Draft EU Texts on the Proposed EWC Directive...

Current Texts on the Proposed Revision of the EWC Directive

Commission

Council

Parliament

Transnational

Matters shall be considered to be transnational where they can reasonably be expected to concern the Community-scale undertaking or Community-scale group of undertakings as a whole, or at least two undertakings or establishments of the undertaking or group situated in two different Member States.

Those conditions shall be deemed to be met where:

Matters shall be considered to be transnational where they can reasonably be expected to concern the Community-scale undertaking or Community-scale group of undertakings as a whole, or at least two undertakings or establishments of the undertaking or group situated in two different Member States. 

Those conditions shall be deemed to be met where:

(ba) The measures considered by central management of the Communityscale undertaking or Community-scale group of undertakings can reasonably be expected to affect workers in a Member State other than that in which those measures are being considered.

4a. In order to determine the transnational character of a matter, the scope of its possible effects on the workforce and the level of management and representation involved shall be taken into account. This shall include matters which are of concern to workers in terms of the scope of their potential impact in two or more Member States, as well as matters which involve the transfer of activities between two or more Member States.

For the purposes of point (c) of the first subparagraph, employees of controlling and controlled undertakings within the meaning of Article 3(2)(ca) shall also be taken into account in the definition of Community-scale group of undertakings.

Comment

Suggestions that any of these proposed wordings in any way clarify the concept of “transnational” are difficult to sustain. It is inherently impossible to define “transnational” in a way that meets the expectations of all parties in what is always a contested area, labour relations.  

It is our view that the wordings under consideration will conflate local/national and European issues. However, the wording proposed by the Council and the Commission are to be preferred to those of the Parliament which would have the effect of making every issue an EWC issue.

As will be clear from the rest of this paper, when you take the Parliament’s proposals together in their entirety, the result would be the creation of a Euro-centred system of labour relations, managed through EWCs, which in turn would be controlled by the European-level trade unions.

This may, or may not, be what the Parliament’s rapporteur, the EPP’s Denis Radtke, intends to achieve, but it is what would happen in practice as anyone with firsthand experience of dealing with there issues will know.

Notes

Employee Representatives

‘Employees’ representatives’ means the employees’ representatives provided for by national law and/or practice.

‘Employees’ representatives’ means

trade unions or the employees’

representatives provided for by national

law or practice.

Comment: 

As will be clear from this document, what the Parliament’s proposals would do is to turn EWC from bodies that represent all employees in a transnational undertaking focused on an exchange of views and dialogue, into trade union controlled bodies intent on confrontation and legal challenges. It is unreasonable to give trade unions such priority as they represent, at best, about 15% of all workers in the European private sector.

The definition of employees’ representatives in the Commission’s draft has served well over many years across multiple pieces of legislation. It should be left as it is.

Notes

Information

‘Information’ means transmission of data by the employer to the employees’ representatives in order to enable them to acquaint themselves with the subject matter and to examine it.

‘Information’ means transmission of data by the employer to the employees’ representatives in order to enable them to acquaint themselves with the subject matter and to examine it and is given at such time, in such fashion and with such content as are appropriate to enable employees’ representatives to undertake an in-depth assessment of their possible impact and, where appropriate, prepare for consultations with the competent organ of the Community-scale undertaking or Community-scale group of undertakings.

Comment

The additional wording suggested by the Parliament already appears elsewhere in the Commission’s text. Duplication is unnecessary.

Notes

Consultation

‘Consultation’ means the establishment of dialogue and exchange of views between employees’ representatives and central management or any more appropriate level of management;”

‘Consultation’ means the establishment of dialogue and exchange of views between employees’ representatives and central management or any more appropriate level of management at such time, in such fashion and with such content as enables employees’ representatives to express a prior opinion on the basis of the information provided about the proposed measures to which the consultation is related, without prejudice to the responsibilities of the management, and within a reasonable time, which is to be taken into account within the Community-scale undertaking or Community-scale group of undertakings. 

Consultation is to take place in such a way as to enable employees’ representatives to obtain a reasoned written response in due time from the central management prior to the adoption of the decision provided the employee representatives expressed their opinion within a reasonable time in accordance with the first sentence

Comment

The same comment applies to the Parliament’s additional wording on consultation as above on information. It simply repeats what is to be found elsewhere in the Commission’s text. Duplication is unnecessary.

Notes

Controlling Undertaking

For the purposes of this Directive, ‘controlling undertaking’ means an undertaking which can exercise a dominant influence over another undertaking (the controlled undertaking) by virtue, for example, of ownership, financial participation or the rules which govern it.

For the purposes of this Directive, ‘controlling undertaking’ means an undertaking which can exercise a dominant influence over another undertaking (the controlled undertaking) by virtue, for example, of ownership, financial participation, control over decisions or the rules which govern it.’

(ca) operates directly or indirectly in the internal market selling goods or providing services through franchise or license agreements concluded with independent third-party companies in return for royalties where such agreements ensure a common identity, a common business name or concept and the application of uniform business methods.

Comment

The Parliament’s wording seeks to extend EWC coverage to franchise or other non-unitary business models. We would suggest that this is legally difficult to do, if not impossible, as “satellite” operations are generally legally independent, having their own corporate structures. There are also a myriad of different contractual arrangement between the businesses involved in such structures. The management of one company cannot be made to answer for the management of a different company, no matter what the relationship between them may be.

This proposal from the Parliament needs to be rejected.

Notes

Article 5: SNB Request

In order to achieve the objective set out in Article 1(1), the central management shall initiate negotiations for the establishment of a European Works Council or an information and consultation procedure on its own initiative or at the written request of at least 100 employees or their representatives in at least two undertakings or establishments in at least two different Member States

In order to achieve the objective set out in Article 1(1), the central management shall initiate negotiations for the establishment of a European Works Council or an information and consultation procedure on its own initiative or at the either joint or separate written request of at least 100 employees or their representatives in at least two undertakings or establishments in at least two different Member States.

Comment

This is just a clarification of what often happens in practice, several letters are received in or around the same time. The Parliament’s proposed amendment just spells this out.

