Information and consultation of workers across Europe: part one
There are hopes that the proposed EU Directive establishing a general framework for informing and consulting workers will be adopted by the end of this year or early in 2002. This new Directive is likely to have a profound impact on information and consultation structures in the EU, certainly in countries such as Ireland and the UK. In this, the first part of a comparative feature, we examine existing arrangements for informing and consulting workers in the EU.Background - the Directive
The European Commission's proposal for a new Directive establishing a general framework for informing and consulting workers is now progressing steadily through the EU decision-making machinery. The current situation is that, following agreement on a common position reached in the Council on 11 June, the European Parliament (EP) gave the text a second reading on 23 October (European Parliament votes to amend information and consultation proposal) and suggested a number of amendments. If the Council does not accept these amendments, a Council/EP conciliation committee will be convened, under the co-decision procedure, to try to broker a joint text.
At this stage, it appears unlikely that the Council will accept the amendments and that a conciliation committee will therefore be convened. Nevertheless, despite the areas of potential conflict and controversy surrounding this issue, there are expectations that a conciliation text will be produced and approved, possibly by the end of this year or the beginning of 2002.
The majority of European countries already have employee representation procedures in place, to a greater or lesser extent. These mainly take the form of works council-type structures, their size depending on the size of the company. As the EU proposal currently stands, transposition into national legislation would therefore entail only minor adjustments to the current system of employee representation in many member states. For an overview of the main requirements of the Council's common position text; for a more detailed examination of that proposal, see EC: Common position reached on national works councils text.
There are, however, two countries where there is no statutory framework governing the setting up of employee bodies for the purposes of regular and general information and consultation - Ireland and the United Kingdom. Such bodies do exist in these countries, but they are run on a voluntary basis without legal underpinning. These are therefore the countries which will be most affected by the Directive, once it comes into force. Accordingly, the UK government has been active in the Council of Ministers in attempting to secure derogations and temporary exemptions for countries such as the UK. In the text agreed upon in June by the Council, countries which currently have no general form of employee representation in place - ie the UK and Ireland - will, in addition to the three-year transposition timetable, have an additional two years to implement the Directive in undertakings of at least 150 employees (or establishments of at least 100 employees) and a further two years in undertakings of at least 100 employees (or establishments of at least 50 employees). Thus, according to the Council's text, undertakings with at least 50 employees (or establishments of at least 20 employees) will have seven years to comply with the Directive. However, this will now be up for debate in the conciliation committee as the EP has taken out this implementing timetable.
Existing arrangements in Europe
In this comparative feature, we look at employee representation arrangements in 18 European countries - the 15 EU member states, plus Cyprus, Malta and Norway. Many countries, such as Austria, Belgium, Denmark, France and Germany, have an extensive framework governing this issue (in the case of Belgium and Denmark, the law takes second place to regulation by collective agreement). These countries typically provide for the setting up of works councils consisting of elected representatives who usually enjoy protection against dismissal and a range of other rights such as paid time off to carry out duties and the right to related training. In many countries, there is also provision for central or group works councils where several establishments are grouped together in a company or several companies comprise a group.
In the majority of countries, works councils are employee-only bodies. However, the Danish model provides for "cooperation committees", which comprise equal representation of management and the workforce. Belgium also has joint bodies. Further, there is provision for management representatives to sit on works councils in Belgium, Luxembourg, France and Norway. In France, the works council is chaired by the employer or its representative.
Works councils in many countries have a right to be informed and often consulted about a range of issues, including the financial situation of the company, the employment situation and related developments, proposed changes to the structure of the business, work organisation and training. In some countries, such as France, there is a requirement that consultation be in good time so as to allow the works council to formulate proposals which the employer must then consider.
In Germany, these rights extend to co-determination in some areas, such as the operation of payment systems, rest breaks and the start and finish of working time, which means that the employer may not make a unilateral decision in those areas. Even though Germany arguably has the most developed system of employee representation in Europe, legislation governing this has recently been strengthened, giving works councils further rights and powers in some areas. Some co-determination rights, largely connected with employment issues, also exist in countries such as Belgium, the Netherlands and Austria. Further, in some countries, such as Sweden and Finland, there is an obligation on management to negotiate with the works council on some issues.
One of the main exceptions to the statutory approach to the regulation of employee representation is Denmark. Here, the operation of works councils is determined by a national collective agreement which dates from 1947 but has been frequently amended, most recently in 1986.
