Opinion on the proposal for a Council Directive on the establishing of European committees or procedures in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees (1) (94/C 295/12)

On 2 May 1994 the Council decided to consult the Economic and Social Committee, under Article 198 of the Treaty establishing the European Economic Community on the abovementioned proposal.

The Section for Social, Family, Educational and Cultural Affairs, which was responsible for preparing the Committee`s work on the subject, adopted its Opinion on 19 May 1994. The Rapporteur was Mrs Engelen-Kefer.

At its 316th Plenary Session (meeting of 1 June 1994), the Economic and Social Committee adopted the following Opinion by 93 votes to 50, with twelve abstentions (vote by name).

1. General comments

1.1. The Economic and Social Committee welcomes the fact that the Commission has re-submitted the proposal for a Council Directive on the establishment of European committees or procedures in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees. The Commission is thus responding to the Committee`s proposal to regulate in a binding way the setting-up of a 'European advisory committee of employee representatives` alongside group or company management, in the context of a Directive (ESC Own-initiative Opinion of 18 October 1989, page 11) (2). However, the Committee regrets that, despite a number of discussions between ETUC, UNICE and CEEP, no agreement was reached on starting negotiations under Article 4 of the social policy protocol.

1.1.1. In view of the rapid increase in company mergers in the Community (3) (in the 1988/89 reporting period, 197 of the 1 000 largest industrial firms in the Community were involved in a Community-scale concentration - as against only 29 in 1983/84), the adoption of this Directive is particularly urgent. The ESC regards the creation of a Community legal basis for the establishment of European committees, or of procedures for informing and consulting employees in Community-scale undertakings and groups of undertakings, as an urgently necessary contribution to the further development of the social dimension (4).

1.2. The ESC shares the view that the significance of contractual rules is greater than ever. In this way it can be ensured that proper account is taken of the various national situations. However, the Committee feels that, in the absence of agreements, the Directive must contain subsidiary minimum provisions for trans-national informing and consultation of employees. This should be cogently laid down in the Directive.

1.3. The Committee is convinced that the proposed Directive is in principle suitable for promoting the economic and production-related integration process to strengthen the potential of companies in Member States, in that it involves employees in this process through information and consultation regarding the development of each firm.

1.4. The Committee therefore also calls upon the Commission to draw up proposals to ensure the training of workers` representatives for activity in European bodies in Community-scale undertakings and groups of undertakings.

1.5. The setting-up and activity of a European committee should in no way impair the rights and responsibilities, anchored in national law, of workers` representatives in the branches or subsidiaries of an undertaking or a group of undertakings in the Member States.

1.5.1. In particular, there must be no possibility of the informing and consultation of a European committee or other body being used to prevent workers` representatives invoking their rights and responsibilities under national law in relation to the circumstances in a branch or subsidiary of an undertaking.

2. Specific comments

2.1. The Committee endorses the proposed Directive subject to the following comments:

2.2. Title of the proposal

The Commission draft as amended on 16 September 1991 originally provided for a draft Directive on the establishment of a European Works Council in undertakings. This highly workable concept was changed in the 8 February 1994 version, with the term 'European Works Council` being deleted and replaced with the term 'mechanisms for informing and consulting employees`.

The formulation now favoured, namely a proposal 'on the establishment of European committees` is certainly not a return to the original concept. However, this term is preferable to the previously favoured paraphrase. Thus the Commission appears to have found a workable compromise.

The Committee therefore welcomes this change and emphasizes that the text has thereby been made significantly more readable and comprehensible.

2.3. Article 1

The purpose of the Directive is to improve the right to information and consultation of employees in Community-scale undertakings and groups of undertakings (Article 1(1)). The Directive is thus a step in the right direction, despite that the fact that this only partially achieves the objective formulated in Article 17 of the Community Charter of workers` basic social rights, since that Article refers expressly not only to information and consultation, but also participation of workers.

