The Migration of European Works Councils to Ireland – Challenges and Opportunities
With Brexit finally concluded a spotlight has fallen on European Works Councils (EWC’s), which had the “Central Management” operating out of the UK. As the UK is no longer a Member State there is a requirement for EWC’s to move it’s “Central Management” to another Member State. The UK’s Central Arbitration Committee has issued a number of decisions confirming that it no longer had jurisdiction to hear cases under the EWC Directive.
At the time of writing, it is estimated that 100 of the 200 EWC’s with Central Management previously located in the UK have moved to Ireland.
This in turn, raises questions about EWC’s in general and should they be feared or embraced by international organisations.
As with all European Directives they need to be transposed into national legislation. In Ireland this was achieved through the Transnational Information and Consultation of Employees Act (TICEA). Central Management (able to exert control over the undertakings) must be situated in Ireland for TICEA to apply.
The European Trade Union Institute (ETUI) estimated that in 2019 there were 913 EWC’s active, covering 17 million employees.
What are EWC’s
European Works Councils (EWC’s) are standing bodies that facilitate transnational information and consultation. They are not negotiating bodies and, as such, do not engage in negotiations. They operate completely separately from any national bodies and do not, in any way, impact directly on the current ways national information and consultation takes place.
The Directive was introduced in recognition of the “Europeanisation” of business and the need to supplement existing national channels of information and consultation.
The thresholds required for an organisation to be covered by the European Works Council Directive are, for a community-scale undertaking, at least 1,000 employees within the Member States and at least 150 employees in each of at least two Member States.
Since 1996, negotiations to set up an EWC require the establishment of Special Negotiating Body (SNB). The SNB is a negotiating body whose function it is to negotiate with the organisations Central Management on the form and function of the EWC. If the parties fail to agree, or if either one withdraws from the process, then the default provisions on an EWC automatically apply. The parties have three years to reach agreement from the commencement of negotiations.
Establishing an EWC
An employer may voluntarily choose to establish an EWC but is under no obligation to do so unless they receive a written request from more than 100 employees from at least two Member States. The employer must establish a Special Negotiating Body (SNB) once it decides to establish an EWC, or has received a valid request. An SNB must be representative of employees in each Member State and must be appointed or elected in accordance with the laws of that Member State. The employer is responsible for all costs associated with the establishing of a SNB.
Employee representatives from countries that are not within the Community (e.g. the UK) may be permitted to participate in meetings but are not entitled to vote. The SNB operates on the basis of a simple majority of those in attendance. Where the SNB wishes to withdraw from negotiations on the establishment of an EWC it requires a 2/3rds majority.
When the SNB has been established, and representatives elected, they must inform employee and employer organisations within the relevant Member States of its composition and the start of the negotiation process.
SNB Negotiations and Rights
Negotiations must commence within 6 months of the commencement of the process for establishing an EWC. Negotiations must be in a spirit of cooperation with a view to reaching an agreement on the detailed arrangements for information and consultation with employees. This is critical as it pre-supposes that the outcome will be more than the default position.
The outcome may involve the establishment of a European Employees Forum (EEF) or a number of information and consultation procedures.
There are significant differences between an EWC and an SNB in that the former is only concerned with information and consultation, whereas the latter is a negotiation body and as such competencies and resources needed differ. The “rights” of the SNB must therefore be viewed from the perspective of a negotiating body and are as follows;-
To meet without management and meet after any meetings with management, using any necessary means for communication.
To be assisted by experts, which may include trade union officials, of their choice and for management to pay any reasonable costs of one such expert per meeting, such experts may be present at negotiation meetings in an advisory capacity at the request of the SNB.
To receive training to the extent necessary for the exercise of their duties.
For management to pay for all necessary and reasonable costs relating to the negotiations such as travel expenses, accommodation expenses, and translation and interpretation support.
Paid time off work for the performance of their duties.
A key outcome of negotiations between Central Management and the SNB is the establishment of the method by which information conveyed to employee representatives, of the EWC, shall be conveyed to employees in each Member State and how this shall be recorded.
The SNB shall remain in existence for as long as it continues to have the function of negotiating for an agreement and shall automatically dissolve on its ceasing to have that function.
