European Works CouncilNew requirements for business

IOE GLOBAL INDUSTRIAL RELATIONS NETWORK Brussels, 25 – 26 May 2010

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The Recast EWC Directive 2009 – Key changes and implications

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Directive 94/45/EC of the European Council of 22 September 1994 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees No longer into force

Directive 2009/38/EC of the European Parliament and the Council of 6 May 2009 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees Entered into force on 5th June 2009

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The Recast EWC Directive The new EWC Directive has entered into force on

5th June 2009 The new rules will not be take effect in national law

until 5th June 2011 However, several issues are today already of

relevance ongoing EWC negotiations re-negotiations of EWC agreements

Final analysis of the new provisions will only be possible once the national transposition legislation is available (after June 2011)

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Field of application Company criteria

All companies located in more than one EU/EEA (Iceland, Lichtenstein, and Norway) Member State and

With at least 1000 employees in total, of which at least 150 are located in each of two EU Member States

Community scale undertaking No obligation to establish EWC or transnational

information and consultation procedure unless Either company management takes the initiative Or employees (or their representatives) trigger the

request procedure(receivable written request from employees, or their representatives, must represent a minimum of 100 employees in two or more EU Member States)

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EWC Directive 2009

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Field of application Directive includes criteria to determine whether or

not employees of a business unit or subsidiary be included in a company’s EWC arrangement

Definition of ‘controlling undertaking’ holds the majority of subscribed capital, or controls a majority of the votes (related to share

capital), or appoints more than half of the company’s management

or supervisory body, or exercises a ‘dominant influence’

‘Group of undertakings’ ‘Community-scale group of undertakings’

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EWC Directive 2009

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Goal of the EWC Directive To improve the right to information and to

consultation of employees in Community-scale undertakings and Community-scale groups of undertakings by European Works Council or A procedure for informing and consulting employees

Coverage limited to transnational issues

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Options before EWC 2009 Voluntary agreement

The 1994 directive did not apply to voluntary agreements that were signed before 22 September 1996. This exclusion is laid down in article 13 of the 1994 directive ‘Article 13 agreements’ have traditionally been more

flexible from an employer’s perspective Article 6 agreement

EWC arrangements negotiated after this time, accordingly to the directive are often called ‘Article 6 agreements’

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EWC 2009 applies to The recast EWC directive applies to all EWCs EXCEPT:

So called ‘Article 13’ EWCs Article 6 agreements which are signed or revised during the

legal transposition period (June 2009 to June 2011) The recast directive permits both article 13 and article

6 EWC arrangements to remain in force, subject to certain important factors.

The recast directive allows article 6 agreements to continue without the new provisions applying, but only if such agreements are revised (or negotiated for the first time) between 5 June 2009 and 5 June 2011.

Article 13 and article 6 agreements (in force) are addressed in the recast directive under article 14

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Challenge Companies are strongly advised to assess in good

time the impact of the recast Directive on existing EWC arrangements and determine what changes should be considered

In particular, the impact of the so-called ‘adaptation clause’ (company restructurings, etc) on current EWC agreements needs to be assessed

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Principal changes Definition of transnational matters Definitions of ‘information’ and ‘consultation’ Involvement of trade unions How EWC consultation interacts with local law Obligations The effects on existing agreements

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Transnational matters ‘Matters shall be considered to be transnational where

they concern the community-scale undertaking(s) as a whole, or at least two undertakings or establishments of the undertaking or group situated in two different Member States.’

Cf. wording found in the subsidiary requirements in the 1994 directive

More clarity? Recitals of EWC directive: The transnational character of a matter should be

determined by taking account of both the scope of its potential effects, and the level of management and representation that it involves. These include matters which, regardless of the number of Member States involved, are of importance for the European workforce in terms of the scope of their potential effects or which involve transfers of activities between Member States.

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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 shall be 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 the possible impact and, where appropriate, prepare for consultations with the competent organ of the Community-scale undertaking or Community-scale group of undertakings

Implies that information must be Extensive enough Received in time Enable to carry out an in-depth examination of possible

consequences Enable to prepare for consultations where appropriate Without slowing down the decision-making process in companies (?)

