EurWORK European Observatory of Working Life

Developments in European Works Councils

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  • Date of Publication: 10 November 2004



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Mark Hall and Paul Marginson
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This study reviews key developments concerning European Works Councils (EWCs) over the period 2002-4. It looks at the incidence of EWC agreements and their renegotiation, the influence of EWCs on the handling of transnational restructuring, legal cases involving EWCs, the impact of EU enlargement on EWCs, and the debate about how best to enhance the effectiveness of EWCs, including the possible revision of the EWCs Directive.

The spread of European Works Councils (EWCs) represents a major innovation in transnational industrial relations institution-building. As a result of the 1994 EU Directive on EWCs (94/45/EC), nearly 750 multinational companies operating across Europe have now set up such bodies. Intended by EU legislators to bridge the gap between increasingly transnational corporate decision-making and employees’ nationally-defined information and consultation rights, EWCs bring together employee representatives from each European Economic Area (EEA) country in which the company has operations, for the purposes of information disclosure and consultation with group-level management (TN9807201S).

Two recent developments have significant implications for the operation of EWCs. In April 2004, the European Commission launched consultations with EU-level social partner bodies on measures to enhance the effectiveness of EWCs, including the possible revision of the Directive (EU0405203F). In May 2004, EU enlargement extended the geographical reach of the EWCs Directive from 18 to 28 countries, ie the 25 EU Member States plus the further three countries that belong to the European Economic Area (Iceland, Liechtenstein and Norway).

Against that background, this comparative study contributes to the assessment of EWCs to date by examining key developments from 2002 onwards in relation to:

  • the number of EWCs, recent agreements and the renegotiation of agreements, including following mergers, takeovers and disposals;
  • EWC practice, including the influence of EWCs on the handling of transnational restructuring and the conclusion/significance of agreements or joint texts negotiated by EWCs;
  • the incidence and outcome of litigation concerning EWCs;
  • the impact of EU enlargement on EWCs in terms of the increase in the number of multinational companies now covered by the Directive, the extension of existing EWCs to include representatives from the new Member States and the implications for their operation; and
  • government, employer and trade union views on whether and how the Directive should be revised, and the means of disseminating good practice.

The study is based on reports submitted by the European Industrial Relations Observatory (EIRO) national centres in 13 'old' EU Member States and Norway in response to a questionnaire, as well as other, published research. It also draws on articles prepared by EIRO national centres in the 10 countries that joined the EU in May 2004, which summarise the key provisions of their national measures to transpose the EWCs Directive and the experience of 'enlarging' EWCs to include employee representatives from the new EU Member States.

The spread and revision of EWC agreements

There are no official EU- or national-level data on the number of multinational companies (MNCs) which have established EWCs, nor on the numbers of new agreements that have been concluded over recent years. The most authoritative figures are those compiled by the European Trade Union Institute (ETUI), which estimates that the number of companies which fall within the scope of the EWCs Directive rose from 1,865 in 2002 to 2,169 in 2004 (European Works Councils Database 2004, P Kerckhofs and I Pas, ETUI). The primary factor underlying the increase is the accession to the EU in May 2004 of the 10 new Member States, the implications of wíhich are considered below. The global total of MNCs with an EWC in place rose by almost 100 between 2002 and 2004, from 639 to 737, an increase of some 15%. The ETUI figures find the sharpest increases in the number of EWCs to be amongst companies headquartered in Belgium, France, Finland, Germany and Sweden. In each instance, the total rose by at least 20% between 2002 and 2004.

Recently concluded EWC agreements

Drawing mainly on trade union sources, EIRO national centres report modest increases in the number of companies with agreements. The German Metalworkers' Union (Industriegewerkschaft Metall, IG Metall) reports six new agreements with German-based metalworking companies since 2002. In Denmark, the Central Organisation of Industrial Employees (Centralorganisationen af industriansatte, CO-industri) reports two new agreements over the same period, whilst the Council of Finnish Industrial Unions (Teollisuuden Palkansaajat, TP) estimates that five new agreements have been concluded in Finnish-based companies. The Dutch Trade Union Federation (Federatie Nederlandse Vakbeweging, FNV) estimates that at least five new agreements have been concluded in companies headquartered in the Netherlands. In Italy and in Spain, two new agreements are reported in locally-based MNCs in each country. Amongst the new Member States, an agreement establishing an EWC at the Hungarian-based oil and gas company Magyar Olaj és Gázipari was concluded in June 2004. ETUI reports that over 50 companies have concluded an agreement to establish an EWC since the beginning of 2002. Table 1 below provides examples.

Table 1. Examples of EWCs established in 2002-4
Name of company Country of origin of parent Sector
Agfa-Gevaert Belgium Chemicals
Autogrill Italy Catering
Banco Bilbao Vizcaya Argentaria Spain Finance
Bahlsen Germany Food
BAM Netherlands Construction
Brambles Australia Waste and packaging
Deutsche Post Germany Postal services
Deutsche Telekom Germany Telecommunications
Ecolab Netherlands Chemicals
Flowserve USA Engineering
France Telecom France Telecommunications
Gruppo Conserve Italiane Italy Food
Heijmans Groep Netherlands Construction
IMI UK Engineering
LSG Sky Chefs Germany Catering
Magyar Olaj és Gázipari Hungary Oil and gas
O2 UK Telecommunications
Radisson SAS Denmark Hotels and leisure
Royal Bank of Scotland UK Finance
Schibsted Norway Media
Seco Tools Sweden Metalworking
Sociedad Anónima Industrias Celulosa Aragonesa Spain Chemicals
Technip France Offshore engineering
Thomas Cook Germany Tourism
VendexKBB Netherlands Retail

Source: EIRO; European Works Councils Bulletin.

Global works councils

Recent years have also seen the establishment of worldwide works councils in a small number of MNCs. In French-based Renault, a worldwide works council was established in 2003 following the negotiation of a rider to the EWC agreement. Further, meetings of the Renault EWC are supposed to coincide with those of Nissan's EWC (Renault holds a significant stake in Nissan) so as to facilitate communication between employee representatives from the two groups. German-based companies establishing worldwide works councils include DaimlerChrysler (DE0209204N) and Volkswagen (DE9806271N). The Danish national centre reports that employee representatives at Group4Falck are aiming to establish a worldwide works council, given the impact of conditions in operations outside of Europe on European developments. In contrast, whereas the scope of the former EWC at the UK-based NatWest bank had been worldwide, following its acquisition by Royal Bank of Scotland representation on the new EWC is now confined to the countries of the EEA.

