Explanatory Memorandum to COM(2024)14 - Amendment of Directive 2009/38/EC as regards the establishment and functioning of European Works Councils and the effective enforcement of transnational information and consultation rights

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dossier COM(2024)14 - Amendment of Directive 2009/38/EC as regards the establishment and functioning of European Works Councils and the effective ...
source COM(2024)14
date 24-01-2024


1. CONTEXT OF THE PROPOSAL

• Reasons for and objectives of the proposal

In the ongoing transformation of the world of work driven by the pursuit of environmental, economic, and social sustainability and the deployment of new technologies, a meaningful involvement of employees and their representatives at all levels can help anticipate and manage change, diminish job losses, maintain employability, and ease effects on social welfare systems and related adjustment costs. In multinational undertakings or groups, the information and consultation of employees at transnational level can make an important contribution to such involvement. For that purpose, Directive 2009/38/EC of the European Parliament and of the Council0 (‘the Directive’ or ‘Directive 2009/38/EC’) lays down minimum requirements for the setting-up and operation of employee representation bodies in certain multinational undertakings, so-called European Works Councils (‘EWCs’). EWCs and transnational information and consultation procedures complement the information and consultation of employees at national level.

This proposal aims to tackle shortcomings of the Directive, and thereby to improve the effectiveness of the framework for the information and consultation of employees at transnational level. It does not affect the EU and national rules and practices concerning the involvement of employees at national level.

The 2018 evaluation of the Directive0 confirmed its added value and the improvements it had brought to the quality and scope of information to employees. It also identified several challenges, principally the low rate of creation of new EWCs, the consultation of EWCs being sometimes ineffective, obstacles to access of EWCs to courts and a lack of effective remedies and effective and dissuasive sanctions in some Member States.

In its legislative own-initiative www.europarl.europa.eu/doceo/document">resolution ‘with recommendations to the Commission on revision of the European Works Councils Directive’0, the European Parliament has called to strengthen the role and capacity of EWCs as information and consultation bodies in Community-scale undertakings. This amending act follows the political commitment expressed in the President vor den Leyen's Political Guidelines to respond to the resolutions based on Article 225 TFEU with a legislative proposal, in full respect of proportionality, subsidiarity and better law-making principles.

Contents

1.

With regard to the results of the evaluation and to the subsequent evidence gathering, this proposal aims to address the following main shortcomings:


- Due to exemptions from its scope, the Directive does not apply to ca. 350 Community-scale undertakings0 in which agreements on transnational information and consultation exist.0 This makes the regulatory framework complex and fragmented, creating different levels of protection for employees in Community-scale undertakings. The proposal aims to avoid unjustified differences in employees’ minimum information and consultation rights at transnational level.

- There can be uncertainty regarding the process for setting up EWCs and the coverage of expenses of special negotiating bodies (‘SNBs’) representing employees. Moreover, in most cases, the setting-up process does not necessarily result in gender-balanced EWCs. The proposal aims to ensure a more efficient and effective setting-up of better gender-balanced EWCs.

- In some cases, there is a lack of a genuine, timely, and meaningful dialogue between management and EWCs. This is notably the case where management fails to provide a reasoned response to EWCs’ opinions before adopting a decision on transnational matters. Some EWCs also face legal uncertainty about the coverage of their resources and about the conditions under which management can require confidential treatment of information or refuse to disclose certain information to EWCs. The proposal aims to ensure a more effective process for the information and consultation of EWCs and their appropriate resourcing.

- Rightsholders under the Directive do not always have effective remedies and access to justice to enforce their rights. Moreover, non-compliance with transnational information and consultation requirements is often not penalised by sufficiently effective, proportionate, and dissuasive sanctions. The proposal aims to promote a more effective enforcement of the Directive to improve compliance.

• Consistency with existing policy provisions in the policy area

Workers’ right to information and consultation within the undertaking is laid down in the EU Charter of Fundamental Rights (Article 27). The Treaty on the Functioning of the European Union (TFEU) provides that EU shall support and complement the activities of Member States in the field of information and consultation of workers (Article 153), promotes social dialogue between management and labour (Article 151) and recognises the role of social partners (Article 152). Principle 8 of the European Pillar of Social Rights states that 'workers or their representatives have the right to be informed and consulted in good time on matters relevant to them'.

