Information and consultation at work: European Works Councils (EWCs)

Section 6 of the Personnel Today Management Resources one stop guide on information and consultation at work. Other sections.


Use this section to

Gain an understanding of employers' consultation obligations in relation to EWCs

Find out which law applies to the establishment of an EWC

Background

A framework for information and consultation exists at a European level. The EWC Directive was adopted in 1994 under the Social Chapter of the Maastricht Treaty. The directive is intended to provide a structure to ensure that undertakings with operations across the European Economic Area (EEA) respect the need to inform and consult their employees on an EEA-wide basis.

Under the EWC directive, companies or groups of companies employing at least 1,000 workers in the EU, with at least 150 in each of two member states, are required to establish a European-level information and consultation procedure or EWC on receipt of an appropriate request.

Employees in qualifying companies (or groups of companies) may negotiate (through a special negotiating body) with the company for the establishment of an EWC or an alternative information and consultation procedure. There will then be a written agreement on the scope, functions and term of office of the EWC or on the alternative procedural arrangement. If no agreement is reached, a default procedure in the directive applies.

The directive was implemented in 1999 in the UK by the Transnational Information and Consultation of Employees Regulations.

Application

Once the thresholds have been reached, the regulations will only apply if central management is situated in the UK. If central management is not based in the UK, the law of another EU country may apply to the establishment of the EWC (see box below on applicable law).

Request to establish EWC

The obligation to initiate negotiations to establish an EWC or alternative information and consultation procedure is triggered when a request is received from employees or employees' representatives.

The request may consist of a single request or a number of requests but must be made by at least 100 employees or by employees' representatives who represent that number in at least two companies in a minimum of two different countries.

Once a valid request is made, central management has six months within which to commence negotiations. A refusal to commence negotiations within this period will mean that the default provisions under the regulations will automatically apply.

Special negotiating body

Compliance with a valid request requires central management to negotiate with a special negotiating body (SNB).

The remit of the SNB is to reach agreement with central management on the EWC or an alternative information and consultation procedure. The UK members of an SNB are elected by ballot, unless a consultative committee already exists, in which case that committee can appoint the members of the SNB. The ballot, so far as is reasonably practical, must allow for secret voting and must permit all UK employees to vote.

Convening negotiations with the SNB to negotiate an agreement

The parties to these negotiations can either establish an EWC or an alternative information and consultation procedure. The EWC constitution must include:

  • The
    •  companies covered by the agreement

  • The
    •  composition of the EWC

  • The
    •  functions of the EWC

  • The
    •  procedure for information and consultation

  • The
    •  venue, frequency and duration of meetings of the EWC

  • The
    •  financial and material resources to be allocated to the EWC by central management

  • The
    •  duration of the agreement and procedures for its renegotiation.

    The rules for alternative information and consultation procedures are less stringent. The constitution must specify the mechanism by which information and consultation is to take place, and its remit shall relate to transnational questions which significantly affect the interests of the employees.

    Statutory EWC model

    If central management and the SNB fail to conclude an agreement providing for the establishment of an EWC within three years of commencing negotiations, an EWC must be set up in accordance with the statutory model set out in the Schedule to the Regulations.

    The Schedule sets out the following requirements:

  • The EWC shall comprise a minimum of three, and a maximum of 30, members
    •

  • The EWC representatives must be made up of at least one member from all the EEA member states in which the undertaking has operations
    •

  • Where
    •  a member state has 25 per cent or more, 50 per cent or more, and 75 per cent or more of the European workforce, that state shall have one, two or three additional members respectively

  • Employee representatives are to be appointed by UK 'employee representatives', or if there are none, shall be elected by ballot ('employee representatives' are defined as recognised trade union representatives, plus any other employee representatives elected or appointed by employees to receive certain information on behalf of employees)
    •

  • Specific balloting arrangements for the election of representatives must be complied with
    •

  • Only UK employees are entitled to vote or stand as a candidate for election
    •

  • An
    •  independent supervisor must be appointed to oversee the ballot

  • The
    •  supervisor may publish an 'ineffective ballot report' within one month of the ballot results being published. The publication of such a report will result in management having to hold another ballot

  • The
    •  competence of the EWC is limited to information and consultation on matters that concern the company as a whole. For example, this would cover a company implementing a data protection policy across its European operations)

  • The EWC is required to meet once a year

  • Central management has an obligation to draw up a report regarding the progress of the business and this report must be distributed to the EWC
    •

  • There
    •  is a procedure for calling exceptional information and consultation meetings.