2.4. Article 2

The Committee welcomes the solution whereby the Directive is applied if the Community-scale undertaking or group of undertakings has at least 1 000 employees in the Member States. The Committee also welcomes the second threshold, whereby another undertaking in the same group of undertakings must have at least 100 employees in another Member State. These arrangements are sensible, particularly for e.g. service undertakings with a number of branches. However, it requests consideration of the question whether involvement of employees in the United Kingdom is possible, or whether the threshold could not be reduced to 500 employees.

The Committee also proposes that the suitability of the threshold for numbers of employees be reviewed after an appropriate period of about two years.

The Committee welcomes the fact that Article 2(2) lays down that thresholds shall be based on the average number of employees in the previous two years.

To ensure equality of treatment, the Committee thinks it necessary to define the term 'employee` in the Directive, in order to avoid distortions caused by the differing legal practice of the Member States. In the Committee`s view, another possible starting point is the three draft Directives of June 1990 on approximation of the legal provisions of the Member States on certain (atypical) labour relations [COM(90) 228 - SYN 380 - SYN 281].

The Committee welcomes the fact that paragraph 3 extends the field of application of the Directive to cover in principle the crews of merchant ships as well.

2.5. Article 4

The Committee endorses the rule in paragraph 2 whereby, in cases where the central management is not situated in a Member State, its representatives in the Community are responsible for creating the conditions for the establishment of a European committee or of a procedure for informing and consulting employees, or this responsibility falls to the undertaking with the highest number of employees in any one Member State.

2.6. Article 5

The Committee endorses the fact that the originally selected threshold of 500 employees in at least two Member States has been reduced to 100. However, there is still the criticism that in the draft of 6 October 1993 it was sufficient for the initiative of setting up the special negotiating body to come from workers` representatives in one Member State. Under the new provision it is necessary for cross-frontier communication between employees or employees` representatives to take place for the special negotiating body to be set up. Practical experience will show whether this constitutes an unjustifiable obstacle.

The Committee endorses the obligation on Member States (Article 5(2) a)) to make arrangements enabling employees themselves to appoint members for the special negotiating body in firms where, through no fault of the employees, there are no workers` representatives.

The Committee endorses the new formulation in paragraph 3 on the task of the special negotiating body. It is clearer and more appropriate.

The Committee was surprised that the quorum for not opening negotiations (Article 5(5)) has been lowered from 75 % to 66 %, with no adequate justification given. It suggests that it be considered whether a quorum of 75 % might not be more appropriate.

2.7. Article 6

The Committee notes that the Commission draft gives decisive priority to the voluntary principle. It also fears there will be considerable uncertainties if an information and consultation procedure is chosen under Article 6(3) instead of a European committee.

In the Committee`s view this variant is not an equally valid alternative to a trans-national workers` committee; nor does it achieve the desired aim that the structures for information and consultation of workers should correspond to the structures of the Community-scale undertaking or group of undertakings.

The Committee fears that, if it is only an information and consultation procedure which is set up, the type of procedure would in each case make the possibility of cooperation between workers` representative bodies at European level much more difficult, since the personal contact among works councils and with the central executive in the Member States could be too much reduced. Such contact is, however, a precondition for efficient, successful work. This would apply particularly if the procedure were, for example, to be essentially confined to written information.

However, the Committee is aware that those concerned are ultimately free to forego the establishment of a European committee in favour of a procedure. Workers` representatives cannot be legally compelled to do so. Hence a final assessment will essentially depend on how things will work out in practice.

2.8. Article 7

Article 7(1) lays down a period of two years for the negotiating phase, instead of a period of one year in the earlier versions.

The Committee takes the view that it is possible to complete the negotiations within a year.

2.9. Article 8

Even if the scope of the confidentiality clauses is determined by the Member States, the confidentiality clause in Article 8(1) appears to the Committee to be rather too broadly formulated. It cannot be ruled out that Member States might make documents confidential which are not of an intrinsically confidential nature. There should therefore be a provision for checks on whether such information is really an industrial or trade secret.

