ECJ rules on German EWCs case

In January 2004, the European Court of Justice (ECJ) ruled in favour of a German works council in a case over the procedure for establishing a European Works Council (EWC). The ECJ found that the German works council had a right to be supplied with the necessary information to open negotiations, as prescribed in the EU Directive on EWCs, even if the parent company of the undertakings concerned was not located in a Member State. In such a case, the responsibility to provide this information falls on the management of the group establishment or company employing the largest number of employees in any single Member State.

On 13 January 2004, the European Court of Justice (ECJ) ruled (in case C-440/00, Gesamtbetriebsrat der Kühne & Nagel AG & Co KG v Kühne & Nagel AG & Co KG) that the company works council (Gesamtbetriebsrat) at the German company Kühne & Nagel AG & Co KG- which is part of the Swiss-based transportation multinational group Kühne & Nagel- had to be supplied with the information necessary in order to open negotiations to set up a European Works Council (EWC) as prescribed in the EU Directive on EWCs (94/45/EC), even though the parent company of the undertaking concerned was not located in a Member State (ie one of the European Economic Area countries covered by the Directive).

As a first step towards the establishment of an EWC, the German company works council had asked Kühne & Nagel in Germany to provide it with specific information about the average number of employees and their distribution across the Member States, undertakings and establishments, and about the structure of the company and the group of companies, as well as the names and addresses of the Kühne & Nagel group employee representatives within those Member States. While Kühne & Nagel did not dispute that it was under an obligation to provide the information, it stated that it was not able to fulfil its obligation because central management, located in Switzerland, was not subject to Community law and refused to supply it with the information. The German company works council took the case to the national courts, and several questions were eventually referred to the ECJ.

The ECJ ruled in January 2004 that if the central management of a company is not located in a Member State, then the responsibility to provide the information essential to opening negotiations over the establishment of an EWC falls on the management of the group establishment or undertaking which employs the largest number of employees in any single Member State (the so-called 'deemed central management'). The other establishments or companies belonging to the group and located in the Member States are obliged to assist this 'deemed central management' in fulfilling its obligations under the Directive.

This ruling is of general importance for establishing EWCs in companies where the central management is based outside the Member States covered by the Directive.

A labour law expert at the Confederation of German Employers' Associations (Bundesvereinigung der deutschen Arbeitgeberverbaende, BDA), Thomas Prinz ,was cited in the press as saying that this decision would indirectly expand the 'bureaucratic regulations' of EU law to countries outside the coverage of the Directive. A labour law expert at the Confederation of German Trade Unions (Deutscher Gewerkschaftsbund, DGB), Helga Niebock, was quoted as being delighted that companies were no longer able simply to ignore attempts to establish EWCs.