Revision of EWC agreements

No systematic data are available on the actual incidence and extent of any revision or renegotiation of EWC agreements. Some indication comes from a recent survey of 39 larger MNCs with EWCs, with headquarters in a range of countries. Of the companies surveyed, 18 reported renegotiating their EWC agreement over the past two years (European Works Councils Survey 2004, ORC Worldwide).

The impetus towards revision or renegotiation of EWC agreements appears to derive from three broad sources. The first is the evolving practice of the EWC itself. For example, amongst companies headquartered in the Netherlands most agreements are valid for four years, and developments in practice are frequently codified as agreements are renewed. Amongst French-based companies, French case law derived from the Renault Vilvoorde closure case of 1997 (FR9704142N) has prompted the introduction of a right to information in due time over restructuring plans into the provisions of a number of EWC agreements. IG Metall reports improvements to information and consultation rights when agreements are revised or renegotiated in several German-owned metalworking companies. Amongst Finnish-based companies, reported changes relate to specifying the working language(s) for the EWC and the availability of interpretation.

The second source is major changes to the business and/or the structure of the company. This includes mergers and major acquisitions, which may or may not involve companies with established EWCs. It also covers divestments and disposals and restructuring and rationalisation involving site closures, which can effect the geographical coverage of the EWC and/or its composition in terms of the weight of employee representation from different countries, both of which require adjustments to be made to representation on the EWC. Also falling under this heading are company reorganisations which may affect cross-border management structures within Europe with implications for the EWC.

In the case of mergers and major acquisitions, the establishment of an EWC for the newly-formed group has sometimes involved fresh negotiations under the procedures of Article 6 of the Directive, but not necessarily so. For example, the 2002 EWC agreement concluded at Arcelor (steel), following the merger of Arbed (Luxembourg), Aceralia (Spain) and Usinor (France), was negotiated under the Directive’s special negotiating body (SNB) procedure. So too was the 2003 Areva (engineering) agreement, following the integration of Alstom’s transmission and distribution division into the former Framatome. The EWC agreement concluded at UK-based Royal Bank of Scotland in 2003, which superseded the EWC arrangement of the NatWest group acquired by RBS in 2000, was also negotiated through the Directive’s SNB procedure. So too was the new (2004) agreement at Dutch-based BAM, which previously had no EWC, following its takeover of another construction group, HBG, which did have an EWC. In practice, the new agreement built on the former HBG agreement. In contrast, following the 2001 merger which established GlaxoSmithKline (UK, pharmaceuticals), representatives from the two EWCs covering the two companies which had combined negotiated a new agreement with the new group management. The EWC established at Aventis (chemicals) in 2000 (which is legally based in France) following the merger of Hoechst (Germany) and Rhône-Poulenc (France) involved the negotiation of a rider to the existing EWC agreements in the two former companies; the same procedure was used to establish a new EWC at BNP-Paribas, following the 2003 merger of the two banks. The effects of divestments and disposals can be rather different. For example, following Montedison’s (Italy) disposal of Eridiana Beghin-Say (food) the EWC, which had been established in 1995, was not reconstituted.

Examples of the revision of EWC agreements to incorporate changes in the functioning and rights of the EWC are given in table 2 below.

Table 2. Examples of revisions of EWC agreements which affect the EWC’s functioning and rights
Axa (France, finance) Rider negotiated in 2002 which entitles the EWC to prior information in due time when restructuring is being planned which will have a considerable impact on the interests of at least half of the staff employed in one country.
Dexia (Belgium, finance) 1996 agreement revised in 1998, 2001 and 2003. Increased frequency of meetings of the select committee, improvements in technical support and specification of working languages.
Diageo (UK, beverages) 1998 agreement revised in 2002 (IE0211204F). Strengthened definition of consultation, specifying that for it to be meaningful it should occur in good time, before final decisions are taken and allowing for comments and proposals for employee representatives to be taken into account. Incorporation (in an annex) of a 'statement of best practice guidelines on redeployment, redundancy and outplacement'.
Heidelberger Cement (Germany, building materials) 1996 agreement revised in 2004. Improved resources for the EWC, increased duration of EWC meetings, and strengthened rights to information and consultation.
Kraft Foods (US, food) 1996 agreement revised in 2002. Expansion of the range of issues which can be tabled on the EWC’s agenda, and strengthened provisions entitling employee representatives to training (including English language training).
Several French-based companies Improvements in relation to EWC operating costs and the use of experts. Recent agreements at Air France (aviation), EDF (electricity), GDF (gas) and Sanofi-Synthélabo (pharmaceuticals) have set out overall annual budgets for commissioning experts. Operating cost budgets have been improved at Axa and Renault.

Source: EIRO.

Examples of the revision of EWC agreements to reflect changes in the business and/or company structure are given in table 3 below.

Table 3. Examples of the revision of EWC agreements reflecting changes in the business and/or company structure
Arjo Wiggins Appleton (UK, paper) The company, which had an EWC, was acquired by French-based bank Worms & Cie. Reorganisation of the group resulted in three distinct companies being formed - Arjo Wiggins, Arjo Wiggins Carbonless Paper Operations and Antalis- for which three separate EWCs were established in simultaneous negotiations involving the employee-side signatory bodies to the 1996 agreement, the UNI-Europa European-level union federation and management representatives from the three new companies and the Worms group.
Degussa (Germany, chemicals) Following a series of acquisitions the number of employee representatives had risen, under the agreed formula, to nearly 50. A revision to the formula for allocating seats reduced the total number of employee representatives to around 30.
General Electric (Consumer and Industrial Group) (USA, appliances, lighting and industrial systems) Following the move of the European headquarters of this part of GE’s business from Spain to Hungary, negotiations are in process to modify the agreement.
Mayr-Melnhof (Austria, cartons) Significant expansion of the company’s international operations in Europe and the creation of new business divisions led the works council at the company’s main site in Germany to demand the renegotiation of the original 1994 EWC agreement to cover the new operations. In 2004, a new agreement was concluded which establishes two parallel EWCs - one for each main division, whose members have reciprocal rights to participate in either forum. The information and consultation rights of the EWCs were also strengthened.
VOEST-Alpine Stahl (Austria, steel) Substantial expansion of the company’s European and international operations in recent years led to the renegotiation of the 1996 agreement in 2001. The new agreement established more detailed, jointly operated procedural rules, increased the frequency of EWC meetings to twice a year and provided for the establishment of joint task forces on specific issues.

Source: EIRO.

The third factor behind the renegotiation of agreements is EU enlargement - discussed in more detail below - which extends the coverage of the Directive and thereby the geographical scope and potential size (in terms of numbers of employee representatives) of a significant number of EWCs.

The revisions to EWC agreements which arise from these different kinds of development do not necessarily involve a formal renegotiation of the entire agreement. In France, for example, revisions are often made by negotiating a rider to the original agreement.

