Participation through employees' councils

Since 1993, Slovenia has had legislation in place on the establishment of elected employees' councils at company level, with a range of information, consultation, co-determination and other rights. This article sets out the rules on the establishment, composition, operation and rights of employees' councils.

The 1993 Law on the Participation of Workers in Management (LPWM) regulates employee participation (notably in the form of information, consultation and co-determination), putting into effect Article 75 of the 1991 Slovene Constitution, which states that 'employees shall participate in the management of commercial organisations and institutions in a manner and under conditions provided by law'.

The LPWM provides for two channels of participation, similar to those found in many current EU Member States:

  • worker representation in the supervisory and management boards of companies; and
  • a representative body elected by workers - the employees' council (svet delavcev) - or a representative 'workers' trustee' in smaller companies.

This article examines only the rules governing employees' councils (and workers' trustees).

Employees' councils may conclude 'participative agreements' with employers, which are regarded as a further form of employee participation, although these are not collective agreements in the traditional sense. Within companies, trade union organisations with the authority to negotiate company-level collective agreements (SI0210102F) operate alongside employees' councils, with the result that there is a 'dual channel' system of representation. Participative agreements signed by employees' councils cannot determine the rights arising from the labour relationship, pay or those employment conditions which are regulated by an applicable collective agreement.

The term employees' council is used here instead of the more widely-used 'works council', as the latter might be construed as meaning a structure at plant level, while in Slovenia employees' councils are established at overall company level only.

Common principles

The LPWM contains detailed provisions on both 'personal' and 'capital' companies. It also covers public companies which provide 'economic public services', banks, insurance companies and non-profit public entities. Employee participation in these organisations may be regulated by special laws related to the nature of work in them, but on the basis of common principles.

The main common principles of participation concerning all workers and all organisations are as follows:

  • the ways in which participation rights are to be exercised - ie the right to present an initiative and receive an answer, to be informed, to issue opinions and proposals and receive answers, to engage in co-determination, to delay implementation of an employer's decision, and to engage in joint consultation (Article 2 of the LPWM);
  • the structures through which workers participate as individuals or collectively - the employees' council or workers' trustee, and workers' representatives on company supervisory or management boards (Article 3);
  • the principle that participation rights should be exercised, in particular in terms of co-determination or influence on the content and organisation of work (Article 4);
  • the principle that an agreement between an employees' council and an employer (the 'participative agreement') can determine rights to participation in more detail, and lay down additional rights and other types of participation on top of those determined by the legislation. Such agreements cannot determine the rights arising from the labour relationship, pay or those employment conditions which are regulated by an applicable collective agreement (Article 5); and
  • the principle that the right to participation shall not encroach upon the rights and duties of trade unions and employers' organisations to protect the interests of their members, and that the employees' council must refrain from any kind of industrial action (Article 7).

Employees' councils and workers' trustees

Establishment, composition, mandate and elections

Establishment of an employees' council is not compulsory (ie it is not a duty on the employer) and is established only if the workers in the company so decide (ie it is a workers' right). Workers are entitled to elect an employees' council if the company employs more than 20 workers who have active voting rights (Article 8 of the LPWM). In a company which employs 20 or fewer workers with active voting rights, workers may instead elect a workers' trustee (Article 9).

The size of the employees' council (Article 10) varies from three members in companies with under 50 workers up to 13 members in companies with 600-1,000 workers. In companies with more than 1,000 workers, the council has two extra members for each additional 1,000 workers.

The term of office of employees' council members (who may be re-elected) is four years.

All workers who have been employed in the company uninterruptedly for at least six months have the right to elect employees' council representatives (ie they have 'active' voting rights) (Article 12). All workers with active voting rights who have been employed in the company uninterruptedly for at least 12 months have the right to be elected to the employees' council (ie they have 'passive' voting rights) (Article 13). Members of the council are directly elected in a secret ballot (Article 15).

Candidates for election to the employees' council may be nominated by workers with active voting rights. The number of workers required to nominate a candidate varies with the size of the company from at least three workers in a company with 21-50 employees, up to at least 10% of workers in a company with over 300 employees, but a proposal submitted by at least 50 workers is valid in any event. In addition, each representative trade union has the right to nominate candidates (Article 27).

In its rules of procedure, an employees' council may determine that candidates are proposed and elected separately for individual groups of workers (such as women, workers with disabilities or young workers), and for separate organisational units or parts of the production process etc.

The employer must assure free and secret elections to the employees' council (Article 52). The necessary expenses for the conduct of elections are borne by the company (Article 54).

Operation of employees' council

The employees' council elects a chair and a deputy (Article 55).

The council may set up committees to deal with: specific matters; matters important for particular groups of workers (women, workers with disabilities, young workers etc); and matters important for separate organisational units or parts of the production process, and for the parts of the company outside the headquarters which have at least 10 workers (Article 58). Such committees may recruit up to a third of its members from employees who are not employees' council members (Article 59).