Default Position Resulting from no Agreement
For any reason, if an agreement is not in place after 3 years the EWC must then be set up as the requirements of the Directive (in Ireland this is TICEA). This must include an annual meeting between the EWC and Central Management covering information and consultation on the overall state of the business. Additional meetings may take place where due to exceptional circumstances where employee interests are impacted to a considerable extent, this may involve collective redundancies in more than one Member State.
Definition of Information
Information means transmission of data by the employer to the employees’ representatives in order to enable them to acquaint themselves with the subject matter and to examine it; information shall be given at such time, in such a fashion and with such content as are appropriate to enable employees’ representatives to undertake an in-depth assessment of the possible impact and, where appropriate, prepare for consultation with the competent organ of the Community-scale undertaking or Community-scale group of undertakings; including:
The situation and probable trends in employment.
The position with regard to investment.
Substantial changes concerning the organisation, introduction of new working methods or productions processes, transfers of production, merger, cutbacks or closures of undertakings, establishments or important parts thereof, and collective redundancies.
Definition of Consultation
Consultation means the establishment of dialogue and exchange of views between employees’ representatives and central management, or any more appropriate level of management, at such time, in such a fashion and with such content as enables employees’ representatives to express an opinion on the basis of the information provided about the proposed measures to which the consultation is related, without prejudice to the responsibilities of the management, and within a reasonable time, which may be taken into account within the Community-scale undertaking or Community-scale group of undertakings;
The consultation shall be conducted in such a way that the employees’ representatives can meet with the central management and obtain a response, and the reasons for that response, to any opinions they might express.
The implication here is that there is an opportunity to influence the outcome.
Once an EWC is established, by agreement or default, the terms, whatever they may be, must be adhered to by organisations. There have been a limited number of cases where it has been found that organisations had violated an EWC agreement.
In Ireland, TICEA applies, and section 18(3A) states “an undertaking or group of undertakings the central management of which does not comply with the requirements referred in section 12A(1) applicable to it shall be guilty of an offence.” Proceedings may be brought and prosecuted by the Minister for Enterprise and Employment. Fines and imprisonment may be imposed. For a complaint to be heard there needs to be a current EWC, by agreement or default, to be in existence.
With the significant increase in the number of Central Management’s located in Ireland a focus has come on how disputes or complaints will be handled. Some clarity has been given in this regard which suggest that the WRC and the Labour Court will be the preferred avenue and legislation will be enacted to strengthen and consolidate the powers of these bodies.
Some examples of complaints arising from failure to adhere to the terms of EWC’s include:
Vesuvious – closure of two sites in Spain involving 130 collective redundancies. The fact that all redundancies were within one Member State would normally mean that it was outside the scope of the EWC, however, in this case, the situation in Spain had implications for production in other Member States and as such the organisation had violated the EWC agreement. No sanction was imposed in this case.
Oracle – 380 job losses covering a number of Member States. As such the EWC was entitled to information on the impact for all employees. However, it was found that management were not required to provide financial information to justify the decision and they were not prevented from implementing the decision before the EWC issued its opinion. It was also found that a virtual meeting was information giving only and should have involved consultation and the requirement for confidentiality from the company was unreasonable as disclosure would not harm the company. It is interesting to note that in a previous case, involving Renault Viloorde, it had been found that information and consultation should be completed prior to implementation.
Verizon – company admitted breach concerning the redundancy of 216 employees in not following its agreement. It did not engage with the EWC and only informed those in the countries directly affected. The EWC were also denied an expert of their choice. The company were fined €35,000 and a second sum of €5,000 for the breach concerning the expert.
Stratis has the expertise and practical experience to assist organisation, in every aspect, of setting up or moving their Central Management locations to Ireland. If you would like to talk to us about any of the above issues or about engaging your people through the period ahead, please get in touch with me at firstname.lastname@example.org or any one of our Partners.
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Disclaimer: The information in this article is for practical guidance only and does not constitute legal or specific case advice. The answers to specific situations will vary depending on the circumstances of each case. This is not a substitute for specific professional advice relevant to individual circumstances facing your business.