Explanatory Memorandum to COM(2008)419 - 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 (Recast) - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2008)419 - Establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of ... |
|---|---|
| source | COM(2008)419  |
| date | 02-07-2008 |
1. This proposal for recasting is intended to amend Council Directive 94/45/EC 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 i, as extended to the United Kingdom by Council Directive 97/74/EC of 15 December 1997 i and adapted by Council Directive 2006/109/EC of 20 November 2006 by reason of the accession of Bulgaria and Romania i.
2. Article 15 of Directive 94/45/EC provides that, not later than 22 September 1999, the Commission, in consultation with the Member States and with management and labour at European level, is to review its operation and, in particular examine whether the workforce size thresholds are appropriate with a view to proposing suitable amendments to the Council where necessary. In the Report from the Commission to the European Parliament and the Council on the application of Directive 94/45/EC i, the Commission stated that it would take a decision on a possible review of the Directive on the basis of the required further assessments and the evolution of the other legislative proposals on the involvement of employees.
3. Fourteen years on from the adoption of Directive 94/45/EC, approximately 820 European Works Councils are active, representing 14.5 million employees with a view to providing them with information and consultation at transnational level. They are vital to the development of transnational industrial relations and help to reconcile economic and social objectives within the Single Market, particularly through the decisive role they play in anticipating and managing change responsibly.
4. However, there are some problems with the practical application of Directive 94/45/EC. The right to transnational information and consultation lacks effectiveness, as the European Works Council is not sufficiently informed and consulted in the case of restructuring. European Works Councils have been set up in only 36% of undertakings falling within the scope of the Directive. There are legal uncertainties, particularly with regard to the relationship between the national and transnational levels of consultation, and in cases of mergers and acquisitions. In three cases referred to it for preliminary rulings i, the Court of Justice of the European Communities also interpreted the provisions of the Directive with regard to the communication of the information required to set up a European Works Council. Lastly, the consistency and linkage of the various directives on the information and consultation of employees are insufficient.
5. European Works Councils need to be up to the task of playing their full role in anticipating and managing change and building up a genuine transnational dialogue between management and labour. The objective of this proposal is thus, in conjunction with non-regulatory action, to ensure that employees’ transnational information and consultation rights are effective, increase the proportion of European Works Councils established, increase legal certainty and ensure that the directives on information and consultation of employees are better linked.
6. This proposal takes account of the fact that there are other directives in the area of the information and consultation of employees. Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community i lays down the general principles to be applied at national level. Directive 98/59/EC i and Directive 2001/23/EC i are applicable where redundancies or transfers are specifically envisaged. Directives 2001/86/EC i and 2003/72/EC i govern the involvement of employees in European Companies (‘SE’) and the European Cooperative Societies (‘SCE’).
7. Against the background of the Renewed Social Agenda i, this initiative is intended to contribute to the European Union’s efforts to have all its citizens benefit from globalisation in a balanced way. In conjunction with the reports on restructurings and transnational company-level collective agreements, it aims to encourage undertakings and employees to anticipate and adapt to the changes they must deal with. Through the appropriate involvement of employees, it contributes to improving the dialogue between management and labour within transnational undertakings and to construct a climate which fosters the search for approaches which combine flexibility and security.
8. This initiative is part of the renewed Lisbon strategy, the aim of which is, in particular, to create more higher-quality jobs in a more dynamic and competitive Europe. It adds to the promotion of best practice, for which the European Union continues to provide substantial aid, in support of the social partners, particularly with regard to the inclusion of issues surrounding the skills and mobility of workers, health and safety at work, and the environment in the European Works Councils’ activities. It is also part of the Commission’s ‘better regulation’ programme, in that it emphasises the need to adapt the legislation to take account of the new economic and social requirements, particularly those concerning the increase in the number and scale of transnational restructuring operations.
9. This initiative intends to respect the fundamental rights and observe the principles recognised in particular by the Charter of Fundamental Rights of the European Union. In particular, this initiative seeks to ensure full respect for the right of employees or their representatives to be guaranteed information and consultation in good time at the appropriate levels in the cases and under the conditions provided for by Community law and national laws and practices, described in Article 27 of the said Charter.
