Thematic feature - works councils and other workplace employee representation and participation structures

This article examines the Danish 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 Danish responses are set out below (along with the questions asked).

Regulation

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 Danish equivalent of the works council is the 'cooperation committee' (Samarbejdsudvalg) (the social partners in Denmark use both expressions in English texts). Cooperation committee s are characterised by a high degree of involvement and co-determination in the day-to-day business of companies. They are not restricted to only formal rights to be informed and consulted over changes.

Cooperation committees are not regulated by law. Since the first collective agreement between the parties on the Danish labour market, the 'September compromise' of 1899 (DK9908140F), workplace employee representation has been regulated by the main social partner organisations, now the Danish Employers’ Confederation (Dansk Arbejdsgiverforening, DA) and the Danish Confederation of Trade Unions (Landsorganisationen i Danmark, LO), on the basis of their basic agreement. After the Second World War, cooperation committees were set up through a collective agreement. The first such cooperation agreement between DA and LO was concluded in 1947 and renewed in 1970. The current version dates from 9 June 1986. Similar agreements apply in parts of the private sector not covered by DA (see below under 'Statistics'). LO has an agreement with the Confederation of Employers' Associations in Agriculture (Sammenslutningen af Landbrugets Arbejdsgivere, SALA), while the Financial Services Union (Finansforbundet, FF), affiliated to the white-collar Confederation of Salaried Employees and Civil Servants in Denmark (Funktionærernes og Tjenestemændenes Fællesråd, FTF), has a cooperation agreement with the Danish Employers’ Association in the Financial Sector, (Finanssektorens Arbejdsgiverforening, FA).

Under the terms of the DA-LO Cooperation Agreement, in companies with more than 35 employees, cooperation committees are set up if wanted by one of the parties - ie the employees or the employer. The committee is essentially a joint management-employee consisting of two groups:

  • group A represents the company management and those technical and managerial staff who cannot be members of a trade union under the terms of the basic agreement; and
  • group B represents all other employees in the company.

The two groups are equally represented on the committee. They have: two representatives each in companies with 35-50 employees; three representatives each in those with 51-100 employees; four each in those with 101-200 employees; five each in those with 201-500 employees, and six each in those with more than 500 employees. If agreed, the number of representatives can be raised in companies with more than 1,000 employees. Workplace trade union representatives (shop stewards) are ex officio members of cooperation committees.

Representatives of group A are appointed by management. Representatives of group B are elected by and from among these employees though, as noted, shop stewards are ex officio members. For both groups, the term of office is two years. In electing representatives on the cooperation committee, efforts should be made to ensure that the members are as representative as possible, in terms of staff group, trade or profession, and department.

The overall task of the cooperation committee is to promote cooperation within the enterprise for the benefit of the enterprise and the employees alike. This is achieved by:

  • promoting and observing day-to-day cooperation and involving as many people as possible in this task;
  • creating and maintaining good and stable working and employment conditions, thereby increasing the welfare and security of the employees; and
  • increasing the employees' understanding of the situation of the enterprise in terms of its operation, finances and competitiveness.

Management should keep the cooperation committee informed about the following matters of relevance to the enterprise:

  • its financial position and future prospects, including the volume of orders and market conditions as well as factors affecting production;
  • employment prospects; and
  • major changes and any proposed restructuring, eg the use of new technology in production and administration, including the introduction of computer-aided technology and systems.

The cooperation committee has the following duties:

  • establishing principles for local working and welfare conditions, as well as principles for the personnel policy pursued by the enterprise towards the employees represented in group B on the cooperation committee (see above);
  • establishing principles for training and retraining employees who are to use new technology;
  • establishing principles for in-company collection, storage and use of personal data;
  • exchanging viewpoints and considering proposals for guidelines on the planning of production and work and the implementation of major changes in the enterprise;
  • assessing the technical, financial, staffing, training and environmental consequences of the introduction of new technology or changes in existing technology, including computer-aided technology and systems, where such introduction or change is extensive; and
  • informing employees of proposals for incentive pay schemes, including particulars of their basic structure, effects and application, and informing them of the possibility of setting up funds for educational and social security purposes.

