The impact of the likely expansion of European works councils

The European Union (EU) established European Works Councils (EWCs) – information and consultation bodies in companies employing more than 1,000 workers across Europe – about 15 years ago to improve social dialogue across Europe.

Existing EWC agreements cover a third of the companies falling within the scope of the directive and the European Commission (EC) wants to see more established, especially in companies employing 5,000 people or less, and for employees to have more information and consultation rights.

Pro-employee proposal

The EC has worked on a review of the directive for almost four years and recently published a proposal for a new directive. It takes a broadly pro-employee stance. EU commissioner Vladimir Spidla told MEPs: “The 820 works councils currently in place throughout the union have not fulfilled their role. Employees are not properly informed and consulted regarding company restructuring. This initiative aims to strengthen social dialogue in companies at the supranational level.”

Some changes may lead to a new wave of negotiations to set up EWCs. European trade unions will be given a more official role and will be able to better support workers in their efforts.

But many employers will wonder if change is needed. Many EWC structures seem to work effectively in practice. Isn’t one reason why some groups haven’t set up EWCs because they aren’t considered necessary?

The current law enables employees to ask for an EWC if they want one and, in many cases, maybe they don’t. One shouldn’t assume, as the EC seems to do, that an EWC is a good thing, regardless of circumstances.

The EC’s proposals are backed by European social partners, trade unions and employers’ organisations. (This is surprising as they failed to agree on a revision last spring, and are now suggesting amendments.)

The proposals call for a definition of the ‘information’ that must be provided to EWC members, and an amendment to the current definition of ‘consultation’, to bring these into line with definitions used in more recent EU directives. These proposals mean consultation will have to start earlier and information must be more comprehensive.

The most controversial change is to provide for existing agreements to be adapted where the structure of the employer ‘changes significantly’. Typically, no-one is clear what ‘significant’ means.

The proposed revision also addresses how national and international consultations interrelate. Many EWC agreements say nothing on this and the issue has given rise to litigation, particularly in France.

The EC has proposed that the sequencing of information and consultation obligations can be established by a EWC agreement itself. If a EWC agreement says nothing on this, it was proposed that national and pan-European processes should start at the same time, especially if decisions likely to lead to substantial changes in work organisation or contractual relations are envisaged.

Watered down

This seemed sensible, but, looking at the amendments suggested by the social partners, it seems this approach may be watered down.

The draft’s woolly wording proposes that information and consultation processes “are conducted in the EWC as well as in the national bodies”. This opens doors for arguments about the sequencing of consultations.

Finally, a new right for employee representatives will be access to training without loss of wages.

Spidla called for the adoption of the new directive before the end of the French presidency in December.

Key points

  • 2,200 companies could have EWCs in place – just 820 currently do so
  • The proposals will strengthen employees’ information and consultation rights
  • If adopted, the proposals will increase employers’ consultation burden
  • Proposals should be adopted by the end of 2008 and will apply after a two-year transition period.

Nicholas Squire, partner, Freshfields Bruckhaus Deringer

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