The EU’s legal framework governing information and consultation at national level has developed over several decades. Several EU directives set out rules on information and consultation of workers’ representatives. The Directive contains provisions on the interplay between the information and consultation frameworks at different levels, with a view to ensuring consistency, complementarity, and synergies with the different existing legal instruments. These principles are preserved by this proposal. In particular:

- The framework for EWCs is without prejudice to the information and consultation procedures established in Directives 2002/14/EC0, 98/59/EC0, and 2001/23/EC0 and the requirements for the information and consultation of worker representatives in the context of corporate restructuring under Directive 2004/25/EC0, Directive (EU) 2017/11320 and Directive (EU) 2019/10230.

- Information and consultation of employees must occur at the relevant level of management and representation, according to the subject under discussion. To achieve that, the competence of EWCs and the requirements of Directive 2009/38/EC are limited to transnational matters. That delineation is important to prevent conflicts of competences, which differ depending on the instrument: while Directives 98/59/EC, 2001/23/EC and 2002/14/EC oblige management to inform and consult the national workers’ representatives ‘with a view to reaching agreement’ on a matter in the context of national industrial relations, transnational consultation of EWCs under Directive 2009/38/EC is ‘without prejudice to the responsibilities of the management’.

- Directives 2001/86/EC0 and 2003/72/EC0 provide for the establishment of representative bodies for information and consultation on transnational issues in European Companies (‘SE’) and European Cooperative Societies (‘SCE’). The application of Directive 2009/38/EC to companies of those types is excluded, to avoid overlaps. That approach is not altered by this initiative.

• Consistency with other Union policies

The proposal provides for measures to ensure that employees’ representatives have access to justice in relation to transnational information and consultation rights. It can thus promote the right to an effective remedy before a tribunal (Article 47 EU Charter of Fundamental Rights).

The proposal is also consistent with the right of collective bargaining (Article 28 of the EU Charter of Fundamental Rights), as it leaves broad discretion to social partners at company level to negotiate appropriate solutions for effective transnational information and consultation. Furthermore, it fully preserves management’s ability to take decisions effectively, in accordance with the freedom to conduct a business (Article 16 of the EU Charter of Fundamental Rights).

The scope of information and consultation of EWCs under the Directive is limited to ‘transnational matters’. Transnational matters are not defined by reference to specific topics or issues, but rather their ability to affect employees in several Member States. EWCs thus have the potential to enhance the implementation of various EU policies in multinational companies, by providing a forum for dialogue between central management and employee representatives. Synergies can thus occur between this initiative and any EU policy field that stands to benefit from the effective involvement of EWCs, in particular in the context of the twin transitions.

2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY

• Legal basis

The Directive was adopted under Article 137 of the Treaty establishing the European Community. In the current Treaty, the appropriate legal basis for a revision of the Directive is Article 153(1)(e) in conjunction with Article 153(2)(b) of the Treaty on the Functioning of the European Union (TFEU). Article 153(1)(e) TFEU provides the legal basis for the Union to support and complement the activities of the Member States to improve the information and consultation of workers. In this field, Article 153(2)(b) TFEU empowers the European Parliament and the Council to adopt – in accordance with the ordinary legislative procedure – directives setting minimum requirements for gradual implementation, having regard to the conditions and technical rules obtaining in each of the Member States.

• Subsidiarity (for non-exclusive competence)

Only an EU initiative can set common rules on information and consultation of workers at transnational level within the EU. The challenges which reduce the effectiveness of workers’ right to transnational information and consultation are closely linked to the coverage and content of the obligations under the Directive, and create effects on companies and their workers across the EU. Given the cross-border nature of the undertakings and groups within the scope of the Directive and the transnational nature of the matters subject to transnational information and consultation requirements, individual Member States cannot address the shortcomings of the current framework in a coherent and effective manner. The identified challenges must therefore be tackled at EU level.

• Proportionality

This proposal amends and sets minimum standard requirements, thus ensuring that the degree of intervention will be kept to the minimum necessary in order to reach the objectives of the proposal. Member States which already have more favourable provisions in place than those put forward in this proposal will not have to change or lower them. Member States may also decide to go beyond the minimum standards set out here.

The principle of proportionality is respected considering the size and nature of the identified problems. The impact assessment accompanying this initiative compared the policy options as to their proportionality relative to the baseline.0 The preferred option strikes a balance between the need to take sufficiently robust measures to achieve the policy objectives, reinforcing the framework for social dialogue in companies, while leaving unchanged the nature of the instrument and not altering provisions of the Directive that have proven effective in the past.

