Government responds to consultation on UK experience of EWCs

In May 2004, the UK Department of Trade and Industry published its response to the comments submitted during a recent consultation exercise on the operation of European Works Councils.

The UK’s Department of Trade and Industry (DTI) held a public consultation between July and October 2003 on the UK experience of European Works Councils (EWCs) (UK0308102N). The main purpose of the exercise was to gather evidence in advance of the review of the EU Directive on EWCs (94/45/EC) by the European Commission, which eventually got underway in April 2004 (EU0405203F).

In May 2004, the DTI published a summary of and response to the 25 formal submissions it received during the consultation exercise. These came from businesses and employers’ groups (12), trade union bodies (seven), lawyers (three) and others (three), and included comments from the Confederation of British Industry and the Trades Union Congress (UK0311101N). The key points of the DTI document are highlighted below.

Key points

According to the DTI, there was a 'general acknowledgement' by respondents that EWCs have had 'some beneficial impact on employee communication at the trans-European level'. In some instances, EWCs have 'played a key role in helping to manage change'. However, some business respondents thought their EWC was 'more of symbolic value', and a number of trade union respondents thought that 'too many EWCs had yet to reach their full potential'.

The DTI reports that 'there were different views expressed as to whether specific regulatory changes were needed to help make EWCs function more effectively. Some respondents, mainly unions, thought that the Directive’s provisions did need strengthening, while others, mainly business, thought that it was too soon given that the concept is a relatively new one.'

On specific proposals for change, the views of respondents are reported to be as follows.

Employment thresholds

A majority of responses were reportedly opposed to lowering the Directive’s employment thresholds. The main reason given was the relatively low EWC take-up rate among companies currently covered by the Directive: only about one-third have actually set up an EWC.

Special negotiating body procedure

A 'clear majority' of views were in favour of reducing the current three-year period allowed by the Directive for negotiating an EWC agreement. Suggestions varied between six months and two years. There was 'some general consensus' that changes to the formula for allocating special negotiating body (SNB) seats might be useful, eg a fixed minimum number of employees in any one country in order to qualify for an SNB seat. There was also 'some agreement' that what should happen if restructuring occurred during the negotiations 'needed clarification' .

EWC agreements

The DTI reports that there were 'differing views on whether there should be a prescribed list of core topics for discussion with the EWC set out in Article 6, and whether there should be more requirements on employers in terms of the quality and timing of information and consultation, especially in the event of a restructuring' . There was 'more agreement that the Directive should be clearer about what should happen to the EWC during and after a major restructuring' .

The 'general view' was that Article 13 agreements 'should not be interfered with unless the parties think otherwise' . However, 'many respondents' thought that the legal status of such agreements should be clarified and that they should be legally enforceable.

Statutory fallback provisions

There were reportedly 'differing views' on whether the size of a statutory EWC under the Directive’s subsidiary requirements needed revising. A majority of respondents felt that it should not rise above the current maximum of 30 members. Others said that the number needed increasing to reflect EU enlargement (see below).

A general point made under this heading was that any changes to the statutory model would become the de facto minimum standard for most new or renegotiated agreements because in practice the statutory model had a significant influence on negotiated EWC agreements.

Time off for training

The DTI reports that there was 'general support' among respondents to the consultation for the Directive to provide EWC representatives with a right to time off for training, though some employers felt that this should be a matter for the EWC itself to agree on. There were 'differing views on prescribing the nature of the training' .

Use of experts

There were apparently 'very differing views' on the Directive’s provisions concerning employee access to outside experts during the setting up and running of EWCs: 'Some companies were opposed to the idea of further involvement for experts and believed that the role of experts was something that should be agreed by the EWC rather than being prescribed in the Directive. Unions, on the other hand, argued that the role of experts is vital as without them it is too easy for management to force through weak agreements.'

Sanctions

Views on whether the Directive’s provisions on sanctions require strengthening were reportedly 'split' , with a majority reported to be 'against any major changes' . Most union respondents supported the proposals by the European Trade Union Confederation and the European Parliament for 'tougher sanctions such as the staying of decisions affecting workers until EWC representatives have been properly informed and consulted' , or higher financial penalties. However, employers argued that 'the current sanctions regime is sufficient to ensure adequate enforcement of the Directive' .

