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
Date: 1994-04-13
Institutions: European Commission
Subjects: European undertaking, group of companies, labour law, worker consultation, worker information, works council

COMMISSION OF THE EUROPEAN COMMUNITIES 

COM(94)  134  final 

Brussels,  13.04.1994 

94/0113  (PRT) 

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 

(presented by  the  Commission) 

EXPLANATORY  MEMORANDUM 

I. 

1. 

2. 

3. 

Introduction 

On  5 December  1990, the Commission  adopted  a  "Proposal  for  a Council  Directive 
on the establishment of a European Works Council in Community-scale undertakings 
or groups of undertakings for the purposes of informing and consulting employees,,(1). 

The Economic and  Social Committee gave its opinion on  18 March  1991(2). 

On  10 July  1991, the European Parliament adopted an opinion on the proposal to the 
Council(3). 

On  10 September  1991,  the Commission  adopted  an  amended  proposal  pursuant  to 
Article  149(3) of the EEC Treaty(4). 

The  Council  of  Ministers  discussed  the  Commission's  successive  proposals  at  14 
meetings at the level  of its Working Party on Social Questions (between  3 July  1991 
and  6 September  1993)  and  at  five  meetings  of  the  Council  of  Labour  and  Social 
Affairs  Ministers (on 6 May  1991, 3 December  1991, 6 April  1993, 1  June  1993 and 
12 October  1993). 

At  none  of  these  meetings  did  the  Council  reach  unanimous  agreement  on  the 
Commission's proposal, as required by the legal basis for the proposal (Article  100 of 
the EEC Treaty). The Council  did, however, establish,  at its meeting on  12 October 
1993, a broad consensus among the great majority  of delegations on a text submitted 
by the Belgian Presidency. The Commission informed  the Council  of its intention to 
initiate, on entry  into force  of the Treaty  on European Union  on  1 November 1993, 
the procedures provided for in the Agreement on Social Policy annexed to the Protocol 
on Social Policy annexed in turn to the Treaty establishing the European Community, 
on the basis of the text submitted by the Belgian Presidency and the views expressed 
in the course of the Council's discussions. 

On  17 November  1993, the Commission  decided to  set these procedures in  motion. 
18 November  1993 saw the commencement  of a six-week period  of  consultation  of 
the social partners at European level, in accordance with Article 3(2) of the Agreement 
on  Social  Policy,  with the dispatch  of a first consultative  document  on the possible 
direction of Community action in the field of information  and consultation of workers 
in  Community-scale  undertakings  or  groups  of  undertakings.  The  employers' 
associations, federations  and confederations  and the trade unions submitted a general 
opinion to the Commission on the questions put to them (see Annex 1). 

On  8 February  1994,  in  accordance  with  Article  3(3)  of  the  Agreement  on  Social 
Policy, the Commission decided to consult the social partners at Community level on 
the content of the proposal, including the possible legal basis for  such a proposal. 

(1) 
(2) 
(3) 
C4) 

COM(90) 581 final, OJ No C 39, 15.2.1991. 
OJNoC  120,6.5.1991. 
OJNoC240,  16.9.1991. 
COM(91) 345 final, OJ No C 336, 31.12.1991 

By  the  deadline  for  this  second  phase  of  consultation  (30  March  1994), the  social 
partners sent the Commission their views on the consultation document (see Annex 2). 
Despite all  the efforts  made, the social  partners at Community  level  failed  to reach 
agreement  on  setting  in  motion  the  procedure  provided  for  in  Article  4  of  the 
Agreement  on  Social Policy. 

4. 

On  13 April  1994, the Commission, taking the view that a Community  initiative on 
the  information  and  consultation  of  workers  in  Community-scale  undertakings and 
groups of undertakings was still warranted, decided to adopt the present proposal, with 
a view to presenting it to the Council on the basis of Article 2(2) of the Agreement 
on  Social Policy. 

EL  General justification  for the initiative 

A. 

The impact of the internal  market 

5. 

The internal  market  is, according to Article  8a of the EEC  Treaty  "an area without 
internal frontiers  in which the free movement of goods, persons, services and capital 
is  ensured  in  accordance  with  the  provisions  of  the  Treaty".  The  dismantling  of 
internal  frontiers  is  already  resulting  in  major  corporate  re-organizations  in  the 
Community, and will continue to do so, particularly in the form of concentrations. The 
accelerating pace of transfrontier  economic restructuring associated with this process, 
involving an increase in mergers, take-overs, transfers  and joint ventures, will result 
in more and more employees being subject to key corporate decisions taken outside 
the country where their establishment or undertaking is located. 

As a result of changes in the structure of undertakings, the procedures for consulting 
and disclosing information to employees are often no longer consistent with these new 
structures.  Whereas firms have become  more  complex  in  that  they  have grown  or 
expanded  their  operations  by  setting  up  subsidiaries  or  establishments  in  several 
Member States, their employees continue to be informed and consulted in a segmented 
fashion,  reflecting  the scope of existing national  laws and practices. 

Existing procedures for informing and consulting employees in a national context only 
have effect  within the legal framework  of that country, only benefit the employees of 
that State and generally only relate to activities carried out within national boundaries. 

The same applies to procedures for informing and consulting employees provided for 
in  the  Community  directives  setting  out  rules  on  information  and  consultation  on 
collective redundancies and transfers of undertakings. Council Directive 75/129/EEC 
of  17 February  1975 on the approximation of the laws of the Member States relating 
to collective redundancies^ and Council Directive 77/187/EEC of  14 February  1977 
on the  safeguarding  of  employees' rights in the  event  of transfers  of  undertakings, 
businesses or parts of businesses(6) incorporate procedures for informing and consulting 
the  representatives  of  those  employees  affected  by  the  operations  in  question. 
However,  these information  and "consultation requirements do not apply  specifically 
and effectively  to situations in which the decision-making centre is not situated in the 
Member  States in which the employees affected  by its decision are employed. 

(5) 

(6) 

OJNoL48,  22.2.1975. 
O J N 0 L 6 I,  5.3.1977. 

B. 

6. 

7. 

8. 

The  current  economic  crisis,  the  competitive  status  of  European  Community 
undertakings  and the liberalization  of international  trade 

The need to set up transnational information and consultation mechanisms for workers 
in Community-scale undertakings and groups of undertakings has become even more 
urgent with the worsening economic crisis affecting  all Member States of the Union. 