The criticism is not lessened by the fact that Article 11(4) provides a legal guarantee in such cases. It is to be feared that in the event of conflict, particularly when legal avenues have been exhausted, legal decisions may be made on matters which are by then long out of date, so that under the normal legal arrangements there will be a legal protection interest in continuing the procedure only if a risk of recurrence can be demonstrated.

The Committee expressly welcomes the deletion of Article 8(3) of the 6 October 1993 draft, which contained inappropriate rules on ideological guidance.

2.10. Article 13

The Committee notes that, under Article 13(1), any existing agreement shall take precedence over the Directive, regardless of the quality of the information and consultation rights provided by that agreement.

However, in view of the fact that all existing agreements have a time-limit, and that when it has expired new negotiations in the spirit of the Directive will be needed, such treatment of firms which have already reached voluntary agreements appears to be acceptable.

Done at Brussels, 1 June 1994.

The Chairman

of the Economic and Social Committee

Susanne TIEMANN

(1) OJ No C 135, 18. 5. 1994, p. 8.

(2) OJ No C 329/40, 30. 12. 1989, point 6.5.

(3) 19th Commission Report on Competition Policy, 1990.

(4) See also Opinion on the Third Report on the application of the Community Charter of the fundamental social rights of workers - CES 754/94.

APPENDIX I to the Opinion of the Economic and Social Committee

The following members, present or represented, voted for the Opinion:

Mr/Mrs/Miss: ABEJON RESA, AMATO, ATAÍDE FERREIRA, ATTLEY, BAEZA, BARBAGLI, BASTIAN, BLESER, BOISSERÉE, BONVICINI, BORDES-PAGES, BOTTAZZI, BRIESCH, van den BURG, Vasco CAL, CARROLL, CASSINA, CEBALLO HERRERO, CHEVALIER, CHRISTIE, COLOMBO, DECAILLON, von der DECKEN, d`ELIA, DIAPOULIS, van DIJK, DRAIJER, DRILLEAUD, DUNKEL, ELSTNER, ENGELEN-KEFER, ETTY, EULEN, FERNANDEZ, FLUM, FRANDI, FREEMAN, GEUENICH, GOMEZ MARTINEZ, GREDAL, GROBEN, HAGEN, HILKENS, JANSSEN, JASCHICK, JENKINS, KARGAARD, de KNEGT, KORYFIDIS, LACA MARTIN, LANDABURU DE SILVA, LAPPAS, LAUR, LIVERANI, LYNCH, LYONS, MADDOCKS, MANTOVANI, MARGALEF MASIA, MASUCCI, MERCIER, MOLINA VALLEJO, MORIZE, MORRIS, MÜLLER R., MUÑIZ GUARDADO, NIELSEN B., NIELSEN P., NIERHAUS, de PAUL de BARCHIFONTAINE, PAVLOPOULOS, PELLARINI, PELLETIER Ch., PETROPOULOS, QUEVEDO ROJO, REA, SAITIS, SALMON, SANDERSON, SANTILLAN CABEZA, SCHMITZ, von SCHWERIN, SCULLY, SEQUEIRA, SILVA, SMITH, SPEIRS, SPYROUDIS, STOKKERS, THEONAS, TIXIER, VANDERMEEREN, ZUFIAUR NARVAIZA.

The following members, present or represented, voted against the Opinion:

Mr/Mrs/Miss: ARENA, ASPINALL, BEALE, BELL, BELTRAMI, BERNABEI, BLACK, BREDIMA-SAVOPOULOU, BROOKES, CAVALEIRO BRANDÃO, CONNELLAN, CUNHA, DONCK, DOUVIS, FRERICHS, GAFO FERNANDEZ, GARDNER, GAUTIER, GHIGONIS, GIACOMELLI, GIESECKE, GREEN, GUILLAUME, KAARIS, KAFKA, KAZAZIS, LINSSEN, LITTLE, LÖW, McGARRY, MOBBS, MORELAND, NOORDWAL, PANERO FLOREZ, PARDON, PEARSON, PELLETIER R., PERRIN-PELLETIER, PRICOLO, PROUMENS, RODRIGUEZ de AZERO Y DEL HOYO, ROMOLI, SALA, SAUWENS, SCHADE-POULSEN, SEGUY, SOLARI, STECHER NAVARRA, TESORO OLIVER, WHITWORTH.

