TUC response to the DTI's discussion paper on UK experience of EWCs

EWC Directive Revision

Introduction

1. The TUC is the national centre for Britain’s trade unions, with 69 affiliated unions with 6.7 million members. The TUC has been working with, and assisting affiliates to establish dozens of voluntarily agreed European Works Councils since 1993 (before the Directive was passed). In addition, the TUC has coordinated unions in a number of companies where Special Negotiating Bodies were established under Article 6 of the Directive.

2. Assistance has continued to be given to unions and their EWC representatives in the form of publications, briefings, seminars, training and advice. On occasion, the TUC will provide an expert to specific EWCs.

3. This response has been prepared after consultation with affiliates, a number of whom will also submit their own responses to the discussions document.

4. It is important to begin with the strong assertion that the TUC, it’s affiliates, and individual EWC members are agreed that there are serious shortcomings to the EWC Directive, and that a process of revision is both necessary and urgent. It is therefore difficult to understand the origin of the view, expressed in the DTI document, that 'there has been relatively little demand from UK stakeholders for changes in the directive.'

5. During the four years since the directive should have been revised (according to Article 15), the European trade union movement has frequently repeated calls for its revision. If this has been less apparent at national level, it is due to two factors:

• The fact that initiation of the process of revision is in the hands of the Commission;

• A lack of belief that the UK government would act upon such calls.

6. British trade unions spent almost four years struggling to ensure that UK workers were not left out of European Works Councils, despite the then Conservative government’s opt-out from the Social Protocol of the Maastricht Treaty. The decision of the newly-elected Labour government to reverse the opt-out in 1997 was warmly welcomed by British unions.

7. This was in the context of the trade union movement’s support for the stated aims of the Directive to 'promote dialogue between management and labour', to 'ensure that the employees .... are properly informed and consulted when decisions which affect them are taken in a Member State other than that in which they are employed', or to ensure that 'undertakings operating in two or more Member States must inform and consult the representatives of those employees that are affected by their decisions' (italicised text from preamble to Directive). These were identified as priorities in the TUC’s response to the government’s consultation over UK transposition of the directive (TUC, September 1999).

8. At that time, the process of revision was already due, but the process was delayed, this delay being attributed to a variety of reasons - UK transposition, the progress of other, related issues (the European Company Statute and Information & Consultation directives), the need for accumulation of experience and an evaluation of transposition measures. All of these conditions have now been met, but the experience of unions and workers representatives on EWCs is that there is a serious gap between practice and the aims referred to in paragraph 7 above. In part, at least, this is due to shortcomings in the directive itself, which are set out in the response below.

General view

9. It would be fair to say that the issue raised by unions and employee representatives on EWCs as being key is the nature and timing of consultation. Complaints range from notification of key decisions (such as restructuring plans, or changes in ownership) after the event, to inappropriate use of confidentiality provisions, to management reliance on tight definitions of what constitutes a 'transnational' issue to keep matters off EWC agendas.

10. Clearer definitions of what constitutes consultation in good time would assist in resolving this serious area of dissatisfaction. Those used in other measures, such as the Information and Consultation and European Company Statute directives are regarded as being preferable to the vague formulations used in the EWC Directive. Indeed, those definitions were drafted in more demanding terms partly as a result of the problems experienced by workers’ representatives on EWCs.

11. The key for ensuring that EWCs perform their function in ensuring consultation of the workforce is for consultation to take place at a time which would permit an input from employee representatives into decisions while alternatives are still under consideration.

Specific points raised in DTI’s discussion document

The nature of EWCs, including details of their size, frequency of meetings, subjects discussed, costs of operation, duration of agreements and procedures for re-newing/terminating them, as well as general views on what makes for an effective EWC and what are the obstacles to an effective EWC.

12. Although experience has suggested that very large EWCs are not effective, size is something that needs to be addressed in negotiations, although points are made below regarding the fall-back provisions in the Annex. The value of an effective steering committee is generally acknowledged amongst unions, and almost inevitably accompanies examples of good practice.

13. A single meeting per year is not thought to be enough, and revision should include provision for at least two meetings per year, perhaps within the annex. A single meeting per year does not permit the development of competence and coherence amongst EWC members, and can mean that a process of continuing discussion is hindered. It also keeps the EWC remote from problems and issues as they arise.

