Transnational company agreement

Transnational company agreements (TCAs) are a form of social dialogue in multinational companies. The European Commission (EC), in its 2012 staff working document on transnational company agreements, SWD(2012) 264 final (84Kb PDF), defined a TCA as:

...an agreement comprising reciprocal commitments, the scope of which extends to the territory of several States and which has been concluded by one or more representatives of a company or a group of companies on the one hand, and one or more workers’ organisations on the other hand, and which covers working and employment conditions and/or relations between employers and workers or their representatives.

The Commission stated that these agreements:

...provide for voluntary, innovative and socially agreed solutions in companies across Europe to issues of, for example, anticipation of change and restructuring, training, mobility, health and safety at work, or equality.

According to the 2009 Eurofound report European and international framework agreements: Practical experiences and strategic approaches (1.3Mb PDF), TCAs can be subdivided into two categories: the International Framework Agreement (IFA) and the European Framework Agreement (EFA)

IFAs are signed by Global Union Federations (GUFs) and have a global scope of application. EFAs have a regional (European) scope of application and are signed by European industry federations (EIFs), European Works Councils (EWCs) and/or national unions and central management.

The number of IFAs and EFAs has increased significantly since 2000, with only a few signed before that date. Most IFAs address the fundamental social rights or core labour standards contained in the International Labour Organization (ILO) 1998 Declaration on Fundamental Principles and Rights at Work. The ILO is also concerned with other cross border social dialogue agreements.

EFAs are more diverse than IFAs, both in terms of content and procedure. EWCs play an important role in the negotiation and signature of these agreements, and have signed a majority of them. They also have an important role in the implementation and monitoring processes of a growing number of EFAs.

EFAs cover a variety of issues, including restructuring, social dialogue, health and safety, human resources management and data protection.

The EC notes in its 2012 staff working document that transnational company agreements have become more significant in the decade since the first initiatives in 2000. By early 2012, 224 such agreements had been recorded in 144 companies, mostly with European headquarters, covering over 10 million employees.

The Commission gives the following examples of TCAs:

• a world leader in transport infrastructure, power generation and transmission came to an agreement with the European Metalworkers Federation (EMF) in 2011 over how to anticipate the impact of market and product trends on employment and skills across 25 European countries.
• the management and the EWC of a global airline agreed in 2010 on how to inform and consult staff at all levels on the reorganisation of sales agencies at European airports.
• a leading company in oil and gas production and the International Federation of Chemical, Energy, Mine and General Workers’ Unions (ICEM) (superceded in June 2012 by the global federation IndustriALL Global Union) concluded a global agreement in 2008 providing for exchange of information to develop good work practices, industrial relations and respect of fundamental rights in worldwide operations.
• the EWC of an industrial group that manufactures and markets building materials and systems signed a Europe-wide Environment, Health and Safety Charter in 2011 with the European Federation of Building and Woodworkers (EFBWW).

The Commission also has set up a database of transnational company agreements – both IFAs and EFAs – containing details on every company and agreement.

The EC’s policy focus on TCAs dates from 2008, when it published a Staff Working Document (53Kb PDF) on The role of transnational company agreements in the context of increasing international integration. The document drew attention to the role and potential of TCAs in an increasingly globalised business environment. It also set up an expert group on TCAs, with the remit of monitoring developments and exchanging information on how to support the on-going process of negotiating these agreements.

The group comprised experts from EU Member States and the EU social partners, as well as academics and researchers, representatives of European institutions and company actors. It held six meetings between 2009 and 2011 and published a report (584Kb PDF) in early 2012. This report contains information on TCAs, including concrete examples and reviews of the main issues, as well as putting forward options for addressing these issues.

In issuing its 2012 staff working document, the Commission called on stakeholders and interested parties to submit their views on the future development of TCAs. It stated that it would like to contribute to the future development of TCAs by:

• supporting the actors in TCAs and clarifying their role;
• promoting transparency in TCAs;
• enhancing the implementation of TCAs and the links with other levels of social dialogue;
• improving legal certainty in the effects of TCAs;
• enabling better prevention and settlement of disputes.

Against this background the Commission identified a series of options for action, which included:

• issuing guidance and promoting good practice;
• maintaining the database and improving information on TCAs;
• establishing references/frameworks for use by parties involved or planning to be involved in the negotiation of TCAs;
• working out, where necessary, a mechanism to clarify the legal effects of TCAs.

See also: International framework agreement; European framework agreement; European collective agreements; European Works Councils; Corporate social responsibility; Decent work.