Thematic feature - works councils and other workplace employee representation and participation structures
This article examines the Austrian situation, as of September 2003, with regard to works councils and similar workplace employee representation and participation structures. It looks at the regulatory framework, statistical data, evidence on practice and the views of the social partners.
The issue of works councils and similar workplace employee representation and participation structures is topical at present, with the EU Member States required to implement the recent Directive (2002/14/EC) establishing a general framework for informing and consulting employees in the European Community (EU0204207F) by March 2005 (though countries which currently have no 'general, permanent and statutory' system of information and consultation or employee representation may phase in the Directive's application to smaller firms up until 2008). The Directive applies to undertakings with at least 50 employees or establishments with at least 20 employees (the choice is left to the Member States). It provides employees with the following rights to information and consultation:
- information on the recent and probable development of the undertaking's or the establishment's activities and economic situation;
- information and consultation on the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged, in particular where there is a threat to employment; and
- information and consultation, with a view to reaching an agreement, on decisions likely to lead to substantial changes in work organisation or in contractual relations.
Information and consultation arrangements set out in agreements between management and labour, including at undertaking or establishment level, may differ from those laid down in the Directive.
While the Directive does not stipulate that information and consultation must be provided through any particular channel or structure, it defines such information and consultation as taking place between the employer and the employee representatives provided for by national laws and/or practices. It is these representatives, who in most EU Member States sit on standing 'works council'-type structures (and in many countries already enjoy all or most of the information and consultation rights laid down in the Directive) that are the focus of this article. The existence of workplace employee representation and participation structures, based on law or widespread collective agreements, is seen in some quarters as a distinctive and important feature of the (mainland) European industrial relations model. Indeed, the idea has been raised of using the coverage of such worker involvement arrangements as an indicator of 'quality' in industrial relations (as suggested, for example, by the European Commission’s June 2001 Communication on Employment and social policies: a framework for investing in quality).
In this context, in September 2003, the EIRO national centres in each EU Member State (plus Norway), were asked, in response to a questionnaire, to provide information about the current situation with regard to national (rather than European level) works councils and similar bodies – the regulatory framework, statistical data (or estimates where not available), evidence on practice and the views of the social partners. The Austrian responses are set out below (along with the questions asked).
What is the legislative framework in your country concerning works councils and/or other workplace employee representation and participation structures? Please include here: definition; workforce-size threshold for establishment; composition/election; subjects for information, consultation and co-determination; conditions under which information, consultation and co-determination should take place (ie timing, methods, contents, level of representation, type of response by employees, form of interaction etc); meetings; confidentiality; protection of employees’ representatives. If there is no legislation on this issue in your country, please refer to widespread systems of works councils etc based on collective agreements.
The law regulating almost all aspects of works councils (Betriebsräte) is the Labour Constitution Act (Arbeitsverfassungsgesetz, ArbVG) which applies only to the private sector. In the public sector, there is a series of special rules on employee representation bodies (Personalvertretung) for each of the major employers - ie the federal government, regional (Länder) governments, local governments and public enterprises - fixed by particular legal provisions. These bodies largely correspond to the works councils in the private sector.
In legal terms, the works council is a body which represents all employees within an establishment consistently employing five or more workers. It exercises the workplace-level consultation and co-determination rights conferred by law on the workforce as a whole. According to the ArbVG, a works council must be set up in all establishments with at least five employees (however, the Act does not provide for any sanctions if no works council is established, and the matter is left to the initiative of employees). Works councils can either be established separately for blue-collar workers and white-collar workers, or may represent both categories. A works council is elected by the workforce (essentially all employees within the establishment aged at least 18) for a term of four years on the basis of proportional representation, with the number of council members determined by the size of the workforce. The election is based on direct secret ballot, conducted by an electoral board appointed by the 'works meeting' (Betriebsversammlung) of all the establishment’s employees. The board is also responsible for overseeing the electoral procedures and announcing the results.
With regard to the works council’s information, consultation, and co-determination rights, the employer is required to hold regular discussions with the works council and keep it informed on matters which are important for the workforce. Such consultation meetings must take place quarterly or (at the council’s request) monthly. The employer’s obligation to inform the works council includes all matters concerning computerised collection and processing of personal data on employees. The works council has the right of intervention in the case of perceived shortcomings on the part of the employer, and is entitled to monitor the employer’s observance of rules laid down by labour law, social security law and health and safety law.
The most important instrument for the expression of works council's co-determination rights over a specific range of 'social' matters is the conclusion of a works agreement (Betriebsvereinbarung) between management and works council. Depending on the nature of the matters concerned, there are three distinct forms of works agreement from a legal point of view:
- 'mandatory' works agreements are based on a right of 'veto' held by the works council, which means that certain matters defined by the ArbVG (such as the implementation of monitoring systems within an establishment) can be decided only by a works agreement between management and works council;
- with regard to a second category of social matters (such as the distribution of working hours over the days of the week), the works council is entitled to call on a special mediation and arbitration board (Schlichtungsstelle) when no agreement can be reached with management. This board (which is set up by the relevant labour and social security court) has to decide the case itself, the resulting decision acquiring the status of a so-called 'enforceable' works agreement; and
- for all other social matters (such as the adjustment of working conditions to 'human needs', the temporary reduction of working hours or the introduction of an occupational pensions scheme), works council and management are free to conclude an 'optional' works agreement.
The permitted scope of formal works agreements is restricted to the matters specified by law. Other matters regarding the employment relationship are subject to collective agreements (ie with trade unions rather than works councils). Pay-related issues, in principle, are excluded from the scope of works agreements and fall within the scope of bargaining between the statutory parties to collective agreements.