The committee should be involved at an early stage such that employees' viewpoints, ideas and suggestions may be included in the decision-making process. In the abovementioned areas where the cooperation committee's role is to establish principles (eg on working conditions and personnel policy), representatives of management and of the employees are under an obligation to try to reach an agreement on these matters. However, the committee is not entitled to deal with issues relating to the conclusion, extension, termination, interpretation or adaptation of collective agreements or local wage agreements.

Disputes arising from the functioning of cooperation committees are settled by special cooperation boards set up for the various sectors (see below). Information that has been given in the cooperation committee as confidential must not be passed on. Reasons for this confidentiality and its duration should be specified at the same time. Meetings held during working hours may not result in a loss of earnings for committee members. Group B members do not have special protection from dismissal, but do receive an additional six weeks' notice of termination of contract on top of the collectively agreed notice period. Shop stewards, who are ex officio members of cooperation committees, cannot be dismissed.

All public institutions in the central state and municipal/county sector also have similar cooperation committees, sometimes called staff councils.

Statistics

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;

According to Statistics Denmark, in January 2002, there were 2,782,306 employees (wage earners and self-employed with spouse) in Denmark, of whom 1,298,682 were women. According to the Central Business Register, in September 2003 there were 487,587 companies (of which 361,801 had no employees).

  • 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);

As noted above, cooperation committees are not regulated by legislation. However, the number of companies with over 35 employees and thus potentially liable to set up a cooperation committee under the terms of basic agreements, is estimated at around 6,600.

  • 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).

Figures are available for the number of cooperation committees established in the member companies of the employers' associations affiliated to DA, the main private sector employers' confederation, though not for the number of employees covered. As indicated by the table below, there are over 1,300 committees in DA member companies, and DA estimates that 70% of the companies which may potentially have a cooperation committee actually do so.

No. of cooperation committees in member companies of DA-affiliated employers' associations
Confederation of Danish Industries (Dansk Industri, DI) 863
Danish Chamber of Commerce (HTS Arbejdsgiverforeningen, HTS) 178
Danish Commerce and Services (Dansk Handel & Service, DHS) 81
Association of Employers in the Danish Building Industry (Dansk Byggeri) 65
Federation of Danish Textile and Clothing (Dansk Textil & Beklædning) 34
Danish Electricians’ and Plumbers’ Association (TEKNIQ) 32
Graphical Association of Denmark (Grafisk Arbejdsgiverforening, GA) 30
Employers’ Bargaining Association of Danish Newspapers (Danske Dagblades Forenings Forhandlingsorganisation) 25
Employers’ Associations in the Asphalt and Oil Industry (AI-BOA) 9
Association of Danish Enterprises in Greenland (Foreningen af Danske Virksomheder i Grønland) 5
Danish Painters’ Association (Danske Malermestre:) 5
Danish Shipowners' Association (Rederiforeningerne) 5
Federation of Small Employers’ Associations in Denmark (Sammenslutningen af Mindre Arbejdsgiverforeninger i Danmark, SAMA) 3
Total 1,335

Source: DA.

Outside DA, in the financial sector, which is covered by the Danish Employers’ Association in the Financial Sector (FA), no exact figure is available for the number of cooperation committees. A total of 238 companies are covered by this sector's cooperation agreement, which provides for the establishment of cooperation committees in enterprises employing over 35 employees. Of these companies, 101 have 35 employees or fewer. Of the 31 companies with 36-60 employees, fewer than 50% have cooperation committees, according to FA, even though the employees have the right to set up a committee. Finally, 106 companies have 61 employees or more, and over 70% of these have cooperation committees, according to FA.