The following members, present or represented, abstained:

Mr/Mrs: BAGLIANO, Dame Jocelyn BARROW, BENTO GONÇALVES, GIRON, KIELMAN, KIENLE, MEYER-HORN, MULLER E., PASQUALI, PETERSEN, RAMAEKERS, WICK.

APPENDIX II to the Opinion of the Economic and Social Committee

The following Counter-Opinion was rejected by 93 votes to 49, with fourteen abstentions (vote by name) in the course of the discussions:

Replace the Opinion as a whole by the following:

'1. General Principles

1.1. The Committee fully supports procedures for effective communication and consultation between management and employees.

1.2. The need for such procedures is particularly pronounced in multi-national enterprises operating in two or more Member States where it is important that the management of the controlling undertaking should be involved.

1.3. Such arrangement should be agreed voluntarily between management and employees though it is recognized that in the absence of any such agreement minimum requirements for the frequency and content of such communication and consultation (though not for the framework in which it should take place) should be imposed by law.

1.4. The arrangements in any particular undertaking should be designed so as to cater specifically for its particular needs and circumstances having regard to its history, traditions and practices as well as those of the Member States in which its components are situated.

1.5. The Committee regrets that the Social Partners were unable to reach agreement on this issue - the first to be developed under the terms of the Social Protocol to the Maastricht Treaty. However it believes that the existence of a draft Council Directive on the subject was prejudicial to even-handed negotiations.

2. General Comments

2.1. While an improvement over its earlier versions (and notably that considered by the Committee in 1991) the Commission`s proposal is unacceptable and likely to prove ineffective because it still seeks to impose a single stereotyped solution in the absence of a specific agreement to the contrary.

2.2. A draft Directive on this subject should lay down the following provisions:

- Multinational enterprises (as defined) should implement effective communication and consultation procedures;

- Such procedures should be initiated by and involve on a continuing basis the management of the controlling undertaking;

- The procedures should be developed and agreed through existing channels in the absence of which a model procedure for a European Negotiating Committee might be adopted;

- The procedures should provide as a minimum for:

an annual process of information and consultation on the progress of the business;

a specific process of information and consultation in closely defined circumstances involving relocations, closure of establishments or undertakings and collective redundancies;

- In the absence of agreed procedures for such communication and consultation the employers` obligations should be expressed in similar terms to those contained in Council Directive 75/129 as modified by Directive 92/56.

3. Specific Comments

3.1. The Committee believes that the draft Directive needs radically re-casting to give effect to the general principles set out above. Without prejudice to these overriding requirements there follow some detailed comments on the present draft as it stands.

3.2. Article 2(d) should be amended to read `Employees` representatives means those employees who are duly elected to act as the representatives of the employees in accordance with the laws of practices of Member States`.

3.3. Article 5 should be amended to permit information and consultation mechanisms to be put in place by alternative suitable means, for example through existing employee representation structures or through consultations between management and employees at all appropriate levels, in accordance with national laws and practices.

3.4. Article 5.4 should provide that while employees or their representatives may seek expert advice, such experts should act only in a consultative capacity and should have no right to participate themselves in the dialogue to agree information and consultation mechanisms. Nor should their expenses be required to be paid for by employers.

3.5. Article 6 should provide that the parties should determine whether to have a central European Committee or whether to establish some other mutually agreed framework for communication and consultation between the management of the controlling undertaking and the employees in its various subsidiary undertakings.

3.6. Article 7 should provide that in the absence of agreement under Article 6 the management of the controlling undertaking should be required to maintain on a continuing basis effective communication and consultation procedures as per the specifications in paragraph 2.2 of this Opinion.

