Implications of proposed EU information and consultation Directive in Ireland

In June 2001, the EU Council of Ministers approved a compromise text of the proposed Directive on national information and consultation rules, and the Directive now looks likely to be adopted in late 2001. The Directive has received mixed reviews from the Irish social partners and looks set to have major implications for Irish industrial relations.

On 11 June 2001, the EU Employment and Social Policy Council of Ministers reached political agreement on a common position on the proposed Directive establishing a general framework for informing and consulting employees in the European Community (EU0106220F). Formal adoption of the common position will take place following legal and linguistic finalisation of the text. Thereafter, the draft Directive will be submitted to the European Parliament (EP) for a second reading in accordance with the co-decision procedure. It seems likely that the Directive may be definitively adopted before the end of 2001.

The draft Directive

Fuller details of the text approved by the Council of Ministers are provided in EU0106219F. However, briefly, the purpose of the draft Directive is "to establish a general framework setting out minimum requirements for the right to information and consultation of employees in undertakings or establishments within the European Community". Member States may decided whether its requirements will apply either to: undertakings employing at least 50 employees in any one Member State; or establishments employing at least 20 employees in any one Member State.

The right to information and/or consultation covers: the recent and probable development of the undertaking's or the establishment's activities and economic situation; the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged, in particular where there is a threat to employment; and decisions likely to lead to substantial changes in work organisation or in contractual relations. The practical arrangements for information and consultation are to be defined and implemented by Member States in accordance with national law and industrial relations practice.

Member States can also entrust management and labour with defining such arrangements freely and at any time through negotiated agreements, including at undertaking or establishment level. These may differ from those set out by the Directive. In other words, employers and employee representatives may reach agreements to suit their own circumstances, which will take precedence over the Directive's provisions.

Having initially been mooted in the European Commission's 1995 medium-term Social Action Programme, the Directive was proposed in November 1998 (EU9812135F), in the wake of the controversy over the Renault-Vilvoorde plant closure in Belgium, when it was widely perceived that the workforce was not consulted properly (EU9703108F). The majority of Member States supported the Directive, but its progress was delayed, primarily because the governments of the UK, Germany, Ireland and Denmark formed a "blocking minority", having expressed a number of "general reservations" (EU0012285F). However, Germany, Denmark and then Ireland apparently withdrew their opposition before the 11 June Council meeting, following the drafting of a compromise text. This left the UK isolated as the only remaining opponent of the Directive and unable to prevent its adoption, as the measure is subject to qualified majority voting. It was thus forced to accept the Directive, albeit with concessions on the timetable for applying its requirements to smaller companies.

Member States will have three years from the date of final adoption of the Directive to comply with its provisions. Under the transitional provisions introduced to accommodate the UK and Ireland, Member States in which there is, at the date of adoption of the Directive, no "general, permanent and statutory system" of information and consultation nor of employee representation at the workplace, will be able to apply the Directive in three phases:

• undertakings with at least 150 employees (or establishments with at least 100 employees) would be covered as from the three-year implementation deadline;

• undertakings with at least 100 employees (or establishments with at least 50 employees) would be covered two years later; and

• full application of the Directive (ie to undertakings with at least 50 employees or establishments with at least 20 employees) would become obligatory four years after the normal implementation deadline.

It is widely thought that the recent progress of the Directive towards adoption has been partly fuelled by the widespread anger and controversy surrounding a number of high-profile cases of mass redundancies, where employees received little or no information or consultation prior to being made redundant (FR0104147F, EU0102293N and UK0102113F)

Irish social partners' views

The Irish Congress of Trade Unions (ICTU) is strongly in favour of the information and consultation Directive. It believes that the Directive could play a vital part in improving worker information and consultation rights relating to workplace change and restructuring. Moreover, there is a perception within ICTU that the Directive could potentially facilitate an increase in the diffusion of enterprise-level "partnership" between employers and employee representatives (IE9807120F).

