2025 and EU Labour Laws: What can we expect?

In summary:

Top of the list, the rewrite of the European Works Council Directive

Unions and NGOs taking companies to courts in countries of their choice over labour issues across the planet is now a reality not a risk. The US based UAW takes Mercedes to court in Germany over alleged union avoidance tactics in Alabama. Panasonic of Japan is investigated by US authorities for anti-union tactics in Mexico. 

This phenomenon will be put on steroids by new European reporting laws. However, there may yet be a chance to cut back and simplify some of the data requirements and information and consultation obligations of the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

The Minimum Wage Directive with its collective bargaining provisions that the unions hold out much hope for will be a damp squib. Don’t believe horror stories that governments across Europe are about to impose sectoral or enterprise collective bargaining as a result of the Directive

Keep a close watch on legislative developments regarding The Right to Disconnect and AI in the Workplace Directives. Business needs to be on top of these developments and not leave the running to others pushing an overly protective agenda

The influence of the Trump/Musk agenda will not be limited to the US … the aftershocks of tariff and immigration laws will disrupt the world

See what opportunities the implementation of the Draghi Report on European competitiveness offers to simplify and streamline doing business

Dig in below for more on the on the issues that matter to you most

European Works Councils

For us in HR Policy Global/Europe it is back to where it all started. The European Works Council Directive. BEERG, the forerunner to HR Policy Global - Europe, was created to provide a forum for those with responsibilities for EWCs in US-based undertakings to compare experiences and to learn from one another. 

How to explain “European ways” to disbelieving Americans, used to the “employment at will” doctrine. “Everything just takes so long in Europe,” they would complain. To which the answer was: it is designed to be that way. But maybe that way is no longer the right way. “If it moves, regulate it to make sure nothing bad happens” can choke off innovation and risk taking, because when you innovate and take risks you often fail. 

BEERG was heavily involved with BusinessEurope when the 1994 EWC Directive was “recast” in 2008/9. We subsequently worked with member companies to draft agreements that worked with the grain of the recast Directive in a way that made pragmatic sense.

Now, here we are again, with the EWC Directive once more been rewritten. This time things are different with the European Parliament pushing for the rewrite. The Parliament had little say in the matter in 1994 and was only marginally involved in 2008/9. This time, it is the driving force, with the “Radtke Report” kickstarting the process. The Parliament’s big ask, as set out in “Radtke 2.0” is for EWCs to be able to go to court to seek injunctions to block proposed management decisions, and for GDPR-size fines in cases of infringement. 

Are such asks proportionate when the remit of an EWC is to offer an opinion on a proposed management decision? Are they in line with the principle of subsidiarity which leaves enforcement actions to the Member States? 

The Council and the Commission think not and oppose both asks. It is unlikely that they will find their way into the final text. In this, the Council and the Commission are right, and the Parliament is wrong. A right to ask for injunctions would, de facto if not de jure turn EWCs in “Euro bargaining” bodies, allowing them to block decisions through repeated runs to court until management agreed acceptable terms. 

In any event, the Parliament is far from united on the matter. In a plenary vote just before Christmas, MEPs only narrowly approved the negotiating mandate, based on the Radtke 2.0 Report, for talks with the Council and Commission. The vote was 300 to 275, the latter figure including 21 abstentions. Such a narrow win will signal to the Council and the Commission that the Parliament is a house divided. Given this, is it unlikely that they will agree to Radtke’s “injunctions and GDPR-size fines” demands.

The ”game-changer” is not likely to be fines and injunctions … it will be the ending  of the so-called Article 13 “get out of jail free” card that applies to companies that reached an EWC agreement before September 1996. There are a lot of them … many of them US companies. 

All three parties to the decision on EWCs, the Council, Commission and the Parliament are agreed on the ending of the “Article 13 Exemption” and the 350 or so undertakings with Article 13 arrangements in place are likely to face requests to set up Special Negotiating Bodies to negotiate EWC agreements within the framework of the Directive when it becomes national law sometime in 2027.  Waiting for 2027 and hoping will not be a good strategy! Now is the time to start planning ahead.