• Choice of the instrument

The relevant legal basis allows for the adoption of binding minimum requirements solely in the form of Directives. Non-binding instruments were also considered, such as a Commission communication providing interpretative guidance or Commission recommendations on enforcement by Member States. However, such alternatives were assessed to be less effective and efficient than a targeted revision of the Directive.

3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS

• Ex-post evaluations/fitness checks of existing legislation

The Commission published an evaluation of the Directive in 2018. The evaluation confirmed the EU added value of the Directive and the improvements it had brought to the quality and scope of information to employees. The Directive was considered relevant by all stakeholders, and the need for transnational dialogue was acknowledged by social partners. The evaluation concluded that the Directive does not impose administrative, financial and legal obligations which would constitute an unreasonable burden for companies.

Nevertheless, the evaluation also found that the consultation of EWCs is sometimes ineffective, EWCs face obstacles in access to courts in some Member States, and there is a lack of effective remedies and effective and dissuasive sanctions in some Member States.0 In response, the Commission acted through non-legislative actions: continued financial support to social partners’ projects, proposing a handbook for EWC practitioners,0 and engaging in a structured dialogue with Member States on enforcement.0 These actions did not resolve the identified challenges.

• Stakeholder consultations

In line with Article 154 TFEU, the Commission carried out the first and second phase consultations of European social partners to seek their views, firstly, on the need for and possible direction of EU action to address the challenges related to the operation of EWCs, and subsequently, on the content of the envisaged proposal. Four trade union organisations and eight employer organisations replied to the first and second stage consultations. In the context of the second stage consultation, the employers’ organisations expressed their readiness to participate in negotiations towards an agreement under Article 155 TFEU; the employees’ organisations, with the exception of CEC European Managers, did not.

Generally, trade unions see a need for a legally binding revision of the Directive, whereas employer organisations mostly argue against a revision, considering the Directive fit for purpose and cautioning against additional regulatory burden on companies. Specifically:

- Trade unions consider that the exemptions from the scope of the Directive lead to an uneven playing field, create legal complexity and should be abolished. Employer organisations argue that it is appropriate to maintain the exemptions, stressing the autonomy of the parties and the need to preserve well-functioning existing information and consultation arrangements.

- Concerning the process of setting up new EWCs, trade unions state that it is not uncommon for the central management to delay the start of negotiations. Trade unions also underline the need to ensure appropriate resources and support by recognised trade union organisations’ experts in the process. Employer organisations submit that the setting-up of EWCs works satisfactorily.

- Stakeholders from both sides of industrial relations acknowledge the issue of imbalanced gender composition of EWCs, in particular in male-dominated industries such as manufacturing and construction, where most EWCs have been set up. However, they raise concerns about the practical feasibility of implementing a binding quota to ensure gender balance.

- As regards the practical functioning of the transnational information and consultation framework, trade unions consider that the Directive does not ensure sufficient legal clarity on essential consultation requirements, such as the scope of transnational matters and the need to ensure a proper follow-up to EWC opinions. Accordingly, they support binding measures to clarify and expand those requirements. Furthermore, they state that the confidentiality obligation is often excessively applied by management, and submit that EWCs are not assured sufficient resources (covering e.g. expert advice, training or legal costs). In contrast, employer organisations consider that the current concept of transnational matters is fit for purpose and does not cause disputes in practice beyond what can reasonably be expected in a corporate setting. They state that many EWC agreements already provide for specific timeframes for information and consultation and a formal response by management to EWC opinions. Employers emphasise the need to avoid additional costs, calling for the alleviation of administrative and financial burdens on undertakings by promoting online EWC meetings.

- Concerning sanctions and remedies, trade unions consider that EWCs have insufficient access to justice in some Member States and that the Directive fails to ensure effective enforcement. They request more stringent provisions including specific thresholds for pecuniary sanctions of up to 4% of global turnover as well as injunctions to suspend management decisions. In contrast, employers submit that the existing rules are sufficient, and argue that the limited number of court cases is not due to a lack of access to justice but due to most EWCs working satisfactorily. They caution against disproportionate sanctions and the risk of delaying companies’ decision-making.