Notes

Article 5: SNB Gender Balance

The members of the special negotiating body shall be elected or appointed in proportion to the number of employees employed in each Member State by the Community-scale undertaking or the Community-scale group of undertakings, in a manner that strives to achieve a gender-balanced representation, by allocating in respect of each Member State one seat per portion of employees employed in that Member State, amounting to 10 %, or a fraction thereof, of the number of employees employed in all the Member States taken together

The members of the special negotiating body shall be elected or appointed in proportion to the number of employees employed in each Member State by the Community-scale undertaking or the Community-scale group of undertakings, in a manner that strives to achieve a gender-balanced representation, by allocating in respect of each Member State one seat per portion of employees employed in that Member State, amounting to 10 %, or a fraction thereof, of the number of employees employed in all the Member States taken together.

The members of the special negotiating body shall be elected or appointed in proportion to the number of employees employed in each Member State by the Community-scale undertaking or the Community-scale group of undertakings, in a manner that strives to achieve a gender-balanced representation, whereby women and men each hold at least 40% of the posts of member of the special negotiating body, by allocating in respect of each Member State one seat per portion of employees employed in that Member State, amounting to 10%, or a fraction thereof, of the number of employees employed in all the Member States taken together. If this objective is not reached, the reasons shall be explained in written by the special negotiating body.

Comment

This is one of those aspirations that will be almost impossible to achieve in practice. Given that most Member States will have at most, one (1) representative on and SNB/EWC and that neither governments nor management can have any say in who is chosen as the representative how a gender balance is to be achieved is impossible to say. Where there is more than one representative from a Member State then a gender balance is possible, but this is a matter for national laws and practice.

Notes

Article 5: Experts

For the purpose of the negotiations, the

special negotiating body may request

assistance from experts of its choice which

can include representatives of competent

recognised Community-level trade union

organisations. Such experts and such trade

union representatives may be present at

negotiation meetings in an advisory

capacity at the request of the special

negotiating body.

For the purpose of the negotiations, the

special negotiating body may request

assistance from representatives of

competent recognised Community-level

trade union organisations and, if needed,

further experts. Such experts and such

trade union representatives may be present

at negotiation meetings in an advisory

capacity at the request of the special

negotiating body

Comment

Again, this is an attempt by the Parliament to impose trade union experts on SNBs by restricting their choice of experts to such union experts and only allowing other experts if needed. The Parliament’s wording would impose a union expert on an SNB if the SNB felt it needed an expert.

The existing wording in the 2009 Directive, as repeated in the Commission’s text, which allows SNBs a free choice as to whom should be their expert has worked well over the years and does not need to be changed.

The Parliament’s proposed wording should be rejected.

Notes

Article 5: Expert and Legal Costs

These expenses shall include reasonable costs of experts, including for legal assistance, insofar as necessary for that purpose, as well as reasonable costs of legal representation and participation in administrative or judicial proceedings. Expenses shall be notified to central management before they are incurred.

In the second subparagraph, the second sentence is deleted (this refers to the funding of one expert only)

These expenses shall include reasonable costs of experts, including for legal assistance, insofar as necessary for that purpose […]. Expenses shall be notified to central management before they are incurred.

The second sentence is deleted (funding of one expert only)

These expenses shall include reasonable costs of experts, including a representative of a recognised Community-level trade-union, for legal assistance, insofar as necessary for that purpose, as well as reasonable costs of legal representation and participation in administrative or judicial proceedings. Expenses shall be notified to and approved by central management before they are incurred

Comment

We continue to believe that it is contrary to established legal practice in most EU Member States to allow one party to a process to incur advisory and/or legal costs at the expense of the other party, without any apparent limit on such costs or any control by the party expected to pay such costs.

The word “reasonable” will always be disputed between parties engaged in a contested action. Labour courts and tribunals should be able to rule on the reasonableness of a case before it and to disallow funding if the case if found to be without merit. Such an approach would have the effect of curbing ill-advised actions.

Such an approach could be included in national budgetary rules. Other approaches could also be considered at national level, such as making cost-free conciliation and mediations a first step before cases can be referred to courts or tribunals. The possibility of EWCs being provided with a budget for expert and legal costs has also been raised. There are examples of EWC which already have access to such a budget. Having to manage a budget would make EWCs conscious of the costs involved. It could force them to ask what value experts and lawyers delivered for them. A formula on determining budgets could be included in national rules covering the Subsidiary Requirements which would then act as a benchmark for Article 6 agreements.

There is no need to specifically mention trade union representatives in this provision, unless the intention is to use SNBs (and EWCs) as a source of union funding, which is not what this legislation should be about.

Notes

Article: EWC Gender Balance

The central management and the special negotiating body, when negotiating or renegotiating a European Works Council agreement, shall agree and lay down the necessary arrangements for attaining, as far as possible, and without prejudice to national laws on electing workers representatives, the objective of gender balance whereby women and men each comprise at least 40 % of European Works Council members, and where applicable, at least 40 % of select committee members

The central management and the special negotiating body, when negotiating a European Works Council agreement, shall agree and lay down the necessary arrangements for attaining, and without prejudice to national laws on electing workers representatives, the objective of gender balance whereby women and men each comprise at least 40 % of European Works Council members, and where applicable, at least 40 % of select committee members

Comments

It is not for management to in any way try to dictate how the members of an EWC are to be elected/selected. This is purely a matter for national laws and/or practice.

Notes

Article: Subsidiary Requirements

In order to achieve the objective set out in Article 1(1), the subsidiary requirements laid down by the legislation of the Member State in which the central management is situated shall apply.

In order to achieve the objective set out in Article 1(1), the subsidiary requirements laid down by the legislation of the Member State in which the central management is situated shall apply with immediate effect.

Comment

What the words “with immediate effect” in the Parliament’s text mean need to be clarified.

Notes

Article: Subsidiary Requirements

in Article 7(1), the following indent is inserted after the second indent:

“— where the special negotiating body is not convened on a regular basis,’

Comment

The wording in the Parliament’s text suggests “meetings for meetings sake”. It is unnecessary. The Directive/national legislation allows three years for the SNB/management to negotiate an agreement. If there is no agreement at the end of the three years, the Subsidiary Requirements apply. The Parliament’s wording would open the door to claims arguing that because there has not been a meeting for, say, three months, the Subsidiary Requirements should immediately apply. In other words, a way of short-circuiting the process. The Parliament’s wording would give rise to needless court cases. It should be rejected.

