EWC practice surveyed

A survey of major multinational companies released in 2004 highlights key trends in European Works Council (EWC) practice and employer concerns about the potential revision of the EWCs Directive.

Between September 2003 and January 2004, the US-based management consultancy ORC Worldwide carried out a survey of 39 major multinational companies concerning the operation of their European Works Councils (EWCs). The companies covered were predominantly headquartered in the USA, UK or Japan, but included two from each of France, Germany and Switzerland. The survey, entitled 'ORC European Works Councils survey 2004', anticipated the start of the consultations with the EU-level social partners - launched in April 2004 (EU0405203F) - about revising the EU Directive on EWCs (94/45/EC) as well as EU enlargement. This feature outlines its key findings.

Key findings

Representation from the new EU Member States

Although the survey pre-dated EU enlargement, 16 of the 39 companies responding already included representatives from the countries joining the EU in May 2004. The degree of participation varied, with some being granted full EWC membership and others having 'observer' status. Where local transposition legislation had not been finalised, EWC representatives from the accession countries tended to be drawn from existing local employee representation bodies.

Changing dynamics

Management in 15 companies considered that the dynamics of the EWC had changed since the agreement’s inception; 24 companies felt there had been no real change. However, employee representatives in 31 companies reportedly expected more engagement and information from management than in the early days of their EWC; and in 27 companies they had become more confident or experienced over time, contributing to their heightened expectations of the EWC process.

Perceptions of EWCs

EWCs were not reported to be valued highly by the wider workforce. Fifteen companies indicated that their EWC was positively viewed; 21 said that it was not valued. A similar picture emerged regarding local management’s perception of the EWC. The focus of 21 companies’ local management was on local consultation processes, and much less on the EWC, while in 17 companies local management were said to value the EWC.

Scope and nature of consultation

The range of issues addressed in EWCs largely conformed to the default 'subsidiary requirements' in the Directive (33 companies). Six companies covered a more extensive list of issues, including health, safety and the environment, training and development, international strategies and corporate social responsibility.

The nature of consultation reflected the Directive’s definition - 'the exchange of views and establishment of dialogue'- in 31 companies. Despite the maturity of several of the EWCs surveyed, few agreements had expanded (at least in formal terms) the definition of consultation agreed at the outset. ORC suggests that this may reflect the continued 'pre-eminence' of local consultation rights: EWCs are seen as 'additional to, and not a replacement for, more robust consultation at local level'.

Feedback to the workforce

In 34 companies, feedback from the EWC to the wider workforce was via existing local communication/consultation processes. Management was involved in the briefing in most cases. In 14 companies, EWC employee representatives were allowed to visit other locations to brief employees.

Interface between EWC-level and local consultation

The relationship between the EWC and local communication processes is an important issue for most companies, though different approaches have been adopted. Eight companies said they consulted with their EWC before the commencement of local consultation; 20 started the consultation with the EWC and local processes simultaneously; and 10 began consultation first at the local level before consulting with the EWC. Six companies’ EWC agreements specify when consultation should take place with the EWC in relation to consultation at the local level; in 33 organisations, it is the company’s responsibility to manage this issue.

Timing of consultation in terms of company decision-making

Twenty companies said that they tended to consult the EWC on some issues at an early stage in the decision-making process. In 19 companies, management took decisions prior to consulting the EWC.

Impact of consultation

In response to the question 'Has management ever adjusted [a] business decision in the light of consultation with the EWC?', most respondents said that their EWCs had very rarely submitted specific recommendations to management following presentation of management’s proposals. The EWCs in 24 companies had reportedly never submitted a counter-proposal; and, in six instances, management had declined to accept the EWC’s views. In some cases, however, discussions with the EWC had resulted in companies adjusting decisions, their implementation or their communication.

Only one respondent indicated that formal written opinions may be submitted by the EWC, despite the provision in the Directive’s 'subsidiary requirements' enabling employee representatives to submit written opinions as part of consultation arising in 'exceptional circumstances'. Twenty-two companies believe that the submission of written opinions by EWC employee representatives would not alter the dynamics of the process; 16 companies replied that it would, by creating more formality and slowing down the process.

Confidentiality

EWC agreements in all but one of the 39 companies included confidentiality clauses. Twenty-nine companies said that they did not disclose price-sensitive information to the EWC, whereas 10 companies did share such information with EWC representatives, usually verbally rather than in writing. In the latter case, employee representatives were bound by a requirement to respect confidentiality. Only two companies reported breaches of confidentiality by employee representatives.

The role of experts

Where 'experts' were permitted to assist the EWC, full-time trade union officials fulfilled this role in the vast majority of cases. In 22 companies, experts assisted employee representatives in an advisory capacity; for five organisations the expert had assumed 'quasi-representative status'. In 12 companies, experts had been 'helpful' to the company; while six companies thought the experts were unhelpful to the process. In over one-third of cases, union officials did not support EWC representatives.

Training and support for EWC representatives

Thirty companies said they provided training to their EWC employee representatives. Of the nine companies indicating that their EWC agreement made no formal provision for training, four stated that they had, nevertheless, provided skills training to their employee representatives. Language training was reportedly not particularly effective, and had not reduced employee representatives’ reliance on simultaneous translation at EWC meetings.

EWC representatives receive administrative and similar support on an ad hoc basis. Companies were reported to be increasingly addressing the issue of communication between EWC employee representatives outside of formal EWC meetings. ORC thinks that the higher profile accorded to this issue most likely reflects the increased use of, and access to, information technology in the workplace.

Negotiation of agreements with EWCs

Fourteen companies reported they had concluded some form of 'framework agreement' with their EWC, although their EWC agreements did not formally provide for any negotiation rights. Issues covered included restructuring, data protection and consultation over new technology. Employee representatives in five further companies were reportedly pressing them to negotiate framework agreements.

Disputes procedures

Conciliation and disputes procedures existed in eight companies, but in only one case to date had the procedure been invoked.

Employer concerns over potential revision of EWCs Directive

ORC asked the survey participants to indicate the priorities that they would want the Union of Industrial and Employers’ Confederations of Europe (UNICE), to focus on when lobbying against the potential revision of the EWCs Directive (EU0405203F; EU0407207F). Key objectives identified by companies included:

• retaining the current definition of consultation without further elaboration (eg requirements for negotiation or agreement, or more precise rules on the timing of consultation with the EWC). However, a few companies said that they would welcome more clarity from the Directive as regards the precedence of consultation at EWC and local level;

• keeping EWCs focused on strategic issues so as to avoid duplication and reduce the scope for conflict with local-level consultative procedures;

• protecting flexibility by ensuring that any amendments to the Directive would not have a retrospective impact on EWC agreements;

• avoiding a bigger role for trade unions in EWCs; and

• maintaining effective confidentiality protections, although some companies wanted legislators and stock exchanges both inside and outside the EU to clarify what information may be disclosed to employee representatives on a confidential basis.

Commentary

The ORC survey provides a useful barometer of EWC practice and managerial opinion among leading multinationals, following a similar exercise in 2002 (EU0301204F). Notable findings include the apparently limited development of many EWCs since their inception, and the low impact of consultation with EWCs on business decisions. As regards the potential revision of the EWCs Directive, the main message from the employers in the survey appears to be that any changes to the legislation should not have the effect of limiting the flexibility currently available to companies. However, some of the findings of the survey, in particular that EWCs rarely influence management decision-making, are likely to be seen by European trade unions as supporting their case for stronger statutory information and consultation rights for EWCs. (Mark Hall, IRRU)