Significantly, ICTU - in collaboration with German, UK and Spanish trade union confederations - issued a joint statement in October 2000 calling on their respective governments to drop their opposition to the Directive (DE0010288F). In a recent statement, ICTU welcomed the passing of the Directive: "We're happy that this Directive has finally been adopted. We'd like the implementation dates to be sooner but we're happy it's going to come into effect."

In contrast, employer groups in Ireland have opposed the Directive because they view it as a potential burden and restriction on business activity. The Irish Business and Employers Confederation (IBEC) is opposed to the introduction of statutory-based mandatory employee representation structures such as works councils, instead preferring a voluntarist system that reflects the competitive situation of individual companies. It prefers the concept of direct communication between management and employees to collective representation. There is a perception within IBEC that works councils are rooted in the past and that the pace of change today requires companies to communicate with employees directly.

IBEC issued the following statement after the approval of the common position of the Directive: "We don't have a problem with the idea of consultation in principle but we would oppose anything that would interfere with a company's right to manage."

A key issue for IBEC is the fact that practical arrangements are to be defined in accordance with national law and practice: "It [the Directive] says what types of areas people have to be consulted on and how it is to be done, but practical arrangements are left to Member States. So, we have to look at this when it comes into Ireland and sit down with government and unions and try to come to an arrangement to make sure employees continue to be informed, but that it doesn't introduce too much rigidity."

The US Chamber of Commerce has also been a vocal opponent of the Directive. There are a large number of US-based multinationals operating in Ireland, the vast majority of which manage employees on an individual basis and strongly resist any form of collective representation. The prospect of being held accountable to employee representatives is not something that they welcome.

Commentary

The information and consultation Directive has moved towards adoption at a time when there have been a number of high-profile cases where employers have failed adequately to inform and consult their workforces about impending mass redundancies. There has certainly been evidence of this in Ireland where, as in the UK, workers are particularly exposed to company restructuring and redundancies because they have few rights in this regard. This was illustrated by spate of recent redundancies in a number of US technology companies located in Ireland. The failure to consult workers and their representatives over company restructuring has fuelled considerable discontent in Ireland and elsewhere. As the current text of the draft Directive suggests, Ireland and the UK are the only EU Member States with no "general, permanent and statutory system" of information and consultation nor of employee representation at the workplace.

With this backdrop in mind, the new Directive, will undoubtedly be important in improving workers' rights to consultation in instances of workplace change and restructuring, certainly in Ireland. This is particularly applicable to workers in non-union companies in Ireland, where collective representation and access to consultation is noticeable by its absence. At the moment union density is approximately 44%, so a large proportion of the workforce do not have access to representation rights (IE0102164F). Ireland is rather unusual in comparison with many continental European countries in only having a single channel of employee representation. European Works Councils have been introduced in a number of multinational companies, but there are no provisions for works council substructures in Ireland, aside from in a few semi-state companies. Accordingly, works council-type structures would be introduced into something of an institutional vacuum in Ireland.

The Directive could prove to be something of a double-edged sword for Irish trade unions. On the one hand, it would provide a second channel of employee representation. On the other hand, some trade unionists may view the new works council-type forums that may emerge as competition, if it means that fewer workers seek trade union recognition. There may be a potential way round this "problem", however. In many European countries where works councils are already embedded, it can be argued that trade unions essentially have two types of member: members who are represented directly; and members who are represented indirectly through a works council by union representatives elected to the council, which receive advice and assistance from the union. This "model" could potentially provide Irish unions with a greater foothold and influence in non-union sectors, particularly where it proves to be very difficult to secure union recognition.

The Directive could potentially be important for promoting the diffusion of enterprise-level "partnership" between employers and employee representatives (IE0104166F). At this juncture, workplace "partnership" is uncommon in Ireland, and it is unlikely to increase significantly in the current context of a voluntarist industrial relations system, under which the majority of employers prefer to introduce change unilaterally. It would seem that legislation or regulation would be required to diffuse "partnership" more widely, and, in this sense, developments relating to the information and consultation Directive are likely to be important. (Tony Dobbins, CEROP, UCD)