Thematic feature - works councils and other workplace employee representation and participation structures

This article examines the Finnish situation, as of September 2003, with regard to works councils and similar workplace employee representation and participation structures. It looks at the regulatory framework, statistical data, evidence on practice and the views of the social partners.

The issue of works councils and similar workplace employee representation and participation structures is topical at present, with the EU Member States required to implement the recent Directive (2002/14/EC) establishing a general framework for informing and consulting employees in the European Community (EU0204207F) by March 2005 (though countries which currently have no 'general, permanent and statutory' system of information and consultation or employee representation may phase in the Directive's application to smaller firms up until 2008). The Directive applies to undertakings with at least 50 employees or establishments with at least 20 employees (the choice is left to the Member States). It provides employees with the following rights to information and consultation:

• information on the recent and probable development of the undertaking's or the establishment's activities and economic situation;

• information and consultation on the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged, in particular where there is a threat to employment; and

• information and consultation, with a view to reaching an agreement, on decisions likely to lead to substantial changes in work organisation or in contractual relations.

Information and consultation arrangements set out in agreements between management and labour, including at undertaking or establishment level, may differ from those laid down in the Directive.

While the Directive does not stipulate that information and consultation must be provided through any particular channel or structure, it defines such information and consultation as taking place between the employer and the employee representatives provided for by national laws and/or practices. It is these representatives, who in most EU Member States sit on standing 'works council'-type structures (and in many countries already enjoy all or most of the information and consultation rights laid down in the Directive) that are the focus of this article. The existence of workplace employee representation and participation structures, based on law or widespread collective agreements, is seen in some quarters as a distinctive and important feature of the (mainland) European industrial relations model. Indeed, the idea has been raised of using the coverage of such worker involvement arrangements as an indicator of 'quality' in industrial relations (as suggested, for example, by the European Commission’s June 2001 Communication on Employment and social policies: a framework for investing in quality).

In this context, in September 2003, the EIRO national centres in each EU Member State (plus Norway), were asked, in response to a questionnaire, to provide information about the current situation with regard to national (rather than European level) works councils and similar bodies – the regulatory framework, statistical data (or estimates where not available), evidence on practice and the views of the social partners. The Finnish responses are set out below (along with the questions asked).

Regulation

What is the legislative framework in your country concerning works councils and/or other workplace employee representation and participation structures? Please include here: definition; workforce-size threshold for establishment; composition/election; subjects for information, consultation and co-determination; conditions under which information, consultation and co-determination should take place (ie timing, methods, contents, level of representation, type of response by employees, form of interaction etc); meetings; confidentiality; protection of employees’ representatives. If there is no legislation on this issue in your country, please refer to widespread systems of works councils etc based on collective agreements.

The system of employee representation and participation in Finland is different from that in many other EU Member States in that there is no system of compulsory works councils. However, there are two acts that determine staff representation and participation in companies. The Act on Cooperation within Undertakings came into force in 1978 and the Act on Personnel Representation in the Administration of Undertakings in 1991. It is the former that provides for workplace employee representation and participation arrangements which are more similar to works councils.

The Act on Cooperation within Undertakings aims to promote exchange of information between employers and employees, to improve the negotiation culture and to increase workplace democracy. It normally applies to private companies that employ at least 30 people, but it also applies to smaller firms in cases where the employer is considering termination of at least 10 employment contracts. The Act does not apply to the public sector, though it can apply to state enterprises by means of a separate decision. However, there are other, similar rules on cooperation between public sector employers and employees.

According to the Act on Cooperation within Undertakings, cooperation negotiations should take place between employees concerned and their organisational superiors, or between employee representatives and the employer. Cooperation can also be arranged in the form of a joint committee involving the employer and employee representatives. The employee representatives can be workplace trade union representatives (shop stewards) or any other representatives elected by the group of employees concerned. If a representative has been elected by trade union members only, although a majority of the employee group concerned does not belong to the trade union, these employee group members have a right to elect their own representative. The employees concerned should arrange the election process, but if no agreement is reached on the procedure, the election must be organised by the labour protection (health and safety) delegate.