The third main private sector employers’ organisation is the Confederation of Employers' Associations in Agriculture (SALA), which has also concluded a cooperation agreement with the LO union confederation, most recently revised in 2001 (DK0109133N). SALA covers 1,725 companies, of which 150-200 could potentially establish cooperation committees (ie they have over 35 employees), and of these 100 have done so (according to SALA and own calculations based on figures from the Central Business Register). A special feature of the SALA agreement is that the company-size threshold for establishing committees in its so-called 'green' agricultural area (ie outside food processing) is only 25 employees. The member companies of SALA typically have very few employees, especially in the 'green' area

Overall, it can be concluded that coverage of cooperation committees is relatively high, generally at more than 50% of companies potentially affected. Companies with 35-50 employees are less likely to establish cooperation committees, whereas larger companies normally do so. The main social partner organisations also believe that committees exist in some companies with fewer than 35 employees - though it cannot be assessed how many - given that Danish companies in general have a tradition of some kind of internal employee representation and cooperation.

Practice

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.

Under the DA-LO cooperation agreement, cooperation committees hold six ordinary meeting a year, unless otherwise agreed locally. A responsible manager or executive acts as chair, and the deputy chair is elected by the representatives of group B employees (see above).

The importance of cooperation committees has increased over the past 10 years. Over the same period, research suggests that the role and responsibilities of shop stewards, who are members of cooperation committees, appear to have moved from acting as a traditional 'employees’ spokesperson', to a more independent role in between the employees and the management (DK9811191F and DK9811192F). Parallel to this development, but not necessarily interdependent, the role of cooperation committees has reportedly developed from formal representation to more involvement and co-determination.

A current example of this change is a cooperation project involving SALA member companies, coordinated by SALA and LO. Over 1998-2000, SALA and LO coordinated a project entitled 'New roles of cooperation committees', aimed at helping cooperation committees to take an active part in the decision-making process and act as a full partner in discussions with management. A total of 61 companies and 393 management and employee representatives took part. The project was a success and was thus renewed as a project entitled 'Competence of the cooperation committee – job satisfaction and competitiveness', which is supported by the European Social Fund and runs from January 2001 to November 2004. The overall purpose is to give cooperation committees the means and tools to help them maintain employment and a good working environment, and improve competitiveness. This involves ensuring that the committees are well informed and able to lead a constructive dialogue about actual and future problems.

Social partners

Please summarise the views of trade unions on works councils etc and their operation, and outline relations between works councils and trade unions.

Please summarise the views of employers’ organisations on works councils etc and their operation.

In the great majority of cases, employee representatives on cooperation committees are members of an LO-affiliated trade union. Union density in Denmark is just over 80%. However, in principle, cooperation committees are also possible in companies with low union membership or none at all. Though the DA-LO cooperation agreement essentially covers DA member companies in which LO member unions organise, some non-organised employers may be covered by an 'adoption agreement' (ie they decide to adopt the provisions of a sectoral agreement to which they are not a signatory), in which case the group B members of any cooperation committee might not be union members.

All the main employers' organisations - DA, FA and SALA - see cooperation through cooperation committees as very important. The employers do not see any confusion between the employers prerogative to lead and manage work (established in the basic agreement a century ago - DK9908142N) and the increasing role of cooperation committees in the daily decision-making process.

A Cooperation Board (Samarbejdsnævnet) was set up by LO and DA in 1964 in the context of their cooperation agreement and functions as adviser, information provider and problem solver for cooperation committees, where needed. The existence of the Board in itself may be seen as an indication of good cooperation between the social partners in this area. In an overall perspective, it seems that both parties are very interested in developing strong and competent cooperation committees. The Cooperation Board's annual report for 2002 stated that the well-being of the employees and the development of the company’s competitiveness and flexibility are mutually dependent factors and a main issue for cooperation committees. (Carsten Jørgensen, FAOS)

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