European Works Councils in Practice

Ljubljana, 01/09/2010

It is always a pleasure to visit this beautiful corner of Europe – one of the best examples of trade union co-operation across national borders anywhere in the European Union.

It was not always like that round here. Armies have criss-crossed these lands for centuries. Guns and tramping soldiers have come and gone in streets and boulevards. The ghosts of the fallen still call to us with the message “never again must the peoples of Europe turn again to war as a solution.”

As a student of the campaigns on the Isonzo and in the Alps nearly 100 years ago, I find this territory along with Europe’s other killing fields as one of the major reasons why we must make Europe work, and why trade unions should be in the vanguard of building a better society for all. We were reminded of this lesson in the much more recent troubles in Bosnia and Kosova.

I came before to Nuovo Gorizia for the splendid demonstration which marked the EU membership of Slovenia in 2004. I came to Ljubljana for the ETUC demonstration during the Slovenian Presidency in 2008 - another success with many Italians and Austrians also present. And now it is good to be back, and to celebrate the successful conclusion of this three country project on European Works Councils. I warmly congratulate the Inter Regional Trade Union Committee, the unions from the three countries, on this work.

The current economic crisis has strengthened the case for European Works Councils. The crisis has many causes – property bubbles in the United States and some European countries, reckless disregard of traditional bank practices by the leaders of some of the West’s leading banks, greedy speculation with the people’s money, among the most prominent.

The current economic crisis has strengthened the case for European Works Councils. The crisis has many causes – property bubbles in the United States and some European countries, reckless disregard of traditional bank practices by the leaders of some of the West’s leading banks, greedy speculation with the people’s money, among the most prominent.

But one aspect which stands out for me is the massive failure of corporate governance particularly in the banks but also in some large companies. These boards of directors forgot or ignored their obligations to all the stakeholders in their companies. They focussed on shareholder value – and they took a very short-term view of that. They linked the pay of senior executives to share prices; and surprise, surprise, the executives spent more time managing the share price than managing the business. Surprise, surprise, they pumped up the share price at the time that annual bonuses were calculated by adopting all sorts of practices – selling assets, extending doubtful credit lines, cutting costs on R+D and worker training among them. It was a casino – it still is, outside maybe some countries – Germany, Austria and the Netherlands are interesting here. Elsewhere we do not have systems of corporate governance which enable other stakeholders to influence fully company policy. This will be a big issue at the ETUC Congress next year in Athens.

This is where European works councils come in. Most of you will be familiar with the history. Adopted on 22 September 1994, the European Works Council Directive gave millions of workers across the European Union the right to information and consultation on company decisions at EU level through their EWC representatives.
The EWC Directive (94/45/EC) applies to all companies with 1,000 or more workers, and at least 150 employees in each of two or more EU Member States.
It obliges them to recognise the right of workers to negotiate the creation of European Works Councils, in order to bring together workers’ representatives (usually trade unionists) from all the EU Member States the company operates in, to meet with management, receive information and give their views on current strategies and decisions affecting the enterprise and its workforce.
It is estimated that over 2.200 companies are covered by the legislation, but only about 950 (+/- 40 %) have EWCs in operation,. Many of these firms are large multinationals, so the proportion of employees represented by EWCs is much higher: more than 64% or 14.5 million workers across Europe. An additional 125 EWCs have been set up but ceased to exist following mergers, takeovers or bankruptcies.
- The majority of companies covered by the directive employ less than 5,000 workers - but only 23% have EWCs.
- Among multinationals employing 10,000 people or more, 61% have EWCs.
The existing coverage of just over one-third of companies with EWCs could be seen as an unsatisfactory outcome. The trade union side, however, sees it as no mean achievement, knowing the battles that workers have had to fight to get this far. Nonetheless, it is clearly inadequate. The companies that have so far failed to set up EWCs tend to be smaller enterprises, often with a low level of trade union organisation, with managements hostile to involving workers in decision-making, or companies that have undergone drastic restructuring in recent years. An active, representative trade union organisation is the first guarantee of a well-functioning EWC.
The 1994 directive allowed two years for Member States to transpose the provisions into national legislation. Under Article 13, companies had until 22 September 1996 to reach voluntary agreement on establishment of an EWC. After that, Article 6 came into force, requiring the setting up of special negotiating bodies and laying down rules on procedures and timing. In 1996, over 300 agreements were concluded, as companies rushed to beat the deadline for voluntary deals. Since then, the pace has slackened, with around 40 to 50 new EWCs annually.
Although the number of EWCs is growing every year, doubling since 1996, the rate of progress is too slow, and constitutes a major challenge for the development of European information and consultation procedures.
At present, there are few if any penalties for companies that defy the directive. The ETUC wants to see changes made to ensure that:
- Member States lay down a framework of proportionate and dissuasive sanctions;
- If companies take decisions that have a substantial impact on workers, without supplying information or taking part in consultation, they would be legally invalid, or the employer would have to make special compensation.
EU enlargement in 2004 brought an additional 300 companies within the scope of the EWC Directive, 31 of them with headquarters in the incoming Member States. All these countries had already transposed the directive into national law. By May 2004, a number of subsidiaries in all ten states, as well as the three candidate countries, had reached voluntary agreements on setting up EWCs: the largest number being in Poland, the Czech Republic and Hungary.
Of the 1,242 companies covered by the EWC Directive that operate in new Member States, 42% have EWCs, but not all are effectively integrating employee representatives from these countries into their activities.