Notes

Article: Subsidiary Requirements

Where an agreement as laid down in Article 6 has been terminated and no new agreement has been concluded within 24 months after the last day of validity of that agreement.

Comments

If an Article 6 agreement has been properly terminated then it is open to employees, or their representatives, to ask for the establishment of an SNB to negotiate a replacement agreement. That procedure should follow the rules down for SNBs. There should not be two classes of SNBs, with two different sets of rules.

The rules in the existing Directive for SNBs should continue to apply.

Notes

Article: Subsidiary Requirements

Where, after three years from the date of this request, they are unable to conclude an agreement as laid down in Article 6 and the special negotiating body has not taken the decision provided for in Article 5(5).

Where, after 24 months from the date of such a request, they are unable to conclude an agreement as laid down in Article 6 and the special negotiating body has not taken the decision provided for in Article 5(5).

Comment

From the time an SNB request is received, it can take up to six months for an SNB to be established, given the procedures that have got to be gone through in multiple EU Member States. Shortening the timeframe from 3 year to 2 years would leave just 18 months for negotiations. This could have the effect of not leaving sufficient time for negotiations and pushing more and more undertakings into the Subsidiary Requirements.

The three year timeframe should be left as it is.

Notes

Article 6: EWC Agreements

Article 6 is amended as follows:

(a) paragraph 2 is amended as follows:

points (c) and (d) are replaced by the following:

Point (f) is replaced as follows:

The requirement to determine the elements listed in the first subparagraph, as amended by [OP: insert reference to this amending Directive*], shall apply also with respect to European Works Council agreements concluded before [OP: insert date laid down in the second subparagraph of Article 2 of this amending Directive.].

(b) the following paragraph 2a is inserted:

“2a. The central management and the special negotiating body, when negotiating or renegotiating a European Works Council agreement, shall agree and lay down the necessary arrangements for attaining, as far as possible, and without prejudice to national laws on electing workers representatives, the objective of gender balance whereby women and men each comprise at least 40 % of European Works Council members, and where applicable, at least 40 % of select committee members.”;

paragraph 2 is amended as follows:

Point (f) is replaced by the following:

[…]

[…]

“2a.      The central management and the special negotiating body, when negotiating or renegotiating a European Works Council agreement, shall agree and lay down the necessary arrangements for attaining, as far as possible, and without prejudice to national laws and practices on electing and appointing employees’ representatives, the objective of gender balance whereby women and men each comprise at least 40 % of European Works Council members, and where applicable, at least 40 % of select committee members.”;

(5) in Article 7(1), the second indent is replaced by the following:

Where the first meeting of the special negotiating body is not convened within six months following a request pursuant to Article 5

Where the first meeting of the special negotiating body is not convened by the central management within six months following a request pursuant to Article 5(1),”;

Comment

To take the last point in the Council’s text first. In our experience, every undertaking we have ever dealt with has worked on the assumption that the first SNB meeting needs to be held within six months of receiving the request. Making that clear in the legislation should not create any problems in practice.

The innovation in the texts from both the Commission and the Council is the reference to the costs of experts, legal advice, and training. These are to be laid down in national budgetary rules for both SNBs and EWCs working under the Subsidiarity Requirements.

For EWCs base don Article 6 agreements, they are to be negotiated between the parties.  As has always been the case with EWC negotiations, what is set out in the Subsidiary Requirements becomes the benchmark. This means that the budgetary rules that national governments lay down on these matters are important.

However such rules are written, there cannot be an “open management chequebook” for SNBs/EWCs to engage experts, legal advisors, or to organise training programs, without a degree of prior management control. Saying that management should only be required to fund “reasonable” costs is not the answer. Who is to define “reasonable”? Those of us with many years of experience of working with EWCs know how easily words such as “reasonable” can result in disputes. And, of course, there will always be outside actors, “expert” consultancies, lawyers, and training advisors, who will see EWCs with access to an “open management chequebook” as seam of gold to be mined assiduously.

As we said earlier, there is also the danger that, given the proposed changes in the definition of “transnational”, if EWCs have access to unlimited funding, then there will be a temptation of the part of national employees’ representatives to escalate issues of concern to the EWC level and to make local issues “transnational”. Of course, management will push back against such escalation, but this pushback will itself generate disputes, creating a vicious circle that, ultimately, will benefit no one. Call this the law of “foreseeable consequences”.

National rules in the Subsidiary Requirements governing these issues need to be carefully written, otherwise disputes and conflicts are going to get baked into the system from the beginning.

Notes

Confidentiality

Provision of information in confidence

Provision of information in confidence

Comment

Whatever the final text on this issue, and the next on “Non-transmission”, there should not be any dilution on the right and obligation on the part of management to mark information as confidential, or to withhold information, if required to do so by either commercial considerations, or legal and regulatory obligations.

Objection to “confidentiality” on the part of unions and employees’ representatives is often driven by the belief that there is a “cache of secret information” that if made available to the representatives would undermine the rationale for whatever decision management is proposing. This is never the case. Managements that acted dishonestly in such a manner would soon find themselves under scrutiny by national regulatory authorities.

Notes

Non-transmission of information on specific grounds

A Member State may make such dispensation subject to prior administrative or judicial authorisation.

A Member State may make such dispensation subject to prior administrative or judicial authorisation.

Member States shall make such dispensation subject to prior administrative or judicial authorisation.

Paragraph 1 shall not apply to members of the European Works Council who reveal information to national or local work councils that may affect the situation of workers where such information has been provided to them in confidence and is subject to national rules on confidentiality

Comment

The existing Directive already allows for national governments to make use of prior judicial or administrative authorisation for the withholding of information. We are not aware of any cases that have been referred to courts under this heading. This is one of those provisions in law that might look good on paper but can rarely be made to work in practice. It would be better if it were deleted.

It is also reflective of the idea that there is a legal answer to everything. There isn’t.

Notes

Information and Consultation

The same shall apply to cooperation between the central management and employees’ representatives in the framework of an information and consultation procedure for workers.

The same shall apply to cooperation between the central management and employees’ representatives in the framework of an information and consultation procedure for employees.

