In June, the global trade union federation, Uniglobal, reported that 35 trade union representatives and EWC delegates from a number of multi-national food and clothing retailers met to share experiences and discuss coherent strategies. The role of the trade unions was described as “crucial” with Uniglobal commenting that “working together” was the only way to “boost our bargaining power towards MNCs”.

In our experience, trade unions are helping EWCs to push the pressure points with employers and, given the boost to EWC rights following a recent change in the law, this collaboration needs to be taken seriously.

EWCs – background

Only larger multi-national retailers fall within the scope of the European Union’s EWC rules. Specifically, only those employers with 1,000 plus employees throughout the European Economic Area (EEA: the EU plus Norway, Iceland and Liechtenstein) and at least 150 employees in two separate EEA states. There is no obligation to set up such arrangements in the absence of a request from at least 100 employees or their representatives in two or more countries, however, once a request is received, an EWC must be put in place.

Typically, an EWC involves informing and consulting with a forum of employee representatives from across the EEA states about workplace change with cross-border implications, for example, restructurings, redundancies, acquisitions, mergers or closures affecting more than one EU country.

Recent changes to EWC law

In 2011, a revised EWC EU Directive was implemented with the aim of increasing the number and effectiveness of EWCs after years of criticism and lobbying for change from European trade unions. The changes have the potential to significantly delay European restructuring and add costs. They include greater rights to demand in-depth information about a proposed change and sufficient time to prepare an opinion, which could include counter-proposals, and to receive a response to that opinion from management.

The expectation is that the EWC should be involved before any decision has been taken to allow genuine consultation to take place. In addition, the changes have provided for the greater involvement of trade unions in EWCs, which goes towards explaining Uniglobal’s recent collaborations.

EWC pressure points in practice

Unions are already harnessing these legal changes to make in-roads into qualifying organisations currently without an EWC and to transform existing EWCs, particularly those older more informal EWCs which may have escaped attention until now.

These older and less regulated EWCs originally agreed before December 1999 under UK law and known as Article 13 agreements, are vulnerable to a request for re-negotiation despite their special legal status which in many countries means that they are self-regulating, sitting outside EU law. They may have ticked over on an informal basis for many years and have not required much investment in management time or money until now.

Retailers with such older EWCs should prepare for change. Trade union strategy is to upgrade these agreements to bring them in to line with the recent legal changes. As many of these older EWCs were not designed to be evergreen and are renewable after a certain term, affected retailers should be prepared for requests for wholesale renegotiation, to include, for example, the strengthened information and consultation duties.

Where such a request arises in the context of significant changes in the corporate structure, such as a merger, the revised Directive sets out the steps the employer must take to ensure the EWC adapts to the new environment. In other words, in this situation, the employer must normally engage with requests for renegotiation from representatives.

In other circumstances, the retailer may not be under a legal obligation to respond to renegotiation requests, but, in practice, their hand may be forced. For example, in the event of a stalemate, the representatives may simply serve notice to terminate the old EWC and trigger the process for a new EWC to be formed under the new law in its place.

Value what you have - before it is gone

Investing in the EWC that you have, valuing its role in managing labour relations and improving employee communications can help to dampen down calls for change. An EWC built on strong relationships is less likely to have disaffected representatives open to influence from outside trade unions.

But, even where EWC relationships are good, retailers should be prepared for pressure to change. Global trade unions are targeting EWCs, with or without the support of employee representatives, having spotted the opportunity for top-down organising within an employer across borders through its EWC. This has been made easier for them by the recent changes in the law which have supported the rise in trade union “experts” advising employee representatives and providing training to them.

Summary

Recent employee friendly changes to EWC law, together with a heightened interest from trade unions, have introduced significant new challenges for multi-national retailers, increasing the potential for disputes, commercial delays and reputational damage. This is the case even for those older EWCs which typically may have escaped attention until now. As a result, the requirement for a considered and strategic approach to negotiating and managing an EWC has never been greater.