Building bridges: 20 years of EWCs / Foundation Focus, September 2015

European works councils (EWCs) provide transnational information and consultation mechanisms for employee representatives in multinational companies (MNCs). In organising meetings between central management and employee representatives from the EU Member States in which the companies operate, the EWC builds a bridge between the headquarters where strategic decisions are made and the workplaces where these decisions have a concrete impact on employees. This bridge-building takes place across different cultures, interests and levels. As there are information and consultation mechanisms at European level, and also at workplace level, the way these different levels work together determines their efficiency.

Legal framework

The information and consultation Directive (94/45/EC) applies to companies that have at least 1,000 employees in the European Economic Area, and 150 or more in at least two EU Member States (European Parliament, 2002). These companies are obliged to establish an EWC or some kind of agreed European mechanism for information and consultation, if employee representatives of at least two EU Member States request this. An EWC is established through negotiations with employee representatives from the MNC’s European operations in a special negotiating body (SNB); this results in an EWC agreement establishing the terms of operation of the EWC. Only when the parties cannot come to such an agreement are the standard rules (the subsidiary requirements) applied. There is no doubt that having the subsidiary requirements in the background boosted the conclusion of voluntary agreements in the years before the entry into force of the national transpositions of the 1994 EWC directive in September 1996.

The EWC directive has evolved to become an important instrument of compliance with the European standards and practices shaping the European Social Model. After 10 years of attempts to amend the EWC directive, on 6 May 2009 a recast EWC directive was adopted (2009/38/EC). By June 2016, the European Commission will present a report assessing the implementation of the recast directive.

Window of opportunity

The period between the adoption of the recast directive in June 2009 and the entry into force of its national transpositions in June 2011 provided a window of opportunity to conclude new EWC agreements, discharging those EWCs and MNCs from the obligations of the recast EWC directive. The window of opportunity aimed to respect the autonomy of the social partners. It did not raise the number of newly established EWCs, as it had done in the period before the entry into force of the national transpositions of the 1994 EWC directive in September 1996. There appear to have been fewer new EWCs established each year since 2009, compared with previous years; the recast EWC directive, however, aims to facilitate the process of establishing new EWCs, by making information on the scope of a company more easily available to local workplace representatives and making local management responsible for disclosing this information in each workplace. In addition, the recast directive has provided for crucial support to SNBs in terms of granting an employee-only preparation meeting for SNB members, training for SNB members, as well as notification of ongoing negotiations to European trade unions and their expert assistance in SNB meetings.

A recent report from Eurofound, based on 10 longitudinal case studies, indicates that the window of opportunity did indeed trigger a considerable number of renegotiations of the agreements of existing EWCs (Eurofound, 2015a). There is, however, no evidence that the recast directive made these EWCs more effective within the period of the window of opportunity, since this could have happened before 2009, and also after 2012. It may be that some of the EWCs had no real scope to become more effective, perhaps having already developed beyond the previous legal minimum requirements. This could be due to their having already implemented provisions on the training of EWC members, holding more than one annual plenary meeting or having further fine-tuned their information and consultation mechanisms. The potential impact of the recast directive had thus already occurred in part in these EWCs before it was adopted. As the case studies were based on interviews conducted in 2012, there is no evidence to show the recast directive has had an influence on the development of EWCs after 2012.

In any case, the legal developments that clearly influenced EWCs most in terms of their composition, representativeness and functional requirements were the successive enlargements of the EU and the subsequent European expansion of MNCs: these led to an increase in the number of employee representatives from different countries in EWCs.

Impact of the crisis

None of the cases studied illustrates a direct impact of the crisis in terms of a reduction in EWC activities, such as cancelling or postponing an EWC meeting. EWCs were indirectly affected through company changes that the crisis set in motion. The companies hardest hit by the crisis were those in the financial sector, but substantial changes also occurred in some companies prior to and independently of the crisis. While such restructuring challenged EWCs, it also offered some an opportunity to clarify their information and consultation procedures.

As regards other factors, the study investigated whether the size of the MNC’s workforce and the degree of its internationalisation might also have a bearing on the development of EWCs. In terms of the degree of internationalisation, a greater number of companies in an MNC means a greater number of countries from which representatives must be included in the EWC. Regarding workforce size, delegates from countries with smaller workforces do not have the same opportunities as representatives from the home country or from countries with larger workforces to participate in and contribute to the development of the EWC. The study also found that the more internationalised the management decision-making or the smaller the workforce in the MNC’s home country, the greater the level of interest of home-country employee representatives in the EWC’s activities. Opportunities for EWCs to autonomously develop a proper European identity are improved when the key roles on both the management and employee representative sides are given to delegates from countries other than the home country. Certain company characteristics and how these change can influence developments in the composition or functioning of EWCs. However, for the companies in this study, this has been more of an ongoing trend than a result of the recast directive or of the recent crisis.

Fine-tuning the parameters

Renegotiations of EWC agreements offer the opportunity to fine-tune the parameters of an EWC in terms of its composition, the number of meetings, the duration of the meetings, the internal structure or the role of the select committee. The report shows that the largest potential impact of an agreement renegotiation on the functioning of an EWC can occur when it is triggered by mergers or acquisitions of companies that both have EWCs already. Company changes can also increase the turnover among EWC membership, potentially impeding the development of cooperation, which is central to the effectiveness of the EWC.

The research shows that the investment and efforts that employee representatives and management make to develop an EWC depend on how they assess its function. Most of the significant developments in the functioning of the EWCs studied were due to the continuous efforts of committed EWC members to overcome cultural differences, challenge company changes and resolve them through increasing cooperation, building trust and seeking a common understanding of the appropriate ways for the EWC to handle change.

As for the management perspective, interesting developments were reported for two companies where a European human resource network was developed in parallel to the EWC. This demonstrates that the efforts made by management and employee representatives to further develop their EWCs can benefit both sides. The practices presented in the EWC case studies in the report are examples of innovative industrial relations practices in a win–win context.

For more, read European Works Council developments before, during and after the crisis.

Peter Kerckhofs

Full publication with references available here


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