European Works Council New requirements for business IOE GLOBAL INDUSTRIAL RELATIONS NETWORK Brussels, 25 – 26 May

The Recast EWC Directive 2009 – Key changes and implications 2

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

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) 4

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) 5

EWC Directive

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’ 7

EWC Directive

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 9

Options before EWC 2009 Voluntary agreement The 1994 directive did not apply to voluntary agreements that were signed before 22 September 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’ 10

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 Article 13 and article 6 agreements (in force) are addressed in the recast directive under article 14 11

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 12

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 13

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. 14

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 (?) 15

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 16

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 17

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 18

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 19

New EWC negotiations 20

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 21

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 22

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

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 24

Content 25 2 x2 x Undertakings affected Composition of the EWC Informationand consultation Information and consultation Venue, frequency and duration of meetings Financial and material resources Validity of the agreement 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,...) 26

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. 27

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 28

Compliance Compliance and sanctions to be ensured by each Member State 29

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 30