In duly justified and exceptional cases, where the adoption of a decision requires urgency, management and employees’ representatives shall carry out an effective information and consultation process in accordance with paragraphs 2 and 3 as quickly as possible. When appropriate and agreed upon, digital means of communication and coordination can be used for that purpose.

If there is a dispute between the central management and the European Works Council or employees' representatives as to whether an information and consultation procedure is to be carried out, the central management shall provide duly substantiated grounds in writing for the reasons why the information and consultation requirements under this Directive or under agreements concluded pursuant thereto do not apply, including the reasons that justify the absence of transnational issues.

In so far as it is necessary for the European Works Council to carry out its tasks, the European Works Council or the select committee may request assistance from experts of its choice. Such experts may include representatives of competent recognised Community-level trade union

organisations. At the request of the European Works Council, such experts shall be present at meetings of the European Works Council and meetings with the central management in an advisory capacity

Comment

The wordings proposed by the Commission and the Council reflect what is already established practice in many EWCs: the EWC offers an opinion on the decision under consideration, management offers a response to that opinion. And the information and consultation process comes to a close. The wording from the Commission/Council could be enhanced by the inclusion of words to the effect that the EWC process runs “without prejudice to the autonomy of national information and consultation procedures as provided roe in national law and/or practice. This is already implicit in the wording, but the text would benefit from it being made explicit.

Interestingly, the Parliament in its proposals on the Subsidiary Requirements proposes the following wording:

Information and consultation procedures within the European Works Council shall be carried out without prejudice to those taking place at the national level. Where a procedure is already taking place at the national level, the European Works Council and the central management shall ensure that those procedures can complement each other with respect to the content and the timing of the procedures

This wording could useful be adopted by the Commission/Council and incorporated into the provision above.

The wording proposed by the Parliament simply invites disagreements and disputes:

Information on transnational matters shall be given at such time, in such fashion and with such content as are necessary and sufficient to enable the European Works Council to consult relevant employees’ representatives at national and local level, to undertake an in-depth assessment of their possible impact, and, where appropriate, prepare for meaningful consultations with the competent organ of the Community-scale undertaking or Community-scale group of undertaking.

Define “necessary and sufficient”. Who decides what is necessary and sufficient? We know from experience that EWCs will always argue that the information provided by management was “insufficient”. Who is to judge, and on the basis of what criteria, what is “necessary and sufficient”? How are courts/tribunals expected to make such decisions?

The Parliament’s proposed text would further conflate national and transnational information and consultation processes, not to mention building unnecessary delays into such processes. How is the EWC to consult “relevant employees’ representatives at national and local level”?

Define “meaningful consultations”? Again, who decides what is meaningful? Are consultations only meaningful if management accepts the “opinion” offered by the EWC?

Again, the demand that management must justify why an issue is not “transnational” simply invites disputes. For employees’ representatives, especially in view of the proposed changes in the definition of transnational, every issue, no matter how minor, will be transnational.

Were the Parliament’s wording to be accepted, national courts and tribunals would be clogged up with EWC disputes, especially if EWCs have access to an “open management chequebook” for expert and legal costs.

For example, the Irish Labour Court has just spent 4 days hearing a minor dispute about payment for an EWC member attending a training program for which management told him in advance he would not be paid.  

When you read the Parliament’s text in its totality, rather than simply paragraph by paragraph, it becomes clear that what is being proposed is a new integrated system of European labour relations, run through EWCs, under the control of trade unions. The Parliament’s text, written by a German MEP, who is a trade union official, even if he is a member of the right-of-centre EPP, does not advocate this openly. But, taking all the Parliament’s proposals together, this is what it would amount to. It is legitimate to ask if Denis Radtke’s colleagues in the EPP fully understand what he is doing and the problems his proposals would pose for national systems on labour relations if they were adopted.

An integrated system of European labour relations in multinational companies that transcends national borders is a legitimate aspiration for labour activists to advocate. But it should be done openly and transparently, with all relevant stakeholders participating in the debate about whether such a system is desirable or not.

What should not happen it to try to bring in such a system through the backdoor of a revised EWC Directive.

The Council and the Commission need to forcible reject the Parliament’s text on this provision.

Notes

Role and Protection of Employees’ Representatives

This shall apply in particular to attendance at meetings of special negotiating bodies or European Works Councils or any other meetings within the framework of the agreement referred to in Article 6(3), the payment of wages for members who are on the staff of the Community-scale undertaking or the Community-scale group of undertakings for the period of absence necessary for the performance of their duties, and protection against retaliatory measures or dismissal.

Without prejudice to agreements concluded pursuant to Article 6(2), point (f), the costs of such training and related expenses shall be borne by the central management, provided that the central management has been informed in advance.

This shall apply in particular to attendance at meetings of special negotiating bodies or European Works Councils or any other meetings within the framework of the agreement referred to in Article 6(3), the payment of wages for members who are on the staff of the Community-scale undertaking or the Community-scale group of undertakings for the period of absence necessary for the performance of their duties, and protection against retaliatory measures or dismissal.

A member of a special negotiating body or of a European Works Council, or such a member's alternate, who is a member of the crew of a seagoing vessel, shall be entitled to participate in a meeting of the special negotiating body or of the European Works Council, or in any other meeting under any procedures established pursuant to Article 6(3), where that member or alternate is not at sea or in a port in a country other than that in which the shipping company is domiciled, when the meeting takes place.

Meetings shall, where practicable, be scheduled to facilitate the participation of members or alternates, who are members of the crews of seagoing vessels.

In cases where a member of a special negotiating body or of a European Works Council, or such a member's alternate, who is a member of the crew of a seagoing vessel, is unable to attend a meeting, the possibility of using, where possible, new information and communication technologies shall be considered. 

Without prejudice to agreements concluded pursuant to Article 6(2), point (f), the reasonable costs of such training and related expenses shall be borne by the central management, provided that the central management has been informed thereof in advance.

A member of a special negotiating body or of a European Works Council, or such a member's alternate, who is a member of the crew of a seagoing vessel, shall be entitled to participate in a meeting of the special negotiating body or of the European Works Council, or in any other meeting under any procedures established pursuant to Article 6(3), where that member or alternate is not at sea or in a port in a country other than that in which the shipping company is domiciled, when the meeting takes place.

Meetings shall, where practicable, be scheduled to facilitate the participation of members or alternates, who are members of the crews of seagoing vessels.

