European Works Councils: on a road to further reform

The latest proposals from the European Commission could put European Works Councils on a firmer footing.

The European Union directive establishing European Works Councils was introduced in 1994. Thirty years on, we may be on the verge of significant change in how EWCs conduct their business.

Late last month, the European Commission published proposals for reform of the directive, which was ‘recast’ in 2009. The suggested changes come on the back of the ‘Radtke report’, a set of recommendations to strengthen EWCs drawn up by the Employment and Social Affairs committee of the European Parliament and endorsed in plenary a year ago.

There are more than 1,000 EWCs in the EU, covering more than 11 million workers. About 4,000 companies in all would however meet the threshold—at least 1,000 employees with at least 150 in each of two or more member states—for their establishment.

A commission evaluation identified shortcomings in how EWCs operate, particularly failures in consultation of employee representatives and in the legal enforceability of their rights. Any further reform must address such issues.

A stakeholder consultation however revealed little if any consensus on reform between the social partners. In general, employers’ organisations were satisfied with the status quo, while trade unions sought further regulation of EWCs. On only one issue, the need to address gender imbalance, was there consensus.

Vindicating rights

Hitherto, ‘voluntary agreements’ have allowed undertakings to be exempted from the scope of the directive. The commission proposes that the employees concerned have the right to request establishment of an EWC, unless (with management) they prefer the existing arrangement.

As to legal rights, member states would be required to notify the commission how EWCs can bring judicial and administrative proceedings to vindicate their rights under the directive. This would also apply to ‘special negotiating bodies’ (SNBs) which draw up EWC agreements with management.

These changes have the potential to be significant. In addition to clarifying the rights of EWCs to legal expertise, the commission is seeking to ensure a path to justice for EWCs within the member states, including provision for at least pecuniary sanctions.

Indeed, the door has been opened to potentially punitive penalties. The commission is suggesting an amendment to the directive obliging members states ‘to take into consideration the gravity, duration, consequences, and the intentional or negligent nature of the offence, and in case of pecuniary sanctions, in addition also the size and financial situation of the sanctioned undertaking or group (for example, its annual turnover), and other relevant criteria’.

Strengthened consultation

The consultation rights of employees would also be strengthened under the commission’s proposals. For example, a new definition of transnationality could broaden the scope of issues to be considered by an EWC. EWCs would also be entitled, regarding any opinion put forward as part of a consultation process, to receive a ‘written response from central management before the latter adopts its decision on the proposed measure’.

While these reforms could be significant, much would depend on how they were implemented. For example, employee representatives would need to have sufficient information to judge what is transnational and what is not, and they would need to be furnished with the resources to ensure they were in a position to put forward a detailed opinion which could be taken into account.

Some proposals for reform could have a practical impact on how EWCs function. For example, the rights of SNBs and EWCs to expert support are to be clarified, with details as to use of experts, legal resources and training to be specified in EWC agreements. Virtual formats for meeting would be adopted only ‘if the parties so agree’. In relation to the subsidiary requirements, the fallback when no EWC agreement is in place, the commission proposes that EWC meetings would be at least twice yearly, rather than the current annual provision. There is a new target that at least 40 per cent of seats on an EWC be allocated to one or other gender.

One potentially significant proposal is extension of the rights of ‘employee representatives’ (typically trade unionists) who work alongside EWC members. They would enjoy ‘the means required to apply the rights’ contained in the directive, while EWC members would have in turn the right, and the means, to inform relevant employees’ representatives regarding information and consultation processes. This could boost the role of such ‘employee representatives’ but the final detail will need to be studied closely.

Areas of concern

The commission’s proposals are not the final word on this reform process. The parliament and the member states will no doubt heavily influence the outcome, while the social partners will doubtless keep a watching brief. The European Trade Union Confederation has  highlighted some areas of concern, including the need for sufficiently strong penalties for any breaches of the directive. The European Federation of Food and Tourism Trade Unions (EFFAT) has stressed the need to extend EWCs to workers employed in transnational franchises.

How EWCs function in practice is very heavily dependent on the dynamic established between members and management and the support and expertise available to employee representatives. But one thing is certain: the legislative framework under which they operate is well on the way to further reform.