In July 2004, the European Court of Justice issued its ruling in a case concerning employees’ rights to company information prior to seeking the establishment of a European Works Council (EWC).
On 15 July 2004, the European Court of Justice (ECJ) delivered its judgment in the case of Betriebsrat der Firma ADS Anker GmbH v ADS Anker GmbH (case C-349/01), concerning the interpretation of the 1994 European Works Councils (EWCs) Directive (94/45/EC). At issue was the extent and practical implications of the Directive’s obligation on management within transnational groups of undertakings to provide information on corporate structure, employee numbers and representation arrangements across the group, where requested by employee representatives prior to seeking negotiations about establishing an EWC.
Background
The German company ADS Anker GmbH belongs to the Anker group whose parent company, Anker Systems GmbH, is located in Switzerland, ie outside the territorial scope of the EWCs Directive. Dutch company Anker BV holds all of the shares in ADS Anker and other undertakings belonging to the Anker group within the European Union/European Economic Area (EEA), whereas the Anker group undertaking with the largest number of employees is the UK-based company, RIVA.
The works council at ADS Anker in Germany requested local management to provide it with information on employee numbers and corporate structure, and the names of the employee representatives in other group undertakings, with a view to seeking the establishment of an EWC. ADS Anker replied that it was not able to respond because both its parent company, Anker BV, and the parent company of the group, Anker Systems GmbH, refused to provide the information requested.
The works council therefore brought proceedings before the Bielefeld labour court. The latter found that the employer cannot merely tell the works council to obtain the information it seeks by conducting its own research: under the Directive, the central management is responsible for creating the conditions necessary for the establishment of an EWC.
The court also held that the German EWCs legislation did not impose an obligation on group undertakings outside Germany to provide information to undertakings established in German territory. The court went on to state, however, that the employer’s argument that it was not able to provide the information requested by the employees could not succeed if, under the legislative measures in place in other Member States to transpose the Directive, the employer can oblige central management established in another Member State to provide the necessary information to undertakings in the group which are established in Germany. It noted, however, that the Directive does not contain any express provision on such a 'horizontal right' for an undertaking in the group to obtain information from the central management established in another Member State.
As the case depended on the interpretation of the Directive, the German court sought a preliminary ruling from the ECJ on:
- whether an undertaking which constitutes a group’s central management for the purposes of the Directive is obliged to provide a group undertaking in another Member State with information on undertakings and establishments belonging to the group, their legal form and representation arrangements and the number and distribution of employees across the Member States; and
- if so, whether the obligation to provide information also encompasses the names of the employee representation bodies and representatives that are to participate in the establishment of an EWC.
Judgment of the ECJ
Citing its judgments in earlier cases concerning the EWCs Directive - Bofrost (case C-62/99) (EU0106218F) and Kühne & Nagel (case C-440/00) (DE0404202N) - the ECJ stated that employees must be guaranteed access to information enabling them to determine whether they have the right to demand the opening of negotiations about the establishment of an EWC. Central management’s responsibility under Article 4(1) of the Directive for creating the conditions and means necessary for the setting up of an EWC 'includes an obligation to supply the employees’ representatives with the information essential to the opening of negotiations'.
The ECJ points out that the central management of a group’s controlling undertaking is in a position to 'request - and oblige - the other undertakings in the group to provide it with the information essential for opening negotiations in order to enable it to communicate that information to the representatives'. However, the Directive provides that, where the central management is situated outside the territory of the Member States, its responsibilities are to be assumed by either a representative agent in one of the Member States or, in the absence of such a representative, by the central management of the establishment or group undertaking employing the greatest number of employees in a member state, ie by the 'deemed central management'. In such circumstances, as established by the Kühne & Nagel ruling, the other undertakings belonging to the group and located in the Member States are under an obligation to assist the deemed central management by supplying the necessary information where they possess it or are in a position to obtain it.
As regards the questions raised by the present case, the ECJ considers that the obligations by which the central management or the deemed central management is bound under Article 4(1) of the Directive 'must be interpreted as encompassing both the obligation to supply directly to the employees’ representatives information which is essential for the opening of negotiations to set up [an EWC] and the obligation to supply that information to employees representatives through their undertaking in the group to which those representatives submitted a request for information in the first place'.
Under Article 11(3) of the Directive, Member States must ensure that adequate administrative or judicial procedures are available to enable the obligations deriving from the Directive to be enforced. The ECJ points out that this means that Member States must take measures to ensure that the obligations to create the conditions and means necessary for the setting up of an EWC and to supply the information essential to the opening of negotiations are fully performed.
As regards the nature and extent of the information to be disclosed, the ECJ makes clear that central management or the deemed central management must provide information not only on the number and national distribution of employees - as specified by Article 11(2) - but also on the group’s companies and establishments, their legal form and representational structure 'in so far as that information is essential for the opening of the negotiations'. The same applies to information on the identities of employee representatives in other group undertakings who would be required to participate in the establishment of an EWC.
Accordingly, the ECJ ruled that:
Article 4(1) and Article 11 of [the Directive] must be interpreted as meaning that Member States are required to impose on undertakings established within their territory and constituting the central management of a Community-scale group of undertakings for the purposes of Article 2(1)(e) and Article 3(1) of the Directive, or the deemed central management under the second subparagraph of Article 4(2), the obligation to supply to another undertaking in the same group established in another member state the information requested from it by its employees’ representatives, where that information is not in the possession of that other undertaking and it is essential for opening negotiations for the setting up of a European Works Council.
Commentary
The ECJ has now dealt with three cases concerning the interpretation of the EWCs Directive - all originating in Germany and all concerning different aspects of the Directive’s obligation on employers to respond to requests by employee representatives for information about the number and distribution of employees and corporate structure in order to prepare for the possible setting up of an EWC. This series of ECJ judgments has sought to clarify the rules on transparency in the initial dealings between employee representatives and company management prior to any employee request for negotiations about establishing an EWC, and will serve to limit the scope for companies to refuse to disclose information in an attempt to avoid or delay negotiations.
The Kühne & Nagel and ADS Anker rulings highlight the essentially artificial nature of the Directive’s 'deemed central management' concept. This was included to ensure that, where corporate groups are headquartered outside the territorial scope of the Directive, a group undertaking within an EU/EEA Member State is allocated overall legal responsibility for the EWC process. Where the role of central management falls to a group undertaking other than the actual controlling undertaking, it is unlikely to have the formal authority to require that all the necessary information is supplied by other group undertakings. However, the ECJ has made it clear that this must not prevent the deemed central management from carrying out its obligations under the Directive: it must request the necessary information from other EU/EEA-based group undertakings and the latter are obliged to supply it as far as possible (Kühne & Nagel). The actual or deemed central management is also obliged to provide group undertakings with such information where necessary (ADS Anker).
The Kühne & Nagel and ADS Anker judgments emphasise the obligation on Member States to require actual or deemed central management and other group undertakings located within their territory to supply the necessary information both upwards and downwards within the group. Existing national EWCs legislation will need to be interpreted in accordance with ECJ case law. Whether Member States and the European Commission will take the view that it is necessary to establish additional national provisions in response to the Kühne & Nagel and ADS Anker rulings remains to be seen. (Mark Hall, IRRU)