International: More EWCs take on negotiating role

Multinational companies are increasingly signing agreements with their European Works Councils (EWCs), dealing with issues such as Europe-wide principles governing HR policy, or handling corporate restructuring.

On this page:
Joint texts examined
Companies involved
Types of joint text
Issues covered
Conclusion
Table: Agreements and other joint texts signed by European Works Councils.

The 1994 EU Directive (94/45/EC) on European Works Councils (on the EUR-Lex website) provides for the creation of EWCs in multinational companies operating in Europe “for the purposes of informing and consulting employees”. The vast majority of the individual agreements on which the 800 or more EWCs currently in existence are based also specify that these bodies should have an information and consultation role. The Directive does not mention the possibility that EWCs could be forums for negotiating activity, and only a very few agreements establishing EWCs specifically allow for them to engage in any type of negotiations (indeed, a sizeable minority of agreements explicitly rule this out).

However, a decade or more after EWCs began to emerge in relatively large numbers, there is mounting evidence that many of them are now exceeding their original information and consultation role and are becoming bodies where bargaining of some form occurs. For instance, in April 2008, central management and the EWC at General Motors (GM) Europe reached two framework agreements. The first relates to the future of the five European plants that currently manufacture the Astra model, and rules out factory closures and compulsory redundancies, while laying down commitments on production, shift patterns, capacity and investments. The second agreement deals with outsourcing across GM Europe, providing for information and consultation of employee representatives and guarantees on the employment conditions of any GM employees transferred to suppliers. Another recently reported example is an April 2008 agreement between the EWC and management at BP, on information and consultation over the consolidation and relocation of the company’s customer services and finance operations.

The emergence of a negotiating role for EWCs has attracted considerable interest, not least from the European Commission, which has been considering the idea of creating an “optional European framework for transnational collective bargaining”, involving EWCs and other employee-side parties, allowing agreements (which are often of unclear legal status) to be made binding. The commission is planning to make more detailed proposals on this issue in summer 2008.

Joint texts examined

It is very hard to assess the true extent of negotiations involving EWCs. The most visible sign that negotiations are occurring is the conclusion of written agreements of some kind, and our research has found 67 examples of joint texts (on issues other than the EWC’s operation) signed by management and an EWC, in 41 multinational companies, which are listed in the table below. However, bargaining activity may not necessarily lead to the signing of a formal text, and where it does this will not necessarily come to public attention. Our list of cases therefore does not claim to be exhaustive, but indicates the increasing scale of the practice and the range of companies and issues involved. In 2001, research found agreements signed by EWCs in only 11 companies.

The table excludes a number of prominent cases where an EWC was involved in negotiating an agreement and/or given a significant role in implementing it, but is not a formal signatory. These include:

• a 2006 agreement on equal opportunities at Areva (France, nuclear power);
• a 2001 agreement on workers’ rights at Carrefour (France, retail);
• a 2004 joint declaration on rights at work and employee mobility at Club Mediterranée (France, leisure);
• a series of agreements signed at Danone (France, food) over 1988-2008 on issues such as training, union rights, restructuring and diversity;
• a 2007 agreement on the anticipation of change at Schneider Electric (France, electrical equipment); and
• a series of agreements signed at Total (France, petrochemicals and energy) over 2004-07 on employee relations, equal opportunities and support for small- and medium-sized companies.

These agreements were formally signed by international trade union organisations at European or global level (such as the European Metalworkers’ Federation at Schneider Electric or the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations at Danone). Such organisations were also co-signatories, alongside an EWC, of some of the agreements listed in the table. These are mainly “international framework agreements” on workers’ rights and corporate social responsibility (CSR), such as those at BMW, Bosch, EADS, GEA and Leoni.

Of the 41 companies involved, 11 have signed more than one joint text with their EWC. The practice is most developed at GM Europe (seven texts), Suez (six), Ford (five) and Air France-KLM (four).