In general, however, regulation in the majority of countries is effected by means of statute. There is relatively little evidence of sectoral or company agreements in this area, although we do include some in this two-part feature. For example, the agreement at the French group Alstom (see p.20) improves on the already extensive statutory provisions regulating employee representative bodies.
Below, we detail employee representation arrangements in seven European countries.
AUSTRIA
Composition
Provisions governing the information and consultation of the workforce are contained in the labour constitution Act (Arbeitsverfassungsgesetz - ArbVG), which dates from 1973. Under the Act, a works council (Betriebsrat) may be set up in all undertakings with at least five employees who are eligible to vote in works councils elections. Separate works councils for blue- and white-collar workers should be set up, if the number of workers is large enough. However, a joint blue-/white-collar works council may be set up if two-thirds of both the blue- and white-collar workers wish. The number of employee representatives elected increases according to the size of the workforce, ranging from one representative for five to nine employees, to five representatives for between 101 and 200 employees and 13 representatives for 901 to 1,000 employees, with one extra representative per additional 400 employees.
Representatives are elected by secret ballot by all employees above the age of 18. Employees are eligible for election if they have at least six months' service and are Austrian or EU citizens. The term of office is four years.
In organisations consisting of at least two undertakings, a central works council may be set up (Zentralbetriebsrat). This consists of four representatives for companies of up to 1,000 employees and one further representative per 500 additional workers, up to 5,000, after which one additional representative is elected per 1,000 additional workers. The central works council is elected by works council representatives and is not divided into blue- and white-collar parts.
Similarly, a group-level works council (Konzernvertretung) may be set up in a group consisting of a number of companies, if at least two-thirds of the members of the central and undertaking-level works council members wish. This is made up of two members from each central works council.
Information and consultation rights
Article 91, para. 1 of the labour constitution Act states that employers are obliged to inform the works council of all events which affect the economic, social, health or cultural interests of the workforce. Section 92, para. 1 states that the employer is obliged to meet with the works council at least every quarter, or monthly if the works council wishes, and to give the works council any documentation it requests.
Works councils have the right to be informed about and consulted on a wide range of issues, including: the economic and financial situation of the company; the development of employment; planned changes to the structure of the business; training; work organisation; redundancies and dismissals; the introduction of new technologies; temporary working; the renting out of company housing; and year-end figures.
In the case of individual dismissals, the works councils must be informed beforehand and given five days in which to express an opinion. Only after this five-day period has elapsed may the dismissal go ahead. In the case of collective redundancies, the works council must be informed at least 30 days before the authorities are notified. In the case of planned changes to the structure of the business, the works council must be informed in advance and "in good time", and be given the reasons for the planned changes, and details of the legal, economic and social consequences for the workforce and details of the measures taken to cushion the consequences for the employees affected.
There are also a number of areas in which the works council has a right of co-determination, meaning that the employer cannot implement a decision without the agreement of the works council. These areas include rest breaks and daily working time, payment systems, the recruitment of temporary workers and the drawing up of a social plan in the event of redundancies. If no agreement can be reached between the company and the works council, the matter may be taken to external conciliation for a binding decision.
Confidentiality
All members and substitute members of the works council are bound by confidentiality, under the labour constitution Act. Breaking confidentiality rules is one of the reasons for which works council members can be dismissed.
Protection against dismissal
Works council members enjoy a certain amount of protection against dismissal in that they can only be dismissed following a court ruling, primarily for reasons such as the closure of the business or a part of the business, incapacity to carry out work as stipulated in the works council member's contract and persistent failure to carry out the duties stipulated in the employment contract, including misconduct. In the case of gross misconduct, the employee may be dismissed summarily and court approval gained after the event.
Resources
Works council members are by law granted paid time off in which to carry out their duties, although representative bodies are under an obligation to carry out their duties in a way which does not disturb the operation of the business. In companies of at least 150 employees, one employee may carry out works council duties on a full-time basis. This rises to two in companies with more than 700 employees, three in those with more than 3,000 employees and one more per additional 3,000 employees.
Works council members also have a right to three weeks of paid time off per four-year term for works council-related training. This can be increased to five weeks in certain circumstances. In companies of fewer than 20 employees, this time off is unpaid.