The majority of European Works Councils meet once a year, with an extra meeting as required. The structure generally conforms to one of two models: workers’ representatives only, or joint worker/management representation, and is influenced by industrial practices in the company’s home country. EWCs may deal with a huge range of economic, financial and social issues, including research, environment, investment, health and safety and equal opportunities.
The ETUC strongly recommends that EWCs should have smaller steering committees that can meet at short notice, and these exist in about 66% of them. Training is very important to enable EWC members to fulfil their role, but only 28% of agreements give members this right, with language education most commonly on offer.
Article 15 of the EWC Directive foresaw that revision would be necessary, based on experience of its implementation, and should be set in motion by 22 September 1999.
The ETUC long called for urgent steps to strengthen the legislation. In recent years, there have been many cases of companies, such as Renault in Vilvoorde, Belgium, and Nokia in Finland, carrying out major restructuring without consultation, in defiance of the spirit of the directive.
The ETUC proposed a number of important changes:
- A clearer definition of information and consultation;
- A lower threshold on the size of companies, to include those with less than 1,000 workers;
- Redefinition of the notion of confidentiality, to ensure EWC members are not prevented from communicating with their trade unions, for example;
- A reduction in the period allowed for negotiating agreements, from three years to one year;
- A framework of sanctions for companies that flout the law, and a legal right for workers’ representatives to challenge breaches of agreements;
- The right to training for EWC members - covering languages and economic, financial and social affairs;
- Better access to expert advice;
- The right to hold preparatory and follow-up meetings;
- The right for EWC members to enter company sites.
We launched a campaign in 2008 – on the offensive for stronger European Works Council – and I can report some success.
Following a request to the social partners in 2008 for advice on how to proceed, we were able to agree some points for strengthening the directive. Those included a new, improved definition of information and consultation, an expanded role for unions, and better training for worker representatives.
A major breakthrough was the agreement that consultation should be on “proposed measures” that is, in advance of management decisions.
This advice was further improved by the European Parliament and a recast Directive (2009/38/EC) has now been approved.
Member States shall transpose the laws of the new Directive into their national legislation, not later than 5 June 2011, or shall ensure that social partners introduce, by that date, the required provisions by way of agreement; the Member states are obliged to take all necessary steps enabling them at all times to guarantee the results imposed by the Directive 2009/38/EC.
Along with new rights for agency workers, this is the most important step forward for workers since the enlargement of the EU in 2004.
So today, we commit to pressing for more EWCs, stronger EWCs, and more influence on corporate governance. On this last aspect, we need to work on European solutions for more worker influence to ensure that enterprises are run in the interests of every one, not just the shareholders and the top executives.