On 2 July 2008, the European Commission adopted a legislative proposal for a revised directive on European Works Councils (EWCs) as part of its renewed social agenda. The proposal aims to better define the competencies of EWCs, linking the national and European levels of information and consultation, and ensuring legal certainty regarding the set-up and the functioning of EWCs. Social partners have given mixed reactions to the proposal.
Changes are deemed necessary to strengthen the role of European Works Councils (EWCs) deriving from Council Directive 94/45/EC of 22 September 1994 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees. The proposed revision of the directive is part of a social package which the European Commissioner for Employment, Social Affairs and Equal Opportunities, Vladimír Špidla, presented on 2 July 2008. It follows the failure of the social partners to agree on negotiations in the framework of the European social dialogue via Articles 138-139 of the EC Treaty.
In response to the second-phase consultation started in February 2008 (EU0803039I), the European employer organisation BusinessEurope – having opposed any revision of the directive in former consultations – finally agreed to start negotiations in the framework of the European social dialogue (see BusinessEurope press release (28Kb PDF) of 2 April 2008). On the employees’ side, however, the European Trade Union Confederation (ETUC) refused to negotiate over the revision, suspecting that ‘there would be insufficient time for both negotiations and for the issue to be dealt with in the lifetime of this Commission and Parliament’ (see ETUC press release of 11 April 2008).
Content of proposal
The revision proposal (COM(2008) 419 final (148Kb PDF)) follows the objectives explained in the European Commission document initiating the second-phase consultation (47Kb PDF). These aims include: enhancing the effectiveness of EWCs, resolving legal uncertainties and problems in practical application, and harmonising the EWC directive with more recent directives on employee representation.
Enhancing the effectiveness of EWCs
In order to clarify the role and the competencies of the EWC, the European Commission has added a definition of ‘information’ to Article 2 and extended the definition of ‘consultation’. Both designations now use the phrase ‘at such time, in such fashion and with such content as are appropriate’.
The revised Article 10 explicitly states that ‘the members of the European Works Council shall collectively represent the interests of the employees of the Community-scale undertaking or Community-scale group of undertakings’. This description might be a first step to solving the legal uncertainties regarding transnational company agreements; the latter topic is considered in the Commission staff working document, The role of transnational company agreements in the context of increasing international integration (53Kb PDF), which was published together with the revision proposal.
The role of employee representatives is further enhanced by the right to ‘access to training without loss of wages’. Furthermore, the revised Article 5 acknowledges the role of trade unions in the functioning of the special negotiating body (SNB) that decides on the establishment of an EWC. Finally, the revision proposal strengthens the subsidiary requirements, which apply in the absence of an agreement at company level. These requirements not only serve as fall-back rules in the event of non-agreement but also as benchmarks for negotiated EWC structures.
Resolving legal uncertainties and problems in practical application
A main issue of the revision is the adaptation of EWC structures in cases of company restructuring, particularly mergers, acquisitions or spin-offs. The proposal introduces the obligation of an adaptation clause for new EWC agreements. In cases where no adaptation clause exists or two or more clauses are in conflict, the EWC has to be renegotiated. Existing EWCs must be represented in the SNB for these renegotiations. Furthermore, the proposal makes clear that ‘existing European Works Council(s) shall continue to operate’ during the period of renegotiation.
The proposal also defines new rules for the composition of the SNB which are adapted for the increased number of EU Member States. Only countries in which at least 50 employees are employed have to be represented in the SNB, instead of all countries where the undertaking is active. The same rule applies to the subsidiary requirements for the composition of the EWC.
Harmonising directive with more recent directives on employee representation
The revision proposal makes references to more recent directives on employee representation, notably Directive 2002/14/EC on information and consultation (EU0204207F), Council Directive 2001/86/EC on employee representation in a European company (EU0206202F), and Council Directive 2003/72/EC supplementing the Statute for a European Cooperative Society. Moreover, the proposal adds provisions for a better interaction of national and transnational levels of employee representation, such as the obligation that new EWC agreements must contain ‘arrangements for linking … EWC and national bodies’.
Reaction of social partners
ETUC welcomed the European Commission’s proposal for the long overdue revision of the EWC directive. The confederation also expressed its hope that the revision process would be successfully completed under the French Presidency of the Council of the European Union, which ends on 31 December 2008.
On the other hand, in a Letter to EU Commissioners’ Heads of Cabinets (29Kb PDF) on 30 June 2008, BusinessEurope Secretary General, Philippe de Buck, severely criticised the Commission’s proposal as ‘over-prescriptive and ill-suited for individual companies’. He particularly underlined the employer organisation’s opposition to recognising the role of trade unions in the formation of EWCs. BusinessEurope is also strongly opposed to the obligation to renegotiate agreements in the context of significant changes in company structure, even in the case of ‘Article 13’ agreements concluded before 22 September 1996. Such agreements were reached before the EWC directive originally came into force, and up to now have been considered exempt under Article 13 of the directive.
The most controversial issue seems to be the definition of the ‘appropriate’ time, fashion and content of information and consultation. ETUC insists that ‘works councils need to be empowered to anticipate and manage changes’. However, BusinessEurope is against any obligation to start consultation before a decision is made, suspecting that the European Commission’s proposal ‘leaves the door open to a possible consultation process taking place before the decision is taken’.
Stefan Lücking, Technical University Munich