In parallel with the Treaty-based formal consultation of the social partners, extensive consultation activities were conducted in the context of the supporting study,0 gathering insights from a diverse pool of stakeholders including also policy makers, EWC representatives, management of Community-scale undertakings, and legal and academic experts. These activities consisted of:

- a targeted online survey of management and employee representatives in companies with EWCs;

- semi-structured stakeholder interviews;

- evidence gathering workshops with management and employee representatives.

These activities largely confirmed the input received during the social partner consultation and yielded further detailed information that fed into the problem definition and the assessment of policy options.

No public consultation was conducted on this initiative. Given the specific and technical nature of the relevant issues and options, the initiative does not lend itself to gathering the views of the general public. The initiative is directly relevant only for the stakeholders targeted by the consultation activities described above, whereas indirect impacts on other stakeholders or the general public are too tenuous to be covered by a general public consultation in a meaningful manner.

• Collection and use of expertise

Several studies by external experts have fed into the impact assessment: the study supporting the evaluation of the Directive, the new evidence-gathering study supporting the impact assessment, legal comparative reviews of national provisions transposing the Directive, and www.eurofound.europa.eu/publications/other/2022">case studies exploring challenges and solutions regarding EWCs. For further information on the collection and use of expertise, see Annex 1 of the impact assessment. Additional scientific sources are referenced in the impact assessment.

The European Parliament’s 2021 www.europarl.europa.eu/doceo/document">resolution on Democracy at Work and 2023 www.europarl.europa.eu/doceo/document">legislative own-resolution on revision of European Works Councils Directive were also taken into account, in conjunction with the relevant www.europarl.europa.eu/RegData/etudes/BRIE/2021(2021)654215_EN.pdf">European Added Value Assessment of the Parliament’s research service.

In addition, ad-hoc data collections by Eurostat and ETUI (from the ETUI EWC Database and www.etui.org/publications/guides">2018 ETUI survey of EWC and SEWC representatives) supported the impact assessment.

• Impact assessment

The proposal is accompanied by an impact assessment,0 which was discussed with the Regulatory Scrutiny Board (RSB) on 29 November 2023. The RSB issued a positive opinion with comments,0 which have been addressed by:

- clarifying the objectives of the initiative and policy options, in particular their interplay with other national and EU rules on the information and consultation of employees;

- strengthening the proportionality assessment and the assessment of costs and benefits, including impacts on competitiveness;

- developing ranges of possible aggregate costs based on hypothetical scenarios regarding the rate of creation of EWCs in currently exempted undertakings, the need to renegotiate existing agreements to take account of the revised minimum requirements, and the possible marginal increases in operating costs of EWCs due to the initiative;

- acknowledging upfront the data limitations and uncertainties having an impact on the robustness of the analysis.

To ensure a proportionate and targeted impact assessment, the analysis focused on substantive policy measures expected to have a significant impact on stakeholders. Clarifications and minor adjustments to Directive 2009/38/EC were identified as accompanying measures and were not assessed individually. Accompanying measures are generally assumed to reinforce the effects of the options without producing significant self-standing impacts.

2.

Based on the quantitative and qualitative analysis of impacts, the preferred policy option is expected to have the following main benefits:


- The currently 678 undertakings with active EWC agreements and their ca. 11.3 million EU employees, as well as parties to future EWC agreements, stand to benefit from increased clarity of the legal requirements, which is expected to reduce the risk of disputes and associated costs.

- By removing exemptions from the scope of the Directive, the ca. 5.4 million EU/EEA employees (and their representatives) or management of the currently exempted undertakings with ‘voluntary agreements’ (323) would gain the right to request the establishment of an EWC to benefit from an equal application of minimum rights and obligations enforceable under EU law. Together with management, they could alternatively opt to preserve well-functioning voluntary agreements. In the context of requests to establish a new EWC, employee representatives would gain a clear entitlement to coverage of their reasonable legal costs and more legal certainty regarding management’s obligation to initiate negotiations within six months. The workforce of Community-scale undertakings would also benefit from improved gender-balance in EWCs, which is expected to contribute to more equitable corporate decisions and have positive impacts on undertakings’ overall performance.

- During the information and consultation process, EWCs which are not yet entitled, through a corresponding provision in their agreement with management, to a timely reasoned response from management to their opinion would gain such a right. This will help them to engage in a genuine dialogue with central management on transnational matters. This dialogue is also facilitated by clarifications of the essential concept of transnational matters, which defines the scope of the information and consultation activities of EWCs, and by the clearer conditions for application of confidentiality obligations. For EWCs, SNBs and employees’ representatives who currently do not have effective remedies to enforce all their rights under the Directive, the initiative would improve access to justice.