14. The development of agendas is largely a matter for agreements and the development of good practice. This in part relies on EWC members receiving good training, a matter which is dealt with later in this response.

15. Regarding costs, while the annex to the directive states that costs should be borne by central management, there have been many reports of local cost centres having to meet the travel and related costs of EWC members who happen to be based at them. This can result in considerable pressure on individuals, particularly when located in smaller subsidiaries. A solution could be to make it clearer that a central budget should be used to finance the EWC.

16. The key obstacle to building effective EWCs is a lack of an open and honest approach to them from central management. If enforcement were both simpler and more dissuasive, the development of such an attitude might be encouraged.

Do you think there should be any changes to the level of the directive’s thresholds? If so, at what level should they be set and what is the case for making such a change?

17. Affiliates have reported examples of employers dragging out SNB negotiations until changes in company structure bring it down below the current employment threshold. There are also certain sectors where significant cross-border activity can take place even with relatively small numbers of workers. A lowering of the employment thresholds would be of value in some cases, therefore. Experience of establishing EWCs to date suggests that where workers and their representatives cannot see any value in establishing an EWC, they will not trigger an SNB. It is unlikely, therefore, that a lowering of the threshold would result in a rash of vexatious demands.

Are there changes that could be made to the SNB procedure that would better facilitate effective EWC agreements?

18. The coordination of newly-elected SNB representatives is a complicated matter, and may prove awkward for them. This reduces the chance of achieving an effective EWC agreement. A specific obligation on central management to notify the European Industry Federations of impending SNB elections would ensure that adequate support and assistance was made available, and reduce the chances of a management-dominated negotiation process.

19. The timescale permitted for SNB negotiations is too long at three years. This simply encourages prevarication from reluctant managements. If six months is seen as enough for the establishment of participatory structures under the European Company Statute, there seems no reason not to adopt the same period for SNB negotiations (subject to mutually agreed extensions).

20. There is a lack of clarity regarding the process to be adopted if a reluctant central management based outside the EU refuses to either nominate a representative agent or to provide information regarding employment levels (making identifying the establishment employing the largest number all but impossible). This can lead to long delays in getting an SNB up and running. In such cases, all local management should be liable.

21. The right to have a pre-meeting of the employee representatives (without the presence of management) on an SNB is essential to ensure the development of a negotiating mandate amongst representatives who may never have met previously.

Are there any changes that could be made to Article 6 of the directive that would make for better agreements or make it easier to reach an agreement? How can more innovative EWC agreements be fostered? Do you think any changes in relation to Article 13 agreements should be made?

22. The key to voluntary agreements is their enforceability, and in the case of Article 13 agreements, this is far from clear. If there is no enforceability, it is hard to see how the rights of the workers as intended by the directive are in fact protected. It may be argued that in such cases, a claim for an SNB could be launched, but this could result in a long period with no EU-level representation, which would not meet the aims of the directive. A requirement that to be effective, an Article 13 agreement must be enforceable would introduce much-needed clarity.

23. The minimum of three members on an SNB should be revised upwards, to five. Likewise the maximum needs revision, particularly in light of enlargement. The principle of at least one seat per country cannot hold when there are 25 member States, if there is a maximum of 17 on an SNB. Upper limits clearly need reconsideration.

24. Some SNBs have been distorted by the requirement for representation for each Member State, irrespective of how small a number of workers may be present. A way of resolving this may be to provide for a minimum threshold to representation, say at 10. There have already been cases in practice where smaller establishments have been grouped for the purpose of representation, even though this could render the SNB invalid. A minimum threshold, together with such grouping, could ensure that identifiable representation was in place, while reducing the distorting effect of SNB seats for very small numbers of workers.

Are there any changes that could be made to the fallback provisions in the directive. For example, are the minimum and maximum number of members for the EWC appropriate. Should they be altered as a result of the expansion of the EU?

25. The maximum number of members of a EWC may well have to be reconsidered in the light of EU enlargement. The maximum number of members of a select committee should also be revised - three is too few even now, and would certainly be so with larger EWCs, and post-enlargement.

