European Union Directive on socially responsible restructuring at a standstill

On 2 September 2013 the European Trade Union Confederation (ETUC) filed an official complaint with the European Union Ombudsmann. It concerns the European Commission’s lack of action on the "Cercas Report", a legislative initiative for the management of company restructuring, which was initiated in January 2013 by the European Parliament (see report in EWC News 1/2013). The commission had until mid-April 2013 to submit draft legislation.

Trade unions and the European Parliament consider this lack of action to represent a violation against the Lisbon Treaty, which is the fundamental pact in force since 2009 defining the functioning of the European Union. The Ombudsman is responsible for examining complaints on irregularities in the administration of EU-institutions and for submitting suggestions on solutions to conflict. It cannot however force any legislative initiative. The matter is just as explosive as the revision of the EWC Directive.

• Full text of the "Cercas Report"
• ETUC press release
• Full text of complaint with the Ombudsman
  

The European Commission is planning to release a declaration on the "Cercas Report" before the end of 2013. This will include examples of best practice in socially responsible management of company restructuring, but will not contain any political recommendations. According to the European Commission any legislative initiative would neither be accepted by employers not obtain wide support in the Council of Ministers. The center of attention is now therefore drawn to a completely different question: what role does the European Parliament play at all in the legislative process? After all, the "Cercas Report" was adopted with an outstanding majority of 503 deputies with 107 votes against and 72 abstentions.

How do transnational company agreements stand?

We can also look forward with great interest to the ongoing developments in a second initiative from the European Parliament. The "Händel Report" was adopted by a large majority during a plenary session on 12 September 2013 in Strasbourg (photo). 393 deputies voted in support of legal recognition for transnational company agreements with only 84 votes against and 19 abstentions. There had already been a large majority on the subject in the economic and social committee in June 2013 (see report in EWC News 2/2013).

The question also arises here whether the European Commission will remain inactive given the obstructive attitude of the employers' associations. The topic has already been on their agenda since 2005. More recently, in September 2012, the Commission had opened discussions on a legislative initiative and started a consultation on the subject (see report in EWC News 3/2012).

The text from the European Parliament addresses a number of issues which need to be legally regulated: apart from legal enforcement of company agreements there should also be provisions for out-of-court settlement of disputes. However, the fact that European works councils are to have no mandate to negotiate and act only in an advisory capacity to external trade union officers, is problematic. The reality in the workplace is somewhat different: in many cases the German model has in fact become accepted, whereby company employee representatives lead the negotiations and end up also signing themselves.

• Summary of resolution contents
• Full text of resolution 

Forthcoming event

These legislative initiatives will be on the agenda of the EWC Academy conference to be held on 24 and 25 October 2013 in London.

• Program of the EWC conference in London

German labour court prohibits access to Intranet

According to the Lörrach labour court ruling on 26 June 2013, a European work council has no right to directly communicate with the workforce on the Intranet, if there is a works council present in the respective country or workplace. The judges prohibited the EWC of Amcor, the Australian packaging company, from giving the workforce access, via the Intranet, to a report on a EWC meeting held in October 2012. There had been disagreement with central management over the contents of the report. They proposed to publish a joint declaration. The European works council however, wanted to publish its own uncensored viewpoint. In the meantime an appeal against the ruling has been submitted and the Freiburg District Labour Court will soon deal with it.

The court referred to Article 10 Paragraph 2 of the new EWC Directive, according to which the EWC has to inform only the local works councils. Only if there are no local employee representatives, should the employees be directly informed. Formally speaking this interpretation is correct. However the formulation is aimed rather at strengthening the small countries without works councils and not at restricting communication (see report in EWC News 3/2012). The heart of the question is whether central management may censor EWC communication. Anglo-Saxon based companies sometimes attempt to do this to prevent wherever possible the employees side from having its own (critical) communication channel.

European labour legislation seen through German eyes

The ruling’s legal justification contains a typically German remark, which can only come as a surprise to other EU-countries:

For the protection of local work councils’ work, as well as for industrial peace and the orderly flow of operations it appears meaningful and appropriate not to expose employees to different reports and information from employee representation bodies.

If this had been the intention of the European legislator: how could it be enforced in Hungary, Belgium or Spain? In what way can employees in a French company with the multiplicity of competing trade unions, allow themselves to be protected from "different reports and information"? Trade unions represented in French works councils often have their own websites, not only on the Intranet, but frequently also on the publicly accessible Internet. While the minutes of EWC meetings are still declared as "confidential" for employee representatives from the United Kingdom, they are at the same time already available for download on French websites (see report in EWC News 2/2012). The following texts are available only in German:

• Report on the ruling
• Full text of ruling
  

Amcor, the Australian packaging company

The European works council was established in1998 under German jurisdiction and its EWC agreement last updated in 2002. It is consequently automatically subject to the new EWC Directive, similarly to the legal case of US automobile supplier Visteon (see report in EWC News 3/2011). Amcor has its European headquarters in Zurich. The European workforce grew strongly in 2010 through the acquisition of the packaging division of the British-Australian raw materials group Rio Tinto Alcan (see report in EWC News 4/2009).