The increased effectiveness and quality of transnational social dialogue in Community-scale undertakings could enable a better-informed strategic decision-making by companies and reinforce mutual trust between management and the workforce that could lead to potential positive effects on competitiveness. However, such effects are uncertain and cannot – in the absence of a robust evidence – be reliably estimated, given the interplay between employee involvement at national and transnational level and the non-binding nature of EWCs’ opinions.

3.

The preferred option would entail the following costs:


- In the currently exempted undertakings with ‘voluntary agreements’, central management could initiate negotiations of a new EWC or would have to initiate them, if requested by employees in accordance with the Directive. The average one-off costs of negotiating a new EWC agreement are estimated at ca. EUR 148 000 per negotiation. Generally, during negotiations or renegotiations involving a SNB, undertakings will be legally obliged to cover – in addition to other costs incurred in the setting-up phase – also reasonable legal costs. Where necessary to align existing EWC agreements with the revised requirements (e.g., to address the coverage of EWCs’ expenses for legal or expert advice and training), central management would have to engage in renegotiations.0 However, in a substantial number of cases, the necessary adaptations of EWC agreements may be expected to take place as part of regular renegotiations, which occur on average every five years, entailing no or only very limited additional costs compared to the baseline. Undertakings could also face a marginal increase in the recurrent annual costs of running an EWC (these being ca. EUR 300 000 on average per year per EWC under the baseline), for instance in relation to the obligation to provide a reasoned response to the EWC, the envisaged clarifications regarding the coverage of legal costs.0 Finally, in cases of breaches of obligations, the undertakings would face a risk of higher financial penalties. The occurrence of legal disputes and application of penalties is however expected to remain low and penalties would be subject to the principle of proportionality.

- When comparing the quantifiable unit costs to the turnover of relevant undertakings and considering the projected trends, the economic costs of the preferred option are expected to be and remain negligible.0

As undertakings with EWCs are primarily concentrated in the metal, services, chemicals, building, food, agriculture and tourism sectors, the identified social and economic impacts across all policy areas will materialise also primarily in those sectors. Moreover, due to the geographic distribution of those undertakings’ headquarters0, most EWCs have been set up under the national laws of seven Member States, namely Germany, France, Sweden, the Netherlands, Ireland and Italy. Nevertheless, the impacts policy options would affect employees across all Member States where the undertaking operates, because they are represented by the EWCs.

The initiative will not have any relevant or foreseeable impacts on consumers, SMEs,0 or the environment.0

The effectiveness, efficiency, coherence, and proportionality of the policy options linked to the same policy objective were compared, considering their impacts, to identify the preferred option taking into account the necessary trade-offs between different approaches.

Alternative measures considered in the impact assessment, which were assessed to be overall less effective, efficient, coherent, and proportionate and therefore not retained as a part of the preferred option, are described in section 5 and Annex 11 of the impact assessment accompanying this initiative.

• Regulatory fitness and simplification

The 2018 evaluation confirmed that the minimum requirements set out in Directive 2009/38/EC do not impose any obligations that would constitute an unreasonable burden for companies. By setting a procedural framework for transnational information and consultation, the Directive allows social partners the autonomy to agree on appropriate solutions in light of their specific needs and circumstances. For example, parties to EWC agreements may make use of ICT technologies for information and consultation purposes and choose, for instance, to use online meeting software, automatic translation tools or automatic speech-to-text transcription tools to save costs and achieve efficiencies. They are also free to agree on simplified language regimes for EWC meetings to lower the costs of simultaneous interpretation. Indeed, the Directive does not impose any specific budget to cover EWCs’ expenses, including for expert advice or training, but includes a general obligation on the company to ensure the means required for the EWC to apply the rights arising from the Directive.

Against this baseline, the scope for burden reduction by this initiative is limited. As mentioned above, the initiative will create only negligible costs for Community-scale undertakings, in proportion to their turnover, and generate potential – non-quantifiable – economic benefits linked to a better quality of social dialogue. Nevertheless, the need to limit costs and administrative burdens for undertakings was considered, in accordance with concerns raised by business organisations in the consultation of social partners, throughout the design and assessment of the measures, and formed part of the rationale for discarding options such as an obligation to fund any legal expenses incurred by the EWC, without limit.

