European Works Councils
Key points
§ UK-based multinational companies with 1,000 or more employees 'on the payroll' (of whom 150 or more are employed in each of at least two EEA Member States) must respond positively to a valid request for the establishment of a European Works Council (EWC) or for a European- level 'information and consultation procedure'. This requirement is to be found in the Transnational Information & Consultation of Employees Regulations 1999, implementing Council Directive 94/45/EC 'on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees'. For convenience, the Regulations are referred to throughout this section as 'the 2000 Regulations' or by their acronym 'TICER'.
§ Multinational companies in the UK, which had voluntarily established their own EWCs or European-level information and consultation procedures – either before 22 September 1996 (under Article 13 of Directive 94/45/EC) or before 15 December 1999 (under Article 3 of Directive 97/74/EC) – are not bound by TICER so long as the EWCs and procedures in question cover the entire workforce in each case. Nor do the 2000 Regulations apply to the UK-based subsidiaries of a multinational company established elsewhere in the EEA which had already been voluntarily included in EWC arrangements established by the company's central management.
§ Council Directive 94/45/EC (or, as appropriate, extending Directive 97/74/EC) applies equally to any foreign-owned multinational company whose head office or central management is outside the EEA (eg, in Japan or the USA) – so long as the company in question employs 1,000 or more people within the EEA, and has at least 150 personnel in each of at least two EEA Member States. In short, the company's 'designated EEA representative' (or, if the company has not designated any such representative, the central management of its largest EEA-based undertaking) must respond to a valid employee or employee-sponsored request for the establishment of an EWC (or information and consultation procedure) for its EEA workforce.
Information about employee numbers
§ Any UK-based employees of a multinational company (or their appointed or elected representatives), who are minded to submit a request to their employer for the establishment of an EWC (or European-level information and consultation procedure), have the legal right under TICER to seek and obtain data from local or central management about the number of persons employed by the company both within the UK and in every other EEA member state in which the company has operations.
§ Should the company refuse or fail to provide that data within one month of receiving such a request (or provide information suspected of being false or incomplete), the matter may be referred to the Central Arbitration Committee (CAC) which, if it upholds the employees' complaint, will order the company either to provide that information by a specified date or face an action for contempt of court. The CAC may decide, on the other hand, from the evidence before it, that the company in question is, or is part of, a multinational company employing 1,000 or more employees within the EEA (with 150 or more employees in each of at least two EEA Member States), and will make a declaration to that effect. In the latter instance, the employees may rely on that declaration when submitting a request for the establishment of an EWC or European-level information and consultation procedure.
Calculating the number of people employed
§ Each EEA Member State has its own rules for calculating the number of people employed by a multinational company within its territory. For UK-based employees, the total number of persons employed by the company in the UK are to be ascertained by adding together the numbers employed in each of the 24 months immediately preceding the date on which the request to establish an EWC (or alternative procedure) was received (whether the employees in question were employed throughout the month or not), and by dividing the resultant figure by 24. Part-time employees working, or contracted to work, fewer than 75 hours a month (excluding overtime hours), may be counted as half-units, if the company so chooses.
Meaning of valid request
§ A request for the establishment of an EWC (or some other form of European-level information and consultation procedure) is valid for the purposes of TICER if it comprises:
o a single request in writing by 100 or more employees (or by their elected or appointed representatives) in at least two undertakings or establishments in at least two EEA Member States; or
o one or more separate requests in writing, on the same or different days, by employees or their representatives, which, when taken together, mean that at least 100 or more employees in at least two undertakings or establishments in at least two different Member States have made requests.
Each request must be sent to the undertaking's central or local management and must specify the date on which it was sent.
§ A UK-based multinational company contesting the validity of a request for the establishment of an EWC (or a European-level information and consultation procedure) may apply to the Central Arbitration Committee (CAC) for a declaration on the matter. It cannot reject the request out of hand and must put its case to the CAC within three months of the date on which the request was made (or within three months of the last request, if that is the one that brings the numbers up to 100). If the CAC upholds the validity of the employees' request (or requests), the company's central management must begin negotiations for the establishment of an EWC (or alternative information and consultation procedure).