Where a member of a special negotiating body or of a European Works Council, or such a member's alternate, who is a member of the crew of a seagoing vessel, is unable to attend a meeting, the possibility of using, where possible, new information and communication technologies shall be considered

to the exercise of their representative duties

in an international environment, the

members of the special negotiating body

and of the European Works Council shall

be provided with training without loss of

wages.

Without prejudice to agreements concluded

pursuant to Article 6(2), point (f), the costs

of such training and related expenses shall

be borne by the central management, or

any other appropriate level of

management, provided that the central

management or any other appropriate

level of management, has been informed in advance.

Comment

Issues around seagoing members of SNBs/EWCs are outside our area of expertise and we will leave it to colleagues in undertakings with operations in this area to comment.

May of the other issues dealt with in this Article are already to be found in Article 10 of the 2009 Directive.

However, there are two issues that need comment.

First, the words in the Parliament’s text “including the right to form and join trade unions” should have no place in a Directive on European Works Councils. The right to form and join trade unions is, and should remain, a national issue.

Secondly, we think the wording in both the Commission and Council texts which refer to communications with employees’ representatives “before and after” meetings with management are unwise. The premise underlying the EWC Directive is that only management in transnational undertakings have access to transnational information. Management meets with the EWC to inform them about transnational issues, and then to consult them on these issues. How are EWCs supposed to communicate with employees or employees’ representatives at national level before they are informed about what is under consideration? What are they supposed to talk about? Invite employees and national representatives to give them a list of local grievances? You can only inform when you yourself have been informed. It would be better if the word “before” was deleted.

Notes

Article 11: Disputes Procedures

Article 11 is amended as follows:

In the event of failure to comply with the national provisions transposing the obligations under Article 9(2) and (3), Member States shall provide for pecuniary sanctions, to be determined considering the criteria listed in the third subparagraph of this paragraph, without prejudice to the possibility to provide for other types of sanctions in addition.

For the purposes of point (b), of the first subparagraph, Member States shall take into consideration, when determining penalties, the gravity, duration, consequences, and the intentional or negligent nature of the offence, and in respect of pecuniary sanctions, also the size and financial situation of the sanctioned undertaking or group, and any other relevant criteria.”;

The first subparagraph is replaced by the following:

The following subparagraph is added:

“The duration of such procedures shall be compatible with the effective exercise of the information and consultation rights under this Directive;

The following paragraph 4 is added:

Where Member States make access to legal proceedings conditional upon the prior implementation of an alternative dispute resolution, that procedure shall neither result in a decision which is binding on the parties concerned, nor otherwise prejudice their right to bring legal proceedings

Article 11 is amended as follows:

In the event of failure to comply with the national provisions transposing the obligations under Article 9(2) and (3), Member States shall provide for […] financial penalties […].

[…]

The first subparagraph is replaced by the following:

The following subparagraph is added:

“The duration of […] the procedures, referred to in the first subparagraph shall be compatible with the effective exercise of the information and consultation rights under this Directive;

(bb-new)           the following paragraph 3a is added:

“3a.      With respect to the rights conferred by this Directive, Member States shall ensure effective access to judicial proceedings and relevant administrative proceedings […] for European Work Councils and special negotiating bodies, or, on their behalf, their members or representatives. In particular, Member States shall provide that the reasonable costs of legal representation and participation in such proceedings are borne by the central management. Alternatively, Member States shall take other measures to avoid any de facto restriction of such access for reasons of lack of financial resources.”

The following paragraph 4 is added:

Where Member States make access to legal proceedings conditional upon the prior implementation of an alternative dispute resolution, that procedure shall not prejudice […] the right of the parties concerned […] to bring legal proceedings.”;

Adequate administrative and judicial procedures are available and easily accessible to enable the rights and obligations deriving from this Directive to be enforced in a timely and effective manner, to apply for and terminate including the possibility to request 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 under this Directive or under agreements concluded pursuant thereto. The effects of the challenged decisions on employment contracts or employment relationships of the affected employees shall be suspended accordingly.

Financial penalties that are proportionate to the nature, gravity and duration of the undertaking’s infringement and which shall increase in amount according to the number of affected employees.

In the case of infringements as referred to in point (b) of this paragraph, which are not committed intentionally, the financial penalties referred to in point (a) of this paragraph, shall be substantive and equivalent to those provided for in Article 83(4) of Regulation (EU) 2016/679

In the case of infringements as referred to in point (b) of this paragraph which are committed intentionally, the financial penalties referred to in point (a) of this paragraph shall be substantive and equivalent to those provided for in Article 83(5) of Regulation (EU) 2016/679.

Orders excluding the undertaking from an entitlement to some or all public benefits, aids or subsidies, including Union funds managed by the relevant Member States, for a period of up to three years.

Orders excluding the undertaking from participating in a public contract as defined in Directive 2014/24/EU of the European Parliament and of the Council.

The central management shall bear the judicial costs incurred in carrying out the procedures, the costs of legal representation and subsidiary costs such as subsistence and travel expenses for at least one employees' representative.

Member States are encouraged to develop out-of-court mediation procedures enabling both parties to find acceptable solutions. Where Member States make access to legal proceedings conditional upon the prior implementation of an alternative dispute resolution, that procedure shall neither result in a decision which is binding on the parties concerned, nor otherwise prejudice their right to bring legal proceedings

Comment

It is appropriate that all national transposing legislation provide for clear and easily accessible mediation and dispute settlement procedures and that such procedures, as underpinned by the necessary legal instruments, are in place from Day 1. The parties to EWC agreements, or working under the Subsidiary Requirements, should know exactly what procedures need to be followed to resolve disputes, should disputes arise. There should be no ambiguity or delay in this regard.

Second, there is no place for injunctions when it comes to EWCs. At the end of an information and consult aition process EWCs can offer an opinion to which management respond. EWCs are not involved in collective negotiations with management. Nor can EWCs enter into any form of contractual agreement with management. Injunctions are a completely inappropriate sanction when all that is at issue is an opinion which has no binding effect. Injunctions in collective labour disputes are only available in a very limited number of EU Member States. Giving EWCs the power to request injunctions could see them introduced into every Member State through the back door. See our earlier comments that what the Parliament or, to be more accurate the Parliamentary rapporteur, is actually proposing is a new, integrated system of Euro-centric labour relations, run through EWCs controlled by trade unions.