The proposal does not create any compliance costs for SMEs, as the envisaged policy measures would not apply to SMEs and no indirect effects on SMEs are foreseeable.

• Fundamental rights

By improving the effectiveness of the framework for transnational information and consultation, the proposal would strengthen workers’ fundamental right to information and consultation within the undertaking (Article 27 of the Charter of Fundamental Rights of the EU). In line with the right of collective bargaining (Article 28 of the Charter), the proposal maintains the principle of autonomy of the parties, pursuant to which it is for the representatives of employees and the management of the undertaking to determine the nature, composition, the function, mode of operation, procedures and financial resources of EWCs so as to suit their own particular circumstances. Introducing objectives for a gender-balanced composition of EWCs will promote equality between women and men (Article 23 of the Charter). The proposal would also reinforce the right to an effective remedy (Article 47 of the Charter) against infringements of rights under Directive 2009/38/EC. Indirectly, positive effects on working conditions could be achieved, in line with workers’ right to working conditions respecting their health, safety and dignity (Article 31 of the Charter). The initiative is also consistent with the freedom to conduct a business (Article 16 of the Charter), as it preserves management’s ability to take decisions effectively and avoids undue burden on undertakings.

4. BUDGETARY IMPLICATIONS

The proposal does not require additional resources from the European Union's budget.

5. OTHER ELEMENTS

• Implementation plans and monitoring, evaluation and reporting arrangements

Member States are required to transpose the amendments to Directive 2009/38/EC into their national laws within one year of the entry into force of the proposed amending directive. The application of the revised requirements would be deferred by two years to provide parties to EWC agreements sufficient time to negotiate adaptations, where necessary.

Progress towards achieving the objectives of the initiative will be monitored by a series of core indicators related to the policy objectives. These indicators and the related data sources are specified in Annex 13 of the impact assessment.

• Explanatory documents (for directives)

As part of the transposition process, Member States will be required to notify the Commission of the means by which EWCs, SNBs, and employees’ representatives can bring judicial, and where applicable, administrative proceedings in respect of each of the rights under Directive 2009/38/EC. In addition, the general rules relating to the transposition of Directives apply. In particular, Member States must provide sufficiently clear and precise information on the measures transposing the proposal.0 In order to satisfy that obligation of legal certainty and to ensure the transposition of the provisions of the proposed amending directive in full throughout its territory, Member States are required to state, for each provision of the directive, the national provision or provisions ensuring its transposition.

• Detailed explanation of the specific provisions of the proposal

Amendments to the concept of transnational matters (Article 1 i of Directive 2009/38/EC)

To clarify the concept of transnational matters, a presumption of transnationality is laid down covering not only cases where measures considered by management can reasonably be expected to affect workers in more than one Member State, but also cases where such measures can reasonably be expected to affect workers in only one Member State and the consequences of those measures can reasonably be expected to affect workers in at least one other Member State, as currently set out in Recital 16 of the Directive. The targeted clarification aims to address the existing uncertainty and reduce the risk of disputes, while maintaining the distinction from national matters in order to prevent conflicts with national information and consultation procedures.

Amendments to the definitions of ‘information’ and ‘consultation’ (Article 2(1)(f) and (g) and Article 9 of Directive 2009/38/EC; point 1(a), third subparagraph of Annex 1)

The existing definitions of ‘information’ and ‘consultation’ not only specify the meaning of those terms for the purposes of Directive 2009/38/EC, but also include normative requirements. In accordance with legislative drafting rules and for the sake of coherence and legal clarity, those requirements will instead be laid down in Article 9. The substantive changes concern the consultation requirements: Article 9 will specify that consultation is to enable employees’ representatives to express an opinion prior to the adoption of the decision and that such an opinion must receive a reasoned written response from central management before the latter adopts its decision on the proposed measure. The subsidiary requirements set out in Annex 1 of Directive 2009/38/EC are adapted accordingly.

