Current EU information and consultation initiatives reviewed

A number of employee information and consultation initiatives are currently on the EU agenda. We outline the position reached, as of November 1999, by the draft Directives on national information and consultation and employee involvement in the European Company Statute, the draft 13th company law Directive concerning takeover bids, which includes provisions on employee information, and the review of the European Works Councils Directive.

A number of important initiatives affecting employee information and consultation issues are currently under consideration by the EU institutions. The progress of three legislative proposals - the draft Directive on the national information and consultation of employees, the draft Directive on employee involvement in the European Company Statute and the draft 13th company law Directive concerning takeover bids (which includes provisions on informing employees) - continues to be slow, while the review of the European Works Councils Directive is only now beginning to get underway in earnest. This feature examines the present position.

Draft Directive on national information and consultation

Under the European Commission's November 1998 proposal for a Directive "establishing a general framework for informing and consulting employees in the European Community", all undertakings with at least 50 employees would be required to inform and consult employee representatives about a range of business, employment and work organisation issues (EU9812135F). Significantly, the proposal has yet to be formally discussed within theLabour and Social Affairs Council of Ministers. The exclusion of the issue from the Council's agenda under the German Presidency during the first six months of 1999 was reported to reflect an understanding with the UK government, which has been particularly critical of the Commission's proposal (UK9811162N). Similarly, no discussion of the issue has taken place under the current Finnish Presidency, whose priority is make progress on the European Company Statute (see below).

While there has yet to be any progress on the proposal within the Council, in April 1999 theEuropean Parliament (EP) gave itsfirst reading approval to the proposal, putting forward a series of amendments (EU9905173N). The EU Economic and Social Committee adopted an Opinion on the proposal in July 1999, which commented positively on the benefits of effective information and consultation procedures but noted that there were differences of opinion in the Committee as to the appropriateness of the Commission's proposal.

In February 2000 the European Commission, in cooperation with the Union of Industrial and Employers' Confederations of Europe (UNICE), the European Centre of Enterprises with Public Participation and of Enterprises of General Economic Interest (CEEP) and the European Trade Union Confederation (ETUC), will be organising a conference relating to the proposed Directive. It is understood that this will be based on the model of the April 1999 social partners' conference on the practice and development of European Works Councils, with the aim of comparing national experiences in the area of employee information and consultation.

European Company Statute

Recent years have seen intensive discussions within the Council concerning the draft Directive on worker involvement in the European Company Statute (ECS). The Directive would provide for European-level information and consultation arrangements in the new "European Company" (SE) based in European rather than national law, plus board-level employee representation in certain circumstances. The ECS has been pending for nearly three decades.

Since its revival in 1997 (EU9705128N), the ECS worker involvement Directive has been refined by successive Council Presidencies with the aim of achieving the required unanimous support in the Labour and Social Affairs Council, so far without success (EU9803193N). German concerns about the nature of the board-level participation arrangements and the possibility of companies establishing as SEs in order to escape German law were met by adjustments to the proposal under the Austrian Presidency of the second half of 1998. Since then, the main obstacle to reaching consensus has been the objection of the Spanish government to the latest proposals on the conditions and procedures for the possible introduction of board-level employee participation (EU9812143N).

The current Finnish Presidency has been holding bilateral talks with the Spanish government in an attempt to draw up a new compromise deal. According to press reports (see European Voice 21-27 October 1999), the Presidency has drafted a new formula acceptable to Spain, which would drop its objections to the Directive's provisions on possible board-level participation in exchange for new rules on the ways that SEs can be established, providing guarantees for smaller national companies involved. However, it is also reported that the proposed new version of the ECS may be unacceptable to Germany, potentially unravelling the delicate compromise reached previously. The Finnish Presidency is now seeking to bring Germany back on board. Matters had not progressed sufficiently to allow the ECS to be discussed the Labour and Social Affairs Council on 12 November. The matter was on the agenda of the 29 November Council, but the Council only heard a Presidency report on the negotiations that had been going on, including a high-level meeting on 26 November, in order to "find a solution acceptable to all Member States and to dissipate the concerns" of Spain. The Presidency stated that it was still hopeful that a solution could be found before the end of 1999.