Likewise, GDPR-size fines are entirely inappropriate when it comes to EWCs. It is rare in EWC disputes for management to consciously and deliberately ignore its EWC information and consultation obligations. Most disputes are about interpretation whether of an EWC agreement or the Subsidiary Requirements. Fines are not appropriate when what is at issue are different of interpretation.  What is needed in such case is judicial guidance as to the correct interpretation for the future.

Fines are only appropriate when there is a clear case of a deliberate ignoring of information and consultation obligations. The setting of the level of fines is a matter that should be left to Member States. Fines should be proportionate to the harm done.

Notes

Article 12: Linking levels of consultation

The arrangements for the links between the information and consultation of the European Works Council and national employee representation bodies shall be established by the agreement referred to in Article 6. That agreement shall be without prejudice to the provisions of national law and/or practice on the information and consultation of employees

The arrangements for the links between the information and consultation of the European Works Council and national employee representation bodies shall be established by the agreement referred to in Article 6 in order to ensure good coordination between information and consultation processes within the European Works Council and those established at national level. That agreement shall be without prejudice to the provisions of national law and/or practice on the information and consultation of employees.

Comment

The Parliament’s proposed language for this article is again an attempt to conflate European and national level systems of information and consultation. The two systems, European and national, should run autonomously and in parallel. EWC information and consultation processes should followed the procedure set out in the EWC agreement. National information and consultation the processes required by national law and/or practice.

The Commission’s wording, which follows the wording in the 2009 Directive, should continue to be used in a revised Directive.

Notes

Article 12: Ideological Undertakings

In Article 12, the following paragraph is added:

6. Each Member State may lay down particular provisions for the central management of undertakings in its territory which pursue directly and essentially the aim of ideological guidance with respect to information and the expression of opinions, on condition that, at the date of adoption of this Directive such particular provisions already exist in the national legislation.

Delete

Comment

We have no comment to make on this issue.

Notes

Article 14 (Pre-existing agreements – the old “Article 13” exemption

Article 14 is deleted

Article 14 is deleted

Article 14 is deleted

Comment

While we continue to believe that the Article 13 exemption should continue, as these agreements have generally worked well, given that the three institutions believe they should end then that clearly is what is going to happen.

This means that from the date the revised Directive is transposed into national law, 100 employees, or their representatives, will be entitled to submit Article 5 requests for the establishment of a SNB to negotiate an EWC agreement. It is estimated that there are around 350 Article 13 arrangements in place.

What happens to such A13 arrangements while an SNB is in place is a matter for the parties to those agreements and what those agreements have to say about termination procedures.

For undertakings headquartered outside the EU it will be necessary to nominate a legal “representative agent” for SNB/EWC purposes. Further, as these undertakings will now fall within the scope of the Directive as transposed into national law, and the law only extends to EEA member States, whether employees’ representatives from non-EEA Member States who may be included in A13 agreements will continue to be included will need to be considered.

Notes

Article 14: Renegotiating Agreements

Where, following the transposition of [OP: insert reference to this amending Directive], a European Works Council agreement or agreement on an information and consultation procedure concluded before [OP: insert date from which the transposing provisions are to apply, set out in the Article 2(1), 2nd subpar. of this amending Directive] in accordance with Articles 5 and 6 of Directive 94/45/EC or Articles 5 and 6 of this Directive is not in conformity with any of the requirements applicable to that agreement as a consequence of the amendments provided for in [OP: insert reference to this amending Directive], central management shall initiate negotiations to adapt that agreement at the written request of at least 100 employees or their representatives in at least two undertakings or establishments in at least two different Member States. Central management may also initiate such negotiations on its own initiative.

Where the European Works Council agreement or agreement on an information and consultation procedure contains procedural arrangements for its adaptation or renegotiation, the adaptation may be negotiated pursuant to those arrangements. Otherwise, the adaptation shall follow the procedure set out in Article 5 in conjunction with Article 13, second and third paragraphs.

Where an adaptation procedure does not lead to an agreement within two years from the date of the respective request by employees or their representatives, the subsidiary requirements set out in Annex I shall apply.

Where, after [OJ: insert date from which the transposing provisions are to apply, set out in the Article 2(1), 1st subparagraph of this amending Directive], a European Works Council agreement or agreement on an information and consultation procedure concluded before [OJ: insert date from which the transposing provisions are to apply, set out in the Article 2(1), 2nd subpar. of this amending Directive] in accordance with Articles 5 and 6 of Directive 94/45/EC or Articles 5 and 6 of this Directive is not in conformity, as a consequence of the amendments entered into force on [OJ: insert date of entry into force of this amending Directive] with any of the elements and requirements of Article 6 […], central management shall, at the written request of at least 100 employees or their representatives in at least two undertakings or establishments in at least two different Member States, initiate negotiations to adapt that agreement to those elements and requirements of Article 6 […]. Central management may also initiate such negotiations on its own initiative. Such negotiations may be limited to the provisions of the agreement that are not in conformity with those elements and requirements of Article 6.

Where the European Works Council agreement or agreement on an information and consultation procedure contains procedural arrangements for its adaptation or renegotiation, the adaptation may be negotiated pursuant to those arrangements. Otherwise, the adaptation shall follow the procedure set out in Article 5 in conjunction with Article 13, second and third paragraphs.

When an adaptation procedure under this Article does not lead to an agreement within two years from the date of the respective request by employees or their representatives or from the date of initiation of the negotiations by the central management on its own initiative, the subsidiary requirements set out in Annex I shall apply.

This Article shall not have the effect of exempting the parties to European Works Council agreements or to agreements on information and consultation procedures from respecting the applicable minimum requirements in this Directive.  

Where a European Works Council agreement or agreement on an information and consultation procedure concluded before [OP: insert date from which the transposing provisions are to apply, set out in the Article 2(1), 2nd subpar. of this amending Directive] in accordance with Articles 5 and 6 of Directive 94/45/EC or Articles 5 and 6 of this Directive does not determine all the elements listed in Article 6(2), as amended by [OP: insert reference to this amending Directive] central management shall initiate negotiations by ... [one year from date of entry into force of this Directive] for the establishment of an addendum, determining the elements not determined by the existing European Works Council agreement or agreement on an information and consultation procedure.

