This article examines the implementation into Czech law of the EU Directive on European Works Councils (EWCs), and the country's experience of EWCs, as of autumn 2004.
Implementing legislation and debate
EU Directive 94/45/EC on the establishment of a European Works Council (EWC) or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees was transposed into Czech law (alongside other EU employment law Directives) in 2000 by an Act of parliament (Act No. 155/2000 Coll) known as the 'grand amendment of the Labour Code'. The provisions governing employees’ access to information and consultation at supranational level and the issue of EWCs (Sections 18(a) and 25(d) to 25(l) of the Labour Code) entered into force when the Czech Republic's Treaty of Accession to the European Union started to apply, in May 2004.
The social partners played a decisive role in the preparation of the 'euro-amendment' of the Labour Code. Its adoption was preceded by an extensive review and comments process in the national tripartite Council of Economic and Social Agreement (Rada hospodářské a sociální dohody, RHSD). In the RHSD debate, the method originally proposed for transposing the Directive met with disagreement from the country's largest trade union centre - the Czech-Moravian Confederation of Trade Unions (Českomoravská konfederace odborových svazů, ČMKOS). ČMKOS demanded that situations where EWCs are formed at an employer based in the Czech Republic be distinguished from situations when they are formed at employers based outside the Czech Republic, and identified a crucial need to: specify in greater detail the position of the special negotiating body; specify the procedure for negotiating the establishment of EWCs; resolve more rigorously the question of costs arising in connection with negotiations and the issue of financing the work of EWCs; and define categorically what entitlements employees’ representatives in EWCs have in connection with the exercise of their office.
Key provisions of the legislation
The legislation (as in all Member States) largely repeats the content of the Directive, while also 'customising' a number of provisions to fit the Czech industrial relations system, as provided for by the Directive. The main such provisions are set out below.
The Czech legislation's duty to provide supranational information and consultation applies to: employers and groups of employers that meet the legally defined conditions, operate in the territory of the European Economic Area (EEA) and are based in the Czech Republic; organisational units of an employer or group of employers operating in the territory of the EEA and based in the Czech Republic; and representatives of an employer or group of employers operating in the territory of the EEA and based in the Czech Republic. The relevant section of the Labour Code introduces the concept of 'central management', which is understood to mean an employer operating in the territory of the EEA (and employers managing a group of employers operating in the EEA). Employees or their representatives may demand information about the number of employees of an employer operating in the territory of the EEA. Their employer is obliged to obtain this information from the central management (ie the average number of employees during the previous two years to the date of submission of the request or the launch of negotiations by central management). Members of the special negotiating body (SNB), members of EWCs or representatives of employees under another agreed information and consultation procedure, as well as the employer, are obliged to inform employees of their activities, the content of the information acquired and the conclusions of discussions in a suitable manner.
As far as the composition of the SNB in Czech-based multinationals is concerned, the legislation provides that, in addition to the basic allocation of one representative per Member State where the multinational has operations, there are additional members as follows: one extra representative for each Member State where at least 25% of the multinational's total workforce (in the EEA) is employed; two extra representatives for each Member State where at least 50% of the multinational's total workforce is employed; and three extra representatives for any Member State where at least 75% of the multinational's total workforce is employed. The SNB representatives of employees in the Czech Republic are appointed from among these employees by existing 'employees’ representatives' at a joint meeting. If there are no employees’ representatives present at an employer, or they 'fail to function', the employees concerned may elect special representatives to attend the joint meeting that selects the SNB member(s). The number of votes each representative has at the joint meeting is based on the number of employees represented.
Central management is to convene the first, founding meeting of the SNB without undue delay after it has been informed that the members have been selected. The SNB elects its chair at this first meeting. The SNB adopts resolutions by a simple majority of votes, except in some exceptional cases. The SNB also agrees with central management on the place and time of joint meetings. If the SNB decides (by at least a two-thirds majority) that negotiations will not be commenced or that negotiations in progress will be terminated, it must make a record of this. The record is to be signed by all members and a copy sent to central management, which in turn must inform lower levels of management and employees or their representatives.
The Labour Code provides that if the SNB and central management agree to establish an EWC, this must be done in writing and the agreement must cover specified matters, including: a definition of the tasks, powers and duties of the EWC, central management and lower levels of management with regard to employees exercising their right to information and consultation; the way meetings are to be convened; the procedure to be followed in the event of organisational changes; and the duration of the EWC agreement and provisions on the possibility of amending it. An EWC may, by agreement, include representatives of employees in non-EEA countries. Any agreement on a procedure for supranational information and consultation, instead of an EWC, must be in writing and must specify in particular: the issues for information and consultation; the way employees’ representatives will be enabled jointly to discuss information provided to them by central management; and the way in which discussions with central management or with any other level of management will be facilitated.
