European Works Councils - law and practice

This article examines the implementation into Lithuanian 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 implemented in Lithuania by the Law on European Works Councils (Lietuvos Respublikos Europos darbo tarybų įstatymas), adopted on 19 February 2004.

Debate on the draft EWCs law took place in the highest national tripartite body - the Tripartite Council of the Republic of Lithuania (Lietuvos Respublikos Trišalė taryba, LRTT) - which finally approved the legislation. The debate was not as broad as that on other recent items of employment legislation (eg the Labour Code or on the Law on Works Councils) because the EWCs Directive stipulates the main principles of the national implementing legislation, leaving only a relatively small number of issues for national decision-making. The main discussion focused on the procedure of selecting members of special negotiating bodies (SNBs) and EWCs (see below), and on the social and economic guarantees for these members. For example, the Lithuanian EWCs legislation provides that the members of SNBs, EWCs or EWCs' committees may not be dismissed from work on the initiative of the employer without prior consent of the employee representatives who appointed them. If these members were elected by a general staff meeting or conference (see below), consent to dismiss them must be given by a regional department of the State Labour Inspectorate. This and other protective measures were seen as very important by trade union representatives during the discussions in the LRTT.

Key provisions of the legislation

Article 16 of the implementing legislation governs Lithuanian representation on SNBs. If in Lithuania there is a single establishment or undertaking of a Community-scale undertaking or group of undertakings, the Lithuanian SNB member(s) shall be appointed by the employee representatives in the establishment or undertaking. If employee representatives in the establishment or undertaking are unable to reach agreement concerning the appointment of the Lithuanian SNB member(s), a 'general staff meeting' shall elect the member(s) by secret ballot. The same election method applies to the selection of SNB members in those establishments or undertakings where there are no employee representatives present.

If there are several establishments or undertakings in Lithuania, the SNB member(s) shall be appointed by consensus among the employee representatives from all establishments or undertakings in Lithuania. If these employee representatives cannot agree on the appointment of the SNB member(s), the Lithuanian member(s) shall be elected by secret ballot at a 'general employee conference' representing all establishments or undertakings (at this conference, every 10 employees are represented by one delegate).

A term of 60 days is fixed for the appointment or election of SNB members. Central management should coordinate the formation of the SNB, while management at other levels should grant technical assistance in organising general employee meetings or conferences.

The procedure described above also applies to the selection of EWC members from Lithuania, if there is no agreement between SNB and central management that provides for a different procedure.

The Law on European Works Councils does not specify the concept of 'employee representatives'. The explanation of this concept is provided in Lithuanian Labour Code. According to the Code, the rights and interests of employees in industrial relations may be represented and protected by trade unions. In those cases where an enterprise, agency on organisation has no trade union and an employee meeting has not transferred employee representation and protection functions to an appropriate sectoral trade union, employees are represented by a works council elected by secret ballot at a general meeting of the staff. This means that trade unions are given priority in appointing SNB or EWC members.

Companies covered

There are no official stastitics on the number of undertakings falling under the provisions of the Lithuanian EWCs legislation - either multinationals covered by the Directive and based in Lithuania, or multinationals covered by the Directive based elsewhere and with operations in Lithuania (though there are certainly a number of the latter - see next section). With regard to the the former category, information indicates that VP Market (retail) meets the criteria for coverage by the Directive. However no initiative has been taken to set up an EWC and there are no operational trade unions at the company to launch such a move. A few other Lithuanian-based companies - eg Ragutis (beverages) and Vakarų laivų gamykla (shipyards) - may also come under the scope of the Directive, but again no initiatives have been taken so far.

Experience to date

The first Lithuanian participants in the work of EWCs were employee representatives from the Lithuanian operations of Danisco Sugar, Kraft Foods and Statoil. Lithuanian employee representatives were given observer status in the EWCs of these multinationals prior to the enlargement of the EU. Since the enlargement of the EU in May 2004, EWCs at a number of other multinationals, such as Philip Morris and Telia Sonera, have also been expanded to include employee representatives from Lithuania.

The impact of Lithuanian employee representatives' participation in the work of EWCs on national industrial relations is not clear yet. It is very hard to evaluate, because the involvement of Lithuanian employees in EWCs is just starting and only a few undertakings have representatives in EWCs. However, there are reportedly cases when participation in an EWC has helped in the negotiation of collective agreements in Lithuanian operations of a multinational.

Some potential problems have been identified with regard to the enlargement of EWCs to include employee representatives from Lithuania:

• it is very difficult to find employee representatives who are fluent in foreign languages. A general knowledge of a foreign language is not enough to understand all the information that EWCs members deal with during meetings;

• not all employee representatives have enough information about EWCs and their activities, and therefore they often do not understand the purpose of their participation in EWCs; and

• in most cases Lithuanian representatives join EWCs that were established on the basis of an agreement reached by employee representatives and central management some time ago. Sometimes, local management in Lithuania reportedly refuses to show such agreements to local representatives, stating that the information is confidential. Therefore, it is very difficult to make sure that the procedure for selecting EWC members is being fully complied with, and an opportunity is, it is claimed, given to management to select a person it wants to represent Lithuanian employees on an EWC.

Commentary

As the main aim of EWCs is to promote an open flow of information, an exchange of ideas and a dialogue between management and employees at European level, the enlargement of EWCs to new Member States such as Lithuania will definitely have a positive impact on the effectiveness of existing EWCs..

The level of labour organisation in Lithuania is very low, with union density among the lowest in the EU Member States. There are also no operating domestic works councils in Lithuania, the Law on Work Councils not yet having been adopted by parliament. Therefore, the implementation of the Law on European Works Councils and initiatives to establish EWCs in the Lithuanian-based multinationals may take a long time, especially in those multinationals that have their operations only in the new EU Member States, such as Lithuania, Latvia and Estonia. (Inga Blažienė, Institute of Labour and Social Research).