Commission reports on implementation of European Works Councils Directive

In April 2000, the European Commission published its long-awaited report on the implementation of the European Works Councils Directive. As widely expected, the Commission is not proposing any immediate revision of the Directive, but there are indications that the Commission is likely to pursue amendments at a later stage, pending progress on related EU information and consultation measures.

In April 2000, theEuropean Commission adopted a report to theEuropean Parliament and the EU Council on the application of the 1994 European Works Councils (EWCs) Directive (94/45/EC). The report, prepared as part of the process of review after five years, which is written into the Directive, offers a "very positive" evaluation of existing national implementing measures, while noting a number of "minor discrepancies". However, the report states that "full results" cannot be provided until Luxembourg and Italy have completed transposition of the Directive, and that the review process will continue, taking into consideration developments concerning "closely linked" Commission proposals - the draft Directives on employee involvement in the European Company Statute and on national information and consultation rules (EU9911211F).

Key points of the report

The report deals only with the transposition of the original 1994 EWC s Directive from which the UK"opted out", not the 1997 Directive extending the original Directive to the UK (Directive 97/74/EC), which will be covered by a further report in due course. The Commission's analysis is also confined to the implementing measures of EU Member States, not those of the three additional member states of the European Economic Area which are also subject to the Directive.

The Commission states that: "the vast majority of countries made a major effort not only to meet the deadline for implementation, ie 22 September 1996, but also to integrate the Directive faithfully into their national law". Overall, the Commission's evaluation of the quality of national transposition measures is "very positive". The report notes the "pioneering role" of the Commission-convened transposition working party of national experts responsible for drafting their country's transposition measures, and recommends that "this method of following up the transposition work should be adopted generally, in the light of the results obtained in implementing this Directive".

The report notes that the Commission initiated proceedings for non-implementation of the Directive against Portugal (subsequently suspended when the necessary Portuguese legislation came into force in July 1999 - PT9912176F) and against Luxembourg (where implementing measures have yet to be adopted) (EU9911209N). In the case of Italy, where a national intersectoral agreement on implementation was concluded between trade union and employers' organisations in 1996, the Commission takes the view that the agreement represents only partial transposition as it does not cover all sectors and does not provide for sanctions, and says that it will open infringement proceedings against Italy unless supplementary legislation is introduced.

The report draws attention to a number of "minor discrepancies" between the Directive and national transposition measures - concerning the method of counting part-time workers and the number of representatives on the special negotiating body (SNB) - and a "lack of detail" in some other areas - eg preparatory meetings. The report comments that: "In any event, these discrepancies must be interpreted as being in the spirit of the Directive."

However, certain issues are identified as needing "further interpretation", including the concepts of "controlling undertaking" and "expert", the "effects of geographical and proportional criteria (presumably in relation to the allocation of SNB and EWC seats) and the conditions for renewing Article 13 agreements, though the report appears to suggest that these issues can be resolved by the parties concerned or by the courts. Problems are also noted in respect of the law applicable to agreements and their legal status."

The Directive is said to have been "smoothly integrated into the industrial relations systems of the different countries", especially in relation to employee representation issues, though the report notes the possibility in some circumstances of "friction" between national and European-level employee representatives.

The report also lists a number of "legal and practical problems" relating to the application of the Directive which are said to have been highlighted at the April 1999 conference on "European Works Councils: practice and development" organised jointly by the European-level social partner organisations with the support of the Commission. These include:

• the "very low level" of transnational information and consultation provided by some agreements;

• the absence of a requirement in the Directive on the adaptation of EWCs to changes in the structure of the undertaking or group;

• questions as to whether the present Directive is sufficiently clear on the timing of information and consultation, ie before a decision is taken;

• the importance of a right to training for SNB and EWC members; and

• the need for "efficient information and consultation systems to exist at national level" and for an effective flow of information between Community and national levels of worker representation.

Prospect of amendments to the Directive

On the key issue of possible amendments, the report recalls the requirements of Article 15 of the Directive: "Not later than 22 September 1999, the Commission shall, in consultation with the member states and with management and labour at European-level, review [the Directive's] operation and, in particular, examine whether the workforce size thresholds are appropriate with a view to proposing suitable amendments to the Council, where necessary."

The Commission notes that it has already consulted the Member States and the European-level social partner organisations about the review, and says that the review process will continue, taking into consideration the debates in the Council of Ministers and European Parliament on the draft Directives on employee involvement within the European Company and on national information and consultation rules. The report concludes that: "On the basis of the results of this review as well as on the basis of the evolution of the other dossiers the Commission will at the given moment decide on the possible revision of the Directive."

Commentary

Few people will be surprised by the Commission's decision not to propose an immediate revision of the EWCs Directive, even though there is pressure for amendments from the European Trade Union Confederation (EU0001221N) and the European Parliament. However, the report can be seen as setting out an implicit agenda for reform, and recent comments by key members of the Commission indicate more explicitly that the Commission will indeed pursue the revision of the EWCs Directive at an opportune time – it is a question of "when" rather than "if".

Writing in the May/June 2000 issue of European Works Councils Bulletin, EU Employment and Social Affairs CommissionerAnna Diamantopoulou argues that there are "some loopholes and unclear provisions" in the Directive, but that proposals for its immediate revision would "make progress harder to achieve" on the European Company Statute and the national information and consultation proposal. Moreover, a "successful outcome" of discussions on these two proposals "could greatly facilitate subsequent revision of the EWCs Directive and even provide a partial solution to some of the problems identified". The Commission thus feels that it might be "more appropriate" to proceed with the revision only after the conclusion of negotiations on the two related proposals and following a more complete evaluation of the Directive's application. These comments confirm earlier remarks made by the EU Commissioner for Enterprise and the Information Society, Erkki Liikanen, in a European Parliament debate on company restructuring on 18 February (EU0003233N).

It is apparent, therefore, that the Commission's current reluctance to propose early amendments is essentially tactical. The Commission accepts that the EWCs Directive contains some shortcomings, but progress on the European Company Statute and the proposal for a Directive on national information and consultation rules is seen as creating the most favourable conditions for its eventual revision. (Mark Hall, IRRU)