What are EUROPEAN WORKS COUNCILS (EWCs) ?

2004 was the 10th anniversary of the European Works Council Directive. Adopted in 1994, it gave millions of workers across the European Union the right to information and consultation on company decisions at EU-level through their EWC representatives. But 12 years on, there is still some way to go before the legislation meets its full objectives.
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 2,204 companies covered by the legislation, some 772 (35%) have EWCs in operation. However, many of these are larger, multinational firms, so that the proportion of employees represented by EWCs is much higher: more than 60% or 14 million workers across Europe. An additional 125 EWCs have been set up but ceased to exist folowing mergers, takeovers or bankruptcies.
The majority of companies covered by the Directive employ less than 5,000 workers - 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 after 12 years could be seen as a depressing 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. All the new Member States 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 1,142 companies covered by the EWC Directive that operate in new Member States, 32% have EWCs, but only half of these 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 needs updating

The revision foreseen in the original Directive is already some six years overdue, and the ETUC is calling for urgent steps to strengthen the law. In recent years, there have been many cases of companies, such as Renault in Vilvoorde, Belgium, carrying out major restructuring without consultation, in defiance of the spirit of the Directive.

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.