European Works Councils - law and practice

This article examines the implementation into Slovenian law of the EU Directive on European Works Councils (EWCs), and the country's experience of EWCs, as of autumn 2004.

Implementing legislation and debate

EU Directive 94/45/EC on the establishment of a European Works Council (EWC) or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees was transposed into Slovene law by the Law on European Works Councils (LEWC) (Zakon o Evropskih svetih delavcev), which was adopted by parliament on 20 June 2002 (SI0208103F). It came into effect when Slovenia joined the EU in May 2004 (or earlier where multinational companies decide to include in their EWC or information and consultation procedure employee representatives from subsidiaries in Slovenia).

The draft LEWC was discussed on 8 May 2002 at a session of the Economic and Social Council of Slovenia (Ekonomsko socialni svet Slovenije, ESSS) (SI0207103F). Both employers and trade unions made remarks, some of which were - after further consultations - taken into account by the government when it sent the final LEWC proposal to parliament. Dusan Semolic, the president of the Union of Free Trade Unions of Slovenia (Zveza svobodnih sindikatov Slovenije, ZSSS), was of the opinion that the draft LEWC was basically sound, but that it did not take into account certain special circumstances in Slovenia. He proposed that:

• the members of the special negotiating body (SNB) and the EWC should have substitutes;

• the representative trade unions in the company should nominate the Slovenian representatives on the SNB, with representatives nominated by the workers' assembly only if there are no such trade unions;

• trade unions or workers should be able to take the initiative for the establishment of an EWC, because Slovene law includes such a provision; and

• EWC members should be elected in secret ballots, in which all workers could participate, because this again is in line with Slovene law.

The representative of the Chamber of Commerce and Industry of Slovenia (Gospodarska zbornica Slovenije, GZS) on the ESSS stated that the draft LEWC adequately followed the Directive. Therefore, the ZSSS proposals were not well grounded and referred more to the organisation of the LEWC's implementation. GZS called attention to the provisions on dispute resolution and was of the opinion that these should be changed. Dusan Rebolj, the president of the Confederation of Trade Unions Pergam of Slovenia (Konfederacija sindikatov Pergam Slovenije, Pergam), agreed with GZS's remark that the resolution of collective disputes has not been regulated yet and remarked that he expected this question to be regulated in a forthcoming new Law on Collective Agreements.

At the end of the ESSS discussion, a heated debate took place about the role of trade unions.

Key provisions of the legislation

The Law on European Works Councils (LEWC) (as with the implementing legislation in all Member States) largely repeats the content of the Directive(s), while also 'customising' a number of provisions to fit the Slovene industrial relations system, as provided for by the Directive. The main such provisions are set out below.

The Directive provides that the Member States should determine the method to be used for the election or appointment of the members of the SNB from their territory. Furthermore, the number of supplementary members (in addition to the basic allocation of one per relevant country) is to governed by the legislation of the Member State where the central management of the multinational concerned is located. The LEWC provides that workers' representatives from the Republic of Slovenia on SNBs are to be elected by the workers' assembly in a secret ballot. The right to propose candidates for election as SNB members is granted to employees' councils (which may be elected by employees in companies with more than 20 workers - SI0311102F) and representative trade unions in the company or subsidiary concerned, or to a group of at least 50 workers in the company or subsidiary. Regarding supplementary SNB members, the LEWC provides that each Member State with at least 25% of the multinational's total workforce in the countries covered by the Directive is entitled to one extra representative, rising to two extra representatives for Member States with at least 50% of the total workforce and three for Member States with at least 75% of the workforce.