Moreover, the works council has special rights in personnel and staff matters. For instance, any planned recruitment of new employees as well as the intended promotion of an employee have to be notified by management to the council. The works council must be informed and consulted in the event of a planned transfer of an employee or of any intended dismissal.
Last but not least, the works council enjoys special consultation rights on economic matters, with the employer obliged to provide regular information on the firm’s economic and financial situation. If the council so requests, the employer has to consult it on this situation. Furthermore, all far-reaching changes to the establishment planned by the employer must be notified to the works council. If the changes entail substantial disadvantages for a substantial part of the workforce, the works council is entitled to demand the conclusion of a 'social plan' providing for measures to prevent or mitigate these disadvantages.
If the company has a supervisory board, the works council has right to appoint one employee representative for every two shareholders’ representatives on this board. As this board-level co-determination system provides the employees with minority board representation, the influence of the works council on strategic business decisions is rather limited.
Works council members enjoy special protection against dismissal and summary dismissal, and are subject to a special duty of confidentiality.
Please provide the most recent available statistics (in absence of statistics please provide estimates referring to sources) on the following (referring to other workplace employee representation and participation structures where works councils are not present and to widespread collective agreements on the issue where there is no legislation):
- the total number of employees and undertakings/establishments in your country;
- the total number of undertakings/establishments covered by the works councils legislation in your country and their total employment (data should be as much as possible disaggregated by gender, company size and sector);
- the total number of undertakings/establishments in your country which have established works councils and their total employment (data should be as much as possible disaggregated by gender, company size and sector).
Please provide any other national data indicating the number/diffusion of works councils.
Reliable data with respect to works councils are generally not available, but the best information available (estimates in some cases) is provided in the table below. The figures indicate that around 30% of Austrian establishments, employing over 70% of all Austrian employees, are potentially covered by the works councils legislation. However, only about 20% of the establishments covered by the legislation (and 6% of all establishments in Austria), employing about 22% of all employees of covered establishments (and 16% of all employees in Austria), actually have a works council in place. As noted above (under 'Regulation'), setting up a works council is essentially left to the employees' initiative, and it appears that in many small and medium-sized enterprises (SMEs) employees are not willing either to take the initiative to establish a works council or to stand as a candidate in works council elections, with the result that most SMEs do not have a council.
|Total no. of establishments||253,013*|
|No. of establishments covered by works councils legislation||74,000*|
|Establishments with works councils||15,000**|
|Total no. of employees||3,155,000***|
|Employees of establishments covered by works councils legislation||2,282,000****|
|Employees of establishments with works councils||500,000**|
* July 2001; ** 2003 (estimate); *** 2002; **** 2002 (estimate).
Sources: Chamber of Labour, Chamber of the Economy, Statistics Austria, own estimates.
If there are any other statistical sources or recent research on the current practice of works councils or other workplace representation/participation bodies, please give details of the results paying attention to the issues covered by Question 1 (Regulation). Please provide as much quantitative data as possible - eg how many meetings and how often, chair, agenda, composition (eg how many representatives of management, if any, workers, proportion of women members, proportion of women as head of works councils etc) and identify factors of success. Please indicate how the works councils (or works council-type bodies) institution has evolved over the years.
Statistical data are lacking in all these areas. While it is evident, for example, that most works council members, and in particular their chairs, are men, there are no figures available
One clear and proven trend is a growing importance of works councils as signatory parties to works agreement. This is due to a generalised tendency for collective agreements to delegate the regulation of some terms and conditions of employment from sectoral to establishment level. For more than a decade, a substantial number of sectoral collective agreements have contained 'delegation' or 'opening' clauses (Öffnungsklauseln) designed to delegate certain issues to regulation by works agreement. This seeks to allow for more flexibility as regards working time and, for limited periods, even pay (eg through the 'distribution option' in some sectoral agreements, allowing for some parts of pay increases to be distributed at company level - AT9801155F), with these matters now being regulated by works agreements.
Please summarise the views of trade unions on works councils etc and their operation, and outline relations between works councils and trade unions.
In Austria, a dual system for the representation of employees’ interests has been institutionalised, based on a formal separation of trade unions and works councils. However, in practice, this separation is modified by the fact that about 85% to 90% of all works council members are also members of unions affiliated to the Austrian Trade Union Federation (Österreichischer Gewerkschaftsbund, ÖGB). In fact, the works council should be considered a basic unit of ÖGB's structure. Co-determination at establishment level is a cornerstone in the whole system of social partnership, since it buttresses the principle of cooperation also at plant level.
Through the de facto 'incorporation' of the works council into the trade unions' structure, the unions are granted easier access to employees. In many cases, the work council acts as a link between the union and the workforce when it comes to recruiting new union members, communicating union policies and even collecting union dues. Hence, the works council is of paramount importance for the unions. Accordingly, in order to cope with the tendency to delegate bargaining issues to the company level (see above), which increases the workload of works councils, ÖGB has demanded stronger rights for works councils and their members (AT0003214N).
Please summarise the views of employers’ organisations on works councils etc and their operation.
The employers’ organisations, in principle, comply with Austria’s 'works constitution' system. They even favour the extension of the scope of works agreements in order to create further opportunities to arrive at company-specific arrangements. However, there are also employers that seek to prevent the establishment of a works council within their company (AT9909165F). This is because they give the possible benefits of the works council - eg higher motivation of the employees and higher legitimacy of management decisions - less weight than its possible costs - eg works councils may strengthen the 'voice' of the company’s employees, entail bureaucracy and its members may receive pay without producing. Accordingly, most employers, as well as the Chamber of the Economy (Wirtschaftskammer Österreich, WKÖ), have opposed any attempts of the unions to extend the rights of works councils. (Georg Adam, University of Vienna)