The employees' council may invite to its sessions experts from inside or outside the company, management personnel, representatives of representative trade unions (SI0210102F) and representatives of employers' associations (Article 61).

The company must allow employees' council members: five hours of paid time off a month for participation at employees' council sessions (article 62), three hours of paid time off a month for consultations with workers; and 40 hours of paid time off a year for for training necessary for the efficient operation of the council. A participative agreement between management and the council may increase these amounts of time off (Article 63).

In companies with 50-300 workers, a number of employees' council members may be released from their work on a half-time basis to carry out their duties (known as half-time 'professional members'). This applies to:

  • one member in a company with 50-100 workers; and
  • two members in a company with 100-300 workers.

In larger companies, a number of employees' council members may be released from their work on a full-time basis to carry out their duties (known as 'professional members'). This applies to:

  • one member in a company with 300-600 workers;
  • two members in a company with 600-1,000 workers; and
  • one extra member for each additional 600 workers.

A 'professional' member is entitled to pay either: at least at the level received before becoming an employees' council member; or equal to that received by workers in the company with an equivalent level of education, if this is more favourable. The pay of professional members is adjusted in line with the growth in pay for other workers in the company (Article 64).

The employer covers the necessary expenses for the work of the employees' council, including as a minimum:

  • the premises needed for meetings, the reception of clients and the work of the professional members;
  • the material means used by the council; and
  • the administrative personnel needed for the work of council.

The expenses for the attendance of experts, union representatives etc attending meetings are covered by the company only if this is agreed previously and up to the agreed amount. The minimum overall employers' contribution to expenses is 50% of the average monthly pay of workers in the company per member of the employees' council (Article 65).

Employees' council members receive various forms of protection (Article 67). Thus, during council members' term of office, if they are acting in accordance with the valid laws, collective agreements and participative agreements, it is not possible for the employer, without the consent of the employees' council to:

  • move them to another work position or to another employer;
  • make them redundant;
  • lower their pay;
  • take disciplinary proceedings against them; or
  • in any other way place them in a less favourable or subordinate position.

Employees' council members and the experts, social partner representatives etc attending meeting are bound to observe business secrecy with regard to company information (Article 68).

If the employer changes because of the legal transfer of a company or part of it, or because of a merger, employees' council members retain their status with the new employer. This does not apply if the conditions are met for the election of a new employees' council. A member whose term of office ends due to a change of employer enjoys the abovementioned protection for nine months after the end of the term of office, along with protection against dismissal under the Law on Labour Relations (SI0206101N) (Article 67a).

Workers' assembly

The employees' council has the right to convene a workers' assembly, which consists of all workers in the company except management personnel. Assemblies in individual organisational units or parts of the work process are possible. The workers' assembly has the right to discuss only issues falling within the competence of the employees' council or one of its committees (Article 69).

Groups of companies

Groups of companies establish an employees' council consisting of representatives of all companies concerned (Article 73). The members of this council are nominated by and from the members of the employees' councils of the individual group companies. They determine by an agreement the total number of members and the number nominated by the council of each individual company, in line with to the size of the companies and the number of members on their employees' councils (Article 74).

Participation rights

The right to participation in company management must be exercised (Article 85) in such a manner that workers are:

  • directly informed and can make proposals and express opinions directly; and
  • informed through a workers' trustee or an employees' council and thereby (i) make proposals and give opinions (ii) request joint consultation with the employer (iii) exercise co-determination on the issues specified by law, and (iv) request a delay in the implementation of employer's decisions until the adoption of a final decision by the competent body.

The employer and the employees' council (or its committees) meet at the request of the employer or of the council. As a rule they meet once a month (Article 86).

As well as information. consultation, co-determination etc (see below), the employees' council has the following basic competences (Article 87):

  • monitoring the implementation of laws and other regulations, collective agreements and participative agreements;
  • proposing measures which benefit the workers;
  • receiving proposals and initiatives from workers and, if they are justified, taking them into consideration in dealings with the employer; and
  • assisting the integration of work of disabled, older and other workers with special protection.

The employer is bound to enable workers as individuals to participate in management. The worker as an individual has the right to:

  • make initiatives and receive responses to these initiatives, if these refer to their workplace, work or organisational unit;
  • receive timely information about changes in their area of work;
  • give their opinion about all questions which relate to the organisation of their workplace and work organisation; and
  • demand that the employer - or an employee designated by the employer - answer questions on pay, other areas of employment relations and the relevant law.

The employer is bound to provide a response to individual employee's initiatives and to respond to questions on pay etc (see last point in the above list) within 30 days (Article 88).

Information

The employer is bound to keep the employees' council informed, particularly concerning:

  • the company's economic situation, development objectives and state of production and sales;
  • the general economic situation of the sector;
  • changes in company activity;
  • reductions in the company's economic activity;
  • changes in the organisation of production and in technology;
  • the company's annual statement of accounts and annual report; and
  • other issues laid down in a participative agreement.