Where the European Works Council agreement or agreement on an information and consultation procedure contains procedural arrangements for its adaptation, the establishment of the addendum may be negotiated pursuant to those arrangements. Otherwise, the establishment of the addendum shall follow the procedure set out in Article 5 in conjunction with Article 13, second and third paragraphs.

Where an adaptation procedure initiated pursuant to paragraph 1 does not lead to an agreement on the addendum within two years following the initiation of the negotiations, the subsidiary requirements set out in Annex I in respect of the elements not determined in the existing European Works Council agreement or agreement on an information and consultation procedure shall apply

Comments

The period of two years to adapt existing A6 agreements to the provisions of the new Directive is appropriate.

However, the wording in the texts from the Council and the Parliament to limit the discussions to the new/amended provisions in a revised Directive are unwise. EWC agreements are a “package”, often containing trade-offs between the parties, balancing the requests of the parties into a final deal that is acceptable to both. Attempts to limit renegotiation to just a few articles will unbalance such deals and will simply not work in practice. Further, such restrictions cut across the autonomy of the parties to negotiate agreements that suit their circumstances and runs contrary to the underlying subsidiary philosophy of Article 6 which gives the parties complete negotiating freedom, subject only to certain minimum requirements.

While it is accepted that agreements will have to be updated following the transposition of a revised Directive into national law, there should be no restrictions on how the parties wish to adapt existing agreements. In this regard, the Commission’s wording is to be preferred.

Notes

Article 14b: Negotiating EWC Agreements: Time Limits

New 14b

Where negotiations pursuant to Article 5 are initiated in order to conclude an agreement under this Directive in a Community-scale undertaking or Community-scale group of undertakings in which an agreement covering the entire workforce providing for the transnational information and consultation of employees was concluded prior to the date of application of Directive 94/45/EC and is still in force […], the period referred to in Article 7(1) indent three shall be reduced to two years. The initiation of negotiations does not affect the terms of the existing agreements in force.

Comments

The rationale for ending the “Article 13” exemption was to bring all undertakings within the same legal framework, subject to the same rules. Why then introduce a lesser time period for SNB negotiations for undertakings with A13 arrangements than for undertakings which are being asked to set up an EWC for the first time? Surely, the same rules should apply to all. What is the justification for the shortened timeline, especially if existing A13 arrangements can continue in force while management and the SNB negotiates.

This proposal should not be included in the final text.

Notes

Article 15: Monitoring Committee

Monitoring

Comments

In our view, the task of monitoring the correct application of the Directive properly falls to the Commission. It already does this to good effect. What value added would such a monitoring committee offer? It is unnecessary duplication. Further, it seems to us inappropriate for the social partners to sit in judgement on the laws of Member States. Existing monitoring arrangement by the Commission should be left as they are.

This proposal from the Parliament should be rejected.

Notes

Transposition

The Directive to be transposed into national law within one year after the date of its adoption.

Member States shall adopt and publish, by [OJ: please insert date: two years from the entry into force of this Directive] […], the laws, regulations and administrative measures necessary to comply with this Directive [ before….]. They shall immediately inform the Commission thereof.

Comment

It seems to us that a two-year transposition period is appropriate and in accordance with normal practice.

Notes

Subsidiary Requirements

Annex I to Directive 2009/38/EC is amended as follows:

(a) the introductory sentence is replaced by the following:

The consultation shall be conducted in such a way that the employees’ representatives can meet with the central management or any more appropriate level of management. The employees’ representatives shall be entitled to a reasoned written response to any opinion they might express prior to the adoption of the decision on the measures in question, provided their opinion was expressed within a reasonable time.

(dd) as far as possible, women and men shall each comprise at least 40% of European Works Council members and of select committee members.

3 Where there are exceptional circumstances or decisions which are likely to affect the employees’ interests to a considerable extent, and urgency does not allow for information or consultation to take place at the following scheduled European Works Council meeting, particularly in the event of relocations, the closure of establishments or undertakings or collective redundancies, the select committee or, where no such committee exists, the European Works Council, shall have the right to be informed in a timely manner. It shall have the right to meet, at its request, the central management, or any other more appropriate level of management within the Community-scale undertaking or group of undertakings having its own powers of decision, in order to be informed and consulted.

Those members of the European Works Council who have been elected or appointed by the establishments and/or undertakings which are directly concerned or can reasonably be expected to be directly concerned by the circumstances or decisions in question shall also have the right to participate where a meeting is organised with the select committee.

Such experts may include representatives of recognised Union-level trade union organisations. At the request of the European Works Council, such experts shall have a right to be present at meetings of the European Works Council and meetings with the central management in an advisory capacity. The central management shall be informed in advance.

The operating expenses of the European Works Council shall include reasonable costs of legal assistance, representation and proceedings. Operating expenses shall be notified to central management before they are incurred.

In compliance with these principles, the Member States may lay down budgetary rules regarding the operation of the European Works Council.

(1)          point 1 is amended as follows:

(aa-new) In point (a), the second subparagraph is replaced by the following:

The information of the European Works Council shall relate in particular to the structure, economic and financial situation, probable development and production and sales of the Community-scale undertaking or group of undertakings. The information and consultation of the European Works Council shall relate in particular to the situation and probable trend of employment, investments, and substantial changes concerning organisation, anticipation of change and management of restructuring processes including those linked to the green and digital transitions, introduction of new working methods or production processes, transfers of production, mergers, cut-backs or closures of undertakings, establishments or important parts thereof, and collective redundancies.

The consultation shall be conducted in such a way that the employees’ representatives can meet with the central management or any more appropriate level of management. The employees’ representatives shall be entitled to a reasoned written response to any opinion they might express prior to the adoption of the decision on the measures in question, provided their opinion was expressed within a reasonable time.

“[…] In doing so and as far as possible, women and men shall each comprise at least 40% of European Works Council members and of select committee members.

(2) Point 2 is replaced by the following:

3 Where there are exceptional circumstances or decisions which are reasonably to be expected to affect the employees’ interests to a considerable extent, and urgency does not allow for information or consultation to take place at the following scheduled European Works Council meeting, particularly in the event of relocations, the closure of establishments or undertakings or collective redundancies, the select committee or, where no such committee exists, the European Works Council, shall have the right to be informed in a timely manner. It shall have the right to meet, at its request, the central management, or any other more appropriate level of management within the Community-scale undertaking or group of undertakings having its own powers of decision, in order to be informed and consulted.

