European Labour Law Lecture 10B

10.1. Industrial democracy – EWC - 1 The European Works Council Directive dates back to 1994 (Directive 94/45/EC), but was “recast” in 2009 (Directive 2009/38/EC). The Directive is characterised by a large amount of flexibility, attained by quite original and interesting legal constructions. It has managed to impose a culture of information and consultation of workers’ representatives at enterprise level. Hendrickx, T, no. 8 and 9; C, p

The Directive focusses especially on multinational companies. The obligation for information and consultation in multinational companies was seen by the EU-legislator as a main target for EU- legislation, as it is notably within the scope of multinationals that the national rules on this item are defective Industrial democracy – EWC - 2

This brings us to the concept of multinational companies. Covered by the Directive are “community-scale undertakings”, viz. companies with - at least 1000 workers in MS (and EEA-countries) - employed in subsidiaries with at least 150 employees - in at least 2 MS (or EEA-countries). (art. 2(1)(c) Thresholds may be put on a lower level by MS law or by agreements between management and labour Industrial democracy – EWC - 3

Not only EU based multinationals are covered. Also multinational companies which have their headquarters outside the MS (and the EEA countries) but which meet the threshold provisions of the Directive are covered. For the sake of the application of the Directive, the central management of such companies must appoint a representative agent. Having failed to do so the Directive designates the management of the establishment employing the greatest number of employees in the MS as the representative agent. (art. 2(2) Industrial democracy – EWC - 4

The concept of “employee” is largely left to MS definitions, but the Directive provides that fixed- time contract workers are counted like permanent workers. However, there is a special calculation rule for part-time workers. It also is understood, that leased (temporary agency) workers are not counted as employees of user-firms Industrial democracy – EWC - 5

The Directive is not only covering single community-scale undertakings, but also Community-scale groups of undertakings. For that purpose the concept of “group” (German: Konzern) has received a EU-definition in art. 3. However, this definition does not clarify whether an enterprise dominated by two or more companies in exactly the same amount (joint ventures) is part of one of these groups and as such subject to the Directive. The Directive does not provide for the inclusion of employees of subsidiaries outside the MS (and EEA) in its information and consultation structure. However, company agreements may do Industrial democracy – EWC - 6

MS may exclude the crews of the merchant navy (art. 1(7) There is a special position for enterprises which had already concluded company agreements on the issue before 22 September Those companies can stick to their agreed system and need not to renegotiate them as long as the agreement lasts or is prolonged. (This concerns ca. 700 of the estimated 2250 groups covered by the Directive). The same applies to companies that concluded an agreement between 1999 and 2011 (art. 14) Industrial democracy – EWC - 7

Especially the recast Directive of 2009 has better than the Directive of 1994 given definitions of - Information (art. 2(1)(f) - Consultation (art. 2(1)(g) and - Transnational issues (art. 1(3) and 1(4). For the concept of “workers’ representatives” the Directive refers to national legislations (art. 2(1)(d) Industrial democracy – EWC - 8

On the precise shape of the procedures to give information and consultation to workers’ representatives the Directive has chosen a very flexible approach: all this must be specified in an agreement between management and labour at the level of each multinational company (art. 5(3). However, if such an agreement cannot be concluded then automatically enters into force a series of subsidiary requirements contained in the Annex of the Directive (art. 7). However, the employees may also decide to renounce from a EWC (by 2/3 majority in the SNB) and then the Annex does not enter into force for that company (art. 5(5) Industrial democracy – EWC - 9

This construction in reality has led to the situation that most company agreements about the establishment of the EWC are very similar with the subsidiary requirements of the Annex on the items of the size, the meeting-frequency and the competences of the EWC. The specific aspects of these agreements are notably in the fields of the allocation of seats to the various subsidiaries, to the elections of the candidates and to the facilities Industrial democracy – EWC - 10

These subsidiary requirements in the Annex on the items of the size, the meeting-frequency and the competences of the EWC are: - 1 seat in each MS per portion of employees employed in that MS, amounting to 10%, or a fraction thereof of all employees covered. - The central management must meet the EWC once a year and in exceptional circumstances. - Information and consultation must contain a several specific socio-economic data, developments and proposed managerial decisions Industrial democracy – EWC - 11

Despite its name the Directive does not exactly require the Community-scale undertakings to set up a genuine European Works Council. It may also agree on just “a procedure for the purposes of informing and consulting employees.” (art. 1(5). However, most agreements seem to provide for a body, the European Works Council Industrial democracy – EWC - 12

How is the EWC-agreement at company level concluded? This must happen in negotiations between the central management of the multinational company and a “special negotiating body” of workers’ representatives. The Directive gives some provisions about the composition of such an SNB (Art. 5 and 6) and has charged the MS to specify them further. The recast Directive has somewhat reinforced the chances for trade unions to assist these SNBs. (art. 5(4) Industrial democracy – EWC - 13

An SNB must be established as soon as it is initiated by the central management or requested by at least 100 employees in the subsidiaries in at least two MS (and EEA-countries). The SNB must reach an agreement within 3 years. If not then the subsidiary provisions shall enter into force (art. 7). The agreements concluded in this respect should be considered legally binding agreements. Labour law specialist have already started to think about technical questions such as the applicable law to such agreements, the competent judge, the possible sanctions on violations and so on Industrial democracy – EWC – 14

This question is all the more important as the Directive does not have much to say about the enforcement and sanctions! This may at least partially explain the large degree of disregard of the EWC-rules. Although it has been calculated that 2250 groups should be covered by an EWC, in reality only 800 of such EWC’s have been established. This raises the question: why? Are employees not really interested in the EWC as this is only a weak construction? Industrial democracy – EWC - 15