    Relationship with other consultation bodies

    The obligation to inform and consult the EWC on a particular matter is additional to the obligations to inform and consult employee representatives on that matter under national laws.

    Future developments

    The European Commission began a review of the EWC directive in April 2004. It is seeking the opinions of European bodies of employer and employee representatives who engage in cross-sector dialogue on how best to ensure that EWCs promote constructive and fruitful transnational social dialogue; the possible direction of EC action in relation to EWCs; and the role the social partners believe they can play in addressing the issues that arise. If, following the consultation, the Commission considers EU action advisable, it must consult the social partners again on the content of the envisaged measures.


    EWC thresholds

    The multinational company must have at least 1,000 employees with 150 in each of at least two member states.

    These employee thresholds are based on the average number of employees (including part-timers) employed during the previous two years.

    An employee or employee representative may request information from management to establish whether these thresholds are met. Management is obliged to provide the information requested within one month.

     


    FREQUENTLY ASKED QUESTIONS

    Touchy Feely Inc is a US-based multi-national which has subsidiaries in a number of European countries, including the UK. Is it obliged to establish an EWC?

    The EWC directive will apply to Touchy Feely if it employs at least 1,000 employees in the EU and has at least two establishments in different member states, each employing at least 150 people.

    However, even if these requirements are satisfied, there is no obligation on Touchy Feely to establish an EWC unless a request satisfying the requirements of the directive has been made to central management of the company.

    The request from employees has to be made on behalf of at least 100 employees from at least two establishments situated in at least two different member states, or their representatives.

    What time limits apply to the establishment of an EWC?

    An employer has six months from the date of a formal request to commence negotiations with the SNB concerning the establishment of the EWC, and three years to conclude those negotiations and reach agreement. Accordingly, the timetable is reasonably relaxed. If an employer fails to comply with these time limits, then the fall-back requirements setting out a 'standard' EWC will apply.

    Which law applies to the establishment of any EWC?

    Although the relevant laws of each member state are all based on the provisions of the same directive, there are some important differences. Also, even once the law governing the operation of the EWC has been determined, the laws of other EU member states may be relevant in relation to certain aspects of the operation of the EWC - for example, the election or appointment of members of the EWC and/or the SNB.

    The basic rule is that where central management is located in one of the member states, the relevant law applying to the establishment of the EWC is the law of that country. This law will apply to all issues other than the election of employee representatives to the EWC or SNB. This issue will be governed by the law of the state in which the relevant employees are based.

    If central management is located outside of the EU, it may appoint a representative agent to act on its behalf.

     


    Remit of EWC

    The remit is specified in the agreement setting it up, but usually covers information and consultation of a transnational nature on:

  • The economic and financial situation
    •

  • Employment and social issues
    •

  • Business, production and sales structure
    •

  • Transfers, mergers, cutbacks, closures and collective redundancies
    •

  • Investment
    •

  • New working methods and technology
    •

  • Organisation

    •

     


    One stop guide to information and consultation at work: other sections

    Section 1: the changing workplace
    Section 2: current consultation obligations on collective redundancies
    Section 3: current obligations with business transfers
    Section 4: electing staff representatives for redundancy and transfers
    Section 5: listed companies and consultation
    Section 6: European Works Councils (EWCs)
    Section 7: health & safety and occupational pensions
    Section 8: trade union recognition
    Section 9: future consultation obligations
    Section 10: useful resources
    Section 11: jargon buster
    Appendix: consulting in a regulated environment checklist