Davignon group on worker involvement publishes recommendations

The Commission-convened "high-level expert group on worker involvement" presented its final report on 14 May 1997. The report assesses the reasons for the lack of progress in European legislation on a European Company Statute and makes recommendations which it believes would help to overcome these difficulties.

The high-level expert group on worker involvement was established in 1996 with the aim of developing solutions to break the 25-year deadlock on European Commission proposals containing clauses on worker involvement, and in particular, the European Company Statute (ECS). The Commission has repeatedly stressed the importance of such a statute, enabling the incorporation of companies at EU level, in order to improve the competitiveness of European companies. Such proposals have long remained blocked in the Council of Ministers, largely because of concerns from countries with advanced employee participation systems which fear that the ECS could be used by companies to circumvent national legislation in this area. Similarly, a solution would have to avoid imposing foreign models of employee representation upon member states where there is currently no provision for the appointment of worker representatives to the boards of companies.

In a Communication on worker involvement published in November 1995, the Commission had suggested a number of options for ensuring employee representation in European Companies, among them:

• a new Community framework for information and consultation of workers at national level;
• the application of the mechanism provided for in the European Works Councils (EWC s) Directive to the new European entities.

However, the debates which followed the Communication showed that the use of the EWCs Directive's formula was not enough to overcome the opposition of a number of member states and social partners to the adoption of the ECS.

The decision to establish a high-level expert group was based on requests received in the consultation phase, with the aim of finding a solution. The group was chaired by Etienne Davignon, president of the Société Générale de Belgique and former Vice President of the European Commission. The group engaged in six months of analysis of the reasons behind the lack of progress.

The group's final report, which was presented to the Commission on 14 May, recommends that priority should be given to free negotiation between the parties directly concerned as to the system of worker involvement which should apply in each European Company. Only if the parties fail to reach an agreement should a set of reference rules come into application. These should cover both information and consultation and the representation of workers in the relevant company bodies.

The main issues discussed and relevant findings of the Group are as follows.

1. The Group's work focused entirely on the ECS. Future work should concentrate on three of the four options for creating a European Company - the creation of a joint holding, the creation of a common subsidiary, and merger.
2. National systems of worker involvement are too diverse, making a general harmonisation impossible.
3. Given this variety and the different combinations of representation systems which could characterise any given European Company, systems of worker involvement should be negotiated on an ad hoc basis between workers and management.
4. Negotiation should be compulsory and time limited. On expiry of this period, set reference rules would come into application.
5. Negotiations would begin before the registration of the European Company, but if negotiations on its formation are concluded prior to agreement being reached, registration can go ahead, with an interim set of rules applying for worker representation. Time-limits should be extendable by agreement, but not indefinitely.
6. Rules for selecting negotiators should be based on those in the EWCs Directive.
7. Negotiators should be free to agree what they like and should not be bound by minimum rules.
8. The rules to apply in case no agreement is reached would be the same for all European Companies.
9. The rules would include information and consultation rules which represent a strengthening of those in the EWCs Directive.
10. Worker representatives would have the right to be full members of the board or supervisory board (in a two-board system). At least one-fifth of the seats on these bodies should be reserved for members designated by the workforce.

The report was due to be presented to the Council of Labour and Social Affairs Ministers in June 1997.