The employer must provide resources - such as offices and stationery - to the works council to enable it to carry out its duties. The employer is not obliged to finance the works council in any other way, although a works council payment may be levied on employees, up to a maximum of 0.5% of pay.
Disputes
All disputes between employers and the works council are dealt with by the labour courts, which can order employers to pay a fine of up to Sch30,000 (€2,180) in certain cases, such as: a refusal to provide the works council with information concerning the recruitment of workers, including temporary workers; the withholding of financial information; and a failure to inform the works council of collective redundancies. Works council members can also be fined if they breach confidentiality provisions.
As the law is so comprehensive in covering the rights, duties and operations of works councils, collective regulation plays almost no part in this. Further, the labour constitution Act stipulates which areas of regulation may be governed by collective agreement, and information and consultation of employees is not one of them.
BELGIUM
A number of laws and decrees govern the issue of informing and consulting employees: the law of 20 September 1948 outlining general principles of the organisation of industrial relations; the Royal Decree of 27 November 1973 regarding economic and financial information; the Royal Decree of 7 April 1995 and the Ministerial Decree of 19 June 1995 regarding information on employment; and the Royal Decree of 3 May 1999 regarding the tasks and organisation of the committees for prevention and protection at work.
Nevertheless, information and consultation rights are mainly set out in the national collective agreements bargained in the bipartite National Labour Council. The government then gives these agreements legal force. The main collective agreement is the national agreement no.9 of 9 March 1972, which details how works councils operate.
Composition
Under this collective agreement, works councils must be set up in all undertakings and establishments of at least 100 employees. Works council members are elected for a four-year term. The most recent elections were held in May 2000. If a company has an existing works council but employs fewer than 100 employees, elections must continue to be held until the workforce dips below 50 employees. Works councils are joint bodies comprising representatives of the employer and employees. The number of participants rises according to the size of the company, ranging from six employee representatives in companies of 101 employees and over, to 22 representatives in companies of 8,000 employees and over. The works council includes representatives for blue- and white-collar workers, young workers (under 25 years) and professional and managerial staff.
Committees for prevention and protection at work must be set up in all companies with at least 50 employees. These are also joint bodies, including representatives of blue- and white-collar workers and, if desired, young workers.
In companies with fewer than 50 employees, a union delegation must be put in place, the competencies of which are set out by law or collective agreement. Their organisation and rights are agreed upon at sectoral level and can vary considerably from sector to sector.
Central works councils, covering several business units, may also be set up if at least half the members of a general assembly of works council members desire this.
Information and consultation rights
The Royal Decree of 27 November 1975 states that information provided to employee representatives "must enable the employees to form a clear and correct image of the state, evolution and prospects of the undertaking . . . it must enable the employees to understand the impact of this data and the consequences for the organisation and the employment policy of the undertaking."
The works council has extensive information and consultation rights over issues such as the economic and financial situation of the company (annual accounts), employment development, proposed changes to the structure of the company, training, work organisation, new technology, labour relations, recruitment and dismissal, early retirement, use of state aid and outplacement activities.
In all of these cases, the power of the works council is limited to information and consultation rights. However, the works council has co-determination powers in the following areas: the formulation and change of employment conditions; the planning of paid educational leave; and the management of social institutions such as day-care centres and canteens.
There are no set rules about how often a works council should be given information, as this depends largely on the issue involved. A basic dossier containing information about the company should be provided every four years. In addition, some information should be provided annually, such as financial information and information relating to the situation and development of employment. Other information must be provided every quarter, such as information on the achievement of financial targets and any adjustments in employment.
Employers must inform the works council in advance of any plans to make collective redundancies, and the works council must have the opportunity to put forward proposals to reduce or cushion the effects of the plans. The works council should be convened extraordinarily to be informed about specific events.
Confidentiality
Works council members are bound by confidentiality provisions regarding material which the employer deems to be commercially and competitively sensitive. Members of the committee for prevention and protection may not make their information public.
Protection against dismissal
Works council members enjoy protection against dismissal from the period beginning one month before the start of their term and during their term. There are exceptions if the dismissal is made for urgent or economic and technical reasons. If, for reasons not included above, an employer dismisses an employee who is protected, it will be liable to pay compensation of between two and four years' pay, depending on the length of service of the works council member. The employee in question may also request re-engagement and if this is refused, the employer must provide full salary for the remainder of the mandate.