The influence of EWCs on transnational restructuring

A central trade union criticism of EWCs has been that many exert only very limited influence on management decision-making, particularly as regards restructuring. The European Commission’s April 2004 consultation document on EWCs also notes that instances where information and consultation have been 'absent or ineffective' during restructuring have given rise to 'concern and anger' among employees. More generally, survey evidence points to widespread dissatisfaction amongst EWC representatives with the current practices of EWCs, particularly regarding the quality of information and consultation (J Waddington, European Journal of Industrial Relations, 2003).

There are no comprehensive data on the extent to which companies consult EWCs on restructuring issues and the impact this has on management decision-making. The available research evidence presents a mixed picture. While many EWCs are largely 'symbolic', involving a low level of information provision and no formal consultation, and little or no contact between employee representatives, or with management, between annual meetings, others have developed a more active and influential role involving, to varying degrees, ongoing contact and activity between employee representatives, and regular liaison with management. Some EWCs have been able to exert a measure of influence over management decision-making and even engage in the negotiation of agreements or joint texts with management.

The 2004 survey of 39 MNCs by the American management consultants ORC (see above) asked senior management whether they had ever adjusted a business decision in the light of consultation with the EWC. In the majority of cases (24), companies stated that the EWC had 'not made specific recommendations'. In six other cases management had 'declined to accept the EWC’s views'. However, additional comments by respondents indicated that, in the light of discussions with the EWC, some companies (unquantified) had adjusted or altered a decision, or had adjusted its implementation or communication to staff. In similar vein, a February 2004 survey of member companies’ experiences of EWCs by the Confederation of Danish Industries (Dansk Industri, DI) employers’ organisation found that management decisions were affected by discussion at EWCs only to a very slight degree. In answer to a question on whether consultation and dialogue within EWCs led management to consider employee proposals and modify management proposals as a result, several respondents said 'no'.

Key findings from recent comparative case study research into the operation and impact of EWCs are highlighted in boxes 1 and 2 below.

Box 1. The impact of EWCs on management decision-making

A recent study of EWCs in eight UK- and US-based companies carried out at Warwick University (Marginson et al, British Journal of Industrial Relations, 2004) found that the capacity of EWCs to influence the outcome of transnational management decision-making is fundamentally conditioned by the nature of companies’ business operations and the degree to which they are internationalised.

The impact of the EWC on management decision-making was found to be greatest in single-business companies whose operations are spread across countries and where production and other activities are integrated across European borders. No EWC impact on management decision-making was evident in multi-business companies whose operations tended to be concentrated in one country and/or where there was little or no cross-border integration of production.

EWC practice in the eight EWCs was also shaped by a range of further, structure and 'agency', factors.

Management structure and management policy are both important. How far EWCs are 'active' rather than 'symbolic' was facilitated or constrained by whether there was a European-level management structure which actually corresponded to the EWC. Where there was a close 'fit' between the management structure and the EWC, the latter was more likely to be active and more likely to have an impact on management decisions, than where there was not. Moreover, EWCs were more likely to exercise influence where management’s approach to the EWC was proactive, seeing it as a mechanism that could be utilised for management purposes - such as improving employee understanding of the rationale for business decisions and hence the legitimacy of management actions - than where management’s approach was minimalist, primarily concerned to comply with its legal obligations but strictly circumscribing the role and remit of the EWC.

The nature of pre-existing structures of employee representation are also important in facilitating the development of employee-side organisation and activity; in particular, the existence of representative structures at national group level in the main countries of operation and/or a pre-existing international network amongst employee representatives on which the EWC can build.

In only one of the eight companies studied, a leading US-based automotive manufacturer, were all these factors present and in this case the EWC exercised the strongest influence, engaging both in formalised consultation and the negotiation of European-level agreements with central management on the handling of restructuring.

EIRO national centres provide a number of examples of EWCs having some influence on the handling of transnational restructuring:

  • at Danish security company Group4Falck, the EWC was reportedly involved in discussions on a merger with Securicor, with 'beneficial' results from the employees’ point of view;
  • in the Netherlands, at LPGD (an electronics joint venture between Philips Electronics and LG of South Korea) and Draka (wires and cables), the respective EWCs have been able to influence the implementation of restructuring 'to some extent';
  • in the wake of the landmark legal case involving Renault (see below), French corporations reportedly usually inform the EWC or its relevant subcommittee about extensive restructuring plans. Also, management often calls special meetings of the EWC in such circumstances; and
  • in certain non-EEA-headquartered companies with major operations in Europe, EWCs have successfully influenced management policy, for example at General Motors (ES0109205F) and Ford (DE0004254N) where EWC-level agreements have been reached concerning the handling of restructuring.

However, national centres report several instances of EWCs protesting at not being adequately consulted over transnational restructuring. In some French companies, EWCs have publicly criticised management for providing 'inadequate' information about proposed restructuring. For example, in May 2004, employee EWC members at Groupama (finance) sought the postponement of a meeting of the EWC on these grounds. In companies such as Renault (EU9703108F), Alstom (FR0308101N) and Alcatel (components) EWCs, in conjunction with national trade unions and works council representatives, have organised 'euro-strikes' or 'euro-demonstrations' to protest at restructuring plans. At the Italian food multinational Parmalat, the EWC has reportedly played no significant role in the reorganisation of the company following its recent financial collapse. Other examples reported include the takeover of ABB by Bombardier (engineering), and the relocation to central and eastern European countries of Samsung (electronics) (ES0402205F), Lear (auto components) (ES0206201N) and Panasonic (electronics) (ES0406101N) operations from Spain and Honeywell (IT), Otis (lifts) and LG Philips (electronics) operations from Germany, although in a number of cases the transnational nature of the restructuring (and therefore whether consultation is formally required) is disputed. It is also the case that the statutory prerogatives of local works councils or trade unions under national legislation may often be stronger than those of EWCs and the latter may not be employees’ primary vehicle for pursuing such issues.

Box 2. European Foundation study of EWC practice

A new European Foundation for the Improvement of Living and Working Conditions report analysing of the practical operation of EWCs draws together findings from Foundation-commissioned case studies of 41 EWCs in companies headquartered in five different countries: France, Germany, Italy, Sweden and the UK. The report finds considerable diversity in the practice of the EWCs concerned.

On the provision of information, the cases ranged across instances where management was said to provide the minimum required to fulfil its obligations to those where employee representatives were provided with comprehensive information aimed at facilitating understanding of the rationale for transnational business decisions, acceptance of this rationale and thereby legitimation. In the majority of cases information provided by management was said by employee representatives to be sufficient, good or very good. Variation was evident in the time-frame of the information provided: in some cases it was largely retrospective, in others it was current as well as retrospective, and in further cases it also covered future plans.