On the one hand, the crisis is making undertakings adapt to the new - often recessive -
economic context, in very many cases requiring restructuring measures which, in the 
case  of  complex  undertakings  and  groups  of  undertakings  with  establishments  or 
subsidiaries in various Member States, are decided on centrally by the undertaking or 
the group and which concern one or more of the establishments and have an effect  on 
workers' interests. 

It is essential, then, for such restructuring measures to take place in socially acceptable 
conditions  and  for  the workers concerned  to  at least  be informed  and  consulted  in 
advance. 

On the other hand, as was underlined in the White Paper on growth, competitiveness 
and employment,  enhancing the competitiveness  of European businesses, which  has 
become  a  vital  factor  in finding a  positive  response  to  current  problems,  requires 
higher productivity  and greater commitment on the part of workers in the day-to-day 
life of their firms. Creating and developing appropriate information  and consultation 
mechanisms for workers at the level of Community-scale undertakings  or groups of 
undertakings  constitutes  a  prior  condition  for  this  enhanced  level  of  commitment, 
particularly  in the current difficult  social climate. 

Finally,  the liberalization  of  world  trade  and the globalization  of  the  economy  are 
creating conditions which are more favourable to the restructuring of undertakings and 
groups of undertakings, which are thus acquiring more and more room for manoeuvre, 
especially  in  terms  of  the  transfer  of  production  units  from  one  Member  State  to 
another  and  even to non-Community  countries. Here too, the prior  information  and 
consultation  of workers is a minimum  condition  if  decisions  are to be  adopted  and 
implemented  in an acceptable social context. 

DI.  The historical  context 

A. 

Earlier initiatives by the Commission 

9. 

Procedures for  informing  and  consulting employees  of European-scale  undertakings 
have been  the  subject  of  various  Community  proposals.  The  original  Commission 
proposals of  1970(7) and  1975(8) for  a European  Company  Statute provided  for  both 
worker participation in a Supervisory Board and the representation of the interests of 
workers in a European Works Council  or Group Works Council. 

(7) 
(8) 

OJNoC  124,  10.10.1970. 
COM(75)  150 final. 

10. 

However,  the  1985 White Paper,  "Completing the Internal  Market", provided for the 
preparation  of  a  new  European  Company  Statute,  discussion  of  the  amended  1975 
proposal  having been  suspended by the Council  in  1982.  Accordingly,  proposals  for 
a  Council  regulation  on  the  Statute  for  a  European  Company00  and  for  a  Council 
directive  complementing  the  Statute with regard to the involvement  of  employees in 
the  European  Company(10)  were  presented  by  the  Commission  to  the  Council  on 
25  August  1989.  The  draft  directive  sets  out  measures  to  enable  employees  "to 
participate  in  the  supervision  and  strategic  development"  of  companies  which  are 
voluntarily  formed  throughout  the  Community  in  the  form  of  a  European  public 
limited  company (Societas Europea, "SE"). Undertakings operating in more than one 
Member State, other than companies formed as European Companies, are not affected 
by  its  provisions,  European  Company  status  being  optional  for  the  undertakings 
concerned.  These  proposals have not yet been adopted by the Council. 

By the same token, it is worth stressing the importance of the revised proposal known 
as the  "Fifth Directive" (19  August  1983),  which  is  still  on the table at the Council, 
providing for employee  participation in undertakings employing at least  1 000 people 
(but not in groups of undertakings) on a management or administrative board, a body 
representing  the employees  or systems adopted by  collective  agreement. 

In  contrast,  the  proposal  for  a  Council  directive  on  procedures  for  informing  and 
consulting  the  employees  of  undertakings  with  complex  structures,  in  particular 
transnational  undertakings01\  submitted  to  the  Council  on  24  October  1980  and 
amended  on  13  July  1983(12),  covered  all  undertakings  or  groups  of  undertakings 
having one or more establishments  or subsidiaries in the Community  and employing 
as a whole  at least  1 000  employees  in the Community.  The proposal  provided that 
EC  or  non-EC  undertakings  or  parent  undertakings,  having  establishments  or 
subsidiaries in the EC,  must regularly  inform  and consult via the local  management 
the employees' representatives provided by the law or practice of the Member States. 
No  single  body  for  employee  representation  was  set  up  and  the  information  and 
consultation  procedures  envisaged  were  channelled  throughout  the  existing  national 
representation structures. After lengthy discussion, the amended proposal for a Council 
directive  on procedures for informing  and consulting the employees of  undertakings 
with complex structures, in particular transnational undertakings, did not find enough 
support among the Member States. 

The  Council  subsequently  adopted  a  Resolution(I3)  relating  to  the  Commission's 
amended proposal, which acknowledged the political  and economic importance of the 
problem  and  emphasized  the  importance  of  a  social  area  in  the  context  of  the 
completion  of  the  Community  internal  market  and the  need for  greater  convergence 
between the rights of  employees in the Member  States to be informed  and consulted 
regarding major decisions in the undertakings concerned.  The Resolution also called 
on  the  Commission  to  continue  its  work  on  this  subject  and,  where  appropriate,  to 
present  another  proposal,  drawing  the  attention  of  the  social  partners  in  the 
Community to the importance of arriving at agreements at the appropriate level which 

(9) 
(10) 
(11) 
(12) 
(13> 

O J N o C 2 6 3,  16.10.1989. 
OJ No  C 263,  16.10.1989. 
OJ No  L 297,  15.11.1990.  Supplement  3/80,  EC Bulletin. 
OJ No  C 217,  12.8.1983.  Supplement  2/83, EC Bulletin. 
OJNoC203,  12.8.1986. 

provide for  information  and consultation  of employees with regard to the provisions 
of Article  118b of the Treaty. 

B. 

The views of the other Community  instances 

11.  With this Council Resolution in mind, the Commission has examined the opinions of 
the two sides of  industry  reached  at Community  level  within the framework  of the 
social  dialogue,  the  opinion  of  the  Economic  and  Social  Committee  on  the  social 
consequences  of  cross-frontier  mergers(M)  and  the  views  and  resolutions  of  the 
European  Parliament. 

