The effect of the Information and Consultation Directive on Industrial Relations in Lithuania five years after its transposition

  • Observatory: EurWORK
  • Topic:
  • Participation at work,
  • Labour and social regulation,
  • Industrial relations,
  • Published on: 18 January 2011



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In Lithuania, there are no statistics on the incidence of information and consultation bodies at undertaking- and/or establishment-level. There also is no research or systematic information on the implementation of information and consultation procedures in Lithuanian undertakings. Information and consultation procedures are defined in the Labour Code as compulsory procedures in cases provided for by the law rather than as information and consultation bodies. The Labour Code stipulates that under ordinary circumstances an employer must inform and consult employee representatives, i.e., trade unions or works councils. In case of restructuring of the undertaking, making decisions on collective redundancies or other decisions that may affect the labour organisation or the legal position of employees, when there are no employee representatives in the undertaking, an employer must inform employees in person or at the general meeting of employees. Unfortunately, information and consultation procedures are actually absent in practice in undertakings without functioning trade unions or works councils (or in some 70% of Lithuanian undertakings). If information and consultation procedures are held, they exclusively depend on the understanding and the good will of the employers.

1. Trends in the incidence of undertaking- and/or establishment-level information and consultation bodies

(a) Using official statistics where possible, please provide annual data for the years 2005-2009 (inclusive) on the number and proportion (%) of undertakings and/or establishments which have an information and consultation (I&C) body or equivalent.

Unfortunately official statistics do not provide data on the incidence of undertakings and/or establishments which have an information and consultation body or equivalent. According to the Labour Code of the Republic of Lithuania (LC), under ordinary circumstances an employer must inform and consult employee representatives, i.e., trade unions or works councils. Only in case of collective redundancies, restructuring of the undertaking or when making other decisions that may fundamentally affect labour organisation or employees' legal position in the undertaking the employer must inform employees in person or at the general meeting of employees when there are no employees’ representatives. Unfortunately, in practice we can see that information and consultation procedures are usually exclusively operational in undertakings/establishments with functioning employees’ representatives. It would be reasonable to this effect to provide data on the number and proportion of undertakings and/or establishments with functioning trade unions/works councils. However, precise information of such a type is not available in Lithuania either. According to different sources, trade unions are likely to be established in 10-20%, and works councils in 5-15%, of Lithuanian undertakings and/or establishments. Therefore, roughly 30% of Lithuanian undertakings and/or establishments presumably have an information and consultation body or its equivalent.

(b) Where possible, please provide data to show trends in the uptake of I&C bodies by:

(i) size of undertakings/establishments in terms of employment levels (i.e. under 50 employees, 50-99 employees, 100-199 employees; 200-499 employees, 500 or more employees or other appropriate size bands used in national statistics)

According to the survey ‘Analysis of establishment of works councils in Lithuania and future development perspectives’, conducted by the Institute of Labour and Social Research in 2006, 4% of Lithuanian undertakings had functioning labour (works) councils or employee representative elected pursuant to the Law on Works Councils. The bigger was the size of undertakings, the higher was works councils coverage. In 2006, works councils/employee representatives were elected only in 0.1% micro enterprises (1-10 employees), in some 10% of small-sized enterprises (10–49 employees), in about a quarter of medium-sized enterprises (50–249 employees) and even in one third of large-sized enterprises (250 and more employees). Although such data on trade unions is not available in Lithuania, we can say that their coverage is similar, i.e., a relatively significant share of large and medium-sized undertakings have established trade unions, while small-sized and, in particular, micro undertakings do not have functioning trade unions. Therefore, employees of larger undertakings probably enjoy better opportunities for being informed and/or consulted.

(ii) sector (broadly defined, i.e. industry/manufacturing, private services, public services).

The above mentioned survey (‘Analysis of establishment of works councils…’) revealed that works councils are more often set up (or employee representatives are more often elected) in the public sector as compared to the private one. The same is applicable to trade unions as well.

(c) Please provide information on the extent of I&C arrangements in:

(i) smaller undertakings (those with fewer than 50 employees)

n.a.

(ii) public administration.

n.a.

(d) What factors explain any increase/decrease in the incidence of I&C bodies (e.g. economic climate, legislative change, other)?

The current financial and economic crisis resulted in a notable increase of unemployment and higher tension in the Lithuanian labour market. These processes, in their turn, affected the membership in trade unions which has declined. As I&C procedures are usually held within undertakings/establishments with functioning employee representatives, we can say that the current main factor explaining decrease in the incidence of I&C bodies in Lithuania is decreased trade-union membership due to the economic downturn and increased unemployment.

