In March 2001, the European Court of Justice delivered its judgment in the first case concerning the European Works Councils (EWCs) Directive to have reached the Court. The ruling in the bofrost* case highlights the responsibility of undertakings which are part of a group to meet employee requests for information about the number and distribution of employees and the structure of the group, including the disclosure of documents if necessary, so that the employees can determine whether they have the right to seek negotiations about a possible EWC.
On 29 March 2001, the European Court of Justice (ECJ) delivered its judgment in the first case concerning the interpretation of the European Works Councils (s) Directive (94/45/EC) to reach the ECJ - Betriebsrat der bofrost* Josef H Boquoi Deutschland West GmbH & Co KG v bofrost* Josef H Boquoi Deutschland West GmbH & Co KG (case number C-62/99). The case concerns the extent of the Directive's obligation - set out in Article 11(2) - on employers to respond to requests by employee representatives for information about the number and distribution of employees and corporate structure in order to prepare for the possible setting up of an EWC.
Background to the case
In April 1997, the bofrost* group's undertakings in Europe adopted an agreement intended to establish parity between them so that none should have a dominant influence over the others. The agreement entrusted the management of the group in Europe to a steering committee. It also established a shareholders' advisory council, presided over by Josef H Boquoi, whose agreement is necessary for the adoption of certain business-related decisions (similar arrangements covering the German-based undertakings in the group date back to 1993).
Prior to this, the German works council at bofrost* Josef H Boquoi Deutschland West GmbH & Co KG had made several requests to the company for information on employee numbers and company structure within the bofrost* group with a view to seeking the establishment of an EWC. In a letter dated 9 January 1997, the company "definitively refused" to provide such information.
In March 1998, the works council applied to the local labour court for an order that the information should be supplied. The company contended that neither Mr Boquoi nor any undertaking within the group exercised legal or actual control of the bofrost* group, so it was not covered by the EWCs legislation. However, the labour court upheld the works council's case.
On appeal, the higher labour court in Düsseldorf took the view that, under the German EWCs legislation, the works council is entitled to information from the employer on the average overall number of employees and their distribution between Member States and on the structure of the group, including the shareholding connections of Mr Boquoi, even where it has not been established that a controlling undertaking exists as defined by Article 3 of the EWCs Directive. However, in order to ensure that its interpretation was consistent with the terms of the Directive, the court decided to stay proceedings and referred the following questions to the ECJ for a preliminary ruling:
- Does the right to information under Article 11(1) and (2) of the Directive exist even where it is not (yet) established whether or not there is a controlling undertaking within the meaning of Article 3 of the Directive in a group of undertakings as defined by Article 2(1)(b) of the Directive?
- If so, does the right to information under Article 11(1) and (2) also include the right to request from the undertaking concerned information which gives rise to the presumption of dominant influence referred to in Article 3(2)? and
- Does Article 11(1) and (2) on the right to information also include the right to request documents from an undertaking to clarify and explain such information?
Judgment of the ECJ
After considering written observations submitted on behalf of the works council, the company, the German and Austrian governments and the European Commission, as well as the opinion of Advocate-General Antonio Saggio (EU0011280F), the ECJ issued its judgment on 29 March 2001, in the following terms:
- "On a proper construction of Article 11 (1) and (2) of [the Directive], an undertaking which is part of a group of undertakings is required to supply information to the internal workers' representative bodies, even where it has not yet been established that the management to which the workers' request is addressed is the management of a controlling undertaking within a group of undertakings."
- "Where information relating to the structure or organisation of a group of undertakings forms part of the information which is essential to the opening of negotiations for the setting up of a European Works Council or for the transnational information and consultation of employees, an undertaking within the group is required to supply the information which it possesses or is able to obtain to the internal workers' representative bodies requesting it. Communication of documents clarifying and explaining the information which is indispensable for that purpose may also be required, in so far as that communication is necessary in order that the employees concerned or their representatives may gain access to information enabling them to determine whether or not they are entitled to request the opening of negotiations."
Commentary
The judgment seeks to clarify the rules governing transparency in the initial dealings between employee representatives and company management prior to any employee request for negotiations about a possible EWC. The implications of the ECJ's ruling are that, in a group of undertakings, the obligation to respond to requests for information on employee numbers and corporate structure applies to all group undertakings within the European Economic Area, not only to the controlling undertaking, and that such an obligation exists even before it is established whether or not the group is a Community-scale group of undertakings within the meaning of the Directive. Undertakings are required to disclose information on the structure or organisation of the group to the extent that it is essential for decisions about the opening of negotiations about the establishment of an EWC, subject to what information the undertaking "possesses or is able to obtain". The provision of documents may also be required, if necessary and to the same extent. The Advocate-General's opinion suggested that the provision of information on corporate structure and documentation should be subject to confidentiality requirements of the national law applicable, but the ruling of the Court does not specify such a limitation.
The ruling may have important consequences for the interpretation of national EWC legislation. The provisions of existing national EWC measures in this area vary in their details. For example, the German law on EWCs of 1996 already requires local management to provide employee representatives with information and documentation on employee numbers and company structure where requested to do so. The UK's Transnational Information and Consultation of Employees Regulations 1999 (UK0001146N) entitle an employee or employees' representative to request information from the management of an establishment or undertaking in the UK for the purpose of determining whether it is part of a Community-scale undertaking or group, but do not specify the disclosure of documents. The UK and other national EWCs legislation will now have to be construed in accordance with the ECJ's decision.
Moreover, the Court's reasoning in respect of the disclosure of necessary documents as part of the process leading up to the establishment of an EWC could also be seen as implying an obligation on management to disclose necessary documents in the course of information and consultation procedures involving EWCs. Such an interpretation could potentially have significant repercussions in terms of the quality of company information available to EWCs. (Mark Hall, IRRU)