12.  At European level, within the framework of the Val Duchesse social dialogue, in spite 
of the complexity of the issue and notwithstanding their different  approaches, the two 
sides  of  industry  have  been  able  to  identify  some  common  ground  as  to  the 
desirability of information and consultation in connection with the introduction of new 
technology.  In  particular,  the joint  opinion  adopted  by  ETUC,  UNICE  and  CEEP 
states: 

"The participants stress the need to motivate the staff at all levels of responsibility in 
firms and to develop their aptitude to change, amongst other ways by means of good 
information  and consultation practices. 

They  consider  that  such  motivation  will  be  all  the  higher  if  all  the  staff  are  in  a 
position to understand the economic and social need for  structural  and technological 
change and the potential which such change offers  to firms and to the workforce. 

Both  sides  take  the  view  that,  when  technological  changes  which  imply  major 
consequences  for  the  workforce  are  introduced  in  the  firm,  workers  and/or  their 
representatives  should  be  informed  and  consulted  in  accordance  with  the  laws, 
agreements and practices in force in the Community countries. This information  and 
consultation must be timely". 

13. 

The Economic and Social Committee, in its opinion of 18 October  1989 on the social 
consequences of cross-frontier  concentrations between undertakings(15), stated: "Since, 
independently of [the European Company Statute], there is a need for information and 
participation  rights  for  employees'  representatives  in  connection  with  cross-frontier 
concentrations between undertakings, a Community framework  should be devised for 
this.  This  framework  ought  to  be  based  on  national  arrangements  for  employee 
representation,  and  provide  for  regular  information  and  consultation  of  employees' 
representatives  at  European  level".  The  Economic  and  Social  Committee's  opinion 
went  on  to  propose  that  in  cross-frontier  undertakings  and  groups,  "a  European 
advisory  committee  of  employee  representatives  [should]  be  set  up  alongside  the 
group/undertaking management", and that Community legislation should cover issues 
such as the composition of such a committee, the need for clearly defined  information 
and  consultation  rights,  the  frequency  of  meetings,  and  the  responsibility  of  the 
undertaking  or group for  meeting the operating costs of the committee. 

(14) 
(15) 

OJ No C 329, 30.12.1989. 
OJNoC329,  30.12.1989. 

14. 

The Commission has taken due consideration of various resolutions of the European 
Parliament,  particularly  its  resolution  of  16  March  1989(16)  on  the  Commission's 
Memorandum  on the European  Company  Statute, in which the European Parliament 
called for the inclusion of provisions requiring the establishment of European Works 
Councils (as originally provided by the 1970 and 1975 proposals),  and the Resolution 
of  15 February  1990 on the most important legislative proposals in the social field to 
be included in the Commission's programme for 1990(17) which recommends, inter alia, 
"the setting up of European  consultative committees in multinational  undertakings". 

C. 

The legal situation at national  and international  level 

15. 

The Commission has taken into account a range of other factors, more particularly the 
aims  pursued  by  certain  non-binding  international  instruments  such  as  the  OECD 
guiding  principles  and  the  ILO tripartite  declaration,  and  the  role  of  legislation  in 
promoting employee involvement. 

16.  As  regards  national  legal  systems,  a  clear  distinction  can  be  drawn  between 
representative  or  indirect  forms  of  employee  involvement  (e.g.  works  councils, 
employee  board-level 
individual  or  direct  forms  (e.g. 
communications groups, profit  sharing, employee share ownership). 

representation)  and 

A  recent  study(18)  shows  that  not  only  do  these  two  distinct  types  of  employee 
involvement fulfil  different  functions, but they also rely on statutory provision to very 
different  degrees. The study concludes that legal requirements have played a limited 
role in the development of direct forms  of involvement, but that legislation has been 
a  necessary  precondition  for  the  widespread  establishment  of  works  councils  and 
employee board-level representation in virtually every Member State where they exist 
(the exception  being the cooperation committees in Denmark which operate without 
statutory backing). 

17. 

The aim of the Commission is to stimulate a process of information  and consultation 
at  European  level  without  creating  an  unduly  heavy  burden  on  undertakings.  The 
Commission wants to introduce these procedures only in large enterprises. Although 
large enterprises are in official  statistics classified  as undertakings with more than 500 
employees,  the  Commission  wants to  limit  its  proposal  to  enterprises  or  groups  of 
enterprises with at least 1 000 employees within the Community having establishments 
or undertakings with at least  100 employees in at least two Member States. 

According  to  statistics  for  1986,  large  businesses  (i.e.  those  with  more  than  500 
employees) accounted for less than 1% of the total number of firms, but provided 28% 
of employment(19). 

OJNoC96,  17.4.89. 
OJN0C68,  19.3.1990. 

<16) 
(17) 
(18)  Mr Gold and Mr. Hall,  "Legal Regulation and the Practice of Employee Participation 
in the European  Community",  European  Foundation  for  the Improvement  of Living 
and Working Conditions, Dublin, (1990). 
Enterprises in the European  Community. Luxembourg,  1990, p. 37. 

(19) 

As the objective  of the proposal  is to overcome the territorial  limitations of national 
laws  on  information  and  consultation  procedures  by  the  setting  up  of  a  European 
Works Council, multiplant national undertakings and national groups or undertakings 
are not covered. On the other hand, via national laws implementing Council Directives 
75/129 and  77/187 concerning respectively  procedures for  informing  and  consulting 
employees  in  the  case  of  collective  redundancies  and  transfers  of  undertakings, 
multiplant national undertakings are subject to the same or similar obligations as are 
single  national  undertakings  and,  in  the  majority  of  Member  States,  they  are  also 
subject to procedures for information  and consultation  equivalent to those envisaged 
by the present proposal. 

With  respect  to  national  groups  of  undertakings,  it  should  be  added  that  there  is 
legislation  concerning  national  group-level  works  councils  in  four  Member  States 
(France, the Federal  Republic  of Germany,  the Netherlands  and  Portugal)  and well 
developed case-law in many Member States concerning the determination  of the real 
employer behind  a group structure. 

D. 

Practical experience of transnational  information  and consultation  of workers 

18. 

The  Commission  has  also  taken  note  of  the  development  of  European-level 
information  and consultation bodies and procedures in a number (just less than 30) of 
large transnational  undertakings or groups of undertakings operating in Europe, and 
indeed in drawing up its proposals has sought the views of management and employee 
representatives party  to certain of these arrangements.  Similar arrangements  operate 
informally  in certain  other companies or groups. The Commission is also aware that 
discussions  on  the  establishment  of  European-level  information  and  consultation 
committees are taking place in a number of other major European transnational groups 
of  enterprises  which  employ  a  substantial  number  of  employees  across  the 
Community. 