Amendments concerning the setting-up, composition, and resources of SNBs (Articles 5 and 7 of Directive 2009/38/EC, and points 5 and 6, last subparagraph, of Annex 1)

In Article 5(2)(b) of Directive 2009/38/EC, a requirement is inserted to elect or appoint the members of the SNB in a manner that strives to achieve a gender-balanced representation. In the first subparagraph of Article 5(6), it is clarified that expenses relating to the negotiations, to be borne by the central management, include the SNB’s reasonable costs of legal assistance, representation, and proceedings. Furthermore, the last sentence of Article 5(6), second subparagraph is deleted because it is not necessary to mention Member States’ option to limit the funding to cover one expert, given that the first sentence of the same subparagraph already states their right to lay down budgetary rules regarding the operation of the SNB, in compliance with the principle that expenses relating to the appropriate conduct of the SNB’s functions must be borne by the central management. Finally, Article 7(1), second indent is clarified by referring to the failure to convene the first SNB meeting instead of central management’s refusal to commence negotiations.

Amendments concerning the content of EWC agreements, to be negotiated by the parties (Article 6(2) of Directive 2009/38/EC)

Parties to EWC agreements will be required to specify the financial and material resources to be allocated to EWCs at least with respect to the use of experts, legal costs, and training. Moreover, they are to also specify the format of EWC meetings, which may include virtual formats if parties so agree. To improve effectiveness of existing EWCs, the new requirements in relation to financial and material resources and the format of EWC meetings apply also with respect to pre-existing EWC agreements, which may hence need to be adapted. This is provided for in a new sub-paragraph in Article 6(2). During the transitional period, the parties to existing EWC agreements should verify whether they fulfil the revised requirements of this Directive and, if this is not the case, renegotiate them to avoid the risk of legal disputes once the revised requirements become applicable. Should such renegotiation not be successful, the subsidiary requirements annexed to the Directive will apply.

Amendments concerning the gender-balanced composition of EWCs (Article 6(2) of Directive 2009/38/EC)

When negotiating new EWC agreements or renegotiating existing agreements, parties will be required by a new paragraph of Article 6(2) of Directive 2009/38/EC to lay down the necessary arrangements for attaining, as far as possible, a gender-balanced composition of the EWC, and where applicable, of the select committee. This objective is defined by the target of 40% of seats on the EWC – or select committee – to be allotted to members of either gender. The same objective is reflected in Annex 1 of Directive 2009/38/EC for newly established EWCs based on subsidiary requirements. In the light of relevant case-law of the Court of Justice of the EU on positive action0, the target of 40 % applies subject to its being legally and factually feasible and is without prejudice to the national laws on election of employee representatives.

Amendments concerning the number of plenary meetings of EWCs based on subsidiary requirements (point 2 of Annex 1 of Directive 2009/38/EC)

The revised subsidiary requirements will require two – instead of one – plenary meetings between EWCs and central management per year.

Amendments concerning extraordinary meetings of EWCs based on subsidiary requirements (point 3, first and second subparagraphs of Annex 1 of Directive 2009/38/EC)

The wording of the subsidiary requirements set out in point 3 of Annex 1 of Directive 2009/38/EC is adapted to clarify, firstly, that information and consultation of EWCs based on those requirements should in principle take place at the plenary meetings, if possible, and at extraordinary meetings only if urgency so requires. Secondly, it is clarified that information is to be provided in a timely manner, and thirdly, that EWC members have a right to participate in extraordinary meetings with the select committee if they represent employees who are potentially directly concerned by the subject-matter of such meetings.

Amendments concerning the resources available to EWCs based on subsidiary requirements (points 5 and 6 of Annex 1 of Directive 2009/38/EC)

In point 5 of Annex 1, it is clarified that the experts assisting EWCs or select committees based on subsidiary requirements may include trade union representatives, and that such experts are to be allowed, upon request of the EWC or the select committee, to be present at meetings in an advisory capacity. In point 6 of Annex 1, it is clarified that the operating expenses of EWCs to be borne by the central management include reasonable legal costs, which are to be notified to central management in advance. Furthermore, in the last subparagraph of point 6 of Annex 1, the second sentence is deleted for the reasons explained above in relation to Article 5(6) of Directive 2009/38/EC.

Amendments concerning the treatment or non-transmission of confidential information (Article 8 of Directive 2009/38/EC)

The provisions on the transmission of information in confidence and on the non-transmission of certain information are laid down in separate Articles to ensure a clearer structure. Additionally, when providing information in confidence, the central management must inform SNB members, EWC members or employees’ representatives in the framework of an information and consultation procedure, at the same time, about the reasons justifying the confidentiality of the information shared. The obligation not to reveal confidential information ceases when, in agreement with management, the justification provided by management has become obsolete. Furthermore, the possibility of the central management not to transmit information will be limited to cases where its transmission would seriously harm the functioning of the undertaking. In such situation, the central management must inform the EWC members, SNB members or employees’ representatives of the reasons justifying the non-transmission of information.