Consultation of interested parties
10. Under the terms of Article 138 of the Treaty, the Commission consulted management and labour at Community level on the possible direction of Community action in this area i. Trade union organisations came out in favour of a rapid revision of the Directive, while employers’ organisations were against such a revision. Management and labour then jointly defined best practices regarding European Works Councils and the Commission then again consulted with them with regard to the promotion and implementation of those practices i. Following these consultations, the Commission considered that Community action was advisable and consulted management and labour at Community level on the content of the planned proposal, pursuant to Article 138 i of the Treaty i.
11. In response to the latter consultation, the employers’ organisations BusinessEurope, CEEP and UEAPME have declared that they are ready to open negotiations within the context of the European Social Dialogue. The European Trade Union Confederation felt that such negotiations were unrealistic. Following a fresh appeal to European management and labour, the Commission has noted that no negotiations have been held under Article 138 i of the Treaty and has decided to submit this proposal, given the established need to review the legislation in force.
12. BusinessEurope and UEAPME, having prepared themselves to negotiate, submitted no opinion on the content of the initiative planned. The CEEP and the organisations consulted which represent employers in the fields of hotels/restaurants (HOTREC), banking (EBF) and trade (EUROCOMMERCE) have stated their opinions on the changes envisaged, as have the Association française des entreprises privées (AFEP), the American Chamber of Commerce to the European Union (AmCham EU) and an individual undertaking.
13. The European Trade Union Confederation (ETUC) and the European Managers’ Network (CEC) have proposed some adaptations to the proposals submitted for consultation, as well as some amendments to the Directive. The Confederation of Nordic Bank, Finance and Insurance Unions (NFU Finance) Finansforbündet and the employees’ representatives from six undertakings also took the opportunity to give their opinion.
14. The responses of the organisations consulted and the contributions received have been examined in detail and taken account of in the impact assessment process, the report on which is included with the proposal. The examination carried out has led the Commission to modify certain proposals envisaged in the consultation document, for example in relation to the provisions aimed at effective decision-making in undertakings, limiting the transnational scope, introducing a threshold for representation, seeking balanced representation of employees, reinforcing the select committee and making pre-Directive agreements more secure without applying the adaptation clause.
15. In addition to the assessments on European Works Councils carried out by social operators or by academia, the Commission has asked external consultants to carry out a study to measure the potential impact of various possible options, particularly with regard to costs. This study was carried out in 2008 and included a survey of a random sample of approximately 10% of active European Works Councils. Both the management and the employees’ representatives of these managements were questioned.
16. The results of this study were incorporated in the impact assessment and will be made available to the public on the Commission’s website.
17. An impact assessment was carried out. It made it possible to precisely identify the problem which action by the European Union should address and to formulate the four objectives, i.e., ensuring rights are effective, increasing the proportion of European Works Councils established, legal certainty, and the linkage of Community legislative instruments on information and consultation of employees, as well as the operational objectives of such action, and to examine three options for achieving them.
18. The first option is for the European Union to take no new action. This would not enable the objectives described to be reached,
19. The second option is a non-regulatory approach and additional promotion of best practice. This includes increased action on communication, followed if necessary by a proposal to boost the financial support for the promotion of best practice and a recommendation on setting up and operating a European Works Council. This has several social and economic advantages, without creating additional expenses for undertakings. However, it can only address the objectives of legal certainty and linkage of Community law to a limited extent.
20. Reviewing the legislation in force is the third option. It includes amendments to Directive 94/45/EC, mainly concerning the definitions of information and consultation, the transnational scope of European Works Councils, adaptations to the subsidiary requirements, the training of employees’ representatives and the role of unions. Except for two sub-options concerning lowering the staff threshold to 500 employees and setting up a mechanism to record the agreements, this option is the most suited to achieving the stated objectives, although it places additional costs on undertakings. However, it has only a limited capacity to focus the attention of operators on improving the transnational information and consultation of employees.
21. The impact assessment concludes that launching a review of the legislation in force in conjunction with non-regulatory action on communication and promotion is the most appropriate.
