European Works Councils: Challenges
Facing Multi-National Employers Doing
Business throughout Europe
June 18, 2014
Presenters
Moderator
Jan Tibor Lelley, Partner,
Buse Heberer Fromm, Frankfurt, Germany
lelley@buse.de
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Presenters
Speakers
Sanna Alku, Associate,
Castrén & Snellman, Helsinki, Finland
sanna.alku@castren.fi
Alessandra Deganis, Associate,
Grimaldi Studio Legale, Milan, Italy
adeganis@grimaldilex.com
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Presenters
Speakers
Ghislain Frerejacques, Associate,
Fromont Briens, Paris, France
ghislain.frerejacques@fromont-briens.com
Katalin Furedi, Partner, Gardos, Furedi,
Mosonyi, Tomori, Budapest, Hungary
furedi.katalin@gfmt.hu
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Presenters
Speakers
Sasha Štěpánová, Associate,
Kocián Šolc Balaštík, Prague, Czech Republic
sstepanova@ksb.com
An Van Doorselaer, Senior Associate,
Lydian, Brussels, Belgium
an.vandoorselaer@lydian.be
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What Types of Companies
Qualify for an EWC?
Sanna Alku
Castrén & Snellman
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What Type of Company Qualifies
for an EWC?
• The legal basis is in the EU Directive
2009/38/EC  implemented into the Finnish
Law with the Act on Co-operation within
Finnish and Community-wide Groups of
Undertakings.
• The Act applies to a controlling undertaking
within a community-wide group of
undertakings and to a community-wide
undertaking that has been registered in
Finland.
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What Type of Company Qualifies
for an EWC?
1) Private or public community-scale
company engaged in economic activity
– Employing at least 1000 employees in
the EU Member States and the other
countries of the European Economic
Area; and
– When there are at least 150 employees
in each of at least two Member States.
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What Type of Company Qualifies
for an EWC?
2) Private or public community-scale
group of companies engaged in
economic activity
– Employing at least 1000 employees in the
EU Member States and the other
countries of the EEA; and
– Controlling at least two group
undertakings in different Member States,
of which each employs at least 150
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employees.
What Type of Company Qualifies
for an EWC?
• The location of the central management of
a community-scale company or group of
companies does not have influence on the
application of the EWC Directive.
• If the central management is situated
outside the EU/EEA but the thresholds of
1,000 employees in the EU/EEA and at
least 150 in two or more EU Member
States are met, the EWC Directive
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applies.
How Is an EWC Established
in Your Country?
Alessandra Deganis
Grimaldi Studio Legale
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EU Directive 09/38 – Implemented in
Italy by Legislative Decree No. 113/2012
• Central management starts the negotiations
for establishing an EWC (of its own initiative
or upon the request: (i) of the Trade Unions
that signed the Collective Bargaining
Agreement applied to the company or (ii)
upon the request of 100 employees).
• A Special Negotiation Body (“SNB”) is set up
to decide, together with central management
and by means of a written agreement, the
area, composition, duration of the EWC, and
the tasks assigned to the EWC.
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EU Directive 09/38 – Implemented in
Italy by Legislative Decree No. 113/2012
• Members of the SNB have to be appointed by
the Trade Union Organizations that signed the
collective agreements applied in the Italian
companies, jointly with the Trade Union
Representatives ("RSU" or "RSA") constituted
in the same companies based in Italy.
• The members of the SNB shall be appointed
in proportion to the number of employees
employed in amounting to 10%, or a fraction
thereof, of the overall number of employees
employed in the EU.
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EU Directive 09/38 – Implemented in
Italy by Legislative Decree No. 113/2012
• The central management has to negotiate
with the SNB. The content of the
agreement has to indicate: the companies
that are part of the group or the plants
subject to the agreement, the composition,
number of members, duration of the
mandate, tasks assigned to the EWC, the
modality of information and consultation,
and frequency, place and the time of the
meetings.
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EWC Representatives
• The Italian EWC representatives are
appointed as follows:
− One-third by the trade unions that have
executed the National Bargaining
Agreement applied to the company.
− Two-thirds by the RSU
(Rappresentanza Sindacale Unitaria –
the unitary trade union delegation) of
the company.
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EWC Representatives
• In the establishments and undertakings
where there is no RSU, the trade
unions that executed the NBA applied
by the company should agree with the
management on the procedures,
criteria and modalities to set up the
special negotiation body and the EWC.
