UK Government publishes proposals for implementing EWCs Directive

The UK Government's long-awaited proposals for national implementation of the EU European Works Councils Directive were published at the beginning of July 1999. We outline the main features of the draft Regulations.

On 2 July 1999, the UK's Department of Trade and Industry (DTI) published draft Regulations to implement the EU European Works Councils (s) Directive in the UK, together with a consultation document seeking views on the government's proposed approach. After further refinement, and subject to approval by parliament, the Transnational Information and Consultation of Employees Regulations 1999 will come into force on 15 December 1999 - the deadline set by the 1997 Directive which reversed the previous UK government's "opt-out" from the original EWCs Directive.

It is estimated that approximately 200 additional companies, some 110 of them UK-based, will be brought within the scope of the EWCs Directive once the extension Directive is implemented and companies' UK workforces are included in the Directive's headcount calculations. Newly covered companies still have the opportunity to conclude voluntary agreements on transnational information and consultation by the 15 December 1999 implementation date, thereby becoming exempt from the requirements of the Directive.

Key points from the draft Regulations

The main elements of the UK government's proposals are of course pre-ordained by the requirements of the 1994 EWCs Directive. Accordingly, the draft regulations follow the Directive in terms of the definition of the "Community-scale" undertakings and groups covered, the special negotiating body procedure, the "subsidiary requirements", the scope for pre-emptive voluntary agreements, and other essential provisions. However, in a number of areas, the UK Regulations have "customised" the Directive's requirements to reflect national industrial relations practice and other considerations. Among the most notable features of the draft regulations are the following.

  • The UK member(s) of special negotiating bodies (SNBs) are to be chosen by election through a general ballot of a company's UK employees. Where more than one UK seat is available, it is proposed to give management the option of establishing separate constituencies for the election of SNB representatives. Selection of the UK members of a statutory EWC set up under the "subsidiary requirements" will be by the same method, except where existing employee representatives (trade unions recognised by the employer or other representatives receiving information about terms and conditions of employment or other developments significantly affecting employees' interests) represent all of the UK employees, in which case the employee representatives are to appoint the EWC members.
  • The rules governing the number and distribution of seats on SNBs and statutory EWCs - applicable to UK-based companies and those whose headquartered outside the European Economic Area (EEA) whose "representative agent" is located in the UK - provide that, in addition to one employee representative from each EEA Member State in which the company operates, there should be: one additional seat per Member State where at least 20% but less than 40% of the workforce (within the EEA) is employed; two additional seats for a country with at least 40% but less than 60% of the workforce; and three additional seats for a country with more than 60% of the workforce.
  • The draft Regulations introduce some flexibility into the application of the three-year negotiating period under the SNB procedure on the expiry of which a statutory EWC based on the subsidiary requirements is to be established if no agreement is reached. Where negotiations are still continuing within three months of the end of the three-year period, but there is a prospect that they may be concluded if extra time is made available, the parties may jointly agree to extend the three-year period by a further six months.
  • Merchant navy crews are not excluded altogether from the ambit of the Regulations, but crew members who are not ferry workers and whose voyages normally exceed 48 hours' duration are barred from standing for election as members of SNBs or statutory EWCs.
  • Central management is required to bear the reasonable cost of SNBs and statutory EWCs obtaining the assistance of one expert, but may agree to fund more than one expert.
  • The draft Regulations provide that, unless agreed otherwise, the chairing of information and consultation meetings between statutory EWCs (or select committees) and management should alternate between the parties.
  • In line with the Directive, management may withhold information from SNBs/EWCs or require it to be held in confidence by members and experts where, according to (unspecified) objective criteria its disclosure would seriously harm or be prejudicial to the company.
  • The draft Regulations mirror the provisions of the original and extension Directives concerning what constitutes a valid voluntary "Article 13" or "Article 3" agreement and do not impose any additional requirements. Notably, the Regulations do not specify who the employee-side parties to such agreements should be.
  • Disputes about the applicability of the UK Regulations, election constituencies and confidentiality issues will be determined by the Central Arbitration Committee (CAC). Failure to comply with a CAC declaration would be punishable as if it were a contempt of court.
  • Employee-side complaints about the non-establishment of an EWC where an "Article 6" agreement has been concluded or a statutory EWC has to be set up or about the operation of an existing EWC agreement (eg an alleged failure to consult over a particular matter) will be dealt with by the Employment Appeal Tribunal (EAT). The EAT will be empowered to order central management to take specified steps to remedy any failure and impose a penalty of up to GBP 75,000, depending on the circumstances. Non-compliance with an order of the EAT may lead to a further employee-side complaint and the possibility of further daily penalties of GBP 1,000, without prejudice to any contempt of court proceedings. However, no order of the EAT under the regulations may have the effect of suspending or altering the effect of any act done or any agreement made by central or local management.
  • The regulations concerning issues such as confidentiality and the enforcement of the provisions of an Article 6 agreement via the appropriate UK institutions do not apply to companies which, on the date the regulations come into force, already have an Article 6 agreement concluded under the law of another Member State, unless the parties agree that UK law shall apply instead of the law of the Member State concerned and central management is situated in the UK.
  • The government's consultation document states that, where a UK-based company has an EWC agreement made prior to UK implementation of the Directive, using a representative agent in another Member State, the role of central management will revert to UK-based management from 15 December 1999.

Commentary

There has been strong pressure from UK companies and employers' organisations for a "minimalist" approach to UK implementation, avoiding any unnecessary "gold-plating" of the Directive's provisions that may impose additional regulation on companies and increase the cost of compliance. This is reflected in the government's approach: in general, the draft Regulations do not impose additional requirements to those contained in the Directive. In many areas, for example concerning confidentiality, the government has essentially adopted a "copy-out" approach, reproducing the wording of the Directive in the UK Regulations. As far as enforcement is concerned, the government's aim is that disputes should be resolved as quickly and flexibly as possible, and that generally sanctions should be kept to the minimum possible to ensure proper compliance with the Directive. No new regulatory/enforcement body is proposed.

Reaction to the government's proposals from employers and trade unions has to date been muted. The Trades Union Congress issued a statement welcoming the proposals as a further step towards reversing the previous UK government's opt-out from the EWCs Directive. However, there is likely to be union disappointment at the absence of any guaranteed role for recognised unions in SNBs and statutory EWCs under the draft Regulations. The Confederation of British Industry made no comment. It remains to be seen whether the three-month consultation process now underway will result in any significant changes to the final version of the Regulations when they are laid before parliament. (Mark Hall, IRRU)

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