994 Directive. In April 2004, the Commission began consultations with the EU-level social partner bodies on measures to enhance the effectiveness of EWCs, including a possible revision of the Directive. At the time, the positions of the social partners on this matter were divided: the European Trade Union Confederation (ETUC) was pressing the Commission for numerous revisions, while BusinessEurope (previously known as the Union of Industrial and Employers’ Confederations of Europe, UNICE) contested the case for overhauling the Directive.In April 2005, the EU-level employer and trade union bodies – UNICE, UEAPME, CEEP and ETUC –published a joint text, Lessons learned on European Works Councils (142 Kb PDF), which assessed the operation of EWCs and highlighted lessons for the future. Overall, the joint text reported the positive role that EWCs can play in improving the information flow between workers and management, allowing for consultation of workers on relevant cross-border issues affecting the group, developing a corporate culture in transnational groups and gaining acceptance for necessary change.
In July 2005, ETUC and BusinessEurope responded formally to the European Commission’s April 2005 Communication on restructuring and employment(COM(2005) 120 final (263 Kb PDF)). The Communication outlines measures aimed at improving the EU’s capacity for anticipating and managing restructuring. The Communication was also intended to initiate the second phase of consultation on the revision of the EWC Directive. However, the reaction of the social partners was generally critical. While the ETUC executive committee criticised the Commission for launching a joint consultation on two separate issues: company restructuring and the Directive on EWCs, BusinessEurope affirmed its opposition to the beginning of a second-phase consultation on the revision of the EWCs Directive.
The European Commission declared the revision of the EWC Directive to be one of its legislative priorities for 2008. In February of that year, a Commission document formally launched the second-phase consultation. This time, the employer side agreed to negotiate about a revision. ETUC, however, rejected negotiations on the grounds that they feared that these could not be finished early enough to complete the revision process before the next European elections. On 2 July 2008, the Commission publishedthe proposal for a recast Directive. By choosing the instrument of a recast instead of a complete revision, the Commission aimed to finalise negotiations with the European Parliament and the Council of Ministers during the French EU presidency in the second half of 2008.
The main objectives of the Commission’s proposal were to enhance the effectiveness of EWCs (particularly by improving the definition of ‘information’ and ‘consultation’), to resolve legal uncertainties and problems (e.g. in cases of restructuring) and to harmonise the EWC Directive with more recent Directives on employee representation.
In August 2008, the European social partners indicated that they accepted the Commission’s proposal as a basis for a recast of the 1994 EWC Directive and proposed a number of changes to this proposal. Based on this common position of the social partners, the political institutions reached an informal agreement on the recast Directive in a meeting on 4 December 2008. On 16 December 2008, the European Parliament adopted the compromise text.
The new, recast Directivestrengthens the role and rights of EWCs in a number of areas. Notably, it:
- reinforces and more clearly defines the information and consultation rights of EWCs;
- links and more clearly differentiates the information and consultation of EWCs and of national bodies, providing a new definition of ‘transnational matters’ covered by EWCs;
- gives a greater role to trade unions;
- entitles EWC members to training without loss of pay; and
- contains rules on adapting EWCs to structural change in the multinational concerned.
On 6 June 2011, the 30 EEA member states were due to implement the recast Directive.According to data from the European Commission, as at 12 January 2012, 26 EU and EEA countries had implemented the Directive, the majority by legislative means. The Commission did not have any information from Greece, Luxembourg, Iceland or Liechtenstein.
After the original Directive took effect in 1996, around 70 new EWCs were set up each year from 1997 to 2001 and the rate declined to around 30 a year during most of the 2000s. However, after the recast Directive was adopted in May 2009, the conclusion of new EWC agreements declined to very low levels (only 15 were signed in 2010).
The slowdown in activity in setting up EWCs in the two years between the adoption and the implementation of the recast Directive may reflect, at least in part, legal uncertainty over the status of agreements signed in this period. It also stems from a desire on the part of unions and employee representatives to await implementation so that they could benefit from the recast Directive’s more advantageous provisions.
Now that the new Directive has taken effect, an upswing in the conclusion of new agreements may be anticipated.
According to figures from the European Trade Union Institute (ETUI) around 2,400 multinationals are potentially covered by the EWCs Directive. The latest data from the ETUI database show that, as at 2012, a total of 1,214 EWCs had been created. However, it should be noted that some multinational companies have installed EWCs at a division level. Therefore, the total number of EWCs is larger than the number of MNCs that have a EWC. Currently, 931 multinational companies have an active EWC. However, not all eligible MNCs have established EWCs. This is due to the fact that the introduction of EWCs is not automatic but requires either the initiative of central management or ‘the written request of at least 100 employees or their representatives in at least two undertakings or establishments in at least two different Member States’ (Article 5(1)).