IV.  The elements of the proposal 

A. 

General  remarks 

19. 

The first thing to note is that this proposal is, in addition to the factors, initiatives and 
positions  mentioned  above, the  outcome  of  discussions  held  within  the  Community 
institutions and elsewhere since the beginning of 1991 (see point  1), more particularly: 

the Commission's initial  proposal  of  15 December  1990; 
the opinions on the above proposal delivered by the European Parliament and 
the Economic and  Social Committee; 
the Commission's  amended proposal  for  10 September 1991; 
the result  of discussions in the Council, more particularly the outcome of the 
Council  of Ministers of Employment  and  Social  Affairs  of  12 October 1993; 
the views  expressed  by  the social  partners  at European  level  during the two 
phases of consultation  which have just  terminated. 

12) 

20. 

21. 

The Commission  has taken  a detailed look  at the various changes made to its initial 
proposal  of  1990 in the light of the objectives wjiich  induced it to take the initiative 
in the first place, and in the light of recent economic, social and institutional  changes 
and  the  broad  lines  of  Community  social  policy  as  set  out  in  the  White  Paper  on 
growth,  competitiveness  and  employment  and  the  Green  Paper  on  European  social 
policy  (options for  the Union). 

In adopting this proposal, as in the recent past, the Commission has been very mindful 
of the fact  that this is the first time that the Agreement on  Social  Policy  annexed to 
the  Social  Protocol,  annexed  in  turn  to  the  Treaty  establishing  the  European 
Community, is being applied in practice. This Agreement, which  seeks essentially to 
widen and clarify  Community  powers in terms of social policy, assigns an enhanced 
role in the legislative process to the social partners, something which the Commission 
has  endeavoured  to  facilitate  and  encourage  throughout  the  consultation  procedure 
preceding this proposal. 

The  rules  which  this  proposal  seeks  to  institute  at  European  level  are  addressed 
primarily  to  the  social  partners  in  that  it  is  they  who  are  the  addressees  and  the 
principal  players in the practical implementation  of the information  and consultation 
mechanisms set up under this proposal. 

Recognition of the important role of the social  partners in the future  development of 
European social policy and more particularly with regard to this proposal has led the 
Commission  to  deploy  all  the  means  at  its  disposal  to  facilitate  the  quest  for,  and 
conclusion  of,  an  agreement  between  the  social  partners  at  Community  level  in 
accordance with Articles 3 and 4 in the Agreement  on Social Policy. 

To this end, the document which the Commission  sent to the social  partners as part 
of  the  second  phase  of  consultation  provided  for  in  Article  3(3)  of  the  Agreement 
sought  to  reconcile  the  two  sides'  positions  as  expressed  in  the  course  of  the first 
phase  of  the  consultation.  This  approach  was  motivated  exclusively  by  a  desire  to 
encourage an agreement-based solution, and meant that the Commission had to deviate 
from  the  most  recent  text  on  the  table  at  the  Council  in  as  much  as  it  seemed 
necessary and useful  to take account of the not insignificant  shift in the position of the 
principal employers' organizations, though respecting the essential rules and principles 
of the text and of the initial  proposal  of December  1990. 

The  Commission's  approach  set  in  motion  a  dynamic  process  between  the  social 
partners  at  European  level,  which  made  them  take  a  hard  look  at  their  respective 
positions  on this important  subject.  The Commission  expected  them  at  any moment 
to  reach  agreement  on  initiating  the  procedure  provided  for  in  Article  4  of  the 
Agreement  on  Social Policy.  Although  no such  agreement was in  fact  forthcoming, 
it  does not follow  that  everything  necessary  and  possible  should  not  continue to be 
done  to  derive  maximum  advantage  from  the  points  of  consensus  or  possible 
"rapprochement" between the positions of the social partners, or to seek an appropriate 
balance between their respective positions on the points on which they  diverge. The 
fact that this might reopen discussion on a number of aspects on which consensus has 
already been reached in the Council would probably be compensated for very largely 
by the Directive's enhanced  potential  for  alignment with  existing  social realities and 
by the fact  that  the  implementation  of the procedures  instituted  by  the Directive  in 
major  European  undertakings  will  be that  much  easier,  more harmonious  and  more 

effective  if  the  leading  employers'  and  workers'  organizations  at  European  -  and 
national  - level can identify  with the final text. 

The Commission would like, then, to draw the Council's attention to the importance 
of  discussions  held  by  the  social  partners  over  recent  months,  as  reflected  in  the 
significant shift in their positions; these deserve to be given due attention. To this end, 
the Commission  has attached (Annexes  1 and 2) the results of the two phases of the 
consultation of the social partners. 

22. 

The proposal which the Commission is now making to the Council takes due account 
of,  and seeks to reconcile, all the abovementioned positions, more particularly the text 
presented by the Belgian Presidency to the Social Affairs Council on 12 October 1993, 
which remains the principal  point of reference  for this proposal. 

The text has had to undergo a number of changes, some of them purely technical or 
editorial, others imposed by the fact that the proposed Directive will not be applicable 
in the United Kingdom (resulting in removal from the enacting terms of all references 
to the "European Community", and references to the "Member States" being taken to 
mean  the  eleven  Member  States  of  the  European  Union  which  actually  signed  the 
Agreement on Social Policy), while others reflect  a different  option on the part of the 
Commission  vis-à-vis the Council's most recent working text,  motivated  by a desire 
to make application  of  the Directive  more  appropriate  and  consensual.  These latter 
changes concern: 

the  exclusion  from  the  scope  of  Article  4  of  the  Directive  of  the  crews  of 
merchant  ships, which the Commission  cannot accept; 
the requirements relating to the commencement of the procedure for setting up 
a European  committee or some other information  and consultation  procedure 
(Article 5(1)) (see point 30 of this explanatory  memorandum); 
removal of the requirement relating to compliance with a number of provisions 
in the Annex in the context of the agreement provided for in Article 6(2) (see 
point 31 of this explanatory memorandum); 
conversion to an obligation of the facility  available to Member States to adopt 
provisions relating  to the confidentiality  of  information  supplied  to workers' 
representatives  (Article  8(1))  and  the  non-communication 
to  workers' 
representatives of information  which might substantially  damage the interests 
of the undertaking (Article 8(2)); 
the  facility  for  Member  States  to  lay  down  particular  provisions  for 
undertakings and establishments which pursue the aim of ideological guidance 
(Article 8(3) of the Council text), which the Commission  cannot accept; 
requirements relating to agreements in existence at the time of entry into force 
of the Directive (Article  13) (see point 36 of this explanatory memorandum); 
the  content  of  information  and  consultation  obligations  provided  for  in 
paragraphs  2  and  3  of  the  Annex  (see  point  33  of  this  explanatory 
memorandum). 

