EurWORK European Observatory of Working Life

Consultation in the enterprise

Consultation is a stage in the process of management of the enterprise in which those consulted can influence decision-making. Council Directive 2002/14 establishing a framework for informing and consulting employees in the European Community is an important legal instrument for developing consultation. ‘Consultation’ is defined in Article 2(g) as ‘the exchange of views and establishment of dialogue between the employee representatives and the employer.’ Consultation is thus a stage in the process of management of the enterprise in which those consulted can influence decision-making. The conditions for consultation are further articulated in Article 4(4):

(a) while ensuring that the timing, method and content thereof are appropriate;

(b) at the relevant level of management and representation, depending on the subject under discussion;

(c) on the basis of information supplied by the employer in accordance with Article 2(f) and of the opinion which the employees’ representatives are entitled to formulate;

(d) in such a way as to enable employees’ representatives to meet the employer and obtain a response, and the reasons for that response, to any opinion they might formulate;

(e) with a view to reaching an agreement on decisions within the scope of the employer’s powers referred to in paragraph 2(c).

The requirement that management of the enterprise inform and consult employee representatives in making decisions covers a wide range of topics, defined in Article 4(2):

(a) information on the recent and probable development of the undertaking’s or the establishment’s activities and economic situation;

(b) information and consultation on the situation, structure and probable development of employment within the undertaking or establishment and on any anticipatory measures envisaged, in particular where there is a threat to employment;

(c) information and consultation on decisions likely to lead to substantial changes in work organisation or in contractual relations.

Article 1(2) of Directive 2002/14 states that the ‘practical arrangements for information and consultation’, must be such ‘as to ensure their effectiveness’. Article 4(4)(a) stipulates that the quality of the consultation required is measured against a criterion of what is ‘appropriate’. ‘Appropriateness’ and ‘effectiveness’ are the overriding criteria in EC law to assess the practical arrangements determined by Member States.

The ‘method’ of consultation includes, for example, meetings, feedback and advice from experts. The reference in Article 4(4)(d) to ‘meet the employer’ is not limited to one meeting. Article 4(4)(c) provides for ‘the opinion which the employees’ representatives are entitled to formulate’ on the basis of the information supplied by the employer. Article 4(4)(d) obliges employers to offer a ‘reasoned response’ to the comments of the employees’ representatives concerning the employer’s proposals. If the employees’ representatives propose alternative options, the employer needs to respond to them and justify any rejection of these options. The method of consultation envisaged by the directive thus opens room for a proactive approach by employees’ representatives; not only to react to the employer’s proposals, but to formulate their own. Article 4(3) describes their activity in terms of conducting an adequate study in preparation for consultation. Article 6(1) also provides that employee representatives may benefit from ‘experts who assist them’ in the process of information and consultation of decision-making in the enterprise.

Decision-making by agreement

Decision-making in the enterprise is required to proceed through a process of consultation with employee representatives under Council Directive No. 2002/14 establishing a framework for informing employees and consulting with them in the European Community. Article 4 states that ‘… Consultation shall take place… with a view to reaching an agreement on decisions within the scope of the employer’s powers referred to in paragraph 2(c).’ The latter refers to ‘information and consultation on decisions likely to lead to substantial changes in work organisation or in contractual relations….’

This seems to indicate that some matters require consultation, but not consultation ‘with a view to reaching an agreement.’ These other matters are specified as information on the recent and probable development of the undertaking’s or the establishment’s activities and economic situation; and information and consultation on the situation, structure and probable development of employment and on any anticipatory measures envisaged, in particular where there is a threat to employment.

This raises the question as to whether there are two types of consultation: dialogue with a view to reaching an agreement on some matters, not so on other matters. However, the scope referred to in Article 4(2)(c) is that of the employer’s powers to make substantial changes in work organisation or in contractual relations. These powers of the employer will affect almost any matter of concern to the workforce. So long as the decision in question is within the scope of the employer’s powers referred to in paragraph 2(c), it can be argued that it must be made in consultation with a view to reaching an agreement with employees’ representatives.

Consultation of employee representatives in the enterprise in accordance with Directive 2002/14 with a view to reaching an agreement is now a legally structured process. It includes the transmission to them of necessary information/data, acquaintance with and examination of this data, conduct of an adequate study, preparation for consultation, formulation of an opinion, meeting with the relevant level of management, a reasoned response by the employer to the opinion formulated by the representatives, an ‘exchange of views and establishment of dialogue’, discussion ‘with a view to reaching an agreement on decisions’ and, finally, ‘the employer and the employees’ representatives shall work in a spirit of cooperation and with due regard for their reciprocal rights and obligations, taking into account the interests both of the undertaking or establishment and of the employees’. This is significant since the obligation to ‘work in a spirit of cooperation ’ applies not only in the definition of practical arrangements, but during their operation in practice.