On consultation, according to employee representatives the majority of EWCs tend to be informed at the point at which, or after, decisions on transnational business issues are taken by management. Although dialogue does occur, the report concludes that consultation in good time is rare. At best, the consultative process concerns the implementation of transnational business decisions. It is also more likely to involve the EWC’s select committee (if such exists) than the full EWC.

In the minority of cases where employee representatives exercised influence over transnational business decisions, it was over the implementation and not the framing and content of the original decision itself. Such influence can, for example, involve shaping the direction of the national and local-level negotiations which accompany a major transnational restructuring. From management’s perspective, at worst the EWC process was not generally seen to slow or impede the decision-making processes and, at best, EWC intervention was seen to result in improved implementation outcomes.

According to the Foundation study, the main factors conditioning the overall influence of EWCs include the business strategy and structures of companies (whether the company’s products and services are diversified or not across borders and the extent to which operations are internationally integrated and there is competition for investment between sites), industrial relations practice and traditions in the home country and company-specific industrial relations considerations, including structures and forms of employee representation and participation. Important too are the resources available to the EWC and the degree of cohesion of the employee side. Cohesion is impeded by prioritisation of local interests by representatives, differences of perception between 'home' country and 'foreign subsidiary' representatives and practical considerations of communication, language and (in)frequency of contact. It can be developed through the 'double-edged' experience of restructuring, which may prompt the forging of a common position against a backdrop of competing local interests.

Agreements and joint texts negotiated by EWCs

The most visible indication of EWC influence is the negotiation of agreements or joint texts by, or within the context of, EWCs. Such texts have been negotiated in a small but growing number of companies. Carley (Transfer, 2002) identified 26 such texts concluded by 12 EWCs. Since then, however, the incidence of texts has increased.

The subject-matter of these joint texts and the nature of their provisions vary considerably. The most common themes addressed are social/trade union rights, corporate social responsibility (CSR) and the handling of company restructuring. Other topics covered include health and safety, skills training and gender equality. Most establish general frameworks for company policy. In a number of cases the joint texts promote or require action on the issues concerned at lower levels within the organisation. Of these, agreements on restructuring concluded in 2000-1 at three companies - Ford Europe, General Motors Europe and Danone (France, food) (EU0111206F) - established specific principles or procedures which are obligatory for the parties at lower levels, and come closest to 'traditional' collective agreements. In Carley's view, the agreements in these companies 'may indeed be the first sight of genuine collective bargaining within EWCs'.

However, the focus of most recent agreements or joint texts which EWCs are party to is CSR, reflecting the trend towards the adoption of 'global agreements' by MNCs and international trade union/employee bodies concerning internationally-recognised (eg International Labour Organisation or United Nations) labour standards and principles, and demonstrating the scope for EWCs to engage with the CSR agenda. Table 4 below lists the companies where EWCs (or world works councils) have been signatories to, or otherwise involved in, agreements or joint texts (usually alongside international and national trade union bodies) over the past three years. In a number of other cases, agreements signed by international or national trade union bodies provide for EWCs to play a follow-up role.

Table 4. Agreements and joint texts signed by EWCs (or world works councils), 2002-4
Company Home country (sector) Subject of agreement/text Date
Bosch Germany (engineering) Basic principles of social responsibility 2004
Club Mediterranée France (leisure) Rights at work and mobility of employees 2004
DaimlerChrysler Germany/USA (motor manufacturing) Social responsibility principles 2002
Dexia Belgium/France (finance) Principles of social management 2002
Ford/Visteon USA (motor manufacturing) Social rights and social responsibility 2003
GEA Germany (technology) Principles of social responsibility 2003
General Electric Advanced Materials USA (plastics) Use of electric communications systems 2002
Pre-employment screening 2004
General Motors Europe USA (motor manufacturing) Principles of social responsibility 2002
Leoni Germany (wire and cables) Social rights and industrial relationships 2003
Porr Austria (construction) Data protection 2004
Prym (EU0410203N) Germany (buttons and fasteners) Social rights and industrial relations 2004
Renault France (motor manufacturing) Employees' fundamental rights 2004
Rheinmetall Germany (engineering) Code of conduct 2003
SCA Sweden (paper and packaging) Promotion of cooperation and social responsibility 2004
SKF Sweden (engineering) Code of conduct 2003
Triumph International Germany (clothing) Code of conduct 2002
Volkswagen (EU0207203F) Germany (motor manufacturing) Social rights and industrial relationships 2002

Source: Carley (2002); European Works Councils Bulletin.

In addition, national centres report that:

  • in September 2002, the Kraft Foods EWC negotiated a 'framework understanding', signed by both management and employee representatives, concerning the protection and international handling of employees’ personal data;
  • Belgian chemicals companies Solvay and Lhoist have agreed 'charters' with their EWCs regarding outsourcing, intended to provide a framework within which outsourcing is undertaken and guarantee the health and safety of the workers concerned;
  • at StMicroelectronics (Italy/France), trade unions and the company have signed an agreement on promoting an ethical code of behaviour covering human rights, trade union rights and working conditions, which provides a key role for the EWC in follow-up negotiations;
  • in June 2003, Philips Electronics published a document called 'Responsible transformation within Europe' following consultations with the European Philips Forum (the EWC). The latter has not signed the document, but reportedly considers it a step forward; and
  • in May 2004, the EDF EWC debated a document submitted by management on the 'policy of pre-empting industrial restructuring and accompanying it with social measures'.

Litigation concerning EWCs

To date, the Directive and national implementing measures have given rise to only a limited amount of litigation. In most countries, EIRO national centres report that there has been no litigation concerning EWCs during the period under review, if indeed at all. The cases that have arisen - at EU and national level - have covered a range of issues, including the provision of company information prior to the establishment of EWCs, disputes about companies’ obligation to consult EWCs, the position of EWCs following mergers and the legal standing of EWCs to pursue litigation.

Information requirements prior to the establishment of EWCs

Since 2001, the European Court of Justice (ECJ) has issued judgments in three cases concerning the interpretation of the EWCs Directive - all originating in Germany and all concerning different aspects of the Directive’s obligation 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.

  • In the first case, Bofrost (case C-62/99), the ECJ ruled that each undertaking within a group was obliged to meet employee representatives’ requests for information relating to the structure or organisation of the group, subject to what it 'possesses or is able to obtain' (EU0106218F).
  • In the second, Kühne & Nagel (case C-440/00), the ECJ underlined the obligation on the management of group undertakings located in the Member States to supply the deemed central management with the necessary information where they are in possession of the information or are in a position to obtain it (DE0404202N).
  • The third case, ADS Anker (case C-349/01), focused on whether a group’s actual or deemed central management is obliged to provide another undertaking belonging to the same group with the information sought by employee representatives. The ECJ ruled that Member States are required to oblige undertakings regarded as central management to provide group undertakings with such information if it is not available to those undertakings and to the extent that it is necessary for the purpose of establishing an EWC (EU0409203F).