Amendments concerning the role and protection of employees’ representatives (Article 10 of Directive 2009/38/EC)

Article 10(1) of Directive 2009/38/EC is adapted to clarify that not only EWC members but employees’ representatives, including SNB members and EWC members, are to have the means required to apply the rights arising from this Directive. In Article 10(2), it is clarified that EWC members are to have the right and necessary means to inform relevant employees’ representatives about the transnational information and consultation procedure before and after the meetings with central management. In Article 10(3), second subparagraph, it is clarified that the requirement to afford rightsholders under Directive 2009/38/EC equivalent protection applies also with respect to protection against retaliatory measures or dismissal. Finally, it is clarified in Article 10 i that central management must bear the costs and expenses related to training necessary for the exercise of EWC and SNB members’ representative duties, of which central management is to be informed in advance.

Amendments concerning penalties and access to justice (Article 11 of Directive 2009/38/EC)

Member States’ obligation to provide for effective, dissuasive, and proportionate sanctions – currently mentioned in recital 36 of Directive 2009/38/EC by reference to the general principles of Union law – will be laid down in Article 11 of Directive 2009/38/EC. To comply with that obligation, Member States will be required, when determining sanctions, to take into consideration the gravity, duration, consequences, and the intentional or negligent nature of the offence, and in case of pecuniary sanctions, in addition also the size and financial situation of the sanctioned undertaking or group (for example, its annual turnover), and other relevant criteria. A provision is inserted in the same paragraph requiring Member States to provide for at least pecuniary sanctions in relation to breaches of the information and consultation procedures set out in Article 9(2) and (3). This does not prevent them from maintaining or introducing other forms of sanctions in addition. In Article 11(3), a reference to EWC and SNB members will be inserted in the first subparagraph, as that provision is relevant for them as well as for employees’ representatives. In the same paragraph, it is further clarified that the duration of the appeal procedure applicable when central management requires confidentiality or withholds information is to be compatible with the effective exercise of the information and consultation rights under Directive 2009/38/EC. Moreover, a new provision is added in Article 11 to ensure that possible mandatory prior out-of-court settlement procedures under national law are to be without prejudice to access to justice in respect of the rights under Directive 2009/38/EC.

Removal of exemptions and arrangements for the adaptation of existing agreements to the revised requirements (Article 14 of Directive 2009/38/EC)

Article 14 of Directive 2009/38/EC is deleted and exemptions from the scope of Directive 2009/38/EC are removed. Consequently, employees and employees’ representatives of Community-scale undertakings or groups with transnational information and consultation agreements pre-dating the transposition of Directive 94/45/EC (‘voluntary agreements’) will be entitled to either maintain their existing agreements or to request, in accordance with Article 5(1) of Directive 2009/38/EC, the establishment of an EWC or an information and consultation procedure with a view to replacing previous agreements. Undertakings with agreements signed or revised between 5 June 2009 and 5 June 2011 will become subject to the revised obligations arising from Directive 2009/38/EC.

A new provision in Article 14a provides for the adaptation of existing agreements concluded under Articles 5 and 6 of Directive 94/45/EC or Articles 5 and 6 of Directive 2009/38/EC to the revised requirements of Directive 2009/38/EC. Parties to such agreements are given the opportunity to negotiate the necessary adaptations during the two-year period between the deadline for transposing the amendments to Directive 2009/38/EC and the date from which the revised requirements under national law are to apply. These transitional arrangements do not apply in respect of ‘voluntary agreements’ concluded and operating outside the scope of the Directive. The consequences for undertakings with such agreements are described above, in relation to the removal of the exemptions.

Transposition and entry into application (Article 2 of the proposal)

Member States are to transpose the amendments to Directive 2009/38/EC within one year from the entry into force of the proposal. The application of the transposing measures is to be deferred by two years following the transposition deadline.

Having regard to the provisions amending Article 11 of 2009/38/EC, Member States are required to notify the Commission of how rightsholders can bring judicial proceedings under their jurisdictions, and where applicable, administrative proceedings, in respect of all the rights under Directive 2009/38/EC.