Resources
Works council members have a right to paid time off in order to conduct their meetings and preliminary meetings. No other resources must be supplied by the employer, with the exception of travel expenses.
Collective agreements
As mentioned above, national collective agreements play an important role in the regulation of works councils activities. However, few collective agreements on this subject exist at sectoral and company level. This is largely because the framework set out by legislation and national collective agreement is deemed to be extensive.
Compliance
It is thought that compliance with provisions governing employee representation is in general good, and that the majority of companies with at least 100 employees do have a works council in place. Works councils do not exist, however, in a limited number of companies where no employees have agreed to volunteer to stand for election to the works council.
In general, there have been no changes in recent years to the way in which works councils operate. One exception is that their competence has been expanded to cover a right to information on issues such as video security, a detailed breakdown of the composition of the workforce and the organisation of parental leave.
There is some debate concerning the threshold of 100 employees for the setting up of a works council. Trade unions would like to see it lowered, but this is strongly opposed by employers' organisations. Employers are unhappy about the scale of organisation involved in setting up and electing members to works councils. They are also unhappy about the extensive protection against dismissal offered to works council members.
CYPRUS
As Cyprus is not part of the EU, it is not obliged to implement EU Directives. However, new laws governing the information and consultation of employee representatives came into force recently, giving a number of rights in some areas.
Information and consultation rights
Statutory regulation governing the information and consultation of employees is contained in legislation dating from July 2000 on informing employees about working conditions, and in legislation dating from March 2001 on collective redundancies. The first law obliges employers to inform employees about their working conditions, while the second obliges the employer to inform and consult employees in the event of collective redundancies.
There is no specific provision for the setting up of works councils, but the law provides for putting into place employee representatives in companies of more than 20 employees. These representatives only have rights in the areas outlined above and there is no provision for regular meetings. However, the legislation states that employee representatives must be informed whenever there is a change in employment terms and conditions or if redundancies are planned. The information should include the reason for the redundancies, the numbers involved and the amount of compensation to be paid, if any (there are no specific provisions obliging employers to consult in good time on planned redundancies).
Statutory provisions protect employee representatives against dismissal. Furthermore, employers are subject to a fine of C£1,000 (€1,754) for contravening any statutory provisions relating to the information and consultation of employee representatives.
In general, trade unions have been in favour of the new legislation. However, employers are concerned that this will have a detrimental effect on small employers and express particular concern about the cost implications for all employers.
DENMARK
Information and consultation of employees is governed by both legislation and collective agreement in Denmark, with collective agreement being by far the most important means of regulation. The two relevant laws are the law governing the operation of public limited companies (lov om aktieselskaber) and the law governing the operation of private limited companies (lov om anpartsselskaber), both dating from 1973. However, these laws are not particularly relevant to the operation of works councils - by contrast, the collective agreement on cooperation committees, dating from 1947, regulates the operation of works councils closely. It has been amended a number of times, most recently in 1986.
Composition
Works councils ("cooperation committees" - samarbejdsudvalg) must be set up in companies of at least 35 workers at the initiative of one of the parties. These are joint bodies comprising a number of worker and management representatives according to company size, as follows:
Management representatives are selected by the employer, while employee representatives are selected by and among the shop stewards. Members have a two-year mandate.
Group committees (koncernudvalg) may be formed from individual works councils within a company group.
Information and consultation rights
Under the collective "cooperation" agreement, works councils have a right to information and consultation, but not to co-determination. Works councils ordinarily meet six times a year, but more often if circumstances dictate a special meeting. Works councils have a right to receive information on a variety of topics, including the economic and financial situation of the company, employment developments, proposed changes to the structure of the company, training, work organisation and new technology. The cooperation agreement states that information should be given "at an early time so that viewpoints, ideas and proposals from the employees can be part of the basis for decisions." Cooperation committees must also be informed about any major collective redundancies or changes of ownership of the company.
Although the cooperation agreement states that the cooperation committee and the company should reach agreement on the range of issues on which the committee is being informed and consulted, there is no procedure for conciliation or arbitration in the case of a disagreement - excepting issues concerning the operation of the committee - and management is therefore entitled to make a final decision unilaterally.
Confidentiality
Members of the cooperation committee are obliged to observe professional secrecy in relation to matters presented by the company as confidential.