10 

B. 

The objectives 

23. 

The  objective  of  the  proposal  is  to  improve  the  information  and  consultation  of 
employees in Community-scale undertakings and groups of undertakings. The risk here 
is  that  this  aim  may  become  dissipated  in  a  range  of  procedures  which  makes  it 
impossible to keep track of what is going on, and to this end it is proposed to set up 
a  European  committee  where  requested  by  employees  or  their  representatives 
according  to  a transparent  procedure,  and  in  so far  as the  interested  parties  do  not 
decide,  by  common  accord,  to  set  up  some  other  information  and  consultation 
procedure. Of course, the initiative in setting up a Council of this kind can come from 
the central management of the undertaking or group of undertakings, but must receive 
the agreement  of the employees. 

C. 

Scope 

24. 

It  is  proposed  that  European  committees  be  restricted  to  Community-scale 
undertakings and groups of undertakings with more than  1 000 employees and at least 
two establishments  in  different  Member  States each  employing  at least  100 people. 
The thinking behind this dual threshold is that: 

small business should not be burdened with additional obligations which might 
be detrimental  to their  development; 
this  proposal  should  have  no effect  whatsoever  on  existing  information  and 
consultation  procedures  in  Member  States based  on  national  legislation  and 
practices.  The  idea  here  is  that,  under  the  subsidiarity  principle,  only 
Community-scale undertakings should be affected,  inasmuch as Member States 
are,  in  the  absence  of  provisions  common  to  all,  unable  to  make  provision 
individually  for transnational  information  and consultation  procedures. 

Of  course,  the  mechanisms  for  informing  and  consulting  employees  which  the 
proposed  Directive  seeks to  create at the level  of  Community-scale  undertakings  or 
groups  of  undertakings  are  in  no way  intended  to  prevent  the  coexistence  and  the 
development of decentralized information  and consultation practices which are in line 
with current business practice or the specific  needs of individual businesses. 

25. 

26. 

The Commission  proposal also covers cases where Community-scale undertakings or 
groups  of undertakings  have their  headquarters  outside the  territory  of the Member 
States.  Where this is the case, the Commission  takes the view that  such businesses 
should  be  treated  in  a  similar  way  based  on  either  the  representative  agent  of  the 
undertaking or group of undertakings or the undertaking with the highest number of 
employees in the territory  of the Member States. 

Community-scale  undertakings  and  groups  of  undertakings  with  their  central 
management in the United Kingdom will, of course, be subject to the same obligations 
as  are  imposed  on  undertakings  and  groups  of  undertakings  from  non-Community 
countries. 

References to the "Member States" in the preamble and in the enacting terms (and in 
this explanatory memorandum) must of course be taken to mean the 11 Member States 
which have signed the Agreement  on  Social Policy  and which  are the addressees of 
the proposed Directive. 

11 

D. 

The legal  concepts  of  "controlled  undertaking",  "controlling  undertaking"  and 
"representatives  of the employees" 

27.  Articles  2  and  3  of  the  proposal  spell  out  what  is  meant  by  the  terms  "controlled 
undertaking", "controlling undertaking" and "representatives of the employees" for the 
are  based  on 
first 
purposes  of 
Council Directive  89/440/EEC  of  18  July  1989,  amending  Directive  71/305/EEC 
concerning coordination  of procedures for the award of public works contracts(20). 

this  Directive.  The 

two  definitions 

28. 

The concept  of  "representatives  of the employees" is taken  from  Council  Directives 
75/129/EEC on collective redundances and 77/187/EEC on transfers of undertakings. 
However,  unlike  the  above  Directives,  this  proposal  says  that,  where  there  is  no 
employees' representative,  the body  of employees  is entitled  to elect  representatives 
on  the  special  negotiating  body  and  on  the  European  committee  if  the  absence  of 
representation  is no fault  of their own. 

£. 

Proposed approach 

29.  As indicated above, institution of a European committee must, under the terms of this 
Directive, result from  a request put forward  either by the central  management of the 
undertaking or group of undertakings, or by the employees or their representatives. In 
other words, there can be no question of imposing a committee from  the outside. The 
approach  proposed  by the Commission  gives  employees'  elected  representatives  the 
chance, in the first instance, to decline setting up a European committee. 

30. 

31. 

The  Commission  feels  that  it  would  be  desirable  to  strengthen  the  requirements 
provided  for  in  Article  5(1)  concerning  the  commencement  of  negotiations  at  the 
workers' request, given  that the latest Council text allows this to be done (as indeed 
did  the  Commission's  initital  proposal)  by  two  employees  only.  It  would  seem 
appropriate to provide for  a minimum  number of applicants (at least  100 employees 
or their representatives from  at least two undertakings or establishments situated in at 
least two different  Member  States) with the power to commence negotiations with a 
view to setting up a European committee or some other information  and consultation 
procedure. 

Once negotiations have begun, the concluding agreement between the two parties will, 
entirely  freely  and  without the provisions in the Annex being  applicable,  define  the 
nature, functions and powers and operating procedure of a committee.  If the need for 
a committee is apparent to all parties, the Commission takes the view that, under the 
principle  of  autonomy  of  the  two  sides  of  industry,  it  is  up  to  workers  and 
management to decide by agreement on the essential characteristics of the committee, 
including the possibility of using existing structures to this effect.  In fact, the decision 
may be not to set up a committee at all, without the mandatory  alternative procedure 
having  to  comply  with  the  provisions  of  the  Annex  either.  On  this  point,  the 
Commission  now  accepts  the  legitimate  points  made  by  the  social  partners  to  the 
effect  that the existence  of minimum  provisions which  would be applicable even in 
the event of agreement being reached would constitute a totally unwarranted violation 
of their bargaining autonomy. 