Companies involved

Types of joint text

Issues covered

The 25 joint texts that lay down relatively wide-ranging transnational principles and commitments are in many cases forms of “international framework agreement”. Such agreements, which are usually signed by international trade union organisations, have been concluded in more than 70 multinationals. They commit the company concerned to observing standards (often based on International Labour Organisation conventions and other international documents) relating to labour rights - such as bans on child and forced labour, or guarantees on non-discrimination and trade union rights - and other aspects of CSR. On top of these basic provisions, many of the joint texts in this category include principles governing various aspects of the company’s employment and HR policy. For example, Air France-KLM’s “social rights and ethics charter” commits it to respecting basic human and workers’ rights and to observing HR policy principles relating to staff employability and mobility, equality, pay, working conditions, working time, social dialogue, and health and safety.

Several of the joint texts in this category go even further and deal almost exclusively, in varying degrees of detail, with day-to-day HR policies, essentially harmonising their treatment across the multinational’s European operations. Examples are the AXA document on the “management of the social dialogue”, the Bouygues “European social charter”, and the Dexia “principles of social management”. For instance, the Dexia text lays down a set of concrete guidelines for the group’s HR policy across Europe, covering issues such as: employee information, consultation and representation; skills planning; training provision; equality; internal advertising of job vacancies; redeployment and other measures to mitigate planned job losses; and pensions, benefits and other entitlements when employees move jobs within the group.

The second group consists of 23 joint texts that deal with a single HR-related issue, generally seeking to ensure similar treatment and standards across Europe. The most common issue dealt with in this way is health and safety, as at ArcelorMittal, ENI, Lafarge, Marazzi, Sara Lee Personal Products, Suez, Vinci and Vivendi. Other themes include protection of employees’ personal data (as at Philip Morris Tobacco, Porr and Unilever), training/lifelong learning (as at ENI and Suez) and mobility/posting (as at Air France-KLM and Starwood). Air France, General Electric Advanced Materials, Philip Morris Tobacco and Suez have signed more than one joint text of this type, with Suez having signed the most (five). For example, in July 2007 Suez and its EWC signed agreements with worldwide scope on:

• “linking employees to company performance”, providing for a supplementary financial incentive for employees, based on Suez's consolidated financial results over 2007-09. In 2007, the incentive took the form of the distribution of 2 million free shares, worth around €80 million, to employees; and
• promoting equality and diversity within the group through measures such as a thorough analysis of the current situation, action to rectify disparities and specific initiatives for young, older and disabled people.

The final group of 19 texts deal specifically with company restructuring and change. They are of two main types: those dealing with the employment aspects of a particular planned restructuring exercise, and those laying down principles and rules for dealing with restructuring in general.

The most notable examples of the first type are at Ford and GM Europe, each of which have signed a series of agreements with their EWCs on the impact on employees of various spin-offs, joint ventures and internal reorganisation plans. BP, DaimlerChrysler and Unilever have also concluded similar accords. For example, in 2005, management and the EWC at Unilever signed a joint statement on “transition to shared services - a framework for responsible restructuring”, relating to a company plan to introduce “shared services” - notably finance and HR functions - on a regional basis, with outsourcing of major parts of these services and the possible transfer of staff to external partners. The statement sets out agreed principles in areas such as: redeployment or outplacement of staff threatened with redundancy; job opportunities with external service providers; pay guarantees for employees who are transferred; the use of early retirement; and compensation for those made redundant.

Examples of the second type of restructuring joint text can be found at Deutsche Bank, Dexia, Diageo, EADS, GM Europe, RWE and Suez. They set out how future restructuring, where it arises, will be dealt with, for example, in terms of mitigating the employment consequences and ensuring adequate information and consultation. For instance, the 2007 agreement at RWE Energy on minimum standards to apply in the event of company restructuring provides that in such cases redundancies must be avoided as far as possible and there should be a focus on: early and phased retirement; voluntary redundancies and severance packages; part-time work; employee transfers; training; and employee mobility. Employee representatives at European and national level must be informed and consulted in a “timely and comprehensive” way and their views should be taken into account in the decision-making process.

Conclusion

This article was written by Mark Carley, editor of European Employment Review.

European Employment Review 413 (EER 413) contents