Contents
- LEGAL ELEMENTS OF THE PROPOSAL
- BUDGETARY IMPLICATIONS
- Grounds for and objectives of the proposal
- General context
- Existing provisions in the area of the proposal
- Consistency with other policies and objectives of the Union
- 2. CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT
- Collection and use of expertise
- Impact assessment
- Summary of the proposed action
- Legal basis
- Subsidiarity principle
- Proportionality principle
- Choice of instruments
- 5. ADDITIONAL INFORMATION
- Review/revision/sunset clause
- Correlation table
- European Economic Area
- Detailed explanation of the proposal
22. The proposal for recasting comprises the following substantive changes to Directive 94/45/EC:
- the introduction of general principles regarding the arrangements for transnational information and consultation of employees, the introduction of a definition of information, and making the definition of consultation more precise;
- the limitation of the competence of European Works Councils to issues of a transnational nature and the introduction of a link, defined as a priority by agreement within the undertaking, between the national and transnational levels of information and consultation of employees;
- clarification of the role of employees’ representatives and of the opportunity to benefit from training, as well as recognition of the role of trade union organisations in relation to employees’ representatives;
- clarification of the responsibilities regarding the provision of information enabling the commencement of negotiations and rules on negotiating agreements to set up new European Works Councils;
- adaptation of the subsidiary requirements applicable in the absence of an agreement to developing needs;
- introduction of an adaptation clause applicable to agreements governing European Works Councils if the structure of the undertaking or group of undertakings changes and, unless the adaptation clause is applied, continuation of the agreements in force.
23. The basis for this legislative proposal is Article 137 of the Treaty which stipulates that the Community is to support and complement the action taken by Member States in the field of information and consultation of employees.
24. The objectives of the action envisaged cannot be achieved adequately by the Member States, in so far as this involves amending a Community legal act in force governing provisions of a transnational nature. The European Union is more up to the task of amending such an act and providing for its links with other Community and national provisions in this field. In particular, only Community action can introduce changes to the setting up and operation of European Works Councils: such changes require consistent and coordinated amendments to the legislation of the Member States, since the application of the law of one Member State affects the rights and obligations of undertakings and employees in other Member States. However, the proposal leaves to the Member States the role of adapting the provisions to the national industrial relations systems and legal systems, particularly with regard to determining the arrangements for designating or electing employees’ representatives, their protection and determining appropriate penalties.
25. Through the priority it gives to negotiation at the level of undertakings, without minimum rules, the Directive is extremely flexible as concerns adapting the operation of the European Works Council to the specific conditions in which it takes action, and in its choice of concrete arrangements and the related duties. The proposal preserves this flexibility while clarifying the framework in which it operates. By keeping the application threshold at 1 000 employees, the proposal avoids imposing administrative, financial and legal constraints in a way which would hold back the creation and development of small and medium-sized enterprises.
26. The review of the legislation in force, which can only be carried out via a directive, is complementary to the non-regulatory approach and the promotion of best practice carried out in support of management and labour.
27. The proposal has no implications for the Community budget.
Simplification and reduction of administrative costs
28. A number of substantial changes are to be made to Directive 94/45/EC i. In the interests of clarity, the proposal recasts that Directive.
29. The proposal contributes towards linking Directive 94/45/EC with other directives concerning the information and consultation of employees, in particular by aligning the definitions, determining the scope of the European Works Councils and incorporating the arrangements for the links between the levels of information and consultation. It thus contributes to a simplification of the legislative framework.
30. The proposal includes a review clause under which review is due five years after the time-limit for transposition.
31. The Member States are required to communicate to the Commission the text of national provisions transposing the Directive, as well as a correlation table between those provisions and the Directive.
32. The proposed text is relevant to the EEA and should therefore extend to the EEA.
33. The following substantive changes have been made to Articles 1, 2, 4, 5, 6, 10, 11, 12, 13 and 14 of Directive 94/45/EC and to its Annex. Articles 3 and 9 of Directive 94/45/EC are slightly adapted while Articles 7 and 8 are unchanged.