2. Procedures for establishing I&C bodies

(a) What are the procedures for establishing I&C bodies in your country? For example, are I&C bodies mandatory (i.e. employers are obliged by law to establish them), or is their establishment dependent on employees/trade unions triggering statutory procedures? In the latter case, who can initiate the procedure? Is there a specified level of employee support required?

The LC defines information and consultation as a procedure which is mandatory in cases provided for by the law rather than as establishment of an I&C body. Article 47 of the LC contains a list of cases when an employer must inform and consult employees’ representatives (trade unions or works councils) or, in the absence of the latter bodies, employees.

Though the duty to consult and inform employee representatives is on the employer, in reality I&C procedures are most often initiated by employee representatives.

In 2008, the employer’s duty to inform employees was extended in the LC to include cases when an employer must inform not only employee representatives but, when employee representatives are not functioning within an undertaking/establishment, employees as well. However, such information providing to employees hardly exists in practice and employees become aware of the taken decisions only post factum.

In addition, with regard to undertakings/establishments without employee representatives, the LC obliges an employer simply to “inform” employees without an obligation to consult them or look for “a mutually satisfactory decision”. Therefore, when employees are informed at the general meeting it is enough to simply document this in the minutes of the meeting and the employer is considered to have discharged his duty.

(b) Please supply any available data on the extent to which I&C bodies have been:

(i) requested by employees(ii) requested by trade unions(iii) initiated unilaterally by employers.

Unfortunately, there is no information of such a type in Lithuania. As we can see in practice, in undertakings/establishments with functioning employee representatives it is namely these representatives to initiate I&C procedures in most cases.

(c) Have the national government and/or the social partners in your country actively promoted the establishment of I&C bodies? If so, how have they done this?

In 2008, trade unions actively participated in the initiation of amendments to the LC related to information and consultation of employees and in the harmonisation of Lithuanian legislation with the Information and Consultation Directive. The 2008 LC amendments extended the list of cases when employers must consult and inform employee representatives on an obligatory basis.

However, few specific measures to promote information and consultation of employees at company level have been taken by the social partners or the Government of the Republic of Lithuania (LRV). Undertakings/establishments which have trade unions and valid collective agreements often have the conditions of information and consultation defined in the collective agreements.

(d) What explains the absence of I&C bodies in some undertakings/establishments in which I&C bodies are supposedly mandatory or the statutory right to trigger their introduction applies?

As its was mentioned above, though the LC provides for I&C procedures to be held in all undertaking/establishment under certain conditions, these procedures are not in place in undertakings/establishment in which employee representatives are absent. This could be explained by the fact that in thes undertakings/establishments without employee representatives there actually is no [interested and organised] body acting on the employer to give due information regarding future changes in the undertaking which are likely to affect the legal position of the employees. Even when employers are obliged to inform employees at the meeting of employees, employees often do not dare to insist on the exercise of this right in the absence of an organised employee structure (trade union or works council) within the undertaking/establishment.

3. Constitutional provisions

(a) Are the structure, rights and functioning of I&C bodies in your country determined by:

(i) statutory requirements that apply to all establishments/undertakings(ii) organisation-specific agreements/arrangements that may differ from the statutory provisions, providing the scope for organisations to vary the design of the I&C body and the processes of information provision and consultation(iii) a mixture of the two.

Basic I&C provisions, such as conditions, periodicity of information and consultation, information content, I&C procedures, are defined in Article 47 of the LC. Therefore, we can say that statutory requirements that apply to all establishments/undertakings are determined in Lithuania. On the other hand, the LC stipulates that other cases, conditions and procedure of information and consultation may be set forth in law, collective bargaining agreements and/or arrangements between an employer and employee representatives. It follows that structure, rights and functioning of I&C bodies in Lithuania are determined by a mixture of two regulations – the LC and other requirements/agreements/arrangements.

(b) To what extent can and do organisation-specific agreements/arrangements differ from national statutory requirements on I&C? What motivates the parties to introduce such agreements/arrangements? Please summarise any available data on the provisions of organisation-specific agreements/arrangements.

In Lithuania, there are no reliable and extensive studies/research that could be used to answer this question in a summarised manner. Based on interviews with social partners, we can say that sometimes social partners use a collective agreement for a more detailed regulation of consultation procedures, define the concept of consultation and indicate a model list of information to be provided. However, in all cases the parties can not restrict the employees’ rights in collective agreements as compared to those defined in the LC.

(c) Are the terms of organisation-specific agreements/arrangements enforceable? What procedures – e.g. complaint to external administrative or judicial authorities (please specify which) – are available for this purpose?