Protection against dismissal
Protection against dismissal in the case of works council members is not contained in the collective agreement. However, protection for shop stewards is included in the general agreement between the LO trade union confederation and the DA employers' organisation (Hovedaftalen). In the case of employee representatives who are not shop stewards, a further six weeks' notice above that granted by collective agreement applies.
Employers are obliged to bear any costs relating to the operation of a works council. Employees also have the right to attend meetings in normal paid working time, but are not entitled to any other paid time off.
Infringements of statutory and collectively agreed provisions governing works councils are dealt with by a national body (samarbejdsnævnet) and ultimately by an arbitration court.
FINLAND
The Act on Cooperation in Undertakings of 22 September 1978 governs the information and consultation of employees. The law provides for employee representatives to be informed and consulted in companies employing at least 30 people. This threshold is lowered to 20 when the employer is considering the termination of at least 10 posts (collective redundancy).
Information and consultation rights
The 1978 Act provides for employee representatives to be informed and consulted about a range of issues, including the economic and financial situation of the company, economic developments, proposed changes to the structure of the company, training, work organisation, new technology, the use of temporary and subcontracted labour, recruitment, international information and the start and finish of regular working time and rest breaks.
Employee representatives should be informed and consulted between two and three times a year, depending on the subject matter. In addition, a special meeting should be convened in order to discuss particular events. In this case, the employer should issue a proposal three days in advance, or five days in advance if the proposal has employment consequences. This then allows the employee representatives time to discuss the subject.
There is an obligation to negotiate on events affecting employment, ranging from one week in the case of changes applying to nine employees or fewer, to six weeks in the case of changes applying to 10 employees or more. This effectively means that no decisions relating to the dismissal or lay-off of workers can be effected until one week or six weeks after the employee representatives have been notified, depending on the numbers involved.
Confidentiality
The Act obliges employees and their representatives not to disclose any business or professional information which is deemed to be commercially sensitive.
Protection against dismissal
The Employment Contracts Act prohibits dismissal on grounds relating to duties connected with the post of employee representative. In practice, this means that employee representatives are among the last employees to be dismissed or laid off. Employee representatives are also entitled to paid time off to carry out their duties.
Many collective agreements also oblige employers to provide resources such as a room to employee representatives, in addition to stipulating time-off rights.
The 1978 Act on Cooperation in Undertakings provides for employers to be fined if they breach its provisions. In addition, if employers dismiss or lay off employees or change employment contracts from a full-time to a part-time basis without consulting employee representatives, they are liable to pay compensation of up to 20 months' salary.
Compliance
According to lawyers at the central employers' organisation TT and the trade union confederation SAK, the number of companies complying with the law is very high. Individual examples of non-compliance include the closure of the Fujitsu Siemens plant in Espoo, announced in December 1999. Trade unions brought a case for compensation, stating that the provisions on consultation had been breached. The case has now been dropped, although a civil suit is continuing. A further case involved the redundancies of 130 stevedores at the ports of Kotka and Hamina in 2000, which provoked strike action.
There have been a number of changes to the statute in this area over the past few years. The 1978 law was most recently amended in 1997, notably reducing the negotiation time from three months to six weeks in the case of collective redundancies and lay-offs.
As regulation by statute is strong in Finland, there are relatively few examples of collective agreements which go beyond the statutory provisions. One exception is the printing industry, where collectively agreed provisions improve upon the statutory provisions in some areas.
FRANCE
Legislation governing the setting up of works councils (comités d'entreprise) dates from 1945 and is incorporated into the French Labour Code. It stipulates that all companies with at least 50 employees must set up a works council. In smaller companies, the setting up of a works council is voluntary. Companies with 11 or more employees are also obliged to provide for employee delegates (délégués du personnel).
Composition
Members of the works council are elected by the workforce for a two-year renewable mandate. The composition of the works council is dependent on company size, ranging from three representatives (and three deputies) in companies of between 50 and 74 employees to 15 representatives (and 15 deputies) in companies of 10,000 employees or more. This number may be increased by collective agreement. Technically, French works councils are a joint body, as they are chaired by the employer.
In cases where distinct establishments form part of a company, even if they do not all employ 50 workers, establishment-level works councils (comités d'établissement) may be set up, in addition to a central works council (comité central d'entreprise). The latter must be set up if two establishment-level works councils exist. Further, a group works council (comité de groupe) may be established at the site of the dominant company in a group of companies.
