The European Commission today opened consultation on more effective European Works Councils legislation.
Democracy may be in crisis, given the electoral success of political parties with anti-democratic goals and growing political polarisation, suggestive of a widespread sense of disempowerment. As counterweights, European Union institutions, particularly the European Parliament, have endorsed more democracy at work, stronger ESG (environmental, social and governance) standards and greater transparency on sustainability risks in finance.
The latest initiative for more effective democracy at work came at the beginning of this year, with a legislative-initiative report on reinforced European Works Councils (EWCs), presented by Dennis Radtke MEP. The report, which makes recommendations to the European Commission on revision of the European Works Councils directive, finally brings some movement to the 14-year gridlock on amendments.
The employers’ side, through BusinessEurope, has long opposed any additional EWC rights, with the assertion that these would harm business. Yet research shows employee participation leads to more deliberative and crisis-proof decision-making.
The European Trade Union Institute (ETUI) has been engaged in research on EWCs for over two decades. This includes analysis of agreements in the ETUI’s EWCs database and surveys of EWC members on their functioning. it is worth examining how far the proposed legislative changes address the findings.
The key objective of the legislative initiative is to strengthen enforcement of EWC rights, based on the law and their founding agreements. Since the first related directive was adopted in 1994, EWCs have complained that, when it comes to information and consultation, this has not been timely or of adequate quality. Yet when they have sought judicial remedies, the have faced a lack of enforcement mechanisms and adequate sanctions.
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In the ETUI’s large-scale EWCs survey in 2018, only one in five members reported that the EWC had been informed and consulted before a decision had been taken. This is contrary to the directive (article 2f), which obliges central management to inform and consult with the EWC at a point in time when the opinion of the latter can be taken into account. EWCs further reported that confidentiality clauses were abused to hinder effective engagement with, and representation of, the workforce.
Comparative analysis by the ETUI of sanctions for breach of EWCs legislation showed that these vary widely across Europe and are too weak in most countries. Sanctions for violations of EWC law are required to be effective, dissuasive and proportionate. Clearly they are not. The average maximum fine across the EU is €33,170, the average minimum a paltry €355. In comparison, infringements of the General Data Protection Regulation can bring fines of up to 4 per cent of global annual turnover—a much more robust sanction than for breaches of democracy at work.
The Radtke report addresses these issues by proposing crucial amendments to the 2009 version of the directive, urging that these be adopted in a commission proposal spurring the long-awaited revision. Member states would be required to ‘establish effective judicial procedures, that can be accessed in a timely manner’, enabling ‘a preliminary injunction for the temporary suspension of decisions of the central management where such decisions are challenged on the basis that there has been an infringement of the information and consultation requirements’. This would enable EWCs to apply to a judge to put on hold the implementation of a decision, if information and consultation had not been effected in advance.
Another revision would stipulate that the currently ineffective penalties be rendered ‘effective, proportionate and dissuasive’, equivalent to the maximum for GDPR breaches. Penalties sufficient to ensure compliance with the directive have been a longstanding demand of the employees’ side.
EWCs are possible in companies with at least 1,000 employees and at minimum 150 in each of two or more member states. The ETUI’s database, which is the only systematic collection of EWC agreements in existence, counts 990 active EWCs as of the turn of the year. Of these however, only 618 can currently rely fully on the provisions of the 2009 recast directive.
Over one third of EWCs are based on agreements signed before even the initial, 1994 directive came into force. Together with the 28 EWC agreements signed or revised between June 2009 and June 2011, these nearly 300 so-called voluntary agreements are not subject to the same rules as the over 600 EWCs established between September 1996 and June 2009 and since June 2011.
This patchwork of rights is illogical and leads to legal uncertainty. The Radtke report proposes a two-year sunset clause for these outdated agreements, save for provisions more favourable to EWCs, to achieve a level playing-field. A unified, strengthened directive would then apply to all EWCs.
These measures, while not resolving all the shortcomings of the current EWCs legislation, would bring about a more effective framework for EWCs and represent a significant step forward on compliance and enforcement. The report provides a strong basis for the commission finally to tackle the long-awaited revision of deficiencies well evidenced by case law and ETUI research.