European Works Councils - law and practice

This article examines the implementation into Slovak 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 Slovakia - within the framework of pre-accession implementation of the 'acquis communautaire' (the body of EU law) - by Act No. 311/2001 on the Labour Code, as amended. Sections 241-250 of the Labour Code regulate EWCs. The new Labour Code entered into force on 1 April 2002, but the provisions on EWCs became valid on 1 May 2004, when Slovakia joined the EU.

Debate over EWCs was overshadowed by that about domestic works councils, which were also introduced in 2002 by the new Labour Code (SK0308102F). These bodies were very controversial due to the trade unions' strong opposition. Initially, unions were against the introduction of works councils because they saw them as weakening their privileged position as the only channel representing employees. Finally, the unions accepted a solution whereby works councils could be introduced only in companies where no trade union organisation was present. Thus the 2002 Code introduced employee representation through an elected works council (which may be set up at organisations with at least 50 employees) or 'works trustee' (who may be elected in organisations with more than five but fewer than 50 employees) with negotiation, information and inspection rights, but only in organisations with no trade union presence. However, the Labour Code's provisions in this area were amended soon afterwards, in line with employers' demands. Thus, since 1 July 2003, works councils can also be established in companies where trade unions are active. The Labour Code's provisions dealing with EWCs were not affected by these changes.

A Phare twinning project on development of social dialogue on the bipartite level, implemented in 2002-3 (SK0307101N), had as one of its aims helping with the introduction of works councils. Though the implementation of the EWCs Directive was not included on the project agenda (the issue not yet being current), its activities focused on domestic works councils (a manual was issued, for example) also helped to lay the groundwork for EWCs.

Key provisions of the legislation

The Slovak Republic's legislation (as in all Member States) largely repeats the content of the Directive(s), while also 'customising' a number of provisions to fit the national industrial relations system, as provided for by the Directive. The main such provisions are set out below.

Representatives of Slovak workers on the special negotiating body (SNB) are to be appointed by 'representatives of employees' through 'joint negotiations', in which their votes are weighted in line with the number of employees they represent. These representatives of employees may be trade unions or elected works councils (see above). In SNBs in multinationals based in Slovakia, the SNB seats are to be allocated among countries - in addition to the basic allocation of one representative from each Member State where the multinational has an establishment or undertaking - in line with the following criteria: one extra representative from each Member State with at least 25% of the multinational's total workforce in the countries covered by the Directive; two extra representatives from each Member State with at least 50% of the total workforce; and three extra representatives from any Member State with at least 75% of the total workforce. The SNB takes decisions by simple majority vote, except for decisions not to open negotiations with management or to terminate negotiations in progress, where three-quarters of the votes are needed..

An EWC based on an agreement may include representatives of employees from non-EEA Member States, if this is agreed by the SNB and central management.

With regard to statutory EWCs established on the basis of the Directive's subsidiary requirements in the absence of an agreement, the Slovak representatives are appointed in the same way as SNB representatives (see above). In addition to the basic allocation of one EWC member per Member State where the multinational has operations, statutory EWCs in Czech-based multinationals have additional members as follows:

  • in multinationals with fewer than 10,000 employees in total in the Member States, each Member State with at least 20% of the total workforce has one extra member. This rises to two extra members for those countries with at least 30% of the total workforce, three extra members for those with at least 40% of the total workforce, and so on in steps of one extra member per 10% of the total workforce up to seven extra members for those with at least 80% of the total workforce; or
  • in multinationals with 10,000 or more employees in total in the Member States, each Member State with at least 20% of the total workforce also has one extra member. However, those countries with at least 30% of the total workforce have three extra members, those with at least 40% have five extra members, and so on in steps of two extra members per 10% of the total workforce up to 13 extra members for those countries with at least 80% of the total workforce.

Central management must check every two years from the date of the establishment of a statutory EWC to assess if the numbers of employees in individual Member States has changed in such a way that, in line with the above formula for the distribution of seats, a different composition is required. Its findings must be announced to the EWC. If the EWC's composition must be changed, central management must ensure that new members are appointed as necessary.

Companies covered

There is no information available on the number of multinational companies headquartered in Slovakia that are covered by the EWCs Directive - though there are thought to be some (see next section). With regard to the number of foreign-based multinationals covered by the Directive that have operations in Slovakia, no official data exist. However, the Confederation of Trade Unions of the Slovak Republic (Konfederácia odborových zväzov Slovenskej republiky, KOZ SR) has drawn up a list of multinational companies operational in Slovakia, and most of them fall within the scope of the Directive. According to the KOZ SR data, there were 138 multinationals with 154 subsidiaries operating in Slovakia in 2000-1. Adding on the estimated number of multinationals that have entered the Slovak market in the past two-three years, the total number of multinationals operational in Slovakia may currently be more than 150. They are mainly in the mechanical and metalworking industry, followed by agri-foodstuffs, banking and insurance, and chemicals industry - see table 1 below.