Works councils meet at least once every two months in companies of up to 150 employees, rising to once a month in companies of 150 employees or more. In both cases, further meetings may be held if a majority of works council members so wish. Works councils have a right to use the services of experts of their choice in certain circumstances, including for perusal of financial documentation and in redundancy situations. The services of the expert are paid for by the employer.
Information and consultation
Works councils have extensive rights to be informed on a wide range of issues. There is a distinction drawn between companies of fewer than 300 employees and those of at least 300 employees. In companies of at least 300 employees, the employer must supply financial information about the company three times a year, and company results information twice a year. The works council must also be informed about the employment situation in the company three times a year. Additional meetings on the number of temporary and fixed-term contract workers may be held if these numbers rise and a meeting is demanded by a majority of the works council.
In companies with fewer than 300 employees, the employer issues a report to the works council once a year, detailing developments in the following areas: the financial situation of the company; part-time work; development of employment, qualifications, training and pay; gender-related differences in working conditions; and actions to be taken to encourage the employment of people with disabilities. Works council members receive the report 15 days ahead of the meeting.
Works councils also have consultation rights. In general, in all areas where the works council has a right of information, decisions taken by the employer must be preceded by a consultation with the works council. The labour code states that this consultation must be prior to the decision and must give the works council time to respond to the employer's proposals. Issues on which the works council must be consulted include: general issues relating to the running of the business; and those which may affect the volume or structure of the workforce, working time, working conditions or training. This includes redundancies; recourse to fixed-term and temporary work; changes to the economic or legal organisation of the business; measures intended to improve working conditions; general problems relating to working conditions; lay-offs; the dismissal of employee representatives; the introduction of new technology; the length of working time; training; paid holidays; health and safety (in conjunction with the health and safety committee); recruitment; and personnel management.
Confidentiality
Works council members are bound by confidentiality rules relating to all matters concerning production methods and any other matters deemed of commercial sensitivity by the employer. The breach of this confidentiality is a criminal offence.
Protection against dismissal
Works council members enjoy general protection against dismissal. They can only be dismissed following consultation with the works council and the authorisation of the labour inspectorate.
If employers breach any of the provisions relating to their obligations towards works councils, this is considered to be a criminal offence and can be punished by up to one year in prison and/or a fine of Fr25,000 (€3,811).
Resources
Works council members have a well-established set of rights outlined in the Labour Code. Both members and deputies are entitled to a total of 20 hours of paid time per year to carry out works council-related duties. These hours may be extended in certain exceptional cases. This 20 hours does not include participation in meetings, which is counted as normal working time. Members and deputies also have a right to attend a financial training course of five days in paid working time. The costs of the course are paid by the works council. Employers also bear any travel costs relating to works councils meetings.
In general terms, works councils are well funded, as the employer is obliged to pay an annual sum equivalent to 0.2% of the gross wage bill to finance the activities of the works council. The employer is also obliged to provide resources which allow the works council to carry out its duties.
Compliance
It is estimated that some 30,000 works councils exist in France, and that they operate in around three-quarters of companies with between 50 and 100 employees. However, it is reported that relatively few of the smaller companies governed by the works councils legislation (ie with 50-70 employees) actually have a works council in place.
There have been a number of changes in recent years to legislation surrounding the operation of works councils. The most recent legislative amendment took place in 2001 and there are further changes proposed in the social modernisation Bill.
In addition to the Labour Code, a number of companies have concluded agreements which go beyond the statutory provisions (for example, see the box at left). It is not envisaged that the proposed EU Directive will necessitate any changes to French legislation in this area, which is already very extensive.
GERMANY
Composition
Germany has a comprehensive statutory framework governing the information and consultation of employees. The works constitution Act (Betriebsverfassungsgesetz) provides for the setting up of an employee-only works council (Betriebsrat) on the request of at least three employees, in all companies with five or more employees. This legislation was most recently amended in the summer of 2001. The amendments to the Act simplified election procedures to works councils, increased their size, allowed works councils to delegate some everyday activities, increased co-determination rights in some areas and lowered the company size threshold at which employers are obliged to allow full-time works councillors, from 300 to 200 employees. For more details of these amendments, see Germany: New works constitution Act enters into force.
Where a number of establishments exist within a company, a central works council (Gesamtbetriebsrat) may be set up, made up of representatives from individual works councils. Further, where there are a number of companies within a group, a group works council (Konzernbetriebsrat) should be set up.