This series of ECJ judgments has sought to clarify the rules on transparency in the initial dealings between employee representatives and company management prior to any employee request for negotiations about establishing an EWC, and should serve to limit the scope for companies to refuse to disclose information in an attempt to avoid or delay negotiations.

In July 2004, an employer’s failure to provide information on the size of its workforce by country when requested by an employee was the subject of the first ever ruling under the UK’s EWCs legislation (UK0409106N).

EWCs’ rights to be consulted

Most cases under this heading have arisen in France. Though they pre-date the period under review, the 1997 court ruling against Renault for failing to consult its EWC properly over the closure of the Vilvoorde plant, and similar rulings against Otis and Panasonic in 1998, remain the most high-profile and significant cases of this kind. More recently, legal action against the Honeywell group in France and Belgium reportedly resulted in the company disclosing previously withheld information, while it is reported from Germany that litigation concerning the rights of EWCs has taken place against Jungheinrich (manufacturing logistics) and Crawford Tor (doors).

An important issue that remains unresolved in French case law concerns the relationship between consultation at EWC-level and consultation with national works councils. Two recent court rulings, concerning events at Alstom and Altadis (tobacco), reportedly support the view that consultation with the EWC should be given priority, whereas in another case, involving STMicroelectronics, the court held that consultation at both levels should take place concurrently.

The position of EWCs following mergers

In the Netherlands, in the first ever EWC case in that country, the Amsterdam Court of Appeal (Enterprise Section) ruled in April 2004 that the Dutch telecommunications company Equant NV did not act unlawfully when it terminated the 1997 agreement establishing the Global One European Employee Forum (EEF) following Global One’s merger with Equant in 2001. Equant, which itself is part of the France Telecom group, informed the EEF in 2002 that it was terminating the agreement and intended to initiate negotiations to set up an EWC at the level of Equant. The EEF considered it was entitled to continue in existence until a new agreement was concluded, but this was rejected by the company. Subsequently, in view of moves to establish a group-wide France Telecom EWC, France Telecom decided against having an EWC specifically covering Equant. The court ruled that Equant was entitled to terminate the agreement establishing the EEF, and could not be forced to establish an Equant EWC because France Telecom, not Equant, constituted the group’s controlling undertaking.

The legal standing of EWCs

In 2002, during a hearing at the UK’s Employment Appeal Tribunal concerning a case initiated by the employee members of the P&O (shipping) European Works Council, subsequently withdrawn, the judge questioned whether, in the (common) situation where an EWC is a joint management-employee body, as at P&O, the employee side, as opposed to the full EWC, has the legal standing under UK law to be able to pursue a complaint. In 2003, a French court dismissed a case concerning alleged lack of consultation over restructuring at Alstom on the grounds that the agreement setting up the EWC did not grant its secretary a permanent mandate to take legal action on its behalf. However, in 2002, the Court of First Instance of the European Communities granted the Legrand EWC leave to intervene in a competition law case connected with the company's merger with Schneider (case T-310/01).

The impact of EU enlargement on EWCs

A series of features available on the index page for this comparative study gives details of the national legislation introduced by the 10 new EU Member States to implement the requirements of the EWCs Directive. Here we focus on the consequences of EU enlargement in terms of the increased number of companies now subject to the Directive, the enlargement of existing EWCs and the impact of this on EWC practice.

EU enlargement and companies covered by the Directive

From 1 May 2004, the coverage of the EWCs Directive was extended to the 10 new Member States. The Directive’s twin thresholds for establishing whether companies are covered by the EWCs Directive, of at least a total of 1,000 employees in the EEA and operations employing 150 or more in at least two EEA countries, now extend across 28 countries as compared to the previous 18. The greatest part of the increase in the number of MNCs covered by the Directive reported by ETUI, from 1,865 in 2002 to 2,169 in 2004, can almost certainly be attributed to the impact of EU enlargement. Of the companies which are newly covered by the Directive, the principal impact has been amongst MNCs headquartered in the 'old' EEA. Relatively few companies headquartered in the new Member States are of sufficient size and transnational scale to fall within the scope of the Directive: ETUI estimates that there are no more than 35 such companies, of which 12 have their headquarters in Hungary, 10 in Poland and seven in the Czech Republic. Examples of such companies include Gorenje (Slovenia, domestic appliances), Magyar Olaj és Gázipari and OTP Bank (Hungary) and VP Market (Lithuania, retail). According to the respective national centres, a Maltese-based hotel group, Corinthia Group, and as many as five Cyprus-based banks may be covered by the Directive. The only instance amongst such companies where, to date, an EWC has been established is at Hungarian-based oil and gas group Magyar Olaj és Gázipari.

Amongst the 18 pre-existing EEA countries, information on the impact of enlargement on locally-based companies is patchy and those estimates which do exist come from trade union sources. A study by Spain’s Trade Union Confederation of Workers’ Commissions (Comisiones Obreras, CC.OO) estimates that the number of Spanish-based MNCs covered may double as a result of enlargement (with most of the newly covered companies being relatively small in size). Austria’s Union of Salaried Employees (Gewerkschaft der Privatangestellten, GPA) reports a sharp rise in the number of Austrian-based companies covered. In contrast, the Danish CO-Industri anticipates no increase in the number of companies covered in Denmark’s industrial sector. Comparing ETUI’s 2002 and 2004 figures for the number of companies covered by the Directive by country of origin confirms that the impact of enlargement is asymmetric. The number of companies headquartered in Finland and Greece which are covered by the Directive shows the highest proportionate increase (whereas there was previously only one company in Greece covered by the Directive, there are now five) and the totals for companies headquartered in Ireland, Norway and Portugal the lowest.

Negotiations to establish EWCs in newly covered companies are reported to be underway in Finnish-based Elcoteq (electronics) and Kesko (trading systems and services), Spanish-based Grupo Celsa (steel) and in several Austrian-based banks and insurance companies, but not as yet in companies based in other countries in the 'old' EEA.

Enlargement of existing EWCs

Extension of the coverage of the EWCs Directive to the 10 new Member States has significant implications for existing EWCs. ETUI estimates that 505, or two-thirds, of the 737 MNCs which have an EWC have operations in one or more of the new Member States. The implication is that, unless it had already occurred, the scope of the EWC, and employee representation on it, will have to be correspondingly enlarged. Table 5 below shows that, other than in Greece where the only EWC in a Greek multinational will be affected, the percentage of existing EWCs affected by enlargement is highest in Austrian-based companies, at 88%, with those in Finnish, German and also Japanese-based companies coming next at around 80%. In contrast, the only Portuguese-based company with an EWC is unaffected, and after this the EWCs of companies headquartered in Spain, Ireland, the UK and Norway are the least likely to be affected by enlargement.

