May 2008

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 establish European Works Councils 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.

Of the estimated 2,264 companies covered by the legislation, some 828 (34%) have EWCs in operation, although the number of active EWCs is higher since some companies have set up more than one. 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.

Timetable and implementation

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.

Structure

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.

The directive urgently needs updating

Since 1994 the industrial relations landscape has changed considerably. The 2000 Lisbon Agenda created a new framework for economic renewal. The directives of 2001 on the European Company Statute and 2002 on workers' information and consultation have created an urgent need for harmonisation of EU law.

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 has 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 is proposing 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.

In April 2004 the European Commission finally launched the first phase of consultation on revision, with the European social partners (trade unions and employers). In March 2005 it issued a Communication on Restructuring and Employment (COM/2005/120), seeking the views of the social partners on both EWCs and order viagra restructuring. The document did not, however, refer to revision of the directive. The ETUC criticised the Commission for trying to merge two separate issues and failing to carry out a proper second-phase consultation.

In February 2008 , the Commission published a Communication to launch the second phase of consultation, and asked the European social partners whether they would be ready to undertake bilateral negotiations on revision of the directive.
The ETUC welcomed this move, together with many of the points covered in the Communication, including explicit reference to information and consultation as a fundamental social right. However, it set the condition that a tight timetable be agreed for the rapid conclusion of talks, in order to allow for a decision to be adopted under the French Presidency in the latter part of 2008, and for the revision to be completed within the life of the current Commission and European Parliament.

For its part, BusinessEurope, representing the European employers, has consistently opposed revision of the directive. However, in February it reversed its stance and informed the Commission that it would be ready for talks.

On 11 April 2008 , the ETUC General Secretary announced that intensive efforts to find a basis for discussion of key issues had been unsuccessful, and that BusinessEurope was not ready to commit itself to a time schedule of less than three months. In view of this, the ETUC informed the Commission that talks within the framework of the European social dialogue were “not practical”.

European Parliament

The European Parliament has given its views on EWCs on several occasions. In May 2007, in its resolution on Strengthening European legislation in the field of information and consultation of workers , it urged the Commission to set a timetable for the “long-awaited revision of the directive on EWCs” in order to provide a stronger legal framework.

European Economic and Social Committee

The EESC has also delivered several opinions on EWCs, and in 2006 urged a “rapid updating” of the directive.

Next steps

The ETUC has asked the Commission to follow up its consultation document by issuing a revised draft directive that can be speedily adopted, in order to enable European workers and trade unions to exercise their fundamental right to information and consultation through EWCs.

On 1 May 2008 the ETUC launched a campaign: On the offensive for stronger European Works Councils , aimed at securing a new and more effective revised directive as rapidly as possible. Details are available on the ETUC website.

Relevant EU legislation :

Directive 94/45/EC establishing European Works Councils.

Directive 2001/86/EC supplementing the European Company Statute.

Directive 2002/14/EC establishing a framework for employees' information and consultation.

Sources :

ETUI-REHS database

European Works Council facts and figures 2006 , ETUI-REHS.

European Works Councils in practice: Key research findings , European Foundation for the Improvement of Living and Working Conditions.

Social Development Agency (SDA) database