Arbitration board validates election

For the first time, on 26 July 2013 in London, the Central Arbitration Committee (CAC) passed a ruling on the election process for British European works council representatives. The court case was sparked off by the question of whether British representatives in Safran, the French electronics and arms manufacturer, should be nominated by the Unite trade union or elected by the workforce, similarly to works council elections in Germany or France. The CAC ruled in favor of an election.

Following an announcement to start elections made by the British management of Safran, on 11 April 2013, the Unite trade union filed a complaint on 15 April 2013. The CAC operates in such matters as a first instance labour jurisdiction in the United Kingdom. The Safran EWC agreement was signed in July 2008 (see report in EWC News 3/2008) and contains a formulation for the election of representatives which is common in nearly all European works councils: the election should take place according to the respective national regulations of the representative’s country of origin. The British EWC legislation (TICER) explicitly prescribes an election. The respective trade union may nominate without an election only if the entire staff in the United Kingdom is covered by trade union recognition. In Safran a large part of the British workforce is unionized, but one quarter not.

• Full text of ruling

No tradition of works councils

This court case highlights a difficulty in labour relations in Anglo-Saxon countries where there is no tradition of works councils which are elected according to equal and universal suffrage by the workforce. If there had been a Safran Group works council in the UK, such as in Germany or France, Unite would have probably obtained the absolute majority of seats and both Unite representatives would have been elected without a problem. British mentality and British labour legislation are however hardly compatible with continental-European customs. Although the British legislator did pass a decree on company level information and consultation committees in 2005 - a sort of "works council light"- in practice however still little use is made of it (see report in EWC News 2/2012).

Guaranteeing a democratic election process

An important task for the EWC is to monitor the democratic legitimacy of representatives (see report in EWC News 3/2007). Standing rules for elections could be of great help here. The EWC could also request a protocol for the orderly running of elections from each country. In critical cases it is not sufficient to delegate the issue to the country concerned and not to worry about it any further.

Forthcoming event

Current developments in British labour legislation are to be covered in the EWC Academy works council conference on 24 and 25 October 2013 in London.

• Program and registration form

New EU-standards integrated

The EWC agreement of ABB was updated on 13 April 2013 at the Ludvika site in central Sweden. The group does business in energy and automation technology and has its roots in Sweden, Germany and Switzerland. Group headquarters are in Zurich and the EWC secretariat is located at the largest German site in Mannheim (photo). The agreement comes under German jurisdiction. Since it was concluded in 1996, the new standards apply- as for other "voluntary" agreements - only following renegotiation.

One remarkable point is the provision for the EWC chairman and deputy to meet regularly with the CEO for face-to-face discussions. Whereas this is also the practice in other companies, in ABB it is explicitly mentioned in the agreement. A further formulation is also rarely seen elsewhere: The EWC is considered as an "integral component of the communication processes within the company". The number of meetings of the six-member steering committee is consequently not limited. The EWC has currently 22 members from 17 countries and meets twice annually.

Completely new EWC agreement after spin-off

A EWC agreement for Xylem was signed on 31 May 2013 in Birmingham under Swedish jurisdiction. Until January 2011, this water technology and pump manufacturer belonged to the ITT group where there had been a "voluntary" EWC agreement in force for the division already since 1996. The spin-off represented a "change in structure" according to the terms of the new EWC Directive. The employee representatives from 16 countries were therefore able to renegotiate on the basis of the new European Union standards. Only the name of "European Works Council Forum" still reminds us of earlier years.

The EWC is composed of 30 members and meets twice annually. The largest countries are Sweden and Germany with four representatives each. It is managed by a five-member steering committee. For voting each representative has as many votes as the number of employees represented. The definition of "transnational competence" goes beyond the standard definition, since the so-called recital No. 16 has been integrated (see report in EWC News 1/2013). One drawback is the limitation of the consultation period to three weeks and which can be extended only by mutual agreement.

Market research firm clearly defines consultation procedure

The Nielsen EWC agreement had already been brought closer to the standards of the new European Union Directive in January 2009, although at the time, this had not yet formally been approved. The Dutch company has had a EWC since 1996. What’s new is the agreement concluded with central management on 15 July 2013 for the precise flow of a consultation procedure. The information and consultation procedure is graphically visualized in a flowchart with eleven steps as an addendum to the EWC agreement.

Employee representatives from Nielsen have hereby established a good foundation for putting the new standards of information and consultation into practice. Since this document was developed from the outset in conjunction with central management and the responsibilities for each phase clearly defined, nothing should stand in the way of a smooth consultation process. The development of a comparable document lies on the agenda for many European works councils, as soon as they have adapted their EWC agreements to the new EU-standards. It is important hereby, to understand the individual phases and basic philosophy behind information and consultation which is based on a French concept (see report in EWC News 3/2011).