Table 5. Number of companies with EWCs and with operations in the new Member States, by country of origin
Company headquarters Number of companies with EWCs and with operations in the new Member States Proportion of all companies with EWCs
Austria 14 88%
Belgium 21 60%
Denmark 16 70%
Finland 21 81%
France 61 74%
Germany 95 79%
Greece 1 100%
Ireland 3 50%
Italy 15 65%
Netherlands 30 60%
Norway 7 54%
Portugal 0 0%
Spain 2 33%
Sweden 41 75%
UK 52 53%
Switzerland 26 70%
Japan 17 81%
USA 74 67%
Total 505 67%

Source: ETUI, 'EWC Database 2004'.

Table 6 below shows the number of companies with EWCs which also have operations in the new Member States. The table indicates that extension of the Directive’s coverage potentially involves the engagement of substantial numbers of additional employee representatives.

Table 6. Number of companies with EWCs operating in each new Member State
Country Number of companies with local operations and an EWC
Cyprus 32
Czech Republic 312
Estonia 97
Hungary 314
Latvia 78
Lithuania 76
Malta 28
Poland 399
Slovak Republic 181
Slovenia 100
Total 1617

Source: ETUI, 'EWC Database 2004'.

In practice, employee representation from the new Member States had already been established amongst a minority of relevant companies with EWCs prior to enlargement. In 2002, ETUI reported that there was some form of employee representation - either an observer or a full member - from the then accession countries on the EWCs of around one-quarter (84) of the then total of 323 companies which had an EWC and an operation in at least one of these countries (European Works Councils; facts and figures, P Kerckhofs, ETUI, 2002). Data on Polish representatives on some 40 EWCs suggested that in 2002 the split between those having full member status and those being observers was slightly weighted towards the former. A 2003 survey by the Czech-Moravian Confederation of Trade Unions (Českomoravská konfederace odborových svazů, ČMKOS) identified union representatives on 51 EWCs with operations in the Czech Republic, of which 24 were full members and 27 observers.

The ORC survey of 39 MNCs, conducted early in 2004, found that 16 had already provided for representation (either observers or full members) from the acceding countries, whilst 23 had yet to do so. EIRO national centres in Hungary, Lithuania and Slovenia also report a mixed picture just prior to enlargement: in the case of some foreign-owned companies with EWCs, employee representatives from the Hungarian, Lithuanian and Slovene operations, respectively, had full member status, whilst in others they were observers to the EWC and in a further group there was as yet no representation on the EWC. In the second group, employee representatives are generally now being accorded full member status. Amongst the third group, the selection or election of employee representatives has not necessarily yet begun.

Reports from national centres in the 'old' EEA confirm significant recent activity towards enlarging EWCs. For example:

  • prior to enlargement, observer status for employee representatives from the new Member States was already widespread amongst EWCs in Austrian-based companies;
  • most recent agreements in French-based companies anticipated EU enlargement by providing for employee representatives from the accession countries, initially as observers. Axa was a rare exception;
  • amongst EWCs in German-based companies, arrangements for extending the coverage of existing arrangements are reported to be underway in a number of companies, with EWC office-holders travelling to the new Member States to establish contact with their counterparts in these countries;
  • EWCs in several Italian-based companies already included representatives from the new Member States, usually as observers. For example, Fiat’s 2001 revised EWC agreement accorded observer status to a representative from Poland. Agreements are currently being reviewed to formalise these observers' status as full members;
  • all of the EWCs in the relevant Finnish-based, and most of those in the relevant Spanish- and Swedish-based companies, have been enlarged to include representatives from the new Member States;
  • a mixed picture is evident amongst EWCs in UK-based companies. A few, such as BAT (tobacco), have long provided for representation from the new Member States. Others, such as HSBC (finance), introduced observer status in the run-up to enlargement, whilst a further group of companies have yet to amend their agreements to extend the coverage of the EWC; and
  • in Norwegian-based Orkla Media (EU0310201N) and Schibsted, the Norwegian Union of Journalists (Norsk Journalistlag) has initiated projects to assist journalists’ trade unions in, respectively, Poland and Estonia, to secure representation and participation in the two companies’ EWCs.

An important practical difficulty in achieving the enlargement of EWC representation in quite a number of cases is reported to be the absence of local representative structures in the new Member State operations concerned. In such instances, the EWC can be confronted with the difficult task of prompting or organising local elections in order to determine a representative.

Enlargement of EWCs to encompass the new Member States can prompt changes in the basis of employee representation. Where agreements contain a ceiling on the total number of employee representatives, the result of these being invoked in the context of EU enlargement is leading to adjustments in representation across countries. In some instances operations are grouped into multi-country constituencies. For example, in some German-based EWCs the Baltic countries are reported to be entitled to only one employee representative from their combined operations. Some other EWC agreements in German-based companies are reported to have been amended to introduce the kind of minimum size thresholds (most frequently either 100 or 150 employees) already found in some 45% of agreements (Negotiating European Works Councils: a comparative study of Article 6 and Article 13 agreements, M Carley and P Marginson, European Foundation for the Improvement of Living and Working Conditions, 2000) below which employees in a given country are not entitled to direct representation on the EWC. At UK-based GlaxoSmithKline, a revised agreement was adopted in 2004 to accommodate the accession of the 10 new Member States, in each of which the company has operations. Application of the formula in the previous agreement would have generated 42 representatives, whereas the maximum number specified was 31. First, the maximum total number of employee representatives was increased from 31 to 33. Second, countries where the local operation employs 1,500 or fewer are no longer automatically entitled to direct representation on the EWC. Instead, the countries concerned can be grouped, with each group being entitled to one representative.

Experience of enlarged EWCs

Reports and the few available studies of the experience of integrating employee representatives from the new Member States into enlarged EWCs tend to suggest that enlargement exacerbates existing difficulties which EWCs face, rather than entailing new kinds of obstacle, and that there is little evidence of systematic 'east-west' rivalry undermining their functioning. Indeed the views of representatives from the new Member States display some noticeable parallels to those of 'established' representatives from the pre-existing EEA countries.