Negotiations for the establishment of an EWC
§ Once it has received a valid request for the establishment of an EWC (or alternative information and consultation procedure), the company in question has six months within which to begin negotiations with employees or their representatives. This entails setting up a 'special negotiating body' (SNB) comprising employee-elected or appointed representatives drawn from each of the EEA Member States in which the company has operations. If the company fails or refuses to begin negotiations within that six-month period, it will have no choice but to accept the statutory or fallback EWC set out in the Schedule to TICER.
| Note | The central managements of multinational companies, which fall within the scope of TICER, are under no statutory obligation to initiate negotiations for the establishment of an EWC or a European-level information and consultation procedure. |
Composition of the SNB
§ The SNB must comprise at least one, but no more than four, representatives from each of the relevant EEA Member States. If between 25 and 50 per cent of the company's total workforce works in a particular Member State, one additional member must be elected or appointed to the SNB; if 50 per cent or more, but less than 75 per cent, two additional members; and, if 75 per cent or more, three additional members.
§ The UK members of the SNB must be elected by a secret ballot of the entire UK workforce, unless there is already a standing consultative committee in existence whose members were themselves elected by a ballot of the entire UK workforce. In the latter case, it will be for the committee itself to nominate one or more of its members to represent the interests of employees on the SNB. What is important is that the persons elected or appointed to the SNB represent the interests of all employees, not just a particular group or sector of employees.
§ If there is to be a ballot of the entire workforce, every UK employee must be afforded the right and opportunity to vote, and must be permitted, without hindrance, to put his or her name forward as a candidate for election as an SNB member. The company's UK central management must discuss its arrangements for the conduct of the ballot with existing employee representatives and must appoint one or more 'independent ballot supervisors' to ensure that workplace ballots are conducted in secret and that the votes cast are counted fairly and accurately.
§ Similar procedures apply for the election or appointment of SNB members from each of the other EEA Member States in which the company has operations. Those procedures will be as laid down in the national legislation of the Member States in question.
Negotiations with the SNB
§ Once an SNB has been established, it is up to the company's central management to begin negotiations with the SNB for the establishment of an EWC or information and consultation procedure, and to inform local managements accordingly. The 2000 Regulations stress that the central management of a multinational company and the SNB are 'duty- bound to negotiate in a spirit of cooperation with a view to reaching a written agreement on the detailed arrangements for the information and consultation of employees' throughout the organisation. During negotiations, the SNB will take decisions by a majority of the votes cast by its members (with each member being entitled to one vote).
§ The role of the SNB is to determine, with central management, by written agreement, the scope, composition, functions and term of office of an EWC. The parties may agree to adopt the statutory or fall-back EWC (outlined in the Schedule to TICER) or one tailored to their own needs. They may decide, on the other hand, in writing, to establish an information and consultation procedure instead of an EWC.
§ If the parties decide to proceed with the establishment of an EWC the agreement establishing it must:
o identify each of the company's EEA operations covered by the agreement;
o specify the number of members to be elected or appointed to the EWC (by whatever means), the allocation of seats, and the terms of office of the members;
o explain the EWC's functions, and the procedures for information and consultation;
o specify the location, frequency and duration of EWC meetings; and what funding and other resources are to be allocated to the EWC to enable it to carry out its functions; and
o determine the duration of the agreement and the procedure for its renegotiation.
The parties to the agreement must decide on the method to be employed for the election or appointment of EWC members from each of the EEA Member States in which the company has operations. Those members may be elected by a workforce ballot in each of the Member States in question or be appointed by a standing consultative committee from amongst its own members.
§ If the parties decide to establish an information and consultation procedure instead of an EWC, the agreement establishing the procedure must specify a method by which the information and consultation representatives are to enjoy the right to meet and discuss the information conveyed to them; the latter must relate in particular to questions which significantly affect the interests of employees throughout the EEA. The information and consultation representatives may be either elected or appointed in accordance with the terms of the agreement.
§ Central management must pay for (or reimburse) all legitimate expenses incurred by the members of the SNB (travelling, accommodation, meals, etc) during negotiations for the establishment of an EWC or an information and consultation procedure.
§ Once agreement has been reached on the establishment of an EWC (or an information and consultation procedure), it is up to the central management of the company in question to implement that agreement. If it fails to do so, it will be ordered by the EAT to take such steps as are necessary to establish the EWC (or procedure) or face proceedings for contempt of court. The central management will also be ordered to pay the Secretary of State for Trade & Industry a penalty of up to £75,000.
