Employer Obligations to Consult Workers

The European Pillar of Social Rights affirms workers’ rights to be informed and consulted by their employers, on matters relevant to their employer’s activities.

For transnational matters, the EU has legislated for European Works Councils (or similar) since 1994. EWCs complement the systems for information and consultation of employees at individual state level.

The New EU EWC Directive

There is a recently published proposed EU Directive for EWCs (“the Directive”), which aims to tackle shortcomings of the current EWC legislative framework, so as to improve their effectiveness. The Directive: –

• requires EWCs to apply to organisations with their own, old (pre-EWC legislative) transnational arrangements;

• requires gender balance in the composition of EWCs, with a growth path to achieve same;

• requires genuine, timely, and meaningful dialogue between management and EWCs, with management obligated to provide a reasoned response to EWCs’ opinions before making management decisions on transnational matters;

• addresses the employer’ resources to be made available to allow functioning, efficient EWCs, including payment of reasonable legal costs which negotiators of an EWC require, in order to establish an EWC on behalf of their workforce and for employee members of the EWC to be provided with relevant training, paid for by the employer;

• clarifies what management can treat as confidential or withhold from disclosure to EWCs;

• ensures effective remedies and access to justice for employees about non-compliance with the Directive; and

• applies effective sanctions in case of non-compliance with the transnational information and consultation requirements.

What is a Transnational Matter?

Traditionally, there has been legal uncertainty about what qualifies as a transnational matter, so as to warrant consultation with EWCs by management.

The Directive clarifies that transnational matters of relevance to EWCs are measures which ‘can reasonably be expected to affect employees … in one member state, but the consequence of those measures can reasonably be expected to affect its employees in at least one other member state’. For example, if a business envisages lay-offs, redundancies, re-allocation of production activities or outsourcing of activities, which explicitly target businesses in one EU member state, but nevertheless can be expected to have consequences for employees of the same business in another EU member state (for example, due to changes in the cross-border supply chain or production activities), this is a transnational matter which could affect employees in a substantial way.  It is not a trivial matter and it does not just concern individual employees or ordinary operational decisions.  Accordingly, a matter of this nature, is considered transnational pursuant to the Directive, requiring information and consultation with EWCs.

Next Steps

We anticipate that this Directive will be adopted before year end. There is likely to be a lead in period of two years for the live implementation date. This gives space now for employers to get their ‘ducks in a row’ to establish new, or modify current, EWC arrangements in anticipation of complying with the minimum requirements of the Directive. 

In Ireland, where until the Directive, the enforcement mechanism wasn’t available to procure compliance with the current legislative framework, meant that EWCs headquartered here had ‘no teeth’.  This will change with the Directive.

Changing the mindset of employers to facilitate the more extensive confidential and heretofore shielded data, that will be shared with EWCs will be a key feature of what the Directive will entail.  Resourcing the training of workers can also be budgeted for, from now.