Commission launches review of EWCs Directive

In April 2004, the European Commission began consultations with EU-level social partner bodies on measures to enhance the effectiveness of European Works Councils (EWCs), including the possible revision of the EWCs Directive.

On 20 April 2004, in a long-awaited move (EU0310204F and EU0005248F), the European Commission initiated formal consultations with the EU-level cross-industry and sectoral social partners about 'how best to ensure the potential of European Works Councils (EWCs) [can be] fully realised', including the possible revision of the EWCs Directive (94/45/EC).

Key points of the consultation document

Operation of EWCs to date

The Commission’s consultation document argues that 'consideration of future policy regarding EWCs must begin by fully recognising the very significant progress that has already been achieved.' It notes that there are now some 650 companies or groups with EWCs, covering an estimated 11 million employees and involving about 10,000 employee representatives. EWCs are said to have 'clearly demonstrated their value, not only in meeting the objective of providing access to information and consultation for employees at [European] level ... but, equally significantly, in providing a mechanism through which effective transnational employee involvement can make a significant positive contribution to company development, particularly to the successful management of change' .

However, the consultation document notes that instances where information and consultation have been 'absent or ineffective' during restructuring have given rise to 'concern and anger' among employees. The Commission argues that the 'primary concern' of those, such as the European Parliament and European trade unions, that have been pressing for amendments to the Directive has been to ensure the effectiveness of information and consultation procedures, particularly in restructuring situations. Other concerns noted relate to:

  • the prerogatives of, and facilities for, EWC members;
  • the role of trade unions;
  • facilitating the more widespread creation of EWCs; and
  • dealing with practical issues concerning the operation of EWCs in situations not explicitly provided for in the Directive.

Wider legislative developments

Since the adoption of the EWCs Directive, EU legislation on employee involvement has developed significantly with the adoption of the 2002 information and consultation Directive ( 2002/14/EC ) ( EU0204207F ), and the Directives on employee involvement linked to the 2001 European Company Statute ( 2001/86/EC ) ( EU0206202F ) and the 2003 European Cooperative Society Statute ( 2003/72/EC ). The Commission says that it is 'significant' that 'some of the issues that have been addressed and dealt with in the recently adopted Directives are relevant to the issues that have been raised regarding the application of the EWCs Directive' . (Among other points, the subsequent Directives contain more detailed definitions of 'information' and 'consultation' and stronger information and consultation procedures than the EWCs Directive does.)

Developments in EWC agreements

The consultation document points out that the provisions of EWC agreements and their actual functioning appear to have developed over time. Renegotiated agreements 'often result in the strengthening of the operation of the EWCs' . This 'process of dynamic development within EWCs has reached its fullest expression to date with the emergence of a negotiating role within some EWCs' .

Numbers of EWCs

The Commission expresses concern that, since the peak in the number of agreements reached in 1996, the pace of adoption of new EWC agreements has slackened to an average of 40-50 per year, and that EWCs have been established in only about 40% of relevant organisations.

Corporate restructuring

The Commission notes that the need for 'proper information and consultation in restructuring situations' was a key issue raised in its January 2002 consultation document on the social aspects of corporate restructuring ( EU0201235F ). The Commission suggests that contents of the social partners’ 2003 joint text, Orientations for reference in managing change and its social consequences ( EU0307203F ) could have a bearing on their approach to the issues raised in the present consultation.

EU enlargement

A final factor highlighted by the consultation document concerns the implications of EU enlargement, both in terms of the adoption of EWCs legislation by the accession countries and the expansion of EWCs to include employee representatives from those countries. The Commission comments that 'making transnational information and consultation fully effective in an enlarged Union remains a major challenge that will require sustained energy and commitment from the social partners in the short to medium term' .

Questions for the social partners

The consultation document concludes by emphasising the importance the Commission attaches to the responses of the social partners on this issue: 'The views of the social partners on how the continued development of European Works Councils can best be facilitated will be crucial. They are best placed to address the issue.'

The Commission asks the social partners to give their opinion on:

  1. 'How best to ensure that the potential of European Works Councils to promote constructive and fruitful transnational social dialogue at the level of the undertaking, which will benefit both companies and their employees, is fully realised in the years ahead.'
  2. 'The possible direction of Community action in this regard, including, as the case may be, the revision of the European Works Councils Directive.'
  3. 'The role they believe the social partners themselves can play in addressing the issues that arise having regard, as appropriate, to their recent reflections on related issues in the context of managing change and its social consequences'.