• An election by the entire workforce is
not provided for under the Italian law.
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Italian Peculiarity
• Sec. 5 par. 1 and 6 par. 2 also includes
trade unions that entered into the
applied National Collective Bargaining
Agreement as the body entitled to:
(i) ask for the set up of an EWC; (ii)
appoint members of the Special
Negotiation Body (to set up an EWC).
• EWC connection to trade unions that
entered into the NCBA applied to the
company is an Italian peculiarity.
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Governing Laws of an EWC
Katalin Furedi
Gardos, Furedi, Mosonyi, Tomori
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Governing Law Rules in
EU Directive 2009/38
• Central management’s obligation to
manage the process – central
management’s national law defines its
obligations (Article 4).
• Election of the members of the special
negotiating body (SNB) – national laws
of where elected (Article 5(2)(a)).
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Governing Law Rules in
Act XXI of 2003
• Hungarian law applies for:
– Collection and transfer of information required for
initiating the set up of the SNB Determination of
the number of the Hungarian employees;
– Election and protection of the representatives of
the Hungarian employees;
– Obligations of Hungarian employer with respect
to the rules of the EWC set up, information and
consultation and consequences of their violation.
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Governing Law Rules in
Act XXI of 2003
• Hungarian law applies for Hungarian
central management (Hung. EU
representative office, etc.) – for:
– Initiation of the negotiations and the relevant information
obligations (3. §)
– Bearing the costs of the set up of the SNB and the
negotiations (6. §), (if applicable, 10–23. §)
– Rules on the number and structure of the EWC and
related information (13–14. §)
– Negotiation with the EWC, extraordinary information and
negotiations (16–17. §)
– Bearing the costs of the EWC operation (18. §, 21/B. §),
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training (21/B. §)
Governing Law Issues
• Initiating the set up of the SNB – several
national laws apply
• Set up of the SNB – several national laws
apply
• Negotiations – central management’s
national law
• Agreement on EWC – choice of law
− Proactive participation by employer – its interest
to minimize costs and maximize efficiency in the
set-up process, + possibility to negotiate terms
different from subsidiary requirements.
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Governing Law Issues
• Set up and operation of EWC – choice
of law or Rome I Regulation
− If no agreement and Hungarian law
applies: e.g.,
o Members of EWC are appointed by the local work
councils for 3 years; members can be recalled
o Limitation on transfer of information is possible
without administrative or court decision
o Disputes: Hungarian labor court has competence,
decision within 15 days in a special court process –
limitations?
o Confidentiality rules – detailed ones, but no liability
rules – which law applies for damages?
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Comparison of
Competence between EWC
and National WC
Ghislain Frerejacques
Fromont-Briens
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The Functions of Each Works Council
• EWCs’ functions: either based on the
agreement signed to establish the
Council or in accordance with Articles
L2343-2 to 4 of the French labour Code
(subsidiary requirements).
• National Works councils’ functions are
much more extensive, at least insofar
as a collective agreement does not
extend the functions of the EWC.
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Coordination between EWCs and
National Works Councils
• Coordination can be defined by the
agreement; otherwise the WC must be
informed and consulted whenever the
EWC has competence.
– Main question for negotiators is to
determine which body should be
consulted first or how to arrange
parallel consultation
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Coordination between EWCs and
National Works Councils
• Information provided to the WC may be
not sufficient for the purpose of EWC’s
consultation (Cass. Soc., Jan 16th
2008).
• If an expert is requested by the EWC,
the WC can wait for the results to
deliver its opinion (TGI Paris, Oct 10th
2003).
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Which Body Must Be
Informed/Consulted First?
• According to the transposition of Directive
2009/38 (Ord 2011-1328), unless the
agreement says otherwise, there is no specific
order.
• TGI, paris Apr 26th 2009: a “principal of
consistence” imposes to consult the EWC first
in order to provide national WC with the best
information.
− Choice made by management is related to
effet utile of information/consultation procedure
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What Is at Stake?
• If order of priority between EWC and WC
is considered inconsistent, the process
can be suspended until completion of the
consultation as it should have been
proceeded (TGI Sarguemmines, Apr 21st
2009).
• The judge can force the employer to
organise a new meeting for the WC to be
fully informed and receive information from
the EWC (Cass. Soc., Jan 16th 2008).