(20) 

OJNoL210,  21.7.1989, p. 1. 

12 

The flexible.approach proposed by the Commission reflects  the need to bear in mind 
the  special  situations  of  Community-scale  undertakings  and  groups  of  undertakings 
and their employees, and is designed to ensure that such European committees are set 
up on the basis of agreement between the parties concerned. 

F. 

Absence of agreement 

32. 

It  may  happen  that,  after  negotiation,  the  parties  concerned  are  unable  to  reach 
agreement on the nature, functions  and powers of the committee, or on its operating 
procedure.  To  meet  the  stated  objective  of  ensuring  information  and  consultation 
within Community-scale undertakings and groups of undertakings in this situation, the 
proposal  provides for  a number of subsidiary  requirements to be applied in this case 
(and in cases where the central management refuses to initiate negotiations within six 
months  of  the  request  being  made,  and  of  course  in  cases  where  the  two  sides  so 
decide).  These are set out in the Annex to this Directive and form  an integral part of 
it.  They  are  mainly  concerned  with  the  nature  and  content  of  information  and 
consultation,  but  also  deal  with  the  composition  and  operating  procedures  of  the 
committee. 

As regards these subsidiary  requirements, the following  points apply: 

On the question of competence, the requirements  deal with matters  affecting 
Community-scale undertakings or groups of undertakings as such located in the 
Community,  to  the  exclusion  of  matters  covered  by  national  legislation  or 
national practices in establishments or undertakings in the Member States, and, 
in the case of undertakings or groups of undertakings with headquarters outside 
the  Community,  matters  relating  to  establishments  or  undertakings  located 
outside the Community.  Matters relating to information  and consultation are 
defined  in the  spirit  of the joint  opinion  adopted  in March  1987 by the two 
sides  of  industry  at  Community  level  on  the  understanding  that  such 
consultation take place in good  time.  The proposal  does not provide for by 
pass procedures, nor does it lay  down a fixed period  within which  decisions 
subject to consultation cannot be put into practice in the absence of an opinion 
on  the  part  of  the  employees'  representatives  on  the  committee.  The 
Commission takes the view that the desire for dialogue reflected  in the setting 
up of a committee should lead to the two parties working naturally together in 
an open and constructive atmosphere. 

As regards  the  composition  and  operating  procedures  of  the  committee,  the 
frequency  of meetings and its operating methods, the subsidiary  requirements 
set out in the Annex are both modest and realistic in terms of both the number 
of  meetings  of  the  committee  (at  least  one  information  and  consultation 
meeting per year) and the funding (borne by the Community-scale undertaking 
or  group  of  undertakings).  It  should  be  stressed  that this  approach  reflects 
current practice on the part of undertakings and groups which have already set 
up  committees  of  this  kind.  Given  the  substantial  advantages  that  such 
committees  can  bring  for  the two  parties  in  contributing  to  a better  mutual 
flow  of  information  and  a  constructive  dialogue,  it  seems  reasonable  to 
suppose  that  these  subsidiary  requirements  will  not  impose  a  significant 
additional  burden  on central  management  - quite the opposite! 

13 

33. 

The  Commission  has  weighed  up  the  critical  remarks  made  by  the  employers' 
organizations, which are wary of the disrupting effect  of having too many consultation 
meetings if they  had to be held  every time there was a decision  in the offing  which 
might have a significant  effect  on employees' interests. At the same time, though, the 
Commission feels that the consultation of workers is an essential element in achieving 
the objectives  of the proposed Directive, at least in respect  of particularly  important 
and  sensitives  decisions  on  matters  like  relocation,  closures  and  collective 
redundancies. 

With a view to striking an acceptable balance, the Commission is now proposing that, 
in  addition  to  the  annual  information  and  consultation  meeting  provided  for  in 
paragraph  2  of  the  Annex,  which  has  to  remain  the  most  important  means  of 
informing and consulting employees in Community-scale undertakings and groups of 
undertakings, consultation meetings might also be held, in cases like those mentioned 
above, with a restricted  delegation from  the European  committee, viz. the executive 
committee, which has to be set up where the size of the European committee warrants 
it  -  see paragraph  1(c) of  the  Annex).  Where  the European  committee  is  not  large 
enough to justify  the creation of an executive committee, such meetings must be held 
with the European committee itself. This solution will make it possible to preserve the 
essential  objectives  of  the  proposed  Directive  and  to  avoid  the  excessive  cost  and 
cumbersomeness  of  consulting  the  entire  committee  every  time  a  decision  is 
envisaged. 

G.  Miscellaneous  provisions 

34. 

The Commission's proposal  features  a number  of provisions  designed  to ensure that 
the European  committee functions  efficiently. 

These are primarily concerned with confidentiality  - i.e. the employees' representatives 
and the experts are required to respect the confidentiality  of information  received, and 
the Directive authorizes undertakings to withhold any information which, if disclosed, 
would  substantially  damage  their  business  interests.  Should  anyone  object  that 
imposing  confidentiality  provisions  of  this  kind  runs  counter  to  a  genuine  flow  of 
information  and  would  make  the  other  side  "hostages"  to  management,  the 
Commission  would  point  to  the  elements  of  "transparency"  and  mutual  respect 
between the parties. 

By the same token, however necessary the confidentiality  provisions are, their aim is 
not to encourage a systematic desire to "conceal" information.  European committees 
and  alternative  procedures  for  informing  and  consulting  employees  can  only  work 
efficiently  and effectively  for the information  and consultation  of employees if both 
sides agree to play the game.  On the basis of past experience in existing committees, 
the Commission  has every reason to believe that this will  work. 

35.  A number of provisions (Articles 9 to  12) are proposed with a view to establishing a 
principle of cooperation between the central management and the European committee 
(or  the  employees'  representatives  under  a  different  information  and  consultation 
procedure),  affording  protection  to  workers'  representatives,  ensuring  that  the 
Member  States have provisions designed to see to it that the obligations arising from 

14 

the Directive are discharged, and clarifying the relationship between the Directive and 
other Community  and national  legal instruments  on information  and consultation of 
workers. 

36. 

