No agreement yet in negotiations on EU consultation Directive

Despite intensive discussion of the draft Directive on national information and consultation rules under the French EU Presidency, the Employment and Social Policy Council meeting of 27-28 November 2000 did not reach agreement on the proposal, though significant progress towards its eventual adoption appears to have been made.

Making progress on the draft Directive on national information and consultation rules has been a key social policy objective of the French government's EU Presidency during the second half of 2000 (EU0007263F). The French Presidency has held intensive discussions on the proposal, in the hope that the Employment and Social Policy Council of Ministers on 27-28 November (EU0012287F) would reach a "common position" or at least political agreement on the Directive. However, in the event, continuing reservations on the part of the UK, Germany, Ireland and Denmark meant that the French Presidency was unable to secure the outcome it had hoped for.

Background

Under the proposed Directive establishing a general framework for informing and consulting employees in the European Community, first put forward by the European Commission in November 1998 (EU9812135F), 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. The European Parliament and Economic and Social Committee submitted opinions on the proposed Directive during 1999 (EU9911211F). However, successive EU Presidencies kept the issue off the Council's agenda until the Portuguese Presidency initiated official-level discussion of the proposal at a meeting of the Council's social questions working group on 27 June 2000, just days before handing over the Presidency to the French. Since then, discussion of the draft Directive has taken place within the social questions working group, the Committee of Permanent Representatives (COREPER) and the Employment and Social Policy Council itself.

On 17 October 2000, the first ministerial discussion of the draft Directive took place at the Employment and Social Policy Council (EU0010274F). Ministers heard a report by the French Presidency on the progress of the discussions, which was followed by a brief exchange of views. A more substantial debate had been expected, but was apparently prevented by lengthy consideration of other items. The Presidency invited national delegations to submit written observations with a view to continuing work on the draft Directive in the run-up to the Council meeting scheduled for 27-28 November.

Positions of the Member States

During the discussions on the draft Directive, the majority of Member States are understood to have adopted a generally positive stance towards the Commission's proposal. However, four countries – the UK, Germany, Ireland and Denmark – have been maintaining "general reservations" concerning the proposal, together constituting a potential "blocking minority" under the qualified majority voting rules applicable to the Directive.

The UK government is opposed to the draft Directive in principle, arguing that it does not respect the principle of subsidiarity (UK9811162N) and, supported by Ireland, that it is a disproportionate response to the events cited as justifying the proposal (eg consultation failures in relation to the closure of Renault's Vilvoorde plant in 1997 - EU9703108F). The UK also sought to suggest that the proposed legal basis of the Directive should be Article 137(3) of the EC Treaty, requiring unanimity on the part of the Council for its adoption, rather than Article 137(2) as proposed by the Commission, which enables adoption by qualified majority vote. However, there seems to have been little support from other Member States for these views. Germany's continued opposition to the draft Directive reportedly reflects a political understanding with the UK (EU9911211F) and the priority it attaches to securing the adoption of the European Company Statute (EU9812143N). Denmark and Ireland's main worries have concerned their preference for collectively agreed consultation arrangements.

On the main substantive issues raised by the draft Directive, the views of the Member States are understood to be as follows:

• a majority of Member States support referring to the "right" to information and consultation, as suggested by the French Presidency, in order to avoid obliging employers to inform and consult even where their employees do not wish to exercise this right;

• a majority of Member States are said to support the proposed employment threshold for the application of the Directive, ie undertakings with at least 50 employees, though Germany would reportedly prefer an employment threshold applying at establishment rather than undertaking level;

• most Member States do not see a need to raise the employment threshold to 100 in the case of information and consultation on employment developments, as proposed by the original Commission draft, but there is opposition to requiring employers to consult over training and employability issues where job losses are in prospect;

• some Member States, especially the UK, Ireland and Denmark, want the Directive to allow greater scope for the social partners to agree alternative information and consultation arrangements; and

• a large majority of Member States have expressed serious doubts about the practicality of the original proposal to suspend the legal effects on employment contracts of work organisation decisions taken by employers in serious breach of their information and consultation obligations.

Amendments reflecting these points have been included in Presidency redrafts of the proposed Directive drawn up during the negotiating process.

Outcome of the November Employment and Social Policy Council

At the Council meeting on 27-28 November, EU ministers reviewed the state of play in respect of the draft Directive but in view of reservations maintained by the UK, Germany, Ireland and Denmark were not able to reach agreement. However, the conclusions drawn up by the French Presidency, while "noting the difficulties felt by certain delegations", state that the "substantial progress" made in the discussions to date "enabled the majority of Member States to record their agreement in principle on the central elements of the proposal for a Directive". These include enabling Member States to choose whether to apply the Directive to undertakings employing at least 50 workers or to establishments employing at least 20. The Presidency has asked COREPER to continue examining the text "in order to draft compromise proposals on the points still unresolved".

Commentary

While the Employment and Social Policy Council's inability to reach agreement on the Directive at this stage will have disappointed the French Presidency, as well as Europe's trade unions and other proponents of the measure, it appears nonetheless that considerable movement has been achieved in the course of the discussions held to date. Indeed, the progress made under the French Presidency could well pave the way towards eventual adoption of the Directive during 2001.

Both the forthcoming Swedish EU Presidency (January-June 2001) and the subsequent Belgian Presidency (July-December 2001) are expected to continue actively to pursue the adoption of the Directive. Moreover, some commentators believe that the German government's opposition to the Directive – a stance strongly criticised by German trade unions (DE0010288F) – is unlikely to be sustained indefinitely, especially following agreement at the December 2000 Nice European Council on the employee involvement aspects of the European Company Statute, enabling early moves towards the latter's adoption. It has also been suggested that Denmark's and possibly also Ireland's remaining concerns over the draft information and consultation Directive are capable of being accommodated in a revised proposal. In these circumstances, the "blocking minority" relied on by the UK government now looks distinctly fragile and the UK may soon find that negotiating a package it can live with is its only remaining option. (Mark Hall, IRRU)