Employee information on takeover bids

Another legislative proposal with employee participation implications is the draft 13th Directive on company law, concerning takeover bids. Its basic aim is to give shareholders of companies subject to takeover bids a minimum level of protection which is equivalent throughout the EU and to ensure greater transparency in (attempted) takeovers. However, the draft Directive also provides that companies which are the subject of a takeover bid would have to inform the representatives of the employees or, where there were no such representatives, the employees themselves, as soon as the bid had been made public, and communicate to them the bidder's offer document. This offer document would have to state "the offeror's intentions with regard to the future business and undertakings of the target company, its employees and its management, including any material change in the conditions of employment". The target company would also have to draw up and make public a document setting out its opinion on the bid and its views on the effects on the company's interests, including employment.

The Commission first proposed the Directive in 1990, but it failed to make progress and a new draft was submitted in February 1996. The EP approved the draft, with numerous amendments, in June 1997 and the Commission presented a revised proposal in November 1997, including many of the EP's amendments. Lengthy deliberations on the draft Directive within the Internal Market Council of Ministers finally resulted in political agreement on a common position in June 1999. At the Internal Market Council on 28 October 1999, ministers took note of current position regarding the proposal and agreed to return to the issue in December 1999.

Review of European Works Councils Directive

The European Works Councils (EWC s) Directive requires the European Commission, in consultation with the Member States and the European-level social partners, to review its operation "with a view to proposing suitable amendments to the Council, where necessary", by 22 September 1999. Some contributory discussions have already taken place: the EP's Social Affairs Committee held a hearing on the implementation of the Directive in January 1999, and in April the social partners held a major conference on the issue. The ETUC has been consulting its affiliates on proposals for the revision of the Directive (EU9901149N). However, the Commission has yet to launch a formal consultation process. One factor in this has been the continued delay in transposing the Directive on the part of some Member States. Another has been the suspension of normal Commission activity for some months pending the assumption of office by the new set of Commissioners (EU9907185N)

There are now signs of movement, however. A draft Commission report on the legal and practical implementation of the Directive was discussed with representatives of the Member States in early November and is on the agenda for a meeting with the social partners in December. This report will then be adopted by the Commission, probably in January 2000. For the moment the Commission is understood to be focusing on evaluating the operation of the Directive rather than on its possible revision.

Commentary

The installation of a new European Commission and European Parliament seems unlikely to weaken significantly the support of the two institutions for the proposed Directive on national information and consultation rules. According to the Financial Times, Anna Diamantopoulou, the member of the Commission responsible for employment and social affairs, has said she intends to press ahead with the proposal. Similarly, despite the increased influence of the centre-right in the European Parliament elected in June, the EP is likely to continue its support for the proposed Directive and, armed with new powers of co-decision on social policy issues, it will be in a position to exert a greater influence than hitherto in pressing for and shaping the details of legislation in this area. MEPs expressed concern about the lack of progress of this issue at the 15 November EP plenary session. Replying to an oral question, Ms Diamantopoulou stated that progress was unlikely before the end of 1999, although a "new strategy" would be adopted under the incoming Portuguese Presidency. However, it is as yet unclear what the Portuguese Presidency's attitude towards the proposal will be. Ms Diamantopoulou also affirmed that she was "optimistic" that an agreement could be reached in the new year with "some fine tuning".

There is also speculation that the French government, which assumes the Presidency of the Council in July 2000, may seek to breathe new life into the draft Directive. The new chair of the EP's Social Affairs Committee is the French socialist MEP and former prime minister of France,Michel Rocard, which may increase the likelihood of cooperation between the French Presidency and the committee to push this issue back up the EU agenda.

In any event, the future prospects of the controversial draft Directive on national consultation rules and of the review of the EWCs Directive appear to be closely linked: a continued lack of progress on the former is likely to strengthen the pressure for amendments to the EWCs Directive. (Mark Hall, IRRU)