The Act provides that the following matters should be covered by the cooperation procedure:

• any major changes in duties, working methods or arrangements affecting the staff and any transfers from one job to another;

• any major acquisitions of machinery and equipment, any major rearrangements of the working premises and changes in the range of goods and services provided, affecting the position of the staff;

• the closure of the company or any part of it, its transfer to another place or any major expansion or reduction of its activities;

• after a business transfer, division or merger, any ensuing conversion of (full-time) contracts of employment into part-time contracts, lay-offs and termination of contracts, and the related arrangements for training and reassignments;

• converting contracts of employment into part-time contracts, lay-offs and termination of contracts due to production and financial reasons, and the related arrangements for training and reassignments, including the abovementioned staff arrangements in connection with the procedure of reorganising the undertaking;

• periodical rationalisation schemes, plans regarding staff and training or any relevant changes to be made to such plans during their term, action programmes for labour protection and any measures to promote equality between men and women to be included in staff and training plans or in the labour protection action programme;

• the times for the beginning and the end of normal hours of work, and the times for breaks for rest or meals;

• the working rules, related disciplinary regulations and rules for suggestion schemes;

• methods used in technical employee monitoring and the use of e-mail and data networks;

• the principles for recruitment, the procedure to be followed, the data to be collected at recruitment and during the employment relationship, the information to be given to new recruits and the arrangements to be made for their initiation into work, as well as principles for using external labour,

• internal information practices;

• budget estimates for training in cooperation and vocational training, and the organisation of training in cooperation; and

• the allocation of accommodation provided by the employer (excluding accommodation for managers), the arrangement of works canteens and childcare facilities, the use and planning of works welfare premises, recreational and holiday activities and the granting of subsidies and donations to the staff – all this within the limits of the funds earmarked by the firm for various welfare purposes.

Following a business transfer, division or merger, it must be determined through a cooperation procedure whether the transfer, division on merger has effects falling within the abovementioned obligation to negotiate. Before taking a decision on any such a matter, the employer should negotiate over the reasons for the action envisaged, its effects and possible alternatives with the employees concerned or with their representatives. Before the cooperation procedure, the employer should provide the employees concerned with any information necessary for dealing with the matter. The information must be given in written form whenever the employer is considering terminating the contract of at least 10 employees or laying off at least 10 employees for at least 90 days, or cutting their contracts of employment to part-time contracts. The information must include an estimation of the time during which the planned workforce reductions are to be carried out, and state the principles used for choosing the employees whom the reduction will affect.

A proposal for cooperation negotiations must be submitted in writing at least three days before the negotiations start, or five days if the measure to be discussed is likely to lead to the laying-off or termination of contract of one or more employees or the reduction of their contracts of employment to part-time contracts. The proposal must indicate the time and location at which negotiations will begin and the issues to be dealt with. When an employee representative requests the initiation of a cooperation procedure, the employer must either make the abovementioned proposal or issue a written communication indicating the grounds on which the cooperation procedure is not considered necessary. A proposal for negotiations must be submitted within a week of a transfer, division or merger, provided that negotiations have not been entered into previously. If there are plans for workforce reductions or lay-offs that were not taken into account in the staff and training plans, the negotiations must examine any existing opportunities for training and reassignment (including external training services available) and the impact of these arrangements on employment, production and profit margins.

The Act on Personnel Representation in the Administration of Undertakings applies to firms with a regular workforce of at least 150 people in Finland, and provides for employee representation on company administrative bodies rather than at the workplace (TN9809201S). This representation should be determined by employees and management in the way defined in the Act on Cooperation within Undertakings (see above). If no agreement is reached in this way, and if at least two employee groups that together form a majority of the workforce so require, the workforce has the right to nominate its representatives, with deputies, to one or more administrative bodies. The bodies on which employees are to be represented are selected by the undertaking from among the supervisory board, the board of directors, or any management groups or similar bodies that together cover the profit units of the undertaking.

Personnel representatives should be nominated in addition to the members appointed by the firm to the administrative body in question. The number of personnel representatives may total a quarter of the number of the rest of the members of the body in question, with a minimum of one and a maximum of four. If employee groups cannot agree amongst themselves on the election of personnel representatives, these representatives are elected following a similar procedure as used for the election of a labour protection delegate. The personnel representatives and the members appointed by the undertaking to the administrative body have the same rights, duties and term of office, unless otherwise agreed. Personnel representatives and their deputies have the right to examine the materials on any issue at hand to the same extent as the other members of the administrative body. They do not, however, have the right to participate in the handling of matters that concern the appointment, dismissal and contract term of the management of the undertaking, the personnel’s terms of employment, or industrial action.

Statistics

Please provide the most recent available statistics (in absence of statistics please provide estimates referring to sources) on the following (referring to other workplace employee representation and participation structures where works councils are not present and to widespread collective agreements on the issue where there is no legislation):

• the total number of employees and undertakings/establishments in your country;

The total number of employees in Finland stands at 2,372,000 (in 2002) and total number of undertakings at 225,000 (in 2001). A breakdown of undertakings by size is provided in the table below.