An international study on these issues, involving the French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT), CC.OO, Trades Union Congress (TUC), FNV, the Independent and Self-Governing Trade Union Solidarność (Niezależny Samorządny Związek Zawodowy Solidarność, NSZZ Solidarność) and ČMKOS union confederations, highlighted the contrast between formal inclusion of representatives from the new Member States and the challenge of genuinely integrating them into the EWC’s activities. An investigation of EWC employee representatives in six companies with operations in Poland (G Meardi, European Journal of Industrial Relations, 2004) found that both 'established' and 'new' representatives still had little familiarity with the prevailing industrial relations and labour law situation in the new and 'old' Member States, respectively. 'Established' representatives suggested that developing such mutual understanding was made all the more difficult when standards were so different across the enlarged EU. Yet, neither 'established' nor 'new' representatives identified any systematic obstacles to developing 'east-west' cooperation and in several cases were able to point to practical examples of this.

According to EIRO national centres in the 'old' EEA, 'established' EWC representatives and/or their trade unions report that enlargement of EWCs exacerbates already existing communication problems and language barriers, and that the range of national labour law and industrial relations frameworks with which representatives need some familiarity becomes even more diverse. It is also reported that expectations amongst representatives of the new Member States as to what EWCs might be capable of achieving are sometimes unrealistically high. In order to facilitate the integration of newly enlarged EWCs some trade unions, including Germany's IG Metall and United Services Union (Vereinigte Dienstleistungsgewerkschaft, ver.di), are providing training courses and other forms of support for members who are EWC representatives.

Available evidence on the views of EWC employee representatives from the new Member States identify several advantages deriving from EWC membership. They are also critical of some aspects of EWCs’ functioning. Surveys of representatives undertaken in the Czech and Slovak Republics and Poland find membership of EWCs is almost universally regarded as useful. Amongst the benefits cited are the information obtained about the economic situation and business plans of the wider company, and more specifically that it establishes a better connection with the parent company; and the opportunity to meet colleagues from other countries and to exchange information and experiences, including comparisons over employment and working conditions which provide useful context for local negotiations. Polish trade union representatives also underlined the practical benefits which experience of wide-ranging dialogue can bring in the local industrial relations context. Amongst the problems pointed up were language barriers, which despite the availability of interpretation inhibit communication between representatives, the relative infrequency of EWC meetings and a concern that information was not always provided by management in good time.

Commission review of EWCs

In April 2004, the European Commission launched long-awaited consultations with EU-level employer and trade union bodies about 'how best to ensure that the potential of EWCs to promote constructive and fruitful transnational social dialogue' can be 'fully realised', including the possible revision of the EWCs Directive (EU0405203F). This section briefly outlines the responses of the EU-level social partner organisations (EU0407207F) before summarising the views of national governments, employers’ organisations and trade union bodies on whether and how the Directive should be revised. In view of the Commission’s emphasis on measures to enhance the effectiveness of EWCs, we also briefly review the mechanisms that exist to promote the diffusion of good practice amongst EWCs.

EU-level social partner responses

The European Trade Union Confederation (ETUC) has for a number of years been pressing for extensive amendments to the EWCs Directive. Its response to the Commission consultation document argues that, for EWCs to become more effective, 'weaknesses' in the Directive must be addressed, particularly to ensure that information and consultation over transnational restructuring 'takes place in a serious and timely manner in all EWCs'. Key amendments put forward by the ETUC include the following:

  • 'improved definitions of information and consultation', reflecting the corresponding provisions in the more recent information and consultation Directive (2002/14/EC) (EU0204207F) and the employee involvement Directives linked to the European Company Statute (2001/86/EC) (EU0206202F) and the European Cooperative Society Statute (2003/72/EC);
  • specifying that information and consultation must take place in good time, ie 'before any decisions are taken', and that EWCs 'must have the right ... to draw up their own proposals in time for them, potentially, to be taken on board before the end of the decision-making process';
  • the guaranteed participation of representatives of the sectoral European trade union federations in both special negotiating bodies and EWCs; and
  • 'a more closely specified procedure for renegotiating agreements', particularly when EWCs are involved in restructuring or merger processes. EWCs must be 'fully able to carry out their important role while restructuring is taking place until any legitimate replacement is up and running'.

The ETUC also wants to see: a right to training for EWC members; a shorter period for EWC negotiations; stronger sanctions; measures to prevent abuses of confidentiality requirements; improved access to experts; guaranteed access for EWC members to company sites; and the right to preparatory and follow-up meetings of employee EWC members.

The Union of Industrial and Employers’ Confederations of Europe (UNICE) on the other hand, is 'strongly opposed' to a revision of the Directive: 'European employers are convinced that the best way to develop worker information and consultation in Community-scale undertakings is through dialogue at the level of the companies concerned.'

According to UNICE, 'the successful implementation of the EWCs Directive is due to the flexibility given to social partners at enterprise level to agree solutions best suited to their own circumstances. They, and not the legislator, can take forward the operation of EWCs in the future. Furthermore, an intervention by the EU legislator would be counter-productive as it could undermine the dynamic of gradual progress in the functioning of EWCs.'

UNICE argues that the main challenge facing EWCs is the enlargement of the EU, which 'will involve more and new representatives from the new Member States with different economic conditions, social traditions, cultures and languages and the associated increased complexity and costs'. 'Changing the rules of the game' would be premature and disruptive.

UNICE concludes that, instead of revising the Directive, Community action should focus on:

  • monitoring the transposition and implementation of the Directive in the new Member States; and
  • 'exchanging and learning from experiences of EWCs and other procedures of workers’ information and consultation in Community-scale undertakings, notably against the background of enlargement'.

In the autumn of 2004, the EU-level social partner organisations held two joint seminars to discuss case studies of how EWCs are responding to EU enlargement, with a view to identifying best practice. The first focussed on the experience of the EWCs at Fortis, Lafarge, EDF, Ericsson and Carrefour. The second examined case studies of the EWCs at Unilever, Henkel, GKN and EDS. In each case presentations were made jointly by management and employee representatives. The EU-level central Social Dialogue Committee was subsequently expected to draw up conclusions. This initiative arose from the social partners’ existing commitment to look at the issue of EWCs and enlargement as part of their joint work programme (EU0212206F), not as a direct response to the European Commission’s consultation, but the Commission is unlikely to take any further steps concerning EWCs until the outcome of the social partners’ discussions is known.

Views of national governments, employers’ organisations and trade unions on revising the Directive

Apart from the occasional difference in emphasis, the views of national employers’ and trade union bodies on whether and how the EWCs Directive should be revised are largely reported to be consistent with the positions taken by the EU-level umbrella organisations, UNICE and ETUC.

National employers’ bodies generally do not favour any revision or extension of the Directive, advocating instead that the evolution of EWCs should be a matter for the parties at company level. The Confederation of German Employers' Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände, BDA) does, however, favour 'the opening of social dialogue at EU level on the basis of Article 139 [of the EC Treaty] with the objective of reaching agreement on practice-related orientations or guidelines for undertakings when applying the existing Directive'. Similarly, the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF) employers' confederation has suggested carrying out a survey of techniques for improving the effectiveness of EWCs as part of the European social dialogue process.

