Developments in European Work Councils - case of Estonia

While most of the 10 new EU countries have introduced legislation implementing the EWCs Directive in advance of their accession to the EU, then Estonia is one exception. There have been several discussions over the employees’ involvement, and the Ministry of Social Affairs has prepared several legislative acts, but none of these have been accepted so far.

The draft of the Social Dialogue Act

In the beginning of 2004, the adoption of the Social Dialogue Act drew much attention in Estonia (EE0403101F), but finally no employers’ and employees’ central organisations did not concerted this Act. The aim of the proposed legislation was to lay down general principles for employee information and consultation and advancing the social dialogue between employers and employees. Estonia had to bring its legislation in line with 'acquis communautaire' and the proposed Social Dialogue Act would have been implement the following Directives: the 1994 Directive on European Works Councils (EWCs) (94/45/EC); the 2002 Directive on national consultation rules (2002/14/EC); and the 2001 Directive on employee involvement linked to the European Company Statute (ECS) (2001/86/EC).

The Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) (EE0308101F) argued, that the draft does not direct the social partners to bargain and does not help to solve the problems concerning informing and consulting employees in reality. EAKL states that an Act should establish conditions for effective social dialogue, regulating the information and consultation procedure, issues, competences and many other relevant matters that the draft Social Dialogue Act does not cover. Trade unions state that monitoring and enforcement by the public authorities of information and consultation rules is almost non-existent and that fines alone are not sufficient for putting into effect a system in this area. The insufficient public monitoring and enforcement of information and consultation is also the reason why EAKL is calling for there to be at least one to three employee representatives on the boards of public enterprises and private enterprises that employ more than 300 employees.

The Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK) (EE0310102F) criticised the draft of the Act, that it would impose more stringent obligations on employers than the relevant EU directives do. ETTK argued, that overly strict regulation of social dialogue limits significantly possible settlements between the social partners and inhibits the natural development of dialogue. ETTK argues that company boards are primarily a structure to protect shareholders' interests - if there is worker participation on such boards, a conflict of interests will arise. Employers also claim that employees’ representatives would not be sufficiently competent to sit on the board, as participation in the management of a large enterprise requires knowledge about financial and management matters. In addition, participation in management also presumes responsibilities (including financial responsibilities), and this may be problematic in the case of employee representatives.

During the discussions, social partners held different positions - trade unions demanded strict legislative regulation of this area, while the employers were in favour of even more flexible approach. As the government did not take the role of arbitrator, the social partners had to harmonise their standpoints in bipartite consultations. In March 2004, central trade union and employers’ organisations made a proposal to the government, to abandon the future proceeding of the draft of the Social Dialogue Act and to initiate working out the draft of the Collective Labour Relations Act with the participation of the social partners. At the negotiations, the common position between social partners was reached, that in the draft of the Collective Labour Relations Act, the requirements of the EU Directive in regards to informing the employees and consulting with them should implemented, and to incorporate the Collective Agreement Act, Settlement of Collective Labour Disputes Act and Employees Representative Act in the draft.

The draft of the Involvement of Employees Act

In the end of July 2004, the draft of Involvement of Employees Act elaborated by the Ministry of Social Affairs was sent to social partners for reconciliation. The draft of Involvement of Employees Act establishes, on the basis of a respective directive of the EU, an obligation for the employers to form workers councils in the companies that give work to more than 1000 employees and operate in at least two EU member states. Workers councils will be formed at the parent company from the representatives of employees of the subsidiaries operating in the member state.

ETTK did not confirm the draft of Involvement of Employees Act, because the draft describes unjustified advantages to trade unions when electing representatives of employees to the workers councils of companies and as the privilege of appointing the respective representatives will be hold by the trade union of the company, thus placing other forms of employee representation into an unequal position. In Estonia, no such compulsory involvement mechanism of employees has been established in the legislative level, and the ETTK is neither in favour of its creation in the future. It would be unreasonably burdensome for the employers to apply the registration of European companies concerning employee participation established in the directive in question.

The chair of ETTK, Tarmo Kriis, stated that the legal substantiation of the rights of the trade unions contradicts the conventional practices of employee representation, as in many companies employees are represented in their relations with the employer by trustees instead of the trade unions. According to Mr. Kriis, the representativeness of the representative of employees depend on which proportion of the work force as a whole is actually presented. Provided that trustees of employees represent the employees independently from the trade unions, they often also have better possibilities for balancing the interests of employees and employers in the companies than trade unions that are using methods of pressure.

EAKL stated that giving preference to trade unions is by all means justified in the draft, because trade unions guarantee the involvement of employees and functioning of the system. The chair of EAKL, Harri Taliga stated, that there is no unreasoned privileges to trade unions, as in the reality the trade unions organisations represent the interest of employees most effectively. The involvement of representatives of employees to workers councils is going to take place only in the enterprises, where trade union organisation exists. The legislative acts do not obligate the workers’ trustees to take any responsibility and accountability of their activities and also they do not have any resources for protecting the employees and therefore workers’ trustees are easier to influence.

The General Deputy Secretary on Labour Policy from Ministry of Social Affairs, Piret Lilleväli, stated, that in Estonia these issues are still unfamiliar and social partners are not strong enough for implementing the requirements to Estonian enterprises.

Commentary

At the moment, employees’ information and consultation rights in Estonia derive from several laws - such as the Law on Trade Unions and the Law on Occupational Health and Safety. The current Estonian legislation describes the process of informing and consulting employees’ representatives very briefly and only information and consultation in the event of collective redundancies is explicitly regulated.

According to the adviser from the Working Life Development Department of the Ministry of Social Affairs, Tiit Kaadu, there is an approximately 20-25 enterprises, whose activities this new Involvement of Employees Act will influence. The future of work councils in Estonia depends on further developments of social dialogue and it is correlated to the negotiation power of unions. (Kaia Philips and Raul Eamets, University of Tartu)

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