Agreements/arrangements must be fulfilled in compliance with general principles thereof. Control of enforcement of such agreements/arrangements is delegated to the State Labour Inspectorate.

4. The main subjects for I&C

(a) What types of information are regularly provided by senior management to I&C bodies? Please give examples.

Before the 2008 amendments, the list of information to be forwarded was defined in the LC. However, after the recent amendments to the LC, the list of information to be given and cases of consolations is not exhaustive. The LC stipulates that an employer must regularly, at least once in a year, inform employee representatives on the present and future activities of the undertaking/establishment (its structural units), economic situation and industrial relations as well as to consult employee representatives. It follows from the definition that employees have the right of access all corporate financial information, i.e., balance sheets, financial statements, information on anticipated redundancies of employees or development, reorganisation and similar plans of the undertaking/establishment. It is important to note that having signed a confidentiality declaration employees even have the right of access to confidential information of the undertaking/establishment.

(b) What issues are typically the subject of consultation between management and employee representatives? Please give examples.

Though the list of consultation instances is not exhaustive and there are very wide opportunities to insist on consolations, in practice they are usually held:

  • by employer’s initiative – before reorganisation and/or collective redundancy of employees – in order to reduce negative impacts on employees. The main reason for employers’ initiative to hold I&C can be explained by the fact that the court would unconditionally oblige the employer to admit the dismissed employee back to work unless he/she was consulted prior the dismissal. This would be a much more serious sanction for the employer, as compared to quite a light penalty for non-consultation (ranging from LTL 500 (EUR 145) to LTL 5,000 (EUR 1,450)).
  • by employees’ initiative - before collective bargaining. In the latter case employees’ representatives usually ask for information about the present and future situation, activity indicators of the undertaking, etc.

(c) What issues are typically raised by employee representatives themselves? Please give examples.

Employee representatives are mainly interested in restructuring issues of the undertaking, especially when they may lead to a redundancy of a group of employees. In this case employee representatives seek consistent and timely consultations, as this is the only way to reduce, at least to a certain extent, the negative social and economic impact on employees.

Under the conditions of the current downturn, employee representatives also seek consultations in case of anticipated reduction of the wage fund, i.e., cutting of wages, laying employees off (causing them to take unpaid leaves), etc.

(d) Since the onset of the recession, to what extent have I&C bodies been a vehicle for dialogue and consultation over management decisions concerning restructuring and recession-related developments? Please provide a general overview with evidence and examples.

On the one hand, under conditions of the current economic downturn there are a lot of incidences where corporate administrations do not consult trade unions before taking decisions concerning working time reduction or changing of other employment conditions (LT0907029Q). According to trade unions, their negotiation positions badly weakened in many undertakings during the recession, including those where social dialogue had been in place for many years. During this period, social dialogue ceased and employers started even more avoiding and evading the social dialogue. Many employers did not take any efforts to maintain social dialogue in times of crisis and often completely neglected I&C procedures up to the unilateral termination of valid collective agreements at undertaking/establishment level. To this effect we can mention a widely discussed example of UAB‘G4S Lietuva, when a collective agreement was not adhered to during the crisis.

On the other hand, in the environment of crisis effects and the need to save funds in Lithuania, dialogue and consultations between employers and employees generated some positive results, too: in a number of companies agreements were reached as to shorter working hours or use of unpaid leaves (lay-offs) in order to preserve jobs. As it was written in the ‘Addressing recession’ report, ‘in order to avoid likely redundancies, on March 2009 the administration and trade union of the Lithuanian Radio and Television (LRT) agreed on temporary (until this autumn) wage cut (by ~10%) for the employees and voluntary taking of few days’ unpaid leaves per month. In addition, both parties agreed that no new staff members would be employed at the LRT within this period’ (LT0907029Q). Some other examples of that nature might be found in other companies as well.

5. The nature and extent of the I&C process

(a) How often do I&C bodies typically meet with management? Is it common practice for special meetings of the I&C body to be called to consider urgent or important matters? If so, on what issues?

I&C bodies typically meet with management bodies only to discuss certain urgent matters or when it becomes necessary to hold a consultation round. An I&C body usually is not a standing consultation body. According to the social partners, the frequency of I&C in each particular case depends on the situation and the need for I&C.

(b) How does consultation take place? For example, is information on proposed changes provided by management so that employee representatives can prepare a considered view? Do managers provide a reasoned response to employee representatives’ opinions? Examples of good and poor practice would be helpful.

