European Works Councils (‘EWCs’) are bodies with employee representatives (joined by a management delegation or not) which have information and consultation rights (‘I/C’) in larger companies or corporate groups operating in the EU. They are designed to receive information from and dialogue with central management on transnational business issues that could affect working or employment conditions.
Currently, EU Directive 2009/38 of May 2009 and its transposition into national laws govern the subject matter. Following a 10-year assessment report in 2018, the EU Commission did not take any legislative initiative to update or revise the current Directive, and so far, it favours softer measures (like a ‘best practices’ handbook and social partners funding) to improve the functioning of EWCs, rather than a total revision. As expected, trade unions and business have opposing views on the need for any such update or legislative intervention, let alone the scope.
In the meantime, the European Parliament has advocated a full revision of the EWC Directive. The EP’s Employment and Social Affairs Committee recently adopted a report (‘the Report’) which calls for an EU Commission proposal for a revised EWC Directive to be tabled by 31 January 2024. In the Report, the Committee addresses a number of punctual changes it wants to see reflected in the revised Directive. These changes include
- A wider definition of the notion of ‘transnationality’ encompassing situations in which decisions are taken in one member state with effect in another member state (an old trade union request),
- The requirement for central management to provide a reasoned response to any EWC opinion as part of the consultation process, and before adopting any decision,
- The enhanced role of recognised EU-level trade union organisations, in that they are entitled – beyond any other experts selected by the employee representatives – to assist the special negotiating body (SNB) and the EWC in its dealings with central management (and be remunerated for that),
- An increased focus on gender balance among employee representatives (requiring a minimum of 40% of seats on the EWC and any select committee for the underrepresented gender),
- The timing for actual negotiation of an EWC agreement becomes tighter, since the initial moment for starting the SNB discussions can even be within 12 months after the request to set up an EWC (it is currently 6 months), whereas the end date for such negotiations would henceforth be 18 months after filing the request (instead of 3 years), after which the subsidiary requirements kick in,
- Clearer rules in connection with confidentiality of information and data, calling on central management to specify the objective criteria for determining the confidential nature of data and the duration of such confidentiality,
- Clearer rules on the timing for consultation, requiring central management to engage with the EWC in a timely manner, including the new obligation for central management to substantiate the grounds for not engaging in an I/C process for any given situation,
- The requirement that national laws shall introduce effective administrative and judicial procedures and sanctions, including (i) injunctive relief and suspension for management decisions taken without having complied with the EWC I/C processes, (ii) appeal against undue application of confidentiality exceptions, and (iii) financial penalties, exclusion from public aid or subsidies and exclusion from public tenders,
- Abolishment of the so-called ‘pre-Directive’ or ‘article 13 agreements’ regime, meaning that all EWC agreements, irrespective of their original date, fall within the remit of the new revised Directive and its new rules,
- The subsidiary requirements are amended in that they would provide for (i) two EWC meetings with central management per year (instead of one), (ii) more detailed management obligations in case of I/C in exceptional circumstances, and (iii) the enhanced role of representatives of recognised EU-level trade union organisations.
Overall, the Report seeks to considerably tighten the rules and procedures in relation to the setup and operation of any EWC. The business community is not likely to welcome nor cheer on the proposed measures.
It is expected that the Report will find proper support and will be approved at the plenary meeting of the European Parliament scheduled for 2 February. As a ‘legislative initiative procedure’ launched by the EP, the EU Commission then has a window of three months to assess the Report and decide whether to proceed with a revision of the EWC Directive as suggested. Clearly, on the side of the European Parliament and the rapporteur, it is expected that the EU Commission will do so.
To be continued.