Takeda Pharmaceutical signs EWC agreement

Takeda Pharmaceutical, a multinational pharmaceutical company based in Japan, signed an agreement establishing a European Works Council in May 2011. It was one of the last EWCs to be established before the ‘recast’ EU directive on works councils took effect in June. However, it appears to reflect many of the provisions set out in the new directive that reinforce the information and consultation rights of the councils and more clearly set out the transnational matters covered in the agreement.

Takeda EWC agreement

Takeda Pharmaceutical is Japan’s largest pharmaceuticals company, and also has operations elsewhere in Asia, Europe and North America. A little over half of its total workforce of nearly 20,000 people works outside Japan.

In 2008, employee representatives at Takeda subsidiaries in France and Germany set up a negotiating body to try and reach agreement on establishing a European Works Council (EWC) with the company’s central management in Europe, which is located in the UK. After more than two years of talks, during which employee representatives were advised by the European Mine, Chemical and Energy Workers’ Federation (EMCEF), an agreement was signed in May 2011.

The agreement, based on UK law, creates an EWC representing the employees of Takeda subsidiaries in the European Economic Area (EEA). The agreement’s formula for the composition of the council is based on the proportion of Takeda’s total EEA workforce employed in each country. This has initially resulted in an EWC made up of 10 employee representatives: two each from France, Germany, Ireland and Italy, and one each from Austria and the UK.

The EWC meets senior management once a year for discussions on a range of business and employment issues. A four-member select committee meets management three times a year. The committee is also informed and consulted, and meets management when ‘exceptional transnational circumstances’ arise.

Employee representatives may invite an EMCEF official to attend annual and exceptional meetings.

Influence of recast directive

On 6 June 2011, the 30 EEA member states were due to implement the ‘recast’ EWCs Directive (2009/38/EC) (EU0901029I) although, according to data from the European Commission, only 14 countries met the deadline. The recast directive strengthens the role and rights of EWCs in a number of areas. Notably, it:

  • reinforces and more clearly defines the information and consultation rights of EWCs;
  • links and more clearly differentiates the information and consultation of EWCs and of national bodies, providing a new definition of ‘transnational matters’ covered by EWCs;
  • gives a greater role to trade unions;
  • entitles EWC members to training without loss of pay; and
  • contains rules on adapting EWCs to structural change in the multinational concerned.

Although signed before the recast directive took effect, the Takeda agreement reflects its provisions in important areas such as the definitions of information, consultation and transnational issues, as well as entitling EWC members to training and giving EMCEF a role.

For example, closely following the directive, the agreement defines consultation as:

…the establishment of dialogue and exchange of views between the select committee and the management representatives or any more appropriate level of management … at such time, in such fashion and with such content as enables the select committee to express an opinion on the basis of the information provided to which the consultation is related, without prejudice to the prerogatives of management of the company, and within a reasonable time… which may be taken into account by the company.

The agreement also refers to the amended UK legislation implementing the recast directive and states that it incorporates several aspects of this legislation.

Slowdown in negotiation of new agreements

According to figures from the European Trade Union Institute (ETUI) published in a report by Romuald Jagodzinski (608Kb PDF), around 2,400 multinationals are potentially covered by the EWCs Directive, while 917 companies had EWCs in place in April 2011, a ‘compliance rate’ of around 38%.

After the original directive took effect in 1996, around 70 new EWCs were set up each year from 1997 to 2001 and the rate declined to around 30 a year during most of the 2000s. However, after the recast directive was adopted in May 2009, the conclusion of new EWC agreements declined to very low levels (only 15 were signed in 2010).

The slowdown in activity in setting up EWCs in the two years between the adoption and the implementation of the recast directive may reflect, at least in part, legal uncertainty over the status of agreements signed in this period. It also stems from a desire on the part of unions and employee representatives to await implementation so that they could benefit from the recast directive’s more advantageous provisions.

Now that the new directive has taken effect, an upswing in the conclusion of new agreements may be anticipated, containing the stronger provisions that have already been pioneered in cases such as Takeda.

Mark Carley, SPIRE Associates

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