In our weekly newsletter, we will track the progress of the EWC rewrite negotiations, which are likely to open in early 2025. 

For those of you with EWCs, our April program in Sitges provides the ideal forum to deep dive into the issues and plan ahead. Click here to find out more. 

Collective Bargaining

The trade unions have high hopes that the Adequate Minimum Wage Directive will spark a revival in their membership fortunes and reboot collective bargain with Member States expected to put plans in place to promote collective bargaining coverage when it fell below 80% of the workforce. 

The date for the Directive to be transposed into national law was November 2024. At the time of writing, January 2025, the Directive still has to be transposed into law in most Member States. It eventually will be, but when it comes to the promotion of collective bargaining, we think it will be like the Samuel Beckett play, Waiting for Godot, with the unions waiting for something that never arrives. 

The union position is not helped by intemperate articles (like this) which argue that without unions and collective bargaining Europe will be engulfed by fascism. 

Watch for a push for by the unions and sympathetic legislators for “social conditionality” to be implanted in all public sector contracts. Were this to happen then only undertakings that engaged with unions and were covered by collective bargaining agreements would be entitled to bid for such contracts. 

Winds of Change

Recent years have seen a whole suite of new EU employment and social laws being enacted. CSRD, CSDDD, Pay Transparency, Platform Workers, Adequate Minimum Wage. Planning is proceeding on a Directive on the Right to Disconnect. There are also strong pointers to a Directive on AI in the Workplace. 

But it seems to us that the political winds are changing. A sense is emerging that there may have been some legislative overreach over the past few years, often driven by activist MEPs in the European Parliament, operating as “policy entrepreneurs,” outside the scope of any party discipline. Radtke is a good example of such “policy entrepreneurship,” pushing something that ran counter to the grain of his own EPP party’s general pro-business policy orientation.

CSRD

A straw in the wind that a rethink may be underway was the decision in December to push back the introduction of the Deforestation Directive by a year. This Directive would ban the placing on the European market of products that come from lands that have been “deforested” in unstainable ways. But how do you prove this? How can you say with any degree of exactitude where an individual coffee bean came from?

More interestingly, four German government ministers collectively wrote to the EU Commission asking for a rethink on the data burdens that CSRD places on undertakings within scope. Before you could conclude that this letter came from centre-right governments, it came from SDP and Green ministers. It has since emerged (as we are writing this) that the Federal German government was also asking for a “time out” on the implementation of the CSRD.

What they are asking for is reasonable. Is it really necessary that undertakings have to report annually on 2,000 plus data points on environmental, human rights, and human resources issues? Who is going to read these reports? There are plenty of academics who see a career in front of them analysing this data, and a slew of consultancies who have built a business model out of helping bewildered managers navigate their ways through the complexities. But will all this data really add value to business decision making? Or just add costs? A leaner, less data-demanding approach might be more workable.

One of the more unrealistic demands in the CSRD is that managers in businesses within scope engage with “employees, their representatives, or their proxies” in undertakings within their value chains. Apart for the practical issue of how the management of one legal undertaking is to engage with employees or their representatives in a completely separate legal undertaking, never mind their “proxies,” whoever they are, how is this even logistically possible? Major corporations can have many thousands of undertakings in their value chains. How are these supposed to engage with employees or their representatives in all of these undertakings? With eventually 50,000 undertakings in scope of the CSRD how much criss-crossing engagement would there be? It is simply an absurd requirement. It should go. 

Let me tell you what the answer is not: let the market resolve it pragmatically. Why? Because as it stands it is a legal requirement and there are more than enough NGOs and activist groups who will take legal actions against businesses that they deem not to be meeting their legal requirements.

We didn’t mean you

Drop into any supermarket anywhere in Europe and you will probably find dairy products from the French company Danone. Clearly part of these supermarkets’ value chains, is every supermarket management in Europe supposed to engage with employees or their representatives in Danone? Is Danone supposed to engage with the various supermarkets employees or representatives, in return? Because that is what the law as written would appear to require. 

