EurWORK European Observatory of Working Life

Employer

An ‘employer’ is a party to an employment relationship characterised as a contract of employment (or contract of service) between the employer and employee. However, while the employee retains a human identity, the employer often has a corporate legal personality.

Council Directive of 12 June 1989 on the introduction of measures to encourage improvements in the safety and health of workers at work (89/391/EEC), the so-called ‘framework’ health and safety Directive, defines an employer as: 'any natural or legal person who has an employment relationship with the worker and has responsibility for the undertaking and/ or establishment' Article 3(b).

At EU level, employers can take the legal form of a European Company, as set out in Council Regulation (EC) 2157/2001 on the Statute for a European company (Societas Europaea (SE)), with Council Directive 2001/86/EC supplementing the Statute for a European company prescribing employee involvement in SEs. This complex legal form of incorporation has potential implications for employment and industrial relations in the EU.

The complex legal forms adopted by employers are increasingly reflected in EU regulation of employment and industrial relations. An example of this is the case of collective dismissals: when corporate decision-making processes are outside the establishment or undertaking in which the employees are being dismissed, informing and consulting with employee representatives becomes more complex and difficult. This is particularly so when the corporate employer taking a dismissal decision is outside the Member State in which the dismissals are being implemented. The transnational dimension of decision-making on collective dismissals was addressed by a 1992 amendment to the Collective Dismissals Directive of 1975: ‘The obligations laid down ... shall apply irrespective of whether the decision regarding collective redundancies is being taken by the employer or by an undertaking controlling the employer’ (Council Directive 75/129 of 17 February 1975 on the approximation of the laws of the Member States relating to collective dismissals, as amended by Directive 92/56 of 24 June 1992, consolidated in Council Directive 98/59/EC of 20 July 1998). The employer remains the subject of the obligation. It is also recognised that the legal structure of the employer may be articulated with other undertakings nationally and transnationally, so that dismissals in one undertaking may be decided, or be the consequence of decisions, by other undertakings.

Due to the problems posed by complex corporate structures, the EU has avoided imposing obligations on the direct ‘employer’, but instead has sought to identify the appropriate ‘level of decision-making’ in the undertaking, which is concerned with the relevant employment or industrial relations matter. For example, in Council Directive 2002/14 establishing a framework for informing and consulting with employees, the European Community stipulates that, ‘the Member States shall determine the practical arrangements for exercising the right to information and consultation at the appropriate level…’ and refers to ‘the relevant level of management and representation’ being involved, depending on the subject under discussion’. This concept of ‘appropriate level’ is now reflected in the Charter of Fundamental Rights of the European Union.

The complex and transnational nature of corporate employers in the EU is particularly important in the case of Council Directive 94/45/EC of 22 September 1994 on the establishment of European Works Councils (EWCs) or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing employees and consulting with them. By definition, the EWC has to deal with an employer established in more than one Member State. The Directive, therefore, imposes obligations not on the ‘employer’, but on the ‘central management of the Community-scale undertaking, or, in the case of a Community-scale group of undertakings, of the controlling undertaking’ (Article 2(1)(e)). The definition of ‘controlling undertaking’ refers to ‘an undertaking, which can exercise a dominant influence over another undertaking (‘the controlled undertaking’) by virtue, for example, of ownership, financial participation or the rules, which govern it’ (Article 3(1)). Even the central management of a multinational undertaking may not be the effective repository of the responsibility of the ‘employer’. This is so where the central management is situated outside the EU. Hence, Article 4(2) provides: ‘Where the central management is not situated in a Member State, the central management’s representative agent in a Member State, to be designated if necessary, shall take on the responsibility.’.

The complex nature of the ‘employer’ emerges in the first decisions of the European Court of Justice on the European Works Councils Directive. The European Court has held that an undertaking which is part of a group of undertakings is required to supply information to the internal workers’ representative bodies, even where it has not yet been established that the management to which the workers’ request is addressed is the management of a controlling undertaking within a group of undertakings (Betriebsrat der Bofrost Josef H. Boquoi Deutschland West GmbH & Co. KG, Straelen v. Bofrost Josef H. Boquoi Deutschland West GmbH & Co. KG Straelen, Case C-62/99 [2001]; Gesamtbetriebsrat der Kühne & Nagel AG & Co. KC v. Kühne & Nagel AG & Co. KC., Case C-440/00 [2004]; Betriebsrat der Firma ADS Anker GmbH v. ADS Anker GmbH, Case C-349/01 [2004]).

See also: central management of the enterprise; collective industrial relations; collective organisation of the social partners; contract of employment; corporate structures; employer organisations; European social partners; management and labour; management prerogative; employment relationship; representativeness; sectoral employer federations; transnational enterprise; UEAPME.

 

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