The chapter of the LEWC on agreements to establish EWCs based on the Directive (ie 'Article 6' agreements) regulates the selection of EWC members from Slovenia. If not otherwise determined by the agreement, the selection method is the same as for SNB members (see above) and members of statutory EWCs (see below)

A statutory EWC is to established on the basis of the law itself where central management refuses to commence negotiations, negotiations are unsuccessful, or the parties so decide (Article 7 of the Directive and Article 18 of the LEWC). The LEWC provides that a statutory EWC must have at least three and at the most 30 members. Substitute members can also be appointed. Regarding supplementary EWC members (ie on top of the basic allocation of one per relevant country) the LEWC determines that: one extra member is to be appointed from every Member State with at least 20% of the multinational's total workforce in the countries covered by the Directive; two extra members from Member States with at least 30% of workforce; three extra members from Member States with at least 40% of workforce; four extra members from Member States with at least 50% of the workforce; five extra members from Member States with at least 60% of the workforce; six extra members from Member States with at least 70% of the workforce; and seven extra members from Member States with at least 80% of the workforce. Statutory EWC members from the Republic of Slovenia are to be selected in the same way as SNB members (see above) and members of agreed EWCs (see above).

Article 35 of the LEWC, which governs the protection of employee representatives (Article 10 of the Directive), determines that EWC members employed in Slovenia are protected according to Article 67 of the Law on the Participation of Workers in Management and Article 113 of the Law on Labour Relations (SI0206101N). This protection also covers substitute EWC members, SNB members and workers' representatives in the framework of an information and consultation procedure.

Article 37 of the LEWC, which governs penalties (Article 11 of the Directive), determines monetary fines for legal persons and responsible persons when they breach the LEWC. In addition, the Penal Code of the Republic of Slovenia provides for sanctions in the event of breaches of rights to participation in management.

Companies covered

There is no official figure or estimate of the number of undertakings falling under the provisions of the Slovene EWCs legislation - either multinationals covered by the EWCs Directive and based in Slovenia, or multinationals covered by the Directive based elsewhere and with operations in Slovenia. Most overseas activity by Slovenian companies has involved establishing new plants or taking over companies in the former republics, now independent states, of Yugoslavia (examples include the food retail company Mercator). However, at least one, the domestic appliance manufacturer Gorenje, has operations in another EU Member State (the Czech Republic) and is thus likely to be covered by the Directive. An unknown number of foreign-based multinationals with operations in Slovenia fall within the scope of the Directive (see next section).

Experience to date

In practical terms, the impact of EWCs in Slovenia and the related processes of 'Europeanisation' of industrial relations are still at an early stage.

Until the LEWC came into force, the representation of Slovene employees on the EWCs of multinationals with operations there depended on the particular agreement establishing the EWC. Slovene representatives were full EWC members in some multinationals (eg Danfoss), had observer status in some others (eg Renault-Revoz) and were awaiting representation in still others (eg Henkel).

There are number of Slovenian companies that have recently been taken over by foreign multinationals with EWCs, and where there is now potential for Slovenian representatives to become EWC members. For example: the Slovenian drug company Lek has been taken over by the Swiss-based Novartis; the Slovenian tyre producer Sava Tires has been taken over by the US-based Goodyear; and a 50% share of the Slovenian holding company OMW Istrabenz has been bought by the Austrian OMW

According to the autonomous Slovenian Banking Union (Sindikat delavcev bank in hranilnic Slovenije, SBS), in July 2004 the process began of including Slovenian workers’ representatives from SKB Bank in the EWC of its parent company, the French-based Société Générale. Two workers’ representatives participated at a meeting in Paris. One of them was the president of the SBS organisation at SKB Bank. His reported experiences concerning the inclusion of EWC members from the new EU Member States are not entirely positive in some respects.

Commentary

At present no state body is responsible for systematically monitoring the practice of employee involvement in Slovenia - through EWCs, employees’ councils or board-level participation (SI0312101F) - for example by compiling statistical data, so no official data are available. The Ministry for Labour, Family and Social Affairs (Ministrstvo za delo, družino in socialne zadeve, MDDS) or the Statistical Office of the Republic of Slovenia (Statistični urad Republike Slovenije, SURS) should be made responsible for the collection of an established set of minimum data.

It can be expected that the main benefit for the Slovene social partners in terms of the impact of EWCs on national industrial relations will be a better awareness and understanding of the internationalisation of company strategies, industrial relations, employment conditions and arrangements in other EU Member States.

At present employee involvement is not a top priority on the industrial relations agenda in Slovenia. The social partners and government are more concerned with collective bargaining at sectoral level and with the bargaining system in general. (Stefan Skledar, Institute of Macroeconomic Analysis and Development)