Elections to the works council are by secret ballot. In companies of between five and 50 employees, the election procedures have recently been simplified - members can now be elected during a staff meeting. This procedure may also apply in companies of between 51 and 100 employees, by agreement. Works council members are elected for a period of four years. The next elections are due in 2002.
The size of the works council depends on the size of the company. The recent legislative amendments increased the size of the works council - it now ranges from one employee representative in firms of between five and 20 employees, to nine representatives in companies of between 201 and 400 employees, 15 representatives in companies of between 1,001 and 1,500 employees, and 35 representatives in firms of between 7,001 and 9,000 employees.
Information and consultation rights
Works councils have extensive rights to be informed and consulted on a range of issues. They also have co-determination rights in a number of cases.
The works council has the right to be informed regularly on issues such as the economic and financial situation of the company (at least once a year, depending on company size - in companies of 100 employees or more, an economic committee may be set up specifically to deal with information of this nature), the employment situation in the company (once a year), work organisation, and new technology.
The works council must be consulted in good time on a range of issues in order to allow a dialogue between management and the works council. These issues include proposed changes to work organisation or processes, individual dismissals, and collective redundancies. The powers of the works council to make suggestions and proposals in certain areas have been widened by the recent legislative changes. For example, the works council can now make proposals regarding flexible working time arrangements, the elimination of overtime, the promotion of part-time working, phased early retirement, new forms of work organisation and alternatives to contracting-out arrangements. The works council may also propose the introduction of guidelines for personnel selection for redundancy.
The works council also has powers of co-determination in certain areas, which means that the approval of the works council is necessary before management can make a decision. These areas cover issues relating to overtime, working time and rest breaks, questions surrounding the operation and administration of remuneration and benefit systems, health and safety, and behaviour and performance monitoring. Co-determination rights have been widened under the recent legislative reform. For example, the works council now has co-determination powers in both the introduction and operation of vocational training (the power was until now restricted to the operation of training). A codetermination right has also been introduced in the operation (but not introduction) of teamworking.
In the event of redundancies, the works council must be informed and consulted in good time, to allow it to make proposals to cushion the effects. There are co-determination rights in the drawing up of a financial compensation plan for redundant employees.
Confidentiality
Legislation requires works council members to respect the confidential nature of any material which the employer deems to be commercially sensitive.
Protection against dismissal
Works council members enjoy enhanced protection against dismissal in that they may only be dismissed with the agreement of the works council or, if this is not possible, an employment tribunal. Candidates for election to the works council enjoy protection for six months following the election, while members enjoy protection for up to two years following the expiry of their mandate. Those employees who have instigated the setting up of the works council also enjoy enhanced protection against dismissal.
Compliance
Not all companies that are eligible to set up works councils actually have these structures in place. This was one of the main drivers, from the point of view of the government, for the recent reform of the legislation governing the setting up and operation of works councils. The government found in a recent survey that only 4% of establishments with between five and 20 workers actually had a works council in place. This rose to 28% of companies with between 21 and 100 workers. It is hoped that the legislative reforms will encourage employees to request the setting up of a works council.
An overview of provisions in the remaining 11 countries covered by this survey will appear in future editions of EIRR.
Overview of the proposed EU Directive establishing a general framework for information and consultation in Europe
The Commission's proposal for a Directive establishing a general framework for informing and consulting employees is making its way through the decision-making process of the EU. The text is far from finalised - the current situation is that the Council of Ministers, on 11 June 2001, reached a common position on a text. The European Parliament (EP) read the text on 23 October and made a number of amendments to it. Under the co-decision procedure, to which this proposal is subject, if the Council cannot accept the EP's amendments, a Council/EP conciliation committee will be convened in order to agree a compromise text. At this stage, it is thought likely that a conciliation committee will be convened.
The key provisions of the text as it currently stands are set out below. This overview is based on the Council's text agreed on 11 June 2001, with the EP's main suggested amendments added in italics.
Thresholds
The Directive will apply either to establishments of at least 20 employees in any one member state or undertakings with at least 50 employees in any one member state. Member states may choose which threshold to apply.