3.7. The Annex should either be deleted or modified so as to take the form of a suggested model for the consideration of the parties. In no circumstances should its adoption be mandatory.

3.8. The proposal in paragraph 1(c) of the Annex to establish an Executive Committee is totally out of place for a body which has no executive functions. The rules of procedure for any European Committee should be agreed between employee representatives and management.

3.9. The term `exceptional circumstances` in paragraph 3 should be closely defined and limited to instances of relocations, closures of establishments or undertakings or collective redundancies.

3.10. The considerations regarding experts specified in paragraph 3.4 of this Opinion should be equally applicable to paragraph 6 of the Annex.`

The following members, present or represented, voted for the Counter-Opinion:

Mr/Mrs/Miss: ARENA, ASPINALL, BAGLIANO, BEALE, BELL, BELTRAMI, BENTO GONÇALVES, BERNABEI, BREDIMA-SAVOPOULOU, BROOKES, CAVALEIRO BRANDÃO, CONNELLAN, CUNHA, DONCK, DOUVIS, FRERICHS, GAFO FERNANDEZ, GARDNER, GAUTIER, GHIGONIS, GIACOMELLI, GIESECKE, GREEN, GUILLAUME, KAARIS, KAFKA, KAZAZIS, LINSSEN, LITTLE, LÖW, McGARRY, MOBBS, MORELAND, NOORDWAL, PANERO FLOREZ, PARDON, PEARSON, PELLETIER R., PERRIN-PELLETIER, PRICOLO, PROUMENS, RODRIGUEZ de AZERO Y DEL HOYO, ROMOLI, SAITIS, SAUWENS, SCHADE-POULSEN, SEGUY, STECHER NAVARRA, TESORO OLIVER, WHITWORTH.

The following members, present or represented, voted against the Counter-Opinion:

Mr/Mrs/Miss: ABEJON RESA, AMATO, ATAÍDE FERREIRA, ATTLEY, BAEZA, BASTIAN, BLESER, BOISSERÉE, BONVICINI, BORDES-PAGES, BOTTAZZI, BRIESCH, van den BURG, Vasco CAL, CARROLL, CASSINA, CEBALLO HERRERO, CHEVALIER, CHRISTIE, COLOMBO, DECAILLON, von der DECKEN, d`ELIA, DIAPOULIS, van DIJK, DRAIJER, DRILLEAUD, DUNKEL, ELSTNER, ENGELEN-KEFER, ETTY, EULEN, FERNANDEZ, FLUM, FRANDI, FREEMAN, GEUENICH, GOMEZ MARTINEZ, GREDAL, GROBEN, HAGEN, HILKENS, JANSSEN, JASCHICK, JENKINS, KARGAARD, de KNEGT, KORYFIDIS, LACA MARTIN, LANDABURU DE SILVA, LAPPAS, LAUR, LIVERANI, LYNCH, LYONS, MADDOCKS, MANTOVANI, MARGALEF MASIA, MASUCCI, MERCIER, MOLINA VALLEJO, MORIZE, MORRIS, MOURGUES, MÜLLER R., MUÑIZ GUARDADO, NIELSEN B., NIELSEN P., NIERHAUS, de PAUL de BARCHIFONTAINE, PAVLOPOULOS, PE, PELLARINI, PELLETIER Ch., POMPEN, QUEVEDO ROJO, SALMON, SANDERSON, SANTILLAN CABEZA, SCHMIDT, SCHMITZ, von SCHWERIN, SEQUEIRA, SILVA, SMITH, SPYROUDIS, STOKKERS, STRAUSS, THEONAS, TIXIER, VANDERMEEREN, ZUFIAUR NARVAIZA.

The following members, present or represented, abstained:

Mr/Mrs: BARBAGLI, Dame Jocelyn BARROW, GIRON, KIELMAN, KIENLE, MEYER-HORN, MULLER E., PASQUALI, PETERSEN, RAMAEKERS, REA, SCULLY, SPEIRS, WICK.