On the trade union side, a similar picture applies. In almost all cases, the various national trade union confederations are reported to favour an extensive range of amendments to the Directive, though some slight differences in emphasis are discernible. For example, in France the General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO) reportedly does not see revision of the Directive as a pressing matter.

Very few national governments are reported to have adopted a public stance on the prospective revision of the EWCs Directive. This is not surprising, given that the European Commission’s consultations with the social partners are still at a fairly early stage, and that EU Member States do not need to address the issue of revision unless or until the Commission adopts a formal legislative proposal for amending the Directive. In Denmark, however, the labour minister is on record as saying that there is no need to change the EWCs Directive, unless revision is agreed upon by the EU social partners, and that changes to EWCs should take place on a voluntary basis within individual companies. The German government is reported to be awaiting the responses of the social partners on how the Directive should develop in the future, but the coalition agreement between the governing parties commits the government to 'advancing co-determination rights for employees at European level'. The UK government’s response to a recent consultation exercise on EWCs (UK0406105F) concluded that there was a degree of consensus for some limited amendments to the Directive, but appeared to reject the key union demand for stronger statutory requirements in terms of the nature and timing of consultation.

Diffusion of good practice

Gilman and Marginson (Industrial Relations Journal, 2002), in a study of EWC agreements, identified a discernible 'learning effect' whereby good practice developments - such as provision of training for employee representatives and convening of employee-side meetings immediately following EWC meetings - are reflected in the provisions of other, new or revised, EWC agreements.

There is a range of mechanisms and processes through which good practice amongst EWCs can be diffused. Some leading MNCs belong to networks or groups which regularly engage with the practice of, and policy towards, EWCs. Management consultants, law firms and trade union officials are often involved in drawing up agreements in a succession of companies. As a result, particular developments or innovations in EWC practice tend to spread across companies over time. More broadly, there is a range of sources of information on EWC developments including the independently published European Works Councils Bulletin and trade union-linked publications or websites. EWCs are the also the focus of extensive academic research.

A wide range of EWC-related initiatives have been undertaken by social partner bodies, acting either jointly or separately. Many have often been supported financially by the European Commission, which allocates a significant amount of funding each year to a budget line supporting social partner projects on employee involvement issues. Recent European-level initiatives have included:

  • a November 2002 EWCs conference in Aarhus on the theme of 'Towards more influence', organised jointly by the ETUC and the main Danish trade union federations (EU0212208F);
  • a seminar convened in 2002 by the European engineering and metalworking employers’ organisation, CEEMET, involving major companies in the sector which have EWCs;
  • the project on the challenges for EWCs of EU enlargement, referred to above, involving the CFDT, CC.OO, TUC, FNV, NSZZ Solidarność and ČMKOS union confederations;
  • the LIFT.COM project, designed to help 'lift the competence' of EWCs. This involved trade unions, EWCs and research organisations from six countries and resulted in the production of a handbook in 2004 aimed at trade union officers advising EWCs and those responsible for EWC training; and
  • the EU-level social partners’ autumn 2004 joint seminars (see above), which discussed case studies of how EWCs are responding to EU enlargement, with a view to identifying best practice.

EWCs have been a key issue for European-level industry federations (EIFs) of trade unions: a significant amount of the briefing of EWC members and monitoring and diffusion of best practice is carried out by EIFs. Officials from EIFs as well as from national trade unions frequently act as 'experts' to EWCs in their sector. National trade union federations and individual unions also provide training courses and seminars aimed at equipping EWC representatives to fulfil their roles effectively.

National and EU-level employers’ organisations have also convened seminars which facilitate exchanges of practice between companies with EWCs. For example, the French employers’ organisation MEDEF recently carried out a questionnaire survey of companies with EWCs, and held a seminar in September 2004 to present an assessment of EWC practice.

Commentary

In the decade since the adoption of the Directive, EWCs have become an established feature of the European industrial relations landscape, operating in nearly 750 multinational companies. Nevertheless, only around one-third of the total number of companies now covered by the Directive had established an EWC by 2004. After the initially rapid establishment of EWCs in the run-up to the September 1996 deadline for voluntary 'Article 13' agreements, the spread of EWCs slowed markedly. ETUI's figures indicate that during 2002 and 2003 agreements establishing new EWCs were concluded in a total of just 48 companies (although this total may subsequently rise since some new agreements can take time to come to light). However, renewed impetus towards establishing EWCs is suggested by reports of a recent upsurge in negotiations (European Works Councils Bulletin 53, 2004).

The impact of EU enlargement on EWCs is substantial, affecting both 'new' and 'old' Member States. In quantitative terms, the increase in the number of companies now covered by the Directive as a result of enlargement is significant. The great majority of the newly covered companies are headquartered in the pre-existing EEA countries or outside Europe altogether. Two-thirds of the companies which already have EWCs also have operations in the new Member States and must therefore enlarge their EWCs. Qualitatively, integration of employee representatives from the new Member States appears not to have generated new problems for EWCs but to have exacerbated existing difficulties posed by variations in national legal frameworks and industrial relations practice, the heterogeneity of local forms and traditions of employee representation, and communication and language barriers. Indeed, the similarities between findings from surveys of the views of employee representatives from the new Member States on the benefits and limitations of EWCs and those from surveys of EWC representatives from the 'old' Member States (Waddington, 2003) are striking.

As regards EWC practice, this study underlines the mixed picture presented by existing research. It is clear that the influence of EWCs varies considerably, ranging from 'symbolic' EWCs, whose role is largely confined to a ritual annual meeting, through more active bodies involving ongoing networking activity on the employee side and regular liaison with management, to those (relatively very few) which exert a measure of influence over management decisions or even engage in the negotiation of agreements or joint texts with management. However, consultation, where it takes place, seems largely to occur only once decisions have been taken by management, focusing on the implementation of those decisions rather than their framing or main parameters. In many cases the practice of EWCs essentially appears to be confined to information provision, and in some instances, EWCs would appear not even to be informed, let alone consulted, about transnational management decisions.

In terms of the debate about revising the Directive, it remains to be seen whether current discussions between the EU-level social partners will produce agreed good-practice guidance and, if so, whether this will have any discernible impact on the generality of EWC practice - that is, beyond the minority of more advanced EWCs. The key problem facing employers’ bodies and other proponents of voluntary measures to enhance the effectiveness of EWCs is the apparently long 'tail' of uninfluential, largely symbolic EWCs, whose existence continues to fuel demands from European trade unions and politicians for stronger statutory consultation requirements. (Mark Hall and Paul Marginson, IRRU)

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