Now the response from the lawmakers could be “Well we don’t mean European companies. We mean engage with employees or their representatives in countries in the Global South where we think abuses are to be found.” If that is what is meant, say so and also explain how that is to be done. Is there a business is Europe that does not source from China? How are undertakings in Europe supposed to engage with employees or their representatives in Chinese factories when, even if there is a union, it is part of the Communist Party apparatus?

Banning wine drinking in Paris

I am often reminded of something my great friend. the Lewis Silkin lawyer Vince Toman, once told me. He said, the UK parliament, can pass a law banning wine drinking in Paris but Parisians will not pay it a bit notice and the UK cannot enforce it. 

The EU may be about to find out the truth of Vince’s words. Just before Christmas, the Qatari energy minister told the Financial Times that if Qatar's energy company was fined up to 4% of its global turnover because of an alleged CSDDD violation it would stop supplying liquified natural gas to Europe. His gas, his decision. I suspect he will not be the last to say if these are your rules, forget about buying from us. 

Trump: They did what?

What happens if a European company with operations in the US, say Mercedes in Alabama for instance, gets fined because its US labour practices are not in line with German law? This is not theoretical. This case is before the German authorities at this time under the German Supply Chain Act, a case brought by the United Auto Workers. Does anyone think a Trump administration would quietly accept such a decision?

Indeed, do not be surprised to see the incoming Trump administration, egged on by Elon Musk, attack the fines being imposed on US social medial companies under the GDPR and other digital legislation. When it comes to these issues, the EU and the US will walk divergent paths. See this comment from the European Council on Foreign Relations here. 

The European Commission says it now plans to publish an “omnibus regulation” in late February which will combine the CSRD with the EU taxonomy – a regulation categorizing “green businesses” - and the Corporate Sustainability Due Diligence Directive (CSDDD). Perhaps an opportunity to see some of the more unrealistic requirements dropped. Member companies should make their views known to the Commission through their government affairs colleagues. 

Those who think that the due diligence laws as they stand should be seen as “sacred scripture” will not be slow to voice their opposition to them being reconsidered here. 

Some concluding comments… with a personal coda

Unions, NGOs, and advocacy groups are, by their nature, narrow focused. They are concerned with a limited range of issues. Some are concerned with only one issue. Campaigning is all they do.

Those who run businesses have to be concerned with multiple issues and multiple stakeholders. They are focused on developing the businesses for which they are responsible. Unlike unions, NGOs, and advocacy groups, they are not “issue campaigners.” Which is not to say that businesses do not get concerned with political issues. Of course, they do. But it is not their raison d’etre. 

It seems to us, that business need to pay more attention to the European legislative process than it now does. Of course, it pays attention to such developments but often too late in the day. Business needs to track legislative initiatives from the moment they are first talked about, at the proposal stage. before the text is written. Legislators need to hear the business story as they think about new laws. 

The reason for the creation of BEERG, information sharing between colleagues in an informal environment, is as necessary today as it was when we began all those years back. 

During the coming year we will work to keep you informed of developments through our weekly newsletter, our Network meetings, and web-based events. 

All and any suggestions as to how we can do better are welcome. 

Our regular newsletter will be back next week and, hopefully, we will see many of you at our meeting in Brussels in February (registration links below). 

2025 will be my last year as European Director of HR Policy Global/Europe (formerly BEERG). But, to borrow from the Welsh poet, Dylan Thomas, “I will not go quietly into that good night” and I will still be here, but it will be for others to do the heavy lifting and organise meetings and events. 

February will be my last Brussels meeting and Sitges in June my last one there. My final in-person event will be lunch in Paris on December 11, hosted by our friends in Flichy Grangé. A fitting way to end.

Further information:

If you want my more political take on Europe in 2025 read my weekly Substack, published every Sunday. 

if you want to be part of the HR Policy Europe discussion on any of these issues, come along to our Network Meeting in Brussels in February: Click Booking Page Booking Page for more information. 

Also check out the latest episode of Alan Wild’s regular podcast , it looks at the implications for the global CHRO of the incoming Trump administration