This obligation to ‘work in a spirit of cooperation’ applies not only in the definition of practical arrangements, but during their operation in practice. For employers, for example, failure to inform and consult with respect to decisions on dismissal could require the measures and sanctions required by Article 8, which could prevent the decision being implemented, at least until the employer has fulfilled his obligation to work in a spirit of cooperation. Thus, it could develop into something similar to a ‘status quo’ clause in a collective agreement, which precludes unilateral action by the employer to change working conditions. For employee representatives, a breach of the obligation could raise the prospect of claims for compensation if the process of information and consultation is delayed, or the results are unsatisfactory as a result of the alleged failure to cooperate. Similarly, a court might hold that any industrial action violated the spirit of cooperation required during the information and consultation process. Thus, the obligation could develop into something parallel to a ‘peace obligation’ (a no-strike clause) in a collective agreement.

Relevant level

Council Directive No. 2002/14, establishing a framework for informing employees and consulting with them in the European Community stipulates that consultation shall take place ‘at the relevant level of management and representation, depending on the subject under discussion’.

As to the relevant level of management, Article 4(4)(e) states that consultation is ‘with a view to reaching an agreement on decisions within the scope of the employer’s powers referred to in paragraph 2(c).’ The question is whether this is the formal decision-maker (e.g. the employer ‘in contractual relations’ with the employees concerned) or the ‘real’ decision-maker (e.g. the employer whose ‘decisions are likely to lead to substantial changes in work organisation’). If consultation is intended to influence decisions, it must be with the employer who makes the decision at the relevant level – for example, either the contractual employer or the employer in a parent company. The Directive refers not to the relevant ‘employer’, but to ‘the relevant level of management.’

As to the relevant level of employee (collective) representation, there is no reason to confine the obligation to one level of employees’ representatives. The impact of the decision may be felt at many levels, and practical arrangements should require information and consultation at these relevant levels. In any event, the relevant level of ‘representation’ does at least presuppose representation. This puts to rest any doubts about whether the Directive allows for consultation of individual employees.

Timing

The timing of consultation in the enterprise is critical. Studies have confirmed the importance for employee representatives of early access to the decision-making process and a predetermined decision-making procedure. Council Directive No. 2002/14, establishing a framework for informing employees and consulting with them in the European Community, stipulates: ‘Consultation shall take place…while ensuring that the timing…thereof [is] appropriate.’ Previous Directives required consultation to be ‘in good time’ (Article 2 of Council Directive 75/129 concerning collective dismissals; Article 7 of Council Directive 77/187 concerning employees’ rights in the event of the transfer of an undertaking) or specified ‘as soon as possible’ (Council Directive 94/45/EC concerning European Works Councils).

What is ‘appropriate’ timing under Directive 2002/14 may vary according to circumstances, e.g. the nature of the decision and its impact, or the organisation of employees’ representation. A crucial ambiguity remains: whether or not the process of information and consultation is to take place prior to a decision being made by the employer.

The case of Irmtraub Junk c. WolfangKuhnel als Insolvenzverwalter uber das Vermogen der Firma AWO, Case C-188/03, Opinion of Advocate General Tizzano, 30 September 2004, ECJ decision, 27 January 2005, concerning the process of information and consultation envisaged by the Collective Dismissals Directive 98/59, may clarify this question. The case concerned specifically the timing of information and consultation. The ECJ interpreted the Directive to mean that the employer is obliged to inform and consult before the employer gives notice of redundancy. Moreover, the ECJ held that the Directive obliges the employer to complete consultations before the decision is made. Again, by ‘decision’ is meant the date of the notice of termination of employment, not the date when the dismissals take effect. The ECJ’s judgment provides powerful support for the view that the language of Directive 2002/14/EC should be interpreted consistently with that of the 1975 Directive, so as to preclude management taking decisions until the process of information and consultation is completed.

See also: Acquired Rights Directive; collective redundancy; European company; information and consultation; European Works Councils; management prerogative.


Please note: the European industrial relations dictionary is updated annually. If errors are brought to our attention, we will try to correct them.
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