The consultation procedure

The consultation document marks the start of the first stage of a two-stage procedure, laid down by Article 138 of the Treaty establishing the European Community (TEC), which the Commission is obliged to undertake before submitting proposals in the social policy field. The Commission must first consult the social partners 'on the possible direction of Community action'. After that, if the Commission considers Community action 'advisable', it is required to consult them on 'the content of the envisaged proposal'. During this process, the social partners may inform the Commission that they wish to attempt to negotiate a Community-level agreement on the issue in question. Such an agreement could then either be implemented by the social partners themselves - as with their July 2002 agreement on telework (EU0207204F) - or be given statutory backing by the Council of Ministers in the form of an EU Directive. If the social partners do not opt to negotiate an agreement, or fail in the attempt, it would be open to the Commission itself to bring forward legislative proposals for amending the EWCs Directive. In practice, however, there would be scope for some other form of agreed social partner input which could help shape the Commission’s approach to the question of revision. The joint text developed by the social partners in response to the Commission’s January 2002 consultation paper on restructuring is an example.

Social partner reaction

Following the publication of the consultation document, the European Trade Union Confederation (ETUC) issued a statement calling for the urgent revision of the EWCs Directive and for 'the pace of the review to be stepped up'.

The statement says that: 'With the EU about to enlarge to 25 countries, and an economic context marked by restructuring, mergers and relocations, the ETUC wants the mechanics of revising the Directive to be speeded up.' It also argues that 'revision is essential from a legal standpoint', given that information and consultation rights are 'dealt with differently' by the other relevant Directives. The statement says that the ETUC 'is ready to engage in consultations' and expresses the hope that the Union of Industrial and Employers' Confederations of Europe (UNICE), which represents private sector employers, will now support a 'speedy revision' of the Directive.

In December 2003, the ETUC’s executive committee adopted a resolution reiterating its key objectives in terms of revising the Directive. An expanded version of the resolution was subsequently published, identifying in greater detail 'all the points on which the ETUC would like to see changes to the Directive and which should be covered by any forthcoming negotiation between the European social partners and addressed by the European Commission'.

UNICE has not reacted publicly to the launch of the consultation, but has always contested the case for overhauling the Directive, arguing that to do so would be premature, and that instances of poor practice that fall short of the Directive’s standards highlight the need to improve its implementation rather than revise its provisions.

UNICE has in the past faced internal tensions over involvement in negotiations with the ETUC over the highly sensitive issue of information and consultation. In 1994, in the run-up to the adoption of the EWCs Directive, 'talks about talks' were held between the two organisations, but eventually failed following the Confederation of British Industry’s withdrawal. In 1998, after much internal discussion, UNICE rejected negotiations with the ETUC on the issue of national information and consultation rules (EU9812135F), following which the Commission brought forward proposals for the Directive which was eventually adopted in March 2002.

UNICE’s social affairs committee was due to meet on 19 May to consider its response to the consultation document. It seems highly unlikely that UNICE would agree to negotiate with the ETUC over revisions to the Directive. Instead, it may suggest a broader process looking at EWC practice, similar to that undertaken by the social partners on restructuring. This involved a series of seminars and case studies, the key lessons from which were then incorporated in a non-binding joint text setting out 'orientations for reference' by the parties concerned.

Commentary

The Commission’s consultation document presents a very upbeat assessment of the operation of EWCs. It does not make any specific proposals for revising the Directive, though it does refer to certain key criticisms of the Directive, which might be interpreted as indicating the Commission’s agenda for possible amendments to the Directive. Moreover, revision of the legislation is only one possible element of the Commission’s rather broader approach to 'realising the full potential' of EWCs.

The scope of the consultation document, as well as its insistence on the 'crucial' nature of the views of the social partners, indicates that the Commission is seeking to maximise the chances of an agreed social partner input on improving the effectiveness of EWCs. Whether this will happen remains to be seen. The terms of engagement between the ETUC and UNICE on this issue are going to be highly sensitive politically for both organisations. However, it seems likely that they will at least want to explore the scope for developing a joint response to the consultation. (Mark Hall, IRRU)

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