EC: Common position reached on national works councils text
On 11 June 2001, the Council of Ministers reached political agreement on a common position on an amended text of the proposal for national-level information and consultation of workers. This is something of a breakthrough, as there has until recently been a blocking minority of countries opposing the measure. However, the text still has a number of legislative hurdles to clear before final adoption.
Background
Political agreement on a common position on an amended proposal for a Directive establishing a general framework for informing and consulting employees was reached at the 11 June employment and social policy Council. The Commission first proposed a text in November 1998, following the European-level social partners' declaration that they could not agree to open talks to try to negotiate a European-level agreement on this issue. However, discussion of the text did not feature on any of the Council agendas in the months that followed, until the French Presidency of the second half of 2000. The text was discussed towards the end of that year and considerable committee work has been done on it over the past few months, under Swedish Presidency.
The speed with which this agreement has been reached has surprised many, especially as until recently there was a blocking minority of member states that were opposed to the Directive. The UK has provided the most vehement opposition to the text, largely as its provisions will have a significant impact on information and consultation procedures at the workplace in the UK. Other countries not in favour of the proposal were Ireland, Denmark and Germany - it is widely held that the German delegation had linked its acceptance of this proposal to that covering worker involvement in a future European company. As political agreement on the latter proposal was reached at the end of 2000, German objections to the national information and consultation proposal were dropped. The Swedish Presidency has worked to amend the text to take into account the concerns of member states such as Denmark, which was anxious to ensure that its collective bargaining system could be maintained under the Directive. Thus, most of the concerns of the member states originally opposing the Directive had been addressed during the first half of this year, with the exception of the UK, which sustained its objections to the text.
The UK's objections were lessened by inserting a phased implementation period into the text. But in any case, the UK alone, even with Ireland, is not able to form a blocking minority in the Council and, as the proposal is subject to qualified majority voting, it became clear that agreement was likely to be reached. It is thought by some commentators that the Swedish Presidency made sure that the employment and social policy Council met on 11 June - ie, after the general election in the UK, so as not to embarrass the UK government domestically over this issue. In the end, the UK did not vote against the proposal on 11 June.
The proposal in detail
The text on which political agreement was reached on 11 June differs considerably from the text first issued by the Commission in 1998. In general terms, it places more emphasis on national-level custom and practice. For example, article 1 states that the practical arrangements for information and consultation shall be defined and implemented "in accordance with national law and industrial relations practices in individual member states", which was not explicitly included in article 1 of the original text.
In addition, whereas the original text spoke exclusively of "undertakings", the latest text distinguishes between undertakings and establishments, defining the latter as "a unit of business defined in accordance with national law and practice and where an economic activity is carried out on an ongoing basis with human and material resources" (article 2).
Thresholds
With regard to the thresholds, under article 2a of the text, member states may choose whether to apply the Directive either to:
This means that countries such as Germany - where employee representation may be set up in establishments with at least five employees, and works councils may be set up in establishments with at least 20 employees - will choose the establishment option. France is also likely to choose this option. Countries such as the UK, where there is no statutory provision for information and consultation of this kind, will, in all likelihood, choose the undertaking option, where the threshold is 50 employees.
Graduated implementation
The other main concession in this text is that member states may avail themselves of a graduated implementation phase. The transposition period for the Directive is three years from the date of adoption. However, in member states where there is, at the date of adoption of the Directive, "no general, permanent and statutory system of information and consultation of employees nor a general, permanent and statutory system of employee representation at the workplace", the thresholds may be raised for a limited period as follows:
After this extra four-year period, the Directive will apply in full to undertakings with at least 50 employees, or establishments with at least 20 employees. This essentially means that countries such as the UK will have a total of seven years before being obliged to apply the Directive to undertakings with at least 50 employees. An extra exemption is supplied by article 2(3), which states that member states may derogate from the Directive in the case of crews "of vessels plying the high seas".
Content of information and consultation
The subjects on which information and consultation should be carried out, contained in article 3(1), remain broadly the same as those contained in the original draft:
Carrying out information and consultation
The parameters governing the carrying out of information and consultation, contained in article 3(3), also remain largely unchanged from the original draft. With regard to information, this shall be given "at such time, in such fashion and with such content" to enable employee representatives to conduct an adequate study and, where necessary, prepare for consultation.