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The Operations of an EWC
Sasha Stepanova
Kocián Šolc Balaštík
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Core Duties of an EWC –
Information/Consultation/Cross Border Issues
• What does EWC Directive 2009/38/EC
say about the “Operation of EWC”?
• Directive, Recital (7):
− “(…) Modernize Community legislation on
transnational information and
consultation of employees” –
Effectiveness, effective decision making –
Agreement between Special Negotiating
Body (SNB) and central management.
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Core Duties of an EWC –
Information/Consultation/Cross Border Issues
– “(…) Ensuring the effectiveness of
employees’ transnational information and
consultation rights” – Effective meeting,
promoting voluntary agreements.
• How: properly informed and consulted
(Recital (12)), frequent communication
(Art. 4.4.), involvement (Recital (14))
• Goal: improving information/
consultation (Art. 1.1).
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How an EWC Typically Operates
• Meetings
– Preparation, agenda, frequency
– Training
– Translation issues
• Considerable diversity in practice
− “Symbolic” EWCs
− “Proactive” EWCs
• Resultant impact on how an EWC
operates and impacts the company
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Practical Operation of an EWC –
Important Points
• Frequency of contact
• Representation of management
• Degree of centralized management
• Engagement of select committees
• Joint working groups
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Key Points for Employers
• Avoid disputes and delays in corporate
decision-making associated with EWC
consultation.
• Protect corporate confidentiality in key
business decisions.
• Manage the complexities associated
with the disclosure of sensitive
information to the EWC.
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Key Points for Employers
• How many representatives to have on
the EWC and the mix of nationalities.
• The number of meetings per annum
and the venue and controlling costs.
• How EWC matters will be
communicated back to employees.
• Whether to have a small select
committee meeting more frequently, its
composition and role.
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Key Points for Employers
• Control of meetings - who chairs, how is
agenda set, what minuting arrangements
apply.
• How EWC member training will be
managed and funded.
• Facilities to be made available to the
employee representatives.
• How the composition of the body adapts to
meet changes in the group or company as
businesses are acquired or shed.
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Involvement of Local Trade
Unions + Special Protection
against Dismissal
An Van Doorselaer
Lydian
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Involvement of Local Trade Unions
• Important role for Belgian trade unions:
− Request to set up EWC -> by at least 100
employees or their representatives
− In Belgium (CBA nr. 101): member(s) of
SNB are:
•
Member(s) of the Belgian WC (if not present: Health
and Safety Committee, unless both not present)
•
Appointed by the members of the Belgian WC (if not
present: Health and Safety Committee; if both not
present: Trade Union Delegation if JLC (industry)
agrees; if none present: all employees)
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Involvement of Local Trade Unions
• Important role for Belgian trade unions:
− In Belgium (CBA nr. 101): member(s) of
EWC are:
•
Member(s) of the Belgian WC (if not present: Health
and Safety Committee, unless both not present (in
which case they must be employee(s))
•
Appointed by the members of the Belgian WC (if not
present: Health and Safety Committee; if both not
present: Trade Union Delegation if JLC (industry)
agrees; if none present: all employees)
-> Strong links: as members of SNB and EWC are most
often also members of Belgian WC (or Health and Safety
Committee)
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Special Protection against Dismissal
• Who?
– Representatives in the SNB
– Representatives in the EWC
– Also substitutes
• When?
– In Belgium (Act of 23 April 1998):
from 30 days before appointment
until end of mandate
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Special Protection against Dismissal
• Which protection?
– Protection and guarantees similar to
those provided for representatives
by national legislation in country of
employment (EU Directive
2009/38/EC)
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Special Protection against Dismissal
• Which protection? (cont’d)
– In Belgium: same as members of
Belgian WC:
• Can be dismissed only after following
strict procedure for economic/technical
reasons or for serious cause
• Penalty: a protection indemnity:
– Fixed indemnity of 2 to 4 years’
remuneration, depending on seniority;
– Variable indemnity of remuneration until
end of mandate (generally max. 4 yrs.) 43
Special Protection against Dismissal
• Which protection? (cont’d)
– Comments:
• Often overlaps: protection indemnities
cannot be combined
• Does not always overlap:
– If no WC/Health and Safety Committee
– If local mandate/protection ends before
mandate EWC
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