34. General principles and concepts of information and consultation. Article 1 of Directive 94/45/EC stipulates that the arrangements for informing and consulting employees must follow the general principle of effectiveness. Article 2 adds a definition of information and brings the definition of consultation into line with that of more recent directives, including the concepts of time, fashion and content appropriate to the information and consultation.
35. Transnational competence of the European Works Council. Article 1 establishes the principle of the relevant level according to the subject under discussion. To achieve this, the competence of the European Works Council is limited to transnational issues, and the determination of whether an issue is transnational is transferred from the current subsidiary requirements to Article 1, so that it can be applied to the European Works Councils established by agreement. It is specified as relating in particular to the potential effects of an issue in at least two Member States.
36. Links between the levels of information and consultation of employees. Article 12 introduces the principle of a link between the national and transnational levels of information and consultation of the employees with due regard for the competences and areas of action of the representative bodies. The arrangements for this link are defined by the agreement concluded pursuant to Article 6, which now covers this matter. Where there are no such arrangements and where decisions likely to lead to substantial changes in work organisation or contractual relations are envisaged, the process would have to start in parallel at national and European level. Since certain national legislation may have to be adapted to ensure that the European Works Council can, where applicable, receive information earlier or at the same time as the national bodies, a clause has been added to stipulate that there must be no reduction in the general level of protection of employees. The titles of the directives relating to collective redundancies and to transfers of undertakings have been updated and a reference to the framework Directive 2002/14/EC has been incorporated.
37. Role and capacity of employees' representatives. The obligation on the employees' representatives to report to the employees that they represent has been moved from the subsidiary requirements of the Directive to Article 10, which thus deals with the role of the employees' representatives and their protection. The competence of the members representing the employees on the European Works Council to represent the employees of the undertaking or group of undertakings is established. The possibility for employees' representatives' to benefit from training without loss of salary is clarified.
38. Opening and process of negotiations. In accordance with the interpretation principles of the European Court of Justice i, Article 5 clarifies the responsibility of the local managements to provide the information allowing negotiations to be opened with a view to setting up new European Works Councils. In order to resolve legal uncertainty and simplify the composition of the special negotiating body, it is modified to one representative per 10% portion of the employees in a Member State in which at least 50 employees are employed. The right of employees' representatives to meet without the employer being present is clarified.
39. Role of trade union and employers' organisations Article 5 introduces the obligation to inform the trade union and employers' organisations of the start of negotiations on setting up a European Works Council and explicitly mentions the trade union organisations among the experts on whom employees' representatives may call for assistance in the negotiations.
40. Content of the subsidiary requirements (which apply in the absence of an agreement). The Annex draws a distinction between fields where information is required and those where consultation is required, and introduces the possibility of obtaining a response, and the reasons for that response, to any opinions expressed. With a view to anticipating such eventualities, the exceptional circumstances requiring information and opening the possibility of a select committee meeting are extended to include circumstances in which decisions are envisaged that are likely to affect the employees' interests to a considerable extent. In order to enable the select committee to perform this more important function, its maximum number of members is set at five and a provision is added stipulating that the conditions enabling it to exercise its activities on a regular basis must be met.
41 Adaptation clause and agreements in force. The agreements pursuant to Article 6 must include provisions for amendments and renegotiation. Where the structure of the undertaking or group of undertakings changes significantly, Article 13 provides for the agreements in force to be adapted in accordance with the provisions of the applicable agreement or, by default and where a request is made, in accordance with the negotiation procedure for a new agreement in which the members of the existing European Works Council(s) are to be associated. These European Works Councils will continue to operate, possibly with adaptations, until a new agreement is reached. They will then be dissolved and the agreements terminated. Except where this adaptation clause applies, the agreements in force concluded in anticipation will still not fall under the provisions of the Directive and there will be no general obligation to renegotiate those concluded pursuant to Article 6.
42. Other provisions. In Article 6, the establishment and the operation of a select committee are, where applicable, part of the content of the agreement. Article 15 provides for a review clause under which review is due five years after the time-limit for transposition. In the Annex, the composition of the European Works Council set up in the absence of an agreement is aligned with the new composition of the special negotiating body.
⎢ 94/45/EC (adapted)