The LC defines consultation as opinion sharing and initiating and maintaining dialogue between the representatives of the employees and the employers. Therefore, the law does not impose to take into consideration the views of employee representatives. It rather obliges the employer to ask them to present their views. According to trade unions, it is quite a frequent practice that a mere calling of a meeting and documenting it in minutes are enough to consider employer’s consultation duties as fulfilled. In some cases employers write letters of notice informing employee representatives about certain decisions to be taken and asking the trade union to submit its opinion.

Trade unions usually ask for a direct meeting with management bodies in order to find out real intentions of the employer, because the notice of anticipated decisions typically do not provide detailed information by claiming confidentiality, etc.

(c) Is information usually provided on a confidential basis to the I&C body before management decisions are taken and announced? Are there examples of I&C not taking place due to confidentiality considerations?

The LC in all cases obliges employers to hold consultations before decisions are taken. Providing information means that employers must timely provide information to employees and their representative free of charge and is kept responsible for the correctness of such information. Upon submission of a written declaration committing not to disclose confidential (industrial) or professional secrets, employees or their representatives shall be entitled to access confidential information. Employers may refuse to disclose information which is considered to be a commercial (industrial) or professional secret. Such decisions may be appealed against by the employee representatives who may apply to a court within a period of one month.

Considering that information on anticipated decisions often is, as a matter of fact, confidential, employee representatives are asked to sign confidentiality declarations to receive such information. After signing of the mentioned document, confidential information is usually provided for the employee representatives.

(d) Please outline what guarantees and protections employee representatives usually have, e.g. time off work, training, material and financial resources, facilities, protection against dismissal/ discrimination, access to workers.

The law grants some better guarantees to employee representatives, i.e., they shall not be dismissed on the employer’s initiative without the employee’s fault unless consent from the employee representative is obtained. In addition, imposition of disciplinary penalties is not allowed without their consent. Employee representatives are entitled to take a day off for the implementation of the functions of employee representative, but this time is not paid (unless stipulated otherwise in a collective agreement). Collective agreements may provide for more guarantees but they are usually confined to the above mentioned.

(e) Can employee representatives seek external advice on how to handle difficult topics for consultation (e.g. from trade unions, external consultants)? In the case of the latter, who pays?

Where consultation is attended and sought by a trade union, it can always apply to a sectoral trade union it belongs to or even to a national centre of trade unions. Both sectoral trade unions and national trade union centres usually have professional lawyers capable of providing with high-quality assistance.

However, where consultations involve participation of works councils, they don’t have the above-mentioned opportunity, as the law does not allow works councils to join any formation on a higher level than that of a company. In addition, works councils do not have their own resources, because of the absence of membership fees.

6. Practical outcomes of consultation

(a) What evidence is there, if any, of the consultation process resulting in the modification of management decisions and/or the process or timetable for their implementation? Please give an overview of the impact of consultation with examples.

Practice shows that the most frequent consultation outcome is records in minutes stipulating proposals made by employee representatives on the questions at issue. However, there are very few cases when employers change their decision and/or decision implementation procedure.

(b) How many complaints per year concerning the operation of I&C procedures (e.g. employers not consulting in circumstances where consultation is obligatory) have been lodged with administrative or judicial authorities since 2005? Who were the claimants and what were the key issues? What proportion of these applications were upheld? What sanctions were imposed?

Unfortunately statistical data on proceedings concerning non-operation of I&C procedures is neither collected nor systemised in Lithuania. It is worth noting, however, that the obligatory nature of consultations not only imposes an obligation to consult, but at the same time renders employer’s decisions unlawful if they are not held in obligatory cases. For example, where a group of employees is made redundant without prior consultation with employee representatives, the dismissed employees are entitled to apply to the courts thereafter alleging a violation of the dismissal procedure and claiming a retur to work. Such proceedings did exist in practice. Yet, the mentioned proceedings are complex ones with the main requirement being returning to work rather than the absence of consultations; the issue of operation or non-operation of consultations is dealt with systematically as a constituent element of the proceedings. It is therefore difficult to identify consultation-related disputes.

Obviously, in certain cases complaints are filed to the State Labour Inspectorate, but it does not publish information on the complaints concerning the operation of I&C procedures in a separate form from other complaints. Trade unions are also in the position of initiating a collective dispute for non-operation of I&C procedures, but there have been no such disputes since 2005.

7. Relationship between I&C bodies and other forms of employee voice

(a) Can, and if so do, trade unions play a part in the establishment of I&C bodies and in their operation? Do external trade union officers often sit on I&C bodies? How common is it for I&C bodies to include both union and non-union employee representatives?

