European Union: New European Works Council directive expands employer obligations

Employer action code: Act

The European Parliament has finalized the provisions of a new EU directive amending Directive 2009/38/EC on establishing and operating European Works Councils (EWCs). The new directive aims to bolster the representation of EU workers in multinational companies. The changes extend the scope of companies subject to EU rules on EWCs, strengthen employer consultation and information-sharing obligations, and ensure that EWCs are provided with sufficient financial and other resources. EWCs are bodies intended to represent a company’s European employees with top management in companies that have 1,000 or more employees in the EU and the other European Economic Area countries (i.e., Norway, Iceland and Liechtenstein) and 150 or more employees in at least two member states. Establishment of an EWC is triggered by a request of 100 employees from two countries or by the initiative of the employer.  

Key details

Following are key provisions in the new directive:

• EU laws regarding EWCs will apply to all companies meeting the head count thresholds; the current exemption that applies to over 300 “grandfathered” companies will be eliminated
• The definition of “transnational” issues, on which employers must consult with and provide information to their EWC (if any), will be broadened to include company decisions that directly affect employees in only one member state but whose consequences may reasonably be expected to affect workers in another member state (e.g., redundancies in one state that could affect production in another). Currently, employees in at least two member states must be directly affected     
• The ability of companies to limit sharing of information with special negotiating bodies, EWC members, or employee representatives in the context of a consultation and information-sharing procedure will be restricted to cases where such sharing would “seriously harm the functioning of the undertakings concerned.” In such cases, management must specify the reasons justifying the non-transmission of information in a way that allows for sufficient legal scrutiny
• The agreement underlying the establishment of an EWC must specify the financial and other resources (e.g., for training, experts’ fees) the company will provide to enable the EWC to fulfill its role
• Women and men should each comprise at least 40% of an EWC’s members. If not, the EWC must explain the reasons, in writing, to the workers

Employer implications

The new directive will take effect 20 days after its publication in the Official Journal of the European Union. Member states will then have two years to adopt conforming legislation and — generally — an additional year to apply the legislation. Employers should monitor the progress of local conforming legislation and work with legal counsel to prepare to implement the new requirements.