ETUC response to UK Presidency's new European Company Statute proposal

The UK Presidency of the EU launched a compromise proposal on the worker involvement provisions of the proposed European Company Statute in March 1998. The European Trade Union Confederation has given its response to the proposal and appears to be only marginally satisfied with its content.

The proposed European Company Statute would enable European multinational undertakings to operate under rules governed by EU company law, rather than the diverse regulations of different Member States. Such "European Companies" would also benefit from a special tax status. The idea has been on the table for over a quarter of a century without winning adoption in the Council of Ministers, with the problems centring around the issue of worker involvement in the European Company. In 1996, a high-level expert group was set up by the Commission to help break the deadlock, particularly in respect of those countries which feared that the Statute would undermine strong national involvement rights, and those countries which currently have no legal mechanisms for ensuring employee involvement.

The Davignon group reported in May 1997, recommending that priority should be given to free negotiations between management and employee representatives (sitting on a special negotiating body, SNB) as to which system of worker involvement should apply in each European Company (EU9705128N). The report recommended that only if such negotiations fail should minimum requirements come into force - an approach similar to that taken by the 1994 European Works Council (EWC) Directive.

The Davignon report restarted the debate on the Statute, with the Luxembourg Presidency of the second half of 1997 producing a new compromise text of the Statute's involvement provisions, based heavily on the Davignon proposals. However, the discussions within the Council of Ministers proved difficult (EU9710158N). The UK Presidency of the first half of 1997 then produced its own draft compromise text, addressed to the Council's social questions working party, in March 1998 (EU9803193n).

The European Trade Union Confederation (ETUC) has responded to the UK text and appears to be only marginally satisfied with the revisions since the Luxembourg proposal.

The UK Presidency's compromise proposal makes some additions to the Luxembourg proposal and to a limited extent, takes on board some of the comments made by the social partners on the Davignon report. The proposal ensures protection for existing board-level employee participation rights when the European Company is created, unless decided otherwise by a special weighted majority of the SNB. It also specifies that where no such arrangements or rights exist in any of the participating companies, there should be no obligation to introduce board-level participation.

In the minimum requirements to apply where no agreement is reached, the UK proposal makes provisions for information and consultation procedures similar to those contained in the EWC Directive, and in addition, provides more flexible provisions on board-level worker participation. The employee representation on the board will be equivalent to the highest level found in any of the participating companies, unless this is opposed by the SNB.

Additionally, the new proposal provides an alternative formula for working out the number of representatives on the SNB. The formula allows one additional seat per Member State where at least 10% of the workforce are employed, up to a maximum of nine additional seats.

For the purpose of negotiations, the SNB is allowed to request assistance from experts of its choice, including representatives of appropriate Community-level trade union organisations. Such experts shall have the right to be present at negotiation meetings. However, Willy Buschak, confederal secretary of the ETUC is dissatisfied with this advisory role, stating that "the Presidency is still not recognising the central role played by the European industry federations in transnational bargaining. The key coordinating role of industry federations has been proven in practice, but the Presidency is still only giving them an advisory role." As a result, the ETUC feels that the proposal does not recognise the democratic right of the industry federations to be invited to the negotiating table.

Mr Buschak also argues for the necessity of compulsory reference to arbitration if negotiations break down, as experience from EWCs shows that "it keeps negotiations alive". The ETUC also favours a reference clause which does not weaken national provisions and would apply to all European companies where talks have failed.

Overall, the ETUC argues that "the British Presidency's new proposal on worker involvement in the future European Company goes a little way, but not far enough." It was hoped that some form of agreement could be reached at the Labour and Social Affairs Council of Ministers meeting on 4 June 1998.

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