The provisions governing consultation state that:
As with the original draft, this text provides that member states may allow management and labour "at the appropriate level, including at undertaking or establishment level" to define negotiated practical arrangements for informing and consulting employees. These agreements may contain provisions which are different to those described above, as long as they respect the principles set out in article 1 of the text, including a provision that information and consultation take place "in a spirit of cooperation". Any negotiated form of information and consultation may also be subject to limitations set out by member states.
Extra wording is provided in the provisions relating to confidentiality, contained in article 7. The new text provides that member states may authorise employee representatives and those assisting them to pass on confidential information to employees and to third parties, bound by an obligation of confidentiality.
Sanctions
The other major amendment to the text concerns the provisions relating to sanctions, contained in article 5. The 1998 text stated that in case of serious breach of the Directive's provisions by the employer, and where this would have direct and immediate consequences in terms of substantial change or termination of the employment contracts or employment relations, these decisions shall have no legal effect on the employment contracts or employment relationships of the employees affected. The original text also defined serious breaches as the total absence of information and consultation, and the withholding of important information or provision of false information.
These provisions have been omitted from the new text, which states merely (as also contained in the original draft) that member states shall provide for appropriate measures in the event of non-compliance with the Directive, that adequate administrative or judicial procedures should be available to ensure compliance and that member states should provide for "adequate penalties" in the case of infringement, which must be "effective, proportionate and dissuasive".
Reactions
The European Trade Union Confederation (ETUC) issued a statement immediately, in which general secretary Emilio Gabaglio stated that the political agreement "sends a strong signal to workers and to all those who had serious concerns about the high-handed and frankly intolerable way company management have been behaving in closures and industrial restructurings." He maintains that agreement on this proposal is the result of concerted trade union action and lobbying, and he stressed that the ETUC would "keep working to see that the text is tightened up in the next stages of the legislative process."
The UNICE position paper on this has not yet been finalised. But Thérèse de Liedekerke, director of UNICE's social affairs division, told EIRR that UNICE was originally not in favour of the Directive, believing that a high level of protection of workers was already ensured by the collective redundancies, transfer of undertakings and EWCs Directives. "If you add to that legitimate information and consultation requirements in the health and safety framework Directive, you cover all key aspects of information and consultation. What is left has to do with everyday communication between employers and employees in purely national companies and we believe it should not be regulated at EU level". However, she added that UNICE welcomed elements in the final text which ensure the avoidance of negative interferences in well-functioning national systems of information and consultation, in particular (and subject to verification of the final text): the exclusion of smaller companies from the scope of the Directive, and in particular, UNICE welcomed the broad principles on sanctions, as it believes that sanctions should be adapted to each specific case. Further, rendering a decision null is not, in UNICE's view, the best way to compensate workers who suffer owing to a lack of information and consultation.
What happens next?
Although this political agreement is being hailed as a significant breakthrough, the text still has a long way to go before final adoption. This proposal, under article 137(2) of the Treaty, is subject to the co-decision procedure. Accordingly, the text is initially issued by the Commission to the Council and the European Parliament (EP). The EP gives it a first reading (achieved in April 1999), following which the Council reaches a common position if the EP has made amendments the Council does not approve in their entirety.
This is the stage the proposal is now at - the Council achieved political agreement on the common position, which means a formal adoption of the common position (following legal and linguistic verification, and involving no substantive changes to the agreed text) can follow at any subsequent Council meeting (ie, not necessarily an employment and social policy Council).
The text will now be forwarded to the EP once more for a second reading - it has three months in which to examine the text, and it may make amendments. After the EP's second reading, the text will be forwarded to the Commission, which will examine any amendments made by the EP. The text will then once more be forwarded to the Council, which has three months to examine the text. If the EP has made no amendments, the Council may adopt the text by qualified majority.
However, if the EP has made amendments and some have been negatively assessed by the Commission, the Council must adopt these amendments by unanimous vote. If the EP has made amendments that the Council cannot agree with, a conciliation committee must be convened to broker an agreement between the Council and the EP. The conciliation procedure was successfully used to gain agreement in the extension of the working time Directive in April 2000.
Thus, proposal is at this stage far from settled. Commentators expect that the issue of sanctions will prove to be the most controversial over the coming months. In its second reading of the text, the EP might well wish to include an amendment relating to sanctions for non-compliance with the Directive. If it does, there is certain to be renewed debate in the Council, which could possibly lead to the convening of a conciliation committee.
With regard to the timescale, if all goes smoothly, the text may be adopted definitively during the latter part of this year. If there are difficulties and the text goes to conciliation, the process may be more drawn out, stretching into the early part of next year. However, the general consensus appears to be that it is unlikely that the text will fail to be adopted.
