European Works Councils - law and practice

This article examines the implementation into Hungarian law of the EU Directive on European Works Councils (EWCs), and the country's experience of EWCs, as of autumn 2004.

Implementing legislation and debate

EU Directive 94/45/EC on the establishment of a European Works Council (EWC) or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees was transposed into Hungarian law by Act XXI of 2003 on EWCs, which came into force when Hungary joined the EU in May 2004

The draft bill, before being submitted to parliament, was discussed by the tripartite tripartite National Interest Reconciliation Council (Országos Érdekegyeztető Tanács, OÉT) in December 2002. Representatives of employers and trade unions fully supported the government’s proposal and did not propose any changes to it.

Key provisions of the legislation

Act XXI of 2003 follows the structure of the EWCs Directive and repeats its provisions in many areas. In the areas where national 'customisation' is required, the most important provision is probably that Hungarian employee representatives on the special negotiating bodies (SNBs) that negotiate EWC agreements are to be appointed by the works council (Üzemi Tanács, ÜT) of the establishment concerned. The provisions of the Act in this area are modelled on the German transposition legislation. However, workplace-level employee representation in Hungary is based on a parallel structure involving both statutory workplace-level works councils (HU0401106F) and workplace-level trade union organisations. Despite this dual 'horizontal' structure, the Hungarian EWCs legislation does not recognise any role for trade union representatives in appointing SNB members.

Companies covered

Since Hungary became a member of the EU, no comprehensive list of companies headquartered in the country and subject to the Directive has been published. However, it is known that a number of companies, including the two largest domestic corporations - Hungarian Oil and Gas (Magyar Olaj és Gázipari Rt, MOL) and OTP Bank (OTP Bank Rt, OTP) - fall under the scope of the Directive. Furthermore, a number of foreign-owned multinational companies whose European headquarters are in Hungary are covered by the Directive due to enlargement. A notable case is the consumer and industrial division of General Electric, where an EWC was set up on 28 April 2004 (General Electric has separate EWCs for its various divisions).

Experience to date

The first EWC in a Hungarian-based multinational was established on 17 June 2004 at MOL. It has members from Hungary, Slovakia, UK, Austria, Germany, France, Slovenia, Cyprus and the Czech Republic, as well as observers from Croatia and Romania. At OTP, the other of the two largest Hungarian-owned multinationals, talks over a possible EWC agreement have not begun yet.

According to an ongoing research project coordinated by the European Trade Union Institute (ETUI) on EWC developments in the Czech Republic, Poland and Hungary, the situation in the Hungarian operations of companies headquartered abroad is varied. In most cases, delegates from Hungary who earlier had observer status on EWCs have more recently gained member status. Other EWCs that did not contain observer members from Hungary have recently begun the process of selecting Hungarian delegates, though in most cases this selection procedure has not been completed yet. There is one known case of a conflict, relating to Hungary, between trade unions and the management over the distribution of EWC seats among national representatives.

Several years ago, the National Association of Hungarian Trade Unions (Magyar Szakszervezetek Országos Szövetsége, MSZOSZ), the largest union confederation in the private sector, initiated a forum to educate trade union representatives operating in multinationals. This forum, however, did not become a regular event. In 1998, the Ministry of Labour together with its counterparts from some EU Member States organised an awareness-raising seminar. In October 2003, the European Mine, Chemical and Energy Workers' Federation (EMCEF), the Friedrich Ebert Stiftung (FES) and the European Integration Commission of Hungarian Trade Unions (Magyar Szakszervezetek Európai Integrációs Bizottsága, MSZEIB) organised a seminar on the experiences of Hungarian EWC delegates. This seminar was based on a questionnaire survey involving delegates from 13 subsidiaries in Hungary. The abovementioned ETUI project includes the organisation of a workshop with the assistance of FES in November 2004.

Commentary

The Hungarian legislation transposing the EWC Directive came into force on 1 May 2004, and it is thus too early to evaluate the impact. By and large, those companies that began their preparations before the accession date are likely to have started work on the establishment of an EWC, or on the extension of an existing one, while those EWCs with Hungarian observers are likely to be introducing full membership. It should be mentioned that the next 'general elections' of members of Hungarian works councils will take place in November 2004. The Hungarian transposition law stipulates that EWC delegates are appointed by these works councils, and at a number of companies, the EWC delegates will be selected by the newly elected works councils. (László Neumann and András Tóth, Institute of Political Science, Hungarian Academy of Science)

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