Table 1. Multinational companies operating in Slovakia, by sector
Sectors No. of companies No. of subsidiaries
Mechanical and metalworking industry 33 39
Agri-foodstuffs 20 24
Banking and insurance 13 13
Chemicals industry 12 15
Distributive and trade 11 11
Building, timber and public works 8 11
Textiles, clothing, leather 7 7
Direct sales, retail and wholesale 4 4
Hotel and restaurants 2 2
Transport 2 2
Distribution of petrol products 1 1
Public services 1 1
Other 24 24

Source: KOZ SR.

With regard to the companies' country of origin, the most common is Germany (almost a third), followed by the USA, France and Austria - see table 2 below.

Table 2. Multinational companies operating in Slovakia, by country of origin
Country of origin No. of multinationals
Germany 38
USA 26
Austria 12
France 17
Netherlands 8
Italy 6
Switzerland 6
Belgium 5
Sweden 5
Norway 2
UK 2
Canada 1
Finland 1
Japan 1
South Africa 1
South Korea 1

Source: KOZ SR.

Experience to date

At present, there is no information on the actual number of multinationals operating in Slovakia that have EWCs with Slovak representation. The current legislation does not oblige employers and trade unions to record data on employees’ representation on EWCs (or on the establishment of domestic works councils). This type of information is not collected by the Ministry of Labour, Social Affairs and Family (Ministerstvo práce, sociálnych vecí a rodiny Slovenskej republiky, MPSVR SR), which is responsible for labour law enforcement, including in terms of employee representation.

However, according to the available information, in general Slovak employee representatives - often trade union representatives - often participated in the work of EWCs, in many cases as observers, prior to accession. This has allowed them to get to know the operation of EWCs and gain experience and knowledge prior to becoming full members after accession. Cases include companies such as Volkswagen, Continental, Siemens, INA, Beakaert, Danone, Nestlé, Heineken and Kraft Foods. Furthermore, according to the social partners in the energy sector, prior to accession E.ON, RWE and Electricité de France expressed interested in the involvement of Slovak representatives in their EWCs.

As seen in table 1 above, the mechanical and metalworking industry is the sector with the greatest number of multinationals with operations in Slovakia. According to up-to-date information from the Metalworkers' Union (Odborový zväz KOVO), which represents employees in these areas, there are currently 34 multinational companies covered by the Directive operating in Slovakia through a total of 42 subsidiaries, in the mechanical engineering, metalworking and electrical sectors .In 15 of these (36%) member unions of KOVO are present (no information is available as to whether any trade unions are present in the others). At eight (19%) subsidiaries of multinationals - Beakaert, Bosch, Panasonic, Siemens, Volkswagen in Bratislava and in Nitra, Whirlpool and Sachs/Boge- local trade union representatives are already regular members of the companies' EWCs. In another two companies - Delphi and Kone- preparatory activities for membership in EWCs are under way. Some companies in the headquartered in the Slovak Republic and covered by the Directive are thought to be working on the establishment of an EWC.

Given the fact that the relevant provisions came into force only on 1 May 2004, there is very little experience of the enforcement of the law relating to the involvement of Slovak employees' representatives in EWCs, and there has been no examination of the practical experience of such involvement. With regard to the experience in the companies where employees' representatives (mostly trade union representatives) had a chance to be involved in EWCs before May 2004, mainly as observers, some comments are available from the KOVO trade union and the social partners in the energy, chemicals and food processing sectors. In these sectors, mostly German, Dutch, French and Austrian multinationals operate in Slovakia. According to the social partners in these industries, the EWCs play an important intermediate role between the parent companies and their subsidiaries in Slovakia, and:

  • at present, the trade unions representatives usually have more information at their disposal on the EWC's operation than Slovakian managements. Trade union representatives act as employees' representatives in the EWCs in the majority of cases and they are usually chairs of union organisations;
  • in multinationals that have more than one subsidiary in Slovakia, as a rule there is only one representative from Slovakia on the EWC, and sometimes one representing both Slovakia and the Czech Republic (eg in the cases of Volkswagen, Heineken, Siemens and Nestlé);
  • union representatives consider their participation in EWCs as very useful channel for information exchange. They receive information on the global situation in the multinationals concerned - eg on the economic situation, development plans and investments, plans on employment levels, marketing strategies and preparation of new products;
  • information acquired by the union representatives during EWC meetings is of use to them in the process of collective bargaining at company level. Trade unionists are better able to formulate their negotiating strategies because they have a certain amount of information also on the real 'room for manoeuvre' of the employer;
  • many union representatives stress the fact that their involvement in the EWC allows for the establishment of better connections between the local subsidiaries and the parent company. It is especially useful for improving the information flow towards Slovak employees about the undertakings' activities (management representatives are obviously better informed about the parent company through their routine daily work); and
  • trade unions' and employers' representatives perceive EWCs as an element in a 'European industrial relations system', whose role is likely to increase in the future.

(Ludovít Cziria, Bratislava Centre for Work and Family Studies)

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