BEERG Perspective - Comments on ETUC Demand for...

Introduction

On Wednesday, October 4, 2023, the European Trade Union Confederation (ETUC) made public its refusal to open negotiations with the employers’ organisation BusinessEurope on possible changes to the European Works Council Directive (EWCD). 

Instead, it demanded, in a 15-page document, that the European Commission prepare legislation amending the 2009 EWCD and push to have it adopted in the “current legislative term”, which means before the end of the first quarter in 2024 at the latest because of European Parliament elections in June 2024. 

What are the Unions Demanding?

In a web post of October 4, the ETUC summarised its position under three headings: 

• Clear definitions of key EWC rights. 
• Strengthening the role of trade union experts.
• Enforcement and access to justice. 

Full details of the ETUC’s position can be found here. It needs to be remembered that unions are only mentioned once in the 2009 EWCD, and then as potential experts to Special Negotiating Bodies. EWCs are representative of all employees. They are not union bodies nor are they extensions of unions. Only about 15% of workers in the European private sector are union members, though this differs from country to country and company to company. 

There is no case for handing control of EWCs to unions which is essentially the ETUC’s position.

As we see it, the ETUC is asking for:

• Only one type of EWC agreement to be allowed from now on… one that fully conforms with the provisions of an amended Directive.
• Article 13 agreements to be automatically ended, irrespective of the wishes of the parties. 
• Existing Article 6 agreements to be subject to the extensive terms of the proposed new Directive, without any negotiations.
• A definition of “transnational” that would make practically every issue “transnational” so eliding the differences between national and European-level labour relations.
• Greater “articulation” (i.e., meetings) between EWCs and national representative bodies and trade union in “exceptional circumstances”, as if EWC members are unaware of what the workers they represent are thinking.
• No management decisions to be finalised before the EWC information and consultation process is finished, though how information and consultation is to be conducted in practice is left vague.
• Management to reply to the EWC’s opinion with a “reasoned response” at a further meeting after the opinion is delivered to give the EWC an opportunity to negotiate an “agreement” if management rejects its opinion. Bargaining to replace consultation.
• EWCs to have the right to ask for injunctions to suspend management decisions where the EWC believes it has not been properly informed and consulted. No definition of “properly informed and consulted” Multiple injunctions could be sought during an information and consultation process. 
• The courts to have the power to impose GDPR-size fines on companies that breach, even unintentionally, EWC information and consultation rights. 
• All the EWC’s legal costs to be paid for by management, even if the claims made to be the court are found to be without foundation and of no merit. 
• There is no mention of the use of mediation and conciliation before references of disputes to courts.
• A trade union official to have the right to sit on every EWC and to attend meetings with management, irrespective of the number of union members in a company. Those familiar with the dynamics of EWC meetings know that this would result in the union official controlling the meeting.
• A second expert to be available to the EWC at management cost with management having no say on the expert’s mandate or the level of costs incurred.
• Two full EWC meetings a year and four meetings with the Select Committee. All such meetings to be held in person.
• All “complex business structures” such as franchise operations to be brought with the scope of the EWCD. 
• SNB’s to meet every three months until an agreement is reached.
• To ensure gender balance, a minimum of 2 EWC representatives for each represented country.

Why Now, Why the Urgency and Why No Negotiations?

For the Commission to draft legislation based on the above extensive list of far-reaching demands and have it agreed and signed-off by both the Council of Ministers and the European Parliament within six months would be unprecedented and is unlikely to happen. 

Why is the ETUC demanding such an accelerated legislative timetable? Because with the Radtke Report and a subsequent Resolution setting out proposed changes to the EWCD, the European Parliament has effectively handed the ETUC what it wants. It was parliamentary capture by the ETUC, spearheaded by the EPP MEP, Denis Radtke, a former German trade union official.

The Council of Ministers is chaired by Yolanda Diaz, the Spanish Deputy Prime Minister, and herself an ex-union lawyer, who has expressed her support for the ETUC position. She chairs the Council until the end of 2023. 

The Social Affairs Commissioner, Nicolas Schmit from Luxembourg, is also known to be in favour of amending the EWCD. So, the unions are hoping that the stars are aligned to deliver on their agenda. If this window of opportunity closes, it will be 2025 at the earliest before it might open again, after a new Parliament has been elected and a new Commission appointed. By which time what support there is for the ETUC’s agenda may have evaporated.

Whatever about Diaz’s position, it is unlikely that the rest of the Council of Ministers will rush through legislation at her behest, especially as businesses across Europe will be making the case to national governments that what is being proposed would be deeply inimical to their competitive position and would destabilize national labour relations practices in multinational companies, handing almost untrammelled power to trade unions to block management decisions which they opposed in such companies. 

What the ETUC is seeking would amount to a massive transfer of power in the labour market from employers to unions which represent a declining minority of workers in many of the companies that would be impacted by the changes they propose. It would see the creation of a centralized European labour relations system in major multinational companies, controlled centrally by unrepresentative trade unions. 

Injunctions would hand significant power to EWCs to block management decisions. As a trade union official would be embedded in every EWC, it would be the unions in effect making the decisions. Injunctions are not a feature of labour relations in most EU Member States. The blurring of “national” and “transnational” labour issues would see national representatives asking EWCs to look for injunctions on their behalf to maximise local leverage. 

We could end up with judges in one country issuing injunctions to block decisions in another. There is no point in the ETUC saying this is not their intention. Build it and they will come. Though how injunctions issued in one country could be enforced in another could give rise to complex legal issues.

The ETUC want all their demands to be built into the Directive, with a greatly enhanced Subsidiary Requirements. Take away the platitudes, and it is clear that the ETUC wants a “Regulation” in the guise of a “Directive”. A one-size-fits-all EWC for every company across Europe which their officials would simply have to turn up and demand be implemented. Whether what is being asked for is allowable under the relevant Treaty article, 153, is open to debate.

Given the very significant consequences for the conduct of labour relations both at European and national level of what the ETUC is demanding, such changes cannot be rushed through a truncated legislative process. 

• DG Employment should not produce legislation that has not given adequate study within the Commission by all relevant Directorates. 
• DG Employment should not be pressurised by the ETUC’s arbitrary timetable.
• National governments, as represented in the Council of Ministers, must be given the time to properly scrutinise any legislation the Commission may propose and discuss the implications with their national social partners before coming to any conclusions.

The ETUC cloaks its extensive list of demands in the language of “democracy at work” when what is really in play is an attempt to extend union power and influence in major multinational companies in many of which unions have a declining or no membership. 

This is probably why the ETUC refuses to negotiate with employers on the issue, knowing that this agenda would fall apart under scrutiny from employer representatives who understand the realities of EWCs and know that most EWCs work well in the interest of both parties. 

It is easier to demand radical change in the name of “democracy” from the legislators than have to deal with those who know what they are talking about.

These are our initial observations on this development. We had scheduled a workshop for members on EWCs for mid-October. We will explore the issue in greater detail there and publish a more detailed response and analysis in the days after that event.