26. As stated above, at least two meetings per year should be required.

27. Provision should be made for meetings of the workers’ side post-EWC, in order to provide for feedback and preparation for communications with the workforce. Experience from existing EWCs is that without this, the value of the EWC meeting itself may be lost.

28. Until legislation and practice settles down, there may be questions regarding the representativity of those coming from establishments without existing collective representation structures (trade unions, works councils). It should be the responsibility of central management to ensure that at least a process of election has taken place.

Should the directive contain specific provisions that would provide for rights to time-off for training of EWC representatives? Are any changes needed to the provisions concerning the use of outside experts in the setting up and running of EWCs?

29. All responses made to the TUC highlighted the need for training for representatives. At present there is no specific requirement for this in the Directive, an omission which needs rectification. Time off and resources must be made available for representatives to receive training from competent and recognised training providers.

30. The assistance of experts should not be restricted by management. Where the SNB or EWC require it, there should be no restriction on the ability of experts to attend full meetings of SNBs and EWCs with central management.

Do you consider that the directive’s provisions on sanctions require strengthening in any way?

31. The whole process of enforcement is vague in the directive, and it is hard to know how such measures as exist at national level can be tested for adequacy. The lack of clarity as to the legal status of an EWC makes it hard to see how a test case on this matter could be pursued. Unions would have preferred some provision for relief from actions taken without adequate prior consultation to have been made in the original directive, and would still like to see such provision made as a result of revision.

32. The provision of some EU-level dispute resolution mechanism might assist with enforcement problems, but it is not clear when such arrangements might be set up.

Do you see any implications for the EWC directive, or for the Commission’s review, from the introduction of the Information and Consultation directive?

33. There will clearly be a relationship between the two measures, but this will not be clear until the process of national transposition of the Information ad Consultation Directive is complete. However, the I&C Directive gives more detailed definitions of the quality and timing of information and consultation. There seems to be no good reason to have more testing requirements in the national-level provisions than in the EU-level ones. Incorporating the more specific definitions into the EWC Directive would be a step in the right direction.

34. There will also be a relationship between structures established at national level as a result of the transposition of the I&C directive and the EWC, both for nomination and reporting back. However, it seems to the unions that these will need to be dealt with in national transposing legislation rather than the EWC directive itself.

Do you think the number of SNB members or EWC members under the annex requirements should be revised as a result of the extension of the directive to the accession countries? Are there any other implications for EWCs as result of the expansion of the European Union that need to be taken into account during the review of the directive?

35. See points made above.

Are there any changes of a deregulatory nature that might help better achieve the aims of the directive? Would best practice guidance be helpful in addition or as an alternative to changes to the directive? If so, guidance on what?

36. Discussions on good practice at the EU level have proved useful and instructive for those able to attend them. In particular, UK reps have benefited from gaining an insight into practice within Member States already having a tradition of continuous information and consultation in the workplace. Government support for such events at national level, permitting exchanges of experience and ideas would be valuable. It should be stressed, however, that this is not an alternative to regulation and should accompany, not substitute for, the reforms suggested in this response.

Are there any aspects of the UK implementing regulations (TICE) that needs to be addressed or on any other aspects of the regulations that could be improved?

37. There is inadequate recognition of the role played by trade unions, in nominating representatives, guiding negotiations, advising EWCs and providing training. Trade unions should be specifically recognised as actors in triggering SNBs, nominating representatives from workplaces with recognition, and as potential partners in enforcement mechanism, as well as providing expert advice.

38. There should be a statutory right for EWC members to report back to their constituency. This should involve provision of both paid tie off and resources for travel, meeting facilities, etc.

39. The maximum stated £75,000 fine is clearly small beer to multinationals, and unlikely to play a deterrent role. The lack of clarity regarding the workers’ side of an EWC to take a case against their management (as identified in the P&O case) is also of concern.

Other matters

40. There is a lack of clarity as to how (or even if) agreements should be renegotiated in the event of mergers, takeovers and other substantial restructuring.

41. Joint ventures should have representation on the EWCs of at least one partner company.

42. Confidentiality is often used to restrict access of the EWC to crucial information, with management frequently citing Stock Exchange rules (quite wrongly). The widespread nature of such complaints suggests that tighter provisions are needed in the directive, specifically preventing the use of market regulation alone as the justification for non-provision of information.