With regard to 'statutory' EWCs - ie those based on the Directive's subsidiary requirements, essentially where no agreement can be reached by management and SNB - the members representing Czech Republic employees are appointed in the same way as for SNBs (see above). In addition to the basic allocation of one EWC member per Member State where the multinational has operations, statutory EWCs in Czech-based multinationals have additional members as follows:
- in multinationals with fewer than 10,000 employees in total in the Member States, each Member State with at least 20% of the total workforce has one extra member. This rises to two extra members for those countries with at least 30% of the total workforce, three extra members for those with at least 40% of the total workforce, and so on in steps of one extra member per 10% of the total workforce up to seven extra members for those with at least 80% of the total workforce; or
- in multinationals with 10,000 or more employees in total in the Member States, each Member State with at least 20% of the total workforce also has one extra member. However, those countries with at least 30% of the total workforce have three extra members, those with at least 40% have five extra members, and so on in steps of two extra members per 10% of the total workforce up to 13 extra members for those countries with at least 80% of the total workforce.
The statutory EWC is obliged to notify central management without undue delay of its members’ names and employment addresses. Central management passes this information on to lower levels of management and to employees’ representatives, or where appropriate to employees.
Central management is obliged without undue delay to convene a first, founding meeting of the statutory EWC, at which a chair and vice-chair are elected - these represent the EWC externally and run its everyday work. If an EWC executive committee is established, its members must be from at least two Member States. EWC sessions are private. As well as the other circumstances laid down by the legislation (and the Directive), central management must discuss with a statutory EWC mass redundancies, the reasons for them, the numbers involved, the structure and the conditions for selecting employees to be made redundant as well as employees’ entitlements (where these exceed those laid down by law). Central management is obliged to inform the statutory EWC in writing of various matters specified by the Labour Code and to consult with it all matters affecting at least two operations based in two different Member States. The statutory EWC may invite a management employee to provide extra information and explanations. It may make decisions (by simple majority vote) if more than half its members are present. The EWC may lay down its own rules of procedure - if so, they must be in writing and must be approved by a majority of all members.
Companies covered
There is no estimate available of the number of undertakings falling under the provisions of the Czech EWCs legislation - either multinationals covered by the Directive and based in the Czech Republic, or multinationals covered by the Directive based elsewhere and with operations in the Czech Republic.
Experience to date
Czech representatives have already taken part in the work of a number of EWCs (in multinationals based in other countries) as members or observers, for many years in some cases. These are mostly trade union representatives, ie representatives of a union organisation operating at the employer concerned. Trade union federations also pay considerable attention to EWCs and help establish contact with EWCs. According to an overview drawn up by ČMKOS, in April 2003 its affiliated trade unions had a total of 51 representatives in EWCs, 24 of whom were full members and 27 observers (two cases of participation in other information and consultation mechanisms were also registered). The dominant sector is the metalworking industry (26 representatives), and other sectors represented are construction, the foodstuffs industry, textiles, chemicals, forestry, timber and water management, trade and banking. A survey conducted by EuroProfis sro reached similar conclusions in 2003, mentioning more than 50 Czech representatives in EWCs, and citing 80 multinational corporations operating in the Czech Republic (or divisions of these multinationals) that had EWCs or were preparing to establish them. The number of such multinationals is now undoubtedly higher. No Czech-based multinational is yet known to have set up an EWC
Experiences to date with EWCs usually differ from case to case and there are still very few general assessments. It is worth mentioning the findings of a questionnaire-based survey conducted in 28 selected companies in the Czech Republic in 2002 (EWC in the Czech Republic, H Malkova, CMKOS, Prague 2002). It found that membership of EWCs is universally regarded as useful and that all Czech members with full membership also have full voting rights. In some cases, Czech representatives have been involved in EWCs right from the start, even in the SNB. The possibilities of obtaining information on the company’s activities first-hand from management, of meeting colleagues from other branches of the same multinational, exchanging information and experiences with them and thus comparing specific conditions, are welcomed. The regularity and good organisation of EWCs’ work is also appreciated, including the possibility of employee representatives meeting separately before the joint session with the management and preparing for it. The main problems are language barriers (despite the presence of interpreters), the perception that the information is not always provided sufficiently promptly or of sufficient quality, and the relevance and concreteness of the agenda. (Jaroslav Hála, Research Institute for Labour and Social Affairs)