The  provision  introduced  by  the  Council  with  a  view  to  permitting  the  continued 
existence  of  agreements  which  were  already  in  existence  in  Community-scale 
undertakings  and  groups  of  undertakings  at  the  time  of  entry  into  force  of  the 
Directive,  and  making  provision  for  transnational  information  and  consultation 
procedures,  is  maintained.  However,  the  Commission  intends that these  agreements 
should not be affected  by the entry into force of the Directive unless the parties do not 
agree to renew them  when they  reach their  expiry  date. The Commission  feels that 
there should be no time limit to this rule. 

H. 

Legal basis 

37.  Article  2(1)  of  the  Agreement  on  Social  Policy  annexed  to  the  Protocol  on  Social 
Policy, annexed in turn to the Treaty establishing the European Community, provides 
that  "with  a  view  to  achieving  the  objectives  of  Article  1,  the  Community  shall 
support and complement the activities of the Member  States in the following fields: 
(...)- the information  and consultation  of workers". 

Article 2(2) provides that, to this end, "the Council may adopt, by means of directives, 
minimum  requirements for  gradual  implementation,  having regard to the  conditions 
and technical rules applying in each of the Member States (...) in accordance with the 
procedure referred to in Article 189c of the Treaty after consulting the Economic and 
Social Committee". 

This Article 2(2) constitutes the legal basis of this proposal. 

V. 

Subsidiarity and cost 

38. 

The main justification  for this proposal lies in the fact that existing mechanisms and 
procedures for the information and consultation of workers at national level apply only 
within individual  countries' legal  systems, work only to the advantage of workers in 
that country  and are generally  linked only to activities  exercised  within the national 
frontiers.  These national procedures are no longer compatible with the new decision 
making structures of major undertakings and groups of undertakings operating across 
national  frontiers. 

The added value of this proposal  lies precisely  in this complement  to national  legal 
frameworks,  instituting  at  Community  level  a  legal  system  of  information  and 
consultation of workers in Community-scale undertakings and groups of undertakings 
which are at present  outside this compartmentalized  legal  framework. 

Given the transnational nature of the reality addressed by this proposal, such a system 
can only be created  at Community level. 

39. 

The impact of this proposal  in terms of cost/benefit  for  undertakings and groups of 
undertakings  will  be  largely  positive,  given  that  the  additional  costs  per  worker 
(maximum ECU 10 per year - see impact assessment form attached) are marginal and 
are  certainly  substantially  lower  than  the  benefits  arising  from  higher  productivity 

15 

associated  with  improved  labour  relations  in  the  undertakings  and  groups  of 
undertakings  addressed by this proposal. 

VI.  Conclusions 

40. 

In the light of the foregoing,  the Commission  considers that: 

there  is  a  Community  need  to  provide  for  procedures  for  informing  and 
consulting  employees affected  by  corporate  decisions  taken by  a  head-office 
or controlling undertaking located outside the Member State in which they are 
employed  (and  therefore  outside  the  scope  of  the  national  information  and 
consultation rights which the employees concerned  may have); 

the measures required to this end can only be taken at Community level, as the 
dimension  and effects  of such measures extend beyond national boundaries; 

at  the'request  of  one  or  other  of  the  parties,  and  on  the basis  of  a  written 
agreement  between  them,  a  European  committee  or  some  other  appropriate 
procedure  must  be  responsible  for  informing  and  consulting  employees  on 
matters likely to be of particular concern to them; 

in  the  event  of  lack  of  agreement,  it  is  important  that  certain  subsidiary 
provisions be applied regarding the composition, functions and powers and the 
operating procedures and financial resources of European  committees. 

41. 

By  presenting  this  proposal  to  the  Council  and  requesting  its  adoption  as  soon  as 
possible, bearing in mind the opinions of the European Parliament and Economic and 
Social  Committee,  the  Commission  feels  that  a  major  step  can  be  taken  towards 
implementing  the  Community  Charter  of  Fundamental  Social  Rights  of  Workers, 
achieving the objectives set out in the Agreement on  Social  Policy  and pursuing the 
objectives  set out in the White Paper on competitiveness, growth  and employment. 

(3) 

16 

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 COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Agreement  on  Social  Policy  annexed  to  the  Treaty  establishing  the 
European  Community,  and in particular Article 2(2) thereof, 

Having regard to the proposal  from  the Commission(1), 

In cooperation with the European Parliament^, 

Having regard to the opinion  of the Economic and  Social Committee(3), 

Whereas, on the basis of the Protocol on Social Policy annexed to the Treaty establishing the 
European  Community,  the  Kingdom  of  Belgium,  the  Kingdom  of  Denmark,  the  Federal 
Republic of  Germany,  the Hellenic Republic, the Kingdom  of  Spain, the French  Republic, 
Ireland,  the  Italian  Republic,  the  Grand  Duchy  of  Luxembourg,  the  Kingdom  of  the 
Netherlands and  the Portuguese  Republic  (hereinafter  referred  to  as  "the Member  States"), 
desirous of implementing the Social Charter of  1989, have adopted an Agreement on Social 
Policy; 

Whereas,  pursuant  to  Article  1  of  the  said  Agreement,  one  particular  objective  of  the 
Community  and the Member  States is to promote social  dialogue at Community level; 

Whereas  point  17  of  the  Community  Charter  of  Fundamental  Social  Rights  of  Workers 
provides,  inter  alia,  that  information,  consultation  and  participation  for  workers  must  be 
developed  along  appropriate  lines,  taking  account  of  the  practices  in  force  in  different 
Member  States; whereas the Charter  states that "this shall  apply  especially  in companies or 
groups of companies having establishments or companies in two or more Member States"; 

Whereas  the  Commission's  proposal  for  a  Council  Directive  on  the  establishment  of  a 
European Works Council in Community-scale undertakings or groups of undertakings for the 
purposes  of  informing  and  consulting  employees(4),  as  amended(5),  did  not  achieve  the 
unanimity  required  for  its  adoption  despite the  existence  of  a broad  consensus  among  the 
majority  of Member States; 

(1) 
(2) 
(3) 
(4) 
(5) 

OJ No C 
OJ No C 
OJ No C 
OJNoC39,  15.2.1991, p. 10. 
OJNoC336,  31.12.1991, p. 11 

17 

Whereas the Commission,  pursuant  to Article  3(2) of the  Agreement  on  Social  Policy,  has 
consulted  the  social  partners  at  Community  level  on  the  possible  direction  of  Community 
action on the information  and consultation of workers in Community-scale undertakings and 
groups of undertakings; 