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Consultation Consultation means the establishment of dialogue

and exchange of views between employees’ representatives and management (appropriate level) at such time, in such fashion and with such content as enables employees’ representatives to express an opinion; without prejudice to the responsibilities of the management, and within a reasonable time

Consultation must take place at the appropriate managerial level, in the appropriate form, and at the appropriate time so that the opinion of the EWC can be taken into account in company decision-making regarding the proposed measures

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Involvement of trade unions New obligation to inform European trade unions and

employers’ organizations of the start of the negotiations

Employee negotiating representatives may request assistance from trade union representatives as experts for the purpose of negotiating an EWC agreement

Trade union representatives are specifically empowered to be present at negotiation meetings on request

This express recognition of trade unions’ role potentially gives them scope to become more involved in the EWC process and, particularly in the current economic climate, they may be keen to take up the opportunity

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Interaction The 1994 directive did not address how national

and transnational consultations interrelate Now EWC info and consultation to be linked with

national bodies info and consultation Arrangements for linkage within agreement If the EWC agreement is silent on the matter,

Member States are required to ensure that necessary processes are conducted in the EWC ‘as well as’ in the local information and consultation body Information of the EWC at least at the same time as

the national level – not after National implementing legislation must ensure this

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New EWC negotiations Central management is responsible for creating

conditions and means to set up EWC Representative agent (if central management is outside

Member State) In the absence of an agent: the management of the biggest

undertaking (n° employees) Local and central management must give information

required for commencing negotiations (e.g., structure, number of employees)

Set up a Special Negotiation Body (SNB) Elected or appointed members (method determined at MS-

level New uniform formula for composition of SNB 1 member per 10% fraction per MS

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New EWC negotiations

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New EWC negotiations Central and local management and employers

organizations and trade unions at EU level are to be informed about composition of SNB and the beginning of negotiations

SNB may request expert assistance including trade union experts from EU level

Before and after meeting with central management, SNB entitled to meet without the employer (using any necessary means of communication)

SNB task is determining, with the central management (by written agreement) the EWC: Scope Composition Functions Term of office

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New EWC negotiations SNB may decide (2/3 of votes) not to start

negotiations or to stop negotiations on EWC No subsidiary requirements Reopening at the earliest after 2 years

SNB decides by majority of members SNB expenses to be covered by central

management MS may lay down budgetary rules

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Content of (new) agreements Strictly only for new or renegotiations of art. 6 from

2011 onwards but also contains important references for renegotiations of art. 13

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Content of (new) agreements Undertakings covered EWC composition

Number of members, allocation of seats, term of office To reflect balance of workforce (in terms of gender, category, job

type) whenever possible If there is a select committee, then agreement must also

define how it is composed, its functions, its rules of procedure, and its means of working

Dynamic agreements: beginning and duration of the agreement, arrangements for amending or terminating the agreement, and the procedure for renegotiation, including in case of change of structure

Arrangements for linking information and consultation procedures at national and European levels

Practical arrangements for meeting Financial and material resources

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Content

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2 x

Undertakings Undertakings affectedaffected

CompositionComposition of the EWCof the EWC

InformationInformation and and consultationconsultation

Venue, frequency Venue, frequency and duration of and duration of

meetingsmeetings

Financial and Financial and material material

resourcesresources

Validity of the Validity of the agreementagreement

Special negotiating

body

Fallback rules New fallback rules - subsidiary requirements (annex I) In case:

Central management and SNB decide so Central management refuses negotiations (6 months) No agreement within 3 years

New, uniform formula for composition of EWCs set up Mininum of 10 members, 1 member per 10% tranche of total

employment, at least one seat per country. Different catalogues of issues for “information” vs. “consultation” Right to meet with central management once a year Right to obtain reasoned response from management to opinion

expressed in process of consultation (implies an extra meeting) Select Committee

5 members maximum (instead of 3 as in 1994 Directive) Must have the means to perform its duties (travel, interpretation,

communication,...)

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Role and Protection EWCs must have means to apply the rights

stemming from the directive to collectively represent the interests of the employees

EWC and SNB members shall enjoy protection and guarantees similar to national legislation

EWC members are to inform at national level about the content and outcome of information consultation procedures in the EWC

Members of SNB and EWC shall be provided with necessary training without loss of wages Still not clear whether training for all EWC members

together, who decides content of training, etc.

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Adaption clause The new “adaption clause” applies to all EWCs from

2011 onwards i.e., “Article 13” and all “Article 6” EWCs

Significant change of company structure Adequate rules for adaptation in agreement(s): OK If not: start new negotiation process at company initiative or

request from two countries (min. 100 employees each) New SNB negotiation rules apply including fallback

rules SNB composition formula applied to all countries/sites

affected plus 3 members of existing EWC

Old EWC(s) remain in place until a new EWC agreement enters into force

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Compliance Compliance and sanctions to be ensured by each

Member State

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Conclusion The changes will make employer obligations more burdensome Employee representatives point to the relatively toothless nature

of EWCs under the 1994 directive and we will now have more meaningful EWC discussions

Changes will improve the effectiveness of information and consultation in existing EWCs?

Employers concerned that decisions may take longer to make and implement as a consequence of what appears to be a more onerous and, in some cases, more opaque process

Coherence between EWCs and other national-level procedures is also not likely to improve

We cannot predict the directive’s ultimate effects. Instead, companies must ensure that they plan for what is likely to be a more arduous regime, at least until employers and employees alike accustom themselves to the new landscape

Employers should analyse the sufficiency of existing adaptation clauses

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