At the request of the employees' council, the employer must allow it to see documentation related to the abovementioned matters (Article 89).

The employer must keep the employees' council informed on certain specified matters before taking a final decision (Article 90) - see below.

Joint consultation

The employer must keep the employees' council informed and request joint consultation on the status (legal situation) of the company, personnel matters and health and safety at work before taking decisions in these areas. The employer must give the council the necessary information at least 30 days before taking the decision and the joint consultation must take place at least 15 days before taking the decision (Article 91).

Joint consultation involves a duty on the employer (Article 92) to:

  • inform the employees' council about planned decisions on company status, personnel questions and health and safety;
  • consult the council; and
  • strive to harmonise its position with that of the council.

The company status questions concerned (Article 93) are:

  • changes in the legal situation;
  • the sale of the company or of a major part of it;
  • the closure of the company or of a major part of it; and
  • major changes in ownership.

The personnel questions subject to joint consultation are:

  • the need for new workers (number and profiles);
  • the classification of jobs into categories related to differences in pay;
  • the transfer of a large number of workers (10% or more of all company employees) outside the company;
  • the transfer of a large number of workers (10% or more of all company employees) within the company;
  • the adoption of measures relating to supplementary pensions, disability and health insurance;
  • workforce reductions; and
  • the adoption of general disciplinary rules.

Co-determination

The employer must submit to the employees' council for consent proposals for decisions on:

  • the basis for deciding on the utilisation of annual leave and other absences from work;
  • criteria for the assessment of workers' efficiency;
  • criteria for rewarding innovative activity in the company;
  • the use of the housing fund, holiday facilities (eg holiday homes owned by the company) and other worker welfare facilities; and
  • criteria for the promotion of workers.

The employees' council must discuss and form an opinion about these proposals within eight days from their submission for approval by management. If the council does not form an opinion on a proposal within the determined time limit, it is considered that it agrees with the proposal. Where the employees' council agrees to to the employer's proposal and gives its assent to the employer in written form, this is considered as an agreement between the council and the employer (Article 95).

The employer is not allowed to adopt decisions in the areas concerned if the employees' council refuses to give its consent within eight days (Article 97).

Delaying management decisions

The employees' council has the right to delay employer's decisions and at the same time to institute dispute-resolution proceedings if:

  • the employer has not informed the employees' council in advance on certain matters before adopting the final decision; or
  • the employer has not informed the employees' council and requested joint consultation in advance before adopting the final decision.

In these cases, the employer is not allowed to implement the decision until the final decision is taken by the competent dispute-resolution body (Article 98).

Dispute resolution

Disputes between the employees' council and the employer are resolved by arbitration. The arbitration body is composed of an equal number of members appointed by the employees' council and by the employer, and one neutral chair whose appointment has been agreed by both parties (Article 99).

The WC and the employer may by agreement establish a permanent arbitration committee in the company (Article 100). Arbitrators are appointed from a list of arbitrators when such a permanent arbitration committee is not established (article 101). This list of arbitrators is drawn up by the minister competent for labour on the basis of proposals from the representative trade unions and employers' associations.

An arbitration decision has the same status as an agreement between the employees' council and the employer. This decision is final, though the parties can appeal against it to the competent court (Article 104).

European Works Councils

On 20 June 2002, parliament passed the Law on European Works Councils (LEWC) (SI0208103F). The LEWC primarily transposing the requirements of the EU Directive (94/45/EC) on European Works Councils into Slovene legislation. It was transposed by law (rather than agreement between the social partners), as was the case in most EU Member States (TN9807201S). The LEWC will come into force on the day that Slovenia joins the EU (due in May 2004) and can be seen as a natural extension of the LPWM, as the latter does not take into account supranational company structures.

Commentary

There was some discussion about the introduction of 'dual channel' employee representation by the 1993 LPWM and the respective roles of the employees' council and the trade unions within the company. However, it is impossible to imagine that trade unions in Slovenia would abolish their organisation at company level and allow their rights to be diminished in order to avoid 'double representation'. The context is that trade unions, and especially newly established ones, fought very strongly at the beginning of the 1990s to gain representation in companies.

Some Slovenian experts argue that collective bargaining at the company level represents a conflictual mode of industrial relations and employee participation a cooperative one. Therefore, employee participation should be promoted in the company, and not collective bargaining. However International Labour Organisation (ILO) experts point out that collective bargaining is an alternative to industrial conflict and should be promoted as such. Collective bargaining is not necessary conflictual (in Slovenia the number of strikes is declining strongly - SI0211101F) although it does not rule out conflict and is tied to the strike weapon as a potential or real form of pressure, and is therefore sometimes preferred by the trade unions. Therefore some authors see bargaining as a special regime between conflict and employee participation (and, below participation, unilateral employer decisions).

It is possible that, in certain small and medium-sized companies, trade unions were slower in acting to establish employees' council, assuming that such double representation would require a lot of effort. (Stefan Skledar, Institute of Macroeconomic Analysis and Development, IMAD)

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