Implications for EWCs of the information and consultation Directive

Some respondents thought that the introduction of legislation ( UK0307106F ) to implement the national information and consultation Directive ( 2002/14/EC ) ( EU0204207F ) should help address the 'skills deficit' on the part of some UK EWC representatives. The 'main concern' of business was that 'the EWC should not impact on, or take priority over, local level consultation' . Some respondents, especially unions, argued that the EWCs Directive’s definition of consultation needed to be 'harmonised' with the (stronger) ones used in the information and consultation Directive or the employee involvement Directive ( 2001/86/EC ) linked to the European Company Statute ( EU0206202F ).

Impact of EU enlargement

There was 'some consensus' that the number of SNB and statutory EWC members would have to be reviewed following EU enlargement. Views varied on how this should be done. Some though it should be 'on a one member per country basis. Others, concerned that the body might become too unwieldy, thought that seats should be allocated according to where the largest number of employees were based.'

Best practice guidance

Many respondents reportedly felt that 'best practice guidance' would be useful on issues such as:

• training;

• the position of 50/50 joint ventures;

• suitable matters for transnational discussion;

• confidentiality; and

• how to get the most out of EWC meetings.

UK Regulations

The DTI notes that most of the comments concerning the operation of the Transnational Information and Consultation of Employees (TICE) Regulations 1999 , which implement the EWCs Directive in the UK ( UK0001146N ), focused on the legal status of EWCs and their ability to pursue complaints against management about the operation of an (Article 6) EWC agreement. Only central management or the EWC itself can initiate a case before the Employment Appeal Tribunal (EAT) under the UK Regulations. Where the EWC includes representatives of management (which is the case in the great majority of UK-based companies), it is unlikely that the whole EWC (as opposed to the employee side) will agree to pursue such a case.

Other comments on the UK Regulations related to:

• whether the GBP 75,000 maximum financial penalty for management failures to comply with an (Article 6) EWC agreement (or the statutory fallback provisions) is sufficient;

• whether the EAT is the correct body to hear first instance EWC disputes;

• a more prominent role for trade unions; and

• additional rights for EWC members to report back to their constituencies.

Government response

The government concludes that the consultation has 'demonstrated some divergence of views as to whether and how the Directive should be revised', but that there is 'a degree of consensus about some aspects of the operation of the Directive, particularly in the following areas':

• 'the period for negotiating an EWC agreement should be reduced';

• 'the size of the SNB needs to be considered post EU enlargement';

• 'a revised formula for determining the composition of the SNB';

• 'clarification of the legal status of an EWC in the event of a restructuring; and'

• 'the need for best practice guidance.'

The government says it will be forwarding the results of the UK consultation to the European Commission and EU-level social partner organisations. While the consultation exercise has been 'very useful' in helping the government to prepare for the EU-level review of the EWCs Directive, 'the government’s position remains that it will look at any possible changes to the Directive from a pragmatic point of view, focusing on how to make the Directive a more effective tool for transnational employee involvement'.

Commentary

The DTI report is interesting in that it seems to imply UK government support for some limited amendments to the Directive. However, there is likely to be trade union criticism of the fact that these do not include stronger requirements in terms of the nature and timing of consultation. Also, the list of issues on which 'a degree of consensus' is reported does not include providing a right to time off for training, despite the 'general support' for such a right from respondents to the consultation (the largest group of which were employers). Such an amendment to the Directive would arguably represent the generalisation of best practice: research suggests that a majority of EWC agreements concluded since September 1996 contain some sort of provision for training EWC representatives. Moreover, in terms of the UK’s legal framework, it seems anomalous that the statutory right to time off for training in the performance of their duties that applies to representatives of recognised unions has been extended to elected employee representatives under the statutory consultation provisions relating to redundancies and transfers of undertakings, but not to members of SNBs and EWCs under the TICE Regulations (nor to employee representatives under the draft Information and Consultation of Employees Regulations, which will implement Directive 2002/14/EC).

The report also leaves it unclear whether the government is likely to pursue changes to the TICE Regulations independently of the outcome of the EU-level review of the EWCs Directive. A particular concern is the doubt over the standing of the employee side of a joint management-employee EWC to pursue a complaint against management for failing to abide by the terms of an EWC agreement. This is a potentially significant problem (and is also one that has implications for the UK transposition of the EU information and consultation Directive). One possible response would be to amend the TICE Regulations to enable the employee members of EWCs (or a majority of them) to pursue complaints against management under the Regulations. (Mark Hall, IRRU)