Subsidiary requirements
§ A company's central management which refuses (within six months of receiving a valid request) to commence negotiations for the establishment of an EWC (or for an information and consultation procedure) will be ordered by the EAT to adopt the fall-back or statutory EWC outlined in the Schedule to the 2000 Regulations or face an action for contempt of court. When making that order, the EAT will also order the central management to pay a penalty of up to £75,000.
§ If the negotiating parties fail to agree on the establishment of an EWC (or alternative information and consultation procedure) within three years of the date on which a valid request for the establishment of such an EWC or procedure was made, the parties will have no choice but to adopt the fall-back or statutory EWC outlined in the Schedule to TICER.
Functions of an EWC
§ Neither TICER nor the originating EC Directive offer any advice as to the information that must be, or need not be, relayed to the members of an EWC (or to information and consultation representatives) by the central management of a multinational company. That is a matter for negotiation and agreement. However, the fall-back or statutory EWC described in the Schedule to Directive 94/45/EC provides several clues. The statutory EWC (which may be imposed on the central management of any multinational company which refuses or fails to negotiate for the establishment of an EWC or a European-level information and consultation procedure) states that an EWC has 'the right to meet with the central management once a year, to be informed and consulted, on the basis of a report drawn up by the central management, on the progress of the business…'.
§ Furthermore, 'the meeting shall relate in particular to the structure, economic and financial situation, the probable development of the business and of production and sales, the situation and probable trend of employment, investments, and substantial changes concerning organisation, introduction of new working methods or production processes, transfers of production, mergers, cut-backs or closures of undertakings, establishments or important parts thereof, and collective redundancies'.
Confidential information
§ Both the originating Directive and TICER acknowledge that the central management of a multinational company has the right to withhold from the members of an EWC (or from information and consultation representatives) any information or document which would, if disclosed, do serious harm or be prejudicial to the company's legitimate business interests. Central management has the right also to insist that certain documents or information entrusted to an EWC (or to information and consultation representatives) be held by them in confidence – although the members or representatives in question may apply to the CAC for a declaration as to whether it was reasonable for the central management to impose such a requirement.
§ If the CAC considers that the release or disclosure of allegedly confidential information is unlikely to prejudice or cause serious harm to the company's business interests, it will make a declaration to that effect. In short, the CAC will either order the central management to disclose documents or information previously withheld from an EWC (or from information and consultation representatives) or will release members of the EWC (or the representatives in question) from any obligation imposed on them by central management to hold certain information or documents in confidence – subject to any conditions which the CAC considers appropriate in the circumstances.
Protection for members of an EWC, etc
§ Under the original Directive and TICER, any employee of a qualifying multinational company who is:
o a member of an SNB or EWC;
o an information and consultation representative; or
o a candidate for election as a member of an SNB or EWC, or as an information and consultation representative,
has the right to be permitted by his (or her) employer to take a reasonable amount of paid time off during normal working hours in order to perform his functions as such a member, representative or candidate.
§ An employer who refuses to allow time off in the circumstances described above, or who fails to pay the employee his (or her) normal wages or salary during such time off, will be ordered by an employment tribunal to pay the employee an amount equal to the remuneration to which he would have been entitled but for the employer 's refusal or failure.
Victimisation or dismissal
§ An employee who is a member of an EWC or SNB (or an information and consultation representative) or a candidate for election as such a member of representative, has the right also not to be disciplined, dismissed, selected for redundancy or subjected to any other detriment (eg, denial of a promotion, transfer, opportunities for training, a promised pay rise, etc) for exercising his (or her) statutory rights under TICER or for performing his functions as such a member, representative or candidate.
§ That same protection extends to employees who have challenged their employer 's refusal or failure to acknowledge their statutory rights under TICER or who have brought proceedings before the CAC, the EAT or an employment tribunal to enforce or secure any entitlement conferred on them by TICER. Employees have the right also not to be victimised, disciplined, dismissed or selected for redundancy for seeking information about the number of persons employed by their employer, or for influencing or seeking to influence the voting intentions of other employees (in a ballot for the election of SNB or EWC members or for information and consultation representatives), or for voting in such a ballot, or for expressing doubts about the conduct or outcome of the ballot.