The Directive will come into force three years after adoption. However, under the Council text, member states which have no general, permanent and statutory system of information and consultation of employees in place may, in addition to the three-year transposition period, have:
Thus, after a total of seven years, the Directive would be applied to undertakings of at least 50 employees (and establishments of at least 20 employees) in these countries. However, the EP's text has taken out all of these transitional provisions.
Definition of information and consultation
Information 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 EP has strengthened this definition, stating that information should include all relevant data and should take place before the decision is taken.
The provisions governing consultation state that:
The EP has strengthened these provisions somewhat, stating that consultation should take place during the planning stage of a decision in order to allow employees to influence the decision-making process.
Subject matter
The subjects on which information should be given and consultation carried out are:
Collective agreements
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 differ in content from the provisions set out above, although they must provide 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.
The EP has reduced the scope for divergence from the Directive, stating that negotiated agreements should meet the general objectives set out in the Directive and any conditions set out by member states.
Sanctions
This is one major area of discussion. An earlier Council draft of the proposal included a raft of sanctions in the case of a breach of the provisions of the Directive, including one to the effect that decisions shall have no legal effect if the Directive has been breached. These sanctions were omitted from the version of the text agreed by the Council on 11 June, which states merely 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".
Although the EP's report on amendments to this text, drawn up by its employment and social affairs committee on 9 October, advised putting the sanctions back into the text, MEPs did not vote in sufficient numbers in favour of approving this amendment at the EP plenary session on 23 October. Therefore, the sanctions provisions of the Council's 11 June text remain unchanged. However, the EP has added a recital stating that more stringent, dissuasive penalties and specific judicial procedures should apply in the case of serious breaches of the Directive. Further, it has added an amendment to the effect that final decisions may be postponed if they are likely to have significant adverse effects on the workforce, in order to allow consultation to continue.
Employee representation at Alstom
A charter detailing employee representation at the energy and transport infrastructure group Alstom was signed by company management and the metalworking trade union federations of the CFDT, CFE-CGC, CFTC and FO on 14 May 2001. Alstom employs over 120,000 people in more than 70 countries. The charter covers the 42,000 employees of the company working in France.
In the preamble to the accord, the signatory parties state that the charter aims to "reinforce a social dynamic based on the recognition of the role of trade unions and employee representative bodies and based on the attempt to adapt social relations to the changing economic context, new forms of communication and the international dimension." It covers both trade union representation and employee representative bodies, providing added protection for representatives, particularly in terms of career development and reintegration into their job following their period of office.
Trade union representation
The first section of the charter deals with trade union representation at the company. The signatories to the accord express a willingness to negotiate and the management of each Alstom company covered by the charter will meet representative trade unions (either separately or together) once a year in order to discuss issues relevant to the company.
The charter states that representative trade unionists will be given paid time off to attend meetings of trade union sections in the company.
Trade unionists at the company will be able to suspend their employment contract in order to carry out trade union-related duties on a full-time basis. They will subsequently have a right to reinstatement or re-engagement in a similar position, with appropriate remuneration. They will also benefit from any training necessary to aid their reintegration into the company.
Employee representation
The second section of the charter deals specifically with the operation of the various employee representative structures in place at the group. It states that all those employees who newly receive a mandate to act as an employee representative will have a meeting with management to determine the extent of their new duties and how to accommodate them. The emphasis will be on finding a balance between their professional activities and their duties related to the role of employee representative.
In addition to the five-day training provided for by the Labour Code (see main text), the charter provides for employee representatives to be given training on the company products.
During the course of the mandate, the employee representative should liaise with management, in particular informing management of any predicted absences in order to enable cover to be put into place as quickly as possible.
Time off in order to carry out duties related to the mandate will be as per statute. However, there is scope for extra time off to be negotiated at local level, provided that this does not interfere with work tasks.
The career progression of employee representatives whose duties take up more than half of their working time will be a particular focus. While employee representatives are carrying out their mandate, management will award them individual pay increases equal to average individual increases awarded to those in their professional group. Further, all attempts will be made to ensure that these workers benefit from a "normal career and pay path" once they return to their posts full-time.
During their mandate, employee representatives should have access to training in order to keep up with technological and professional developments. At the end of the mandate, employee representatives may request an orientation interview with management or a certificate of competencies in order to ensure that they are not professionally disadvantaged.
In terms of communication facilities, trade unions and employee representatives will be given access to the company intranet and the use of a bulletin board for conveying relevant messages. This should, however, not be used for individual messages.