Those members of the European Works Council who have been elected or appointed by the establishments and/or undertakings which are directly concerned or can reasonably be expected to be directly concerned by the circumstances or decisions in question shall also have the right to participate where a meeting is organised with the select committee.

Such experts may include representatives of recognised Union-level trade union organisations. At the request of the European Works Council, such experts shall have a right to be present at meetings of the European Works Council and meetings with the central management in an advisory capacity. The central management shall be informed in advance.

The operating expenses of the European Works Council shall include reasonable costs of legal assistance […]. Operating expenses shall be notified to central management before they are incurred.

In compliance with these principles, the Member States may lay down budgetary rules regarding the operation of the European Works Council.

The information of the European Works Council on transnational matters shall relate in particular to the structure, economic and financial situation, probable development and production and sales of the Community-scale undertaking or group of undertakings. The information and consultation of the European Works Council shall relate in particular to the situation and probable trend of employment, working conditions, skills and training policies including in franchise networks, and substantial changes concerning organisation, introduction of new working methods or production processes, transfers of production, mergers, cut-backs or closures of undertakings, establishments or important parts thereof, and collective redundancies.

European Works Council members and those of select committee shall represent the diversity of the workforce and women and men shall each comprise at least 40% of European Works Council members and of select committee members.

The European Works Council shall have the right to meet in person with the central management at least twice a year, to be informed and consulted, on the basis of a report drawn up by the central management, on the progress of the business of the Community-scale undertaking or Community-scale group of undertakings and its prospects. The local managements shall be informed accordingly. When appropriate and agreed upon and while ensuring meaningful information and consultation, digital means of communication and coordination can be used in exceptional cases without replacing ordinary meetings.

Where there are exceptional circumstances or decisions which may or are likely to affect the employees’ interests to a considerable extent, and urgency does not allow for information or consultation to take place at the following scheduled European Works Council meeting, particularly in the event of relocations, the closure of establishments or undertakings or collective redundancies, the select committee or, where no such committee exists, the European Works Council, shall have the right to be informed in a timely manner. It shall have the right to meet, at its request, the central management, or any other more appropriate level of management within the Community-scale undertaking or group of undertakings having its own powers of decision, in order to be informed and consulted.

Those members of the European Works Council who have been elected or appointed by the establishments and/or undertakings which are directly concerned or can reasonably be expected to be affected by the circumstances or decisions in question shall also have the right to participate where a meeting is organised with the select committee

Information and consultation procedures within the European Works Council shall be carried out without prejudice to those taking place at the national level. Where a procedure is already taking place at the national level, the European Works Council and the central management shall ensure that those procedures can complement each other with respect to the content and the timing of the procedures

The operating expenses of the European Works Council shall include reasonable costs of legal assistance, representation and proceedings, and relevant training to members of the European Works Council. Operating expenses shall be notified to central management before they are incurred.

Comments

We have already commented earlier in this paper on such matters as funding for experts, legal advice, training, and franchise operations. There is no need to repeat these comments here, save to say that national budgetary rules need to be carefully considered not just in regard to the provisions of this Directive, but to the consequences such rules could have for existing national systems of labour relations and how such systems are funded.

Many existing EWC agreements provide for two meetings a year. In building two meetings into the Subsidiary Requirements, it should be made clear that only one of these meetings need to be held in person. The second can be held virtually. Since Covid, there is less and less reliance on face-to-face business meetings. Virtual meetings have become a much more important part of normal business practice. There is no reason why EWCs should be exempt for this trend. In fact, in many EWCs the use of virtual meeting technology has allowed for a greater number of meetings between management and the EWC and/or select committees.

Also, in person EWC meetings generally run over 2/3 days and may involve up to 30 people, if not more. A significant amount of air travel for such relatively short meetings is involved. Mandating anywhere over 1,000 extra in-person EWC meetings per year is not in keeping with the EU’s wider carbon reduction targets. Other than one in-person annual meeting, in future all EWC and select committee meetings should be held virtually.

When it comes to “exceptional circumstances” if a change to the existing wording is to be made, then the Council’s wording is preferable to that of the Parliament, which is much too open-ended and would mean that practically all proposed decisions could be considered “exceptional”. At the same time, the Parliament’s wording on the parallel running of European and national information and consultation procedures has merit and is worth considering.

The proposed wording from all three institution would allow for EWCs to bring their experts with them to meetings with management. Such experts would attend the meetings with management in an advisory capacity, which we understand to mean that they do not have speaking rights in the meeting, save by mutual agreement between the EWC and management. Nor can such experts become “spokespersons” for the EWC.

Nonetheless, we believe that this change is ill advised. The rationale for EWCs is that they are a forum for dialogue between central management and the representatives of all employees from countries within the EEA in which the undertaking has operations. The assumption is that these representatives are experiences employees, who may also be employees’ representatives locally or nationally. They know the workings of their own company better than any outside expert ever can. Why should they need an “expert” to explain to them what their own management is telling them about their own company?

Further, there is a very real danger that if EWCs are given the right to bring experts with them to meetings with management, then senior business managers, who now willingly participate in such meetings because they are talking to their own employees, will stop attending because they have no wish to deal with experts, whoever those experts might be. The unintended consequence of allowing experts to attend meetings between EWCs and management may be to lessen the dialogue, rather than improve it. EWCs should not exist for the benefit of experts. Senior business leaders will withdraw from EWCs meetings and leave such meetings to Human Resources and Labour Relations as the “appropriate level of management” for interfacing with EWCs with experts present. Another example of the law of “foreseeable consequences”.

Certainly, there are circumstances when EWCs can use expert advice. But such advice should be provided to EWCs in their own, internal meetings.

It has also been argues that management bring experts to EWC meeting, so why cannot the EWC? Managements do not bring experts to EWC meetings because management itself has the relevant expertise in its role as management. That is the whole underlying rationale for EWCs. Management talking with representatives of their employees.

EWCs should not become a “game of experts” but allowing EWCs to bring experts to meetings with management runs that risk.

Notes