There is no practice of establishing I&C bodies, while consultations are understood as a one-off procedure held to discuss a particular and urgent matter. Consultations are usually initiated by trade unions or works councils. Therefore, typically representatives of company-level trade unions participate in I&C procedures. Sometimes, usually in trade unions with strong sectoral structures (e.g., Trade Union of Lithuanian Food Producers (LMPS), sectoral trade union also participates in company-level I&C procedures. In some individual cases, representatives of national trade union can participate, too. As consultations are held between employers and trade union/works councils members, other employees are usually not invited to attend, unless consultations are held in companies without the established employee representative.

(b) Is there any overlap between the remit of I&C bodies and trade union-based collective bargaining? If so, how are such issues resolved?

Typically both collective bargaining and I&C procedures are held by the same employee representatives, namely, by trade unions or works councils. Pursuant to the Lithuanian law, works councils can be established only in undertakings/establishments where trade unions are not functioning. Therefore, employee representation and I&C functions are in most cases implemented by trade unions in Lithuania.

(c) Is the consultation required by the collective redundancies/transfer of undertakings Directives carried out via I&C bodies, trade unions or other employee representatives?

This type of consultation is obligatory and foreseen in the LC. Failure to hold consultations in case of collective redundancies shall entail the strictest sanctions for employers: the dismissed employees would return to work on grounds of a violation of the edundancy procedure. In the above-mentioned cases consultations are held either with employee representatives (trade unions or works councils) or, in their absence, by providing information to employees.

(d) Is the use of direct forms of employee involvement by management through such things as team briefings seen as complementary to or in competition with the I&C body?

According to the applicable Lithuanian statutory provisions, direct consultations between employers and employees are possible only if there are no employee representatives in the undertaking/establishment. Where a trade union or works council are functioning within an undertaking, providing information by the employer directly at the meeting of employees would be in derogation from the statutory provisions.

Where there are no employee representatives in an undertaking, the employer is obliged to inform employees, where in person or at the general meeting of employees, about the date the adopted decisions will be implemented, their reasons, legal, economic and social impact as well as measures foreseen in respect of employees.

As a rule, direct forms of employee involvement by management through such mechanisms as team briefings completely depend on the good will of employers. In some undertakings, particularly in small ones, employees are frequently informed and consulted at employee briefings, usually held periodically once per week or per month.

8. Views of the social partners

(a) What are the attitudes of the main employer and trade union organisations in your country towards (i) the value or necessity of I&C bodies and (ii) the operation of I&C bodies in practice, especially in a recession?

According to both trade unions and employer organisations, employee information and consultation is an undoubtedly positive phenomenon with social, economic and psychological effects, because non-informed employees who are uncertain about the company’s and their own future lose labour productivity, loyalty towards the employer and, more often, experience stress at work, etc. Despite the value of I&C being recognised, in practice I&C procedure are held only in undertakings with employee representatives able to insist on the exercise of I&C righs. In other undertakings this right basically depends on the employer’s understanding and good will. Peak employer organisations actually cannot influence the situation in undertakings/establishments. Therefore, there are cases as seen in the recession that instead of extending I&C procedures employers, on the contrary, take many decisions unilaterally in light of the objective economic circumstances.

(b) Have the social partners, jointly or separately, conducted any review of the operation of the national regulatory framework governing I&C? What is their assessment of its effectiveness? Is there any pressure from the social partners for reform?

No, such review has not been conducted by the social partners.

Commentary by national correspondents

We can say that for many Lithuanian employees information and consultation remain a theoretical opportunity, but do not constitute the actual reality. Both in public and private sectors employees are often not informed about their future, particularly in times of crisis in the country. To say more, they do not even have adequate knowledge and information about their right to be informed and consulted. In general, the existing situation has been determined by the absence of social dialogue traditions in the country and a lack of a legal command both by employees and employers. On the other hand, in undertakings with functioning trade unions or works councils, or “socially-driven” employers I&C procedures operate quite smoothly. According to trade unions, in the sufficient spread of I&C is determined, inter alia, by too small penalties in cases of non-fulfilment of I&C duties. Though the Directive stipulates that penalties for non-compliance are to be dissuasive, penalties for such violations range from LTL 500 (EUR 145) to LTL 5,000 (EUR 1,450) In Lithuania. Penalties imposed by the State Labour Inspectorate for non-compliance with labour legislation are often appealed against to in courts by employers. Litigation takes more than a year with an outcome imposing on employers to pay the minimum penalty. This does not at all dissuade employers from non-compliance with I&C procedures.

Inga Blaziene, Institute of Labour and Social Research

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