Social partners criticise draft Social Dialogue Act

The Estonian government is seeking to enact a Social Dialogue Act, implementing various EU information and consultation Directives, in May 2004, the date of the country's EU accession. Tripartite discussions over the draft legislation have been proceeding since 2003, but trade unions and employers' organisations still have major criticisms of the proposals.

Tripartite discussions on a draft Social Dialogue Act, drawn up by the Ministry of Social Affairs, started in 2003. The proposed legislation would lay down general principles for employee information and consultation, with the general aim of advancing the social dialogue between employers and employees. The context is that Estonia needs to bring its legislation in line with 'acquis communautaire' (the body of EU law) before EU accession on 1 May 2004. This includes transposition of: the 1994 Directive on European Works Councils (EWCs) (94/45/EC); the 2002 Directive on national information and consultation rules (2002/14/EC) (EU0204207F); and the 2001 Directive on employee involvement linked to the European Company Statute (ECS) (2001/86/EC) (EU0206202F). The proposed Social Dialogue Act would implement these three Directives.

The draft Act defines 'social dialogue' as information and consultation between employees’ representatives (or employees) and employers on issues concerning employees, and also the involvement of employees in the affairs of European Companies formed on the basis of the ECS. The legislation will govern the procedures and issues for employee information and consultation in undertakings and establishments in Estonia (as well as European-scale multinational enterprises with operations in Estonia) and provide the legal basis for the involvement of employees in the affairs of European Companies. The Social Dialogue Act should come into force on 1 May 2004, though the section on involvement in European Companies should come into effect on 8 October 2004 (the implementation date of the relevant Directive).

Since the beginning of 2004, the progress towards adoption of the Social Dialogue Act has attracted much attention in the Estonian media. While the Act should come into force on 1 May, central trade union and employers' organisations have not yet approved the draft. The parties clearly hold different positions - trade unions demand strict legislative regulation of this area, while the employers are rather in favour of a more flexible approach. As the government does not want to take on the role of arbitrator, the social partners have been seeking to harmonise their standpoints on employee information and consultation in bipartite consultations, before the next round of tripartite negotiations in the middle of March.

Trade unions' positions

The Confederation of Estonian Trade Unions (Eesti Ametiühingute Keskliit, EAKL) (EE0308101F) regards the establishment of procedures for informing and consulting employees’ representatives at workplaces as one of its main objectives in tripartite concertation for 2004. It raised problems related to informing and consulting employees' representatives over two years ago. Though the draft of the Social Dialogue Act deals with these issues, EAKL has not approved the draft and points out many perceived deficiencies in it. EAKL argues 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. Though the aim of the draft Act is to implement EU information and consultation provisions in Estonian legislation, this has been done incorrectly in many points, the union confederation claims. EAKL states that an Act on informing and consulting employees 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 also 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. EAKL takes the view that Estonia should introduce a principle that decisions affecting employees which are taken without informing and consulting employees should be invalid.

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. Trade unions argue that the aim of such board-level employee participation should be to keep employees informed about decision-making, and that such participation would help to address problems in enterprises' working environment. It would be helpful to clarify to employees issues such as the remuneration system and the calculation of performance-related pay at board level. In addition, employees would receive information on training possibilities and enterprise's development strategy more effectively, and employers would have a clearer idea about the enterprise's internal climate and employees' problems.

EAKL has proposed regulating the issues covered in the draft through two separate Acts. One should regulate informing and consulting employees in multinational enterprises operating or based in Estonia. The other should take into account employers' and trade unions' suggestions and regulate information, consultation and employee participation in enterprises located in Estonia.

Employers' criticism

Although the Estonian Employers’ Confederation (Eesti Tööandjate Keskliit, ETTK) (EE0310102F) approves the idea of improving employee information, it criticises the draft Social Dialogue Act on the grounds that it would impose more stringent obligations on employers than the relevant EU Directives do. ETTK does not approve of adding to the Directives' minimum requirements concerning employee information and consultation at enterprise level. Overly strict regulation of social dialogue, it is argued, limits significantly possible settlements between the social partners and inhibits the natural development of dialogue. In addition, the establishment of unjustifiably high requirements for informing and consulting employees would become burdensome for employers and decrease the competitiveness of Estonian companies in comparison with their competitors elsewhere in the EU.

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.

ETTK has made several proposals for amendments to the draft Social Dialogue Act. In order to avoid pressures which would hinder the activities and development of small and medium-sized enterprises, the transitional arrangements allowed by Article 10 of the national information and consultation Directive (2002/14/EC) for application of its provisions to smaller enterprises should be used. This would mean that the Directive's requirements would not apply to enterprises employing 50-100 employees until 2008. 'Micro' and small-sized enterprises (employing less than 50 employees) should not be covered by the Act at all.

ETTK criticises the fact that Estonia is attempting to bring its legislation implementing the national information and consultation Directive into force on 1 May 2004, while the Directive provides only that Member States should transpose it by 23 March 2005. Employers argue that it would be more rational to give them enough time to become familiarised with the rights and responsibilities specified by the new legislation.

Commentary

Part of the criticism levelled at the draft Social Dialogue Act relates to its title. At the moment the title is misleading, as the Act deals only with the issues of information and consultation. It should be renamed as an Information and Consultation of Employees Act, which would correspond with its content. Criticism is also targeted at the content of the draft Act. If the Ministry of Social Affairs wants to introduce legislation on social dialogue, the Act should cover other aspects of social dialogue, and not only information and consultation.

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. (Kaia Philips and Raul Eamets, University of Tartu)

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