Complaint to an employment tribunal
§ An employee who is dismissed or selected for redundancy for exercising his (or her) statutory rights under TICER (whether before an employment tribunal or otherwise) may complain to an employment tribunal regardless of his age or length of service at the material time. The amount of compensation that may be awarded in such cases is substantial. An employee who is victimised, disciplined or subject to any other form of detriment for presuming to assert those same statutory rights has no need to resign in order to seek redress before an employment tribunal, and will be awarded such compensation as the tribunal considers 'just and equitable' in the circumstances.
Disclosure of confidential information
§ Any member of an SNB or EWC (or an information and consultation representative) who is dismissed, selected for redundancy or otherwise disciplined for unlawfully disclosing information or the contents of any document entrusted to him (or her) in confidence, thereby forfeits the protection otherwise available to such employees under TICER – unless the disclosure amounts to a 'protected disclosure' as defined by section 43A of the Employment Rights Act 1996.
§ Complaints about the failure of a company's central management to respond positively to a valid request for, or to implement an agreement for, the establishment of an EWC (or an information and consultation procedure), may be presented to the Employment Appeal Tribunal by an employee, employee representative or member (or former member) of an SNB. If such a complaint is upheld, the EAT will order the central management of the company in question to take such steps as are necessary to establish the EWC or procedure in accordance with the terms of the agreement concluded with the SNB or, if there is no such agreement, to establish an EWC in accordance with the Schedule to TICER. When making such an order, the EAT will also issue a written penalty notice to the central management of the multinational company in question requiring it to pay to the Secretary of State for Trade & Industry a penalty of up to £75,000 in respect of that failure.
§ In determining the amount of the penalty payable by a defaulting company's central management, the EAT will take into account the gravity of the failure, the period of time over which the failure occurred; the reason for that failure, the number of employees affected by the failure, and the number of persons employed by the company throughout the EEA.
§ The statutory (or fall-back) EWC referred to in the text above will be imposed by the EAT on the central management of a company which has disregarded a valid request for the establishment of an EWC (or information or consultation procedure) and has refused to commence negotiations within six months of the date on which that request was made. The statutory EWC is also likely to be imposed if the negotiating parties are deadlocked and fail to reach agreement within three years of that date. It is as well to add that the negotiating parties are free to adopt the statutory EWC, if that is what they have agreed to do.
Composition of the statutory EWC
§ The statutory EWC must comprise a minimum of three and a maximum of 30 members, with at least one member from each of the EEA Member States in which the company has operations. If between 25 and 50 per cent of the company's total EEA workforce works in a particular Member State, one additional member must be elected or appointed to represent the interests of employees in that Member State – rising to two additional members from a Member State in which 50 per cent or more but less than 75 per cent of the workforce is employed; and three additional members from a Member State in which the numbers employed account for 75 per cent or more of the company's total EEA workforce.
Appointment or election of UK members of the statutory EWC
§ The UK members of the statutory EWC may be elected or appointed by the members of an existing negotiating committee (representing the interests of the entire UK workforce for the purposes of collective bargaining) or, if there is no such committee, by a secret ballot of the entire UK workforce (similar to the balloting procedures described earlier in this section). Every employee must be afforded an opportunity to vote in the ballot and to put his or her name forward as a candidate for election as a member of the EWC.
Information and consultation meetings
§ The statutory EWC has the right to meet with central management once a year in an information and consultation meeting, on the basis of a report drawn up by the central management on the progress of the business and its prospects. Additional meetings should take place if there are exceptional circumstances directly affecting the employees' interests (eg, collective redundancies, the closure of certain establishments, etc).
§ Furthermore, EWC meetings 'must relate in particular to issues such as the company's structure, economic and financial situation; its probable future development (including production and sales plans); employment trends; likely future investments; proposed organisational changes; the planned introduction of new working methods or production processes; transfers of production; mergers, cut-backs or closures of undertakings or establishments; collective redundancies', etc.
Procedures
§ The statutory EWC may adopt its own rules of procedure. It has the right also to conduct its own meeting before joining central management at the formal information and consultation meeting; and may be assisted in its deliberations by one or more experts of its own choosing. Once discussions with management have ended, the EWC must take steps to inform the workforce (or their representatives) of the content and outcome of the information and consultation procedure.
§ Central management is duty-bound to pay the EWC's travel and accommodation costs, as well as any cost involved in organising meetings and arranging for interpretation facilities (although it need not pay the expenses of more than one expert appointed by the EWC to assist it in carrying out its tasks). Central management must ensure that EWC members have whatever financial and material support they may need to enable them to carry out their duties in an appropriate manner.
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