Whereas  the  Commission,  considering  after  this  consultation  that  Community  action  was 
desirable,  has  again  consulted  the  social  partners  on  the  content  of  the  planned  proposal, 
pursuant to Article 3(3) of the said Agreement,  and the  social  partners have presented  their 
opinions to the Commission; 

Whereas, following  this second phase of consultation, the social partners have not  informed 
the Commission  of their desire to initiate the procedure which might lead to the conclusion 
of agreement,  as provided for  in Article 4 of the Agreement; 

Whereas the completion  of the internal  market  should  generate a process  of  concentrations 
of  undertakings,  cross-border  mergers,  takeovers,  joint  ventures  and,  consequently,  a 
transnationalization  of  undertakings  and  groups  of  undertakings;  whereas,  if  economic 
activities are to develop in  a harmonious fashion,  undertakings and groups of  undertakings 
operating in two or more Member  States must inform and consult the representatives of those 
of their employees that are affected  by their decisions; 

Whereas procedures  for  informing  and  consulting  employees  as embodied  in  legislation  or 
practice in the Member  States are often  not geared to the transnational  structure of the entity 
which takes the  decisions affecting  those employees; whereas this may lead  to the unequal 
treatment of employees affected  by decisions within one and the same undertaking or group 
of undertakings; 

Whereas appropriate provisions must be adopted to ensure that the employees of Community-
scale  undertakings  or  groups  of  undertakings  are  properly  informed  and  consulted  when 
decisions likely to affect  them are taken in a Member  State other than that in which they are 
employed; 

Whereas, in order to guarantee that the employees of undertakings or groups of undertakings 
operating in two or more Member  States are properly informed  and consulted, it is necessary 
to set up European committees or to create some other suitable procedure for the transnational 
information  and consultation  of employees; 

Whereas  it  is  accordingly  necessary  to  have  a  definition  of  the  concept  of  controlling 
undertaking relating solely to this Directive and not prejudging definitions  of the concepts of 
group or control  which might be adopted  in texts to be drafted  in the  future; 

Whereas the mechanisms  for  informing  and  consulting  employees  in  such  undertakings  or 
groups  must  encompass  all  of  the  establishments  or,  as  the  case  may  be,  the  group's 
undertakings located within the Member States, regardless of whether the undertaking or the 
group's controlling undertaking has its central  management inside or outside the territory of 
the Member States; 

18 

Whereas,  in  accordance  with  the  principle  of  autonomy  of  the  parties,  it  is  for  the 
representatives  of  employees  and  the  management  of  the  undertaking  or  the  group's 
controlling undertaking to determine by agreement the nature, composition, powers, mode of 
operation,  procedures  and financial  resources of European  committees  or other  information 
and consultation  procedures  so as to suit their own particular  circumstances; 

Whereas,  however,  in the event of the central  management  refusing  to initiate  negotiations 
or in the absence of agreement subsequent to such negotiations, provision should be made for 
certain  subsidiary  requirements to apply  should the parties so decide; 

Whereas,  moreover,  employees'  representatives  may  decide  not to  seek the  setting-up  of a 
European  committee  or  the  parties  concerned  may  decide  on  an  alternative  procedure  for 
informing  and consulting employees; 

Whereas, without prejudice to the possibility of the parties deciding otherwise, the European 
committee set up in the absence of agreement between the parties must be kept informed and 
consulted  on the activities and projects of the undertaking or group of undertakings so that 
it  may  assess  the  possible  impact  on  employees'  interests;  whereas,  to  that  end,  the 
undertaking  or controlling  undertaking  must be required to communicate to the employees' 
appointed  representatives  general  information  concerning  the  interests  of  employees  and 
information  relating  more  specifically  to those  aspects  of the  activities  and  projects  of the 
undertaking or group of undertakings which are liable to affect  employees' interests; whereas 
the European  committee must be able to deliver an opinion; 

Whereas certain decisions having a particular effect  on the interests of employees must be the 
subject  of  a  special  consultation  of  the  employees'  appointed  representatives  as  soon  as 
possible to enable them to deliver an opinion; 

Whereas the  information  and  consultation  provisions  laid  down  in  this  Directive  must  be 
implemented in the case of an undertaking or a group's controlling undertaking which has its 
central management  outside the territory of the Member States by its representative agent in 
one  of  the  Member  States  or,  in  the  absence  of  such  an  agent,  by  the  establishment  or 
controlled undertaking  employing the greatest number of employees in the Member States; 

Whereas special treatment  should be accorded to Community-scale undertakings and groups 
of  undertakings  in  which  there  exists,  at the  time  of  entry  into force  of  this Directive,  an 
agreement providing for the transnational  information  and consultation  of employees; 

Whereas the Member  States must take appropriate measures in the event of failure to comply 
with the obligations imposed  in this Directive, 

19 

HAS ADOPTED  THIS  DIRECTIVE: 

Section  I:  General 

Article  1 

Objective 

1. 

2. 

3. 

4. 

The  purpose  of  this  Directive  is  to  improve  the  right  to  information  and  to 
consultation  of  employees  in  Community-scale  undertakings  and  Community-scale 
groups of undertakings. 

A European committee  or a procedure for informing  and consulting  employees  shall 
be  established  in  every  Community-scale  undertaking  and  every  Community-scale 
group of undertakings, where requested in the manner set out in Article  5(1), with the 
purpose  of  informing  and consulting  employees  under the terms,  in the  manner and 
with the effects  laid  down in this Directive. 

Notwithstanding paragraph 2, where a Community-scale group of undertakings within 
the meaning of  point (c)  of Article 2  comprises one  or more undertakings which are 
Community-scale undertakings within the meaning of points (a) or (c) of that Article, 
a  European  committee  shall  be  established  at  the  level  of  the  group  unless  the 
agreements referred  to in Article 6 provide  otherwise. 

Unless  a wider  scope  is  provided  for in the  agreements  referred  to in  Article  6,  the 
powers  and  competence  of  European  committees  and the  scope  of  information  and 
consultation  procedures  provided  for  by  this  Directive  shall,  in  the  case  of  a 
Community-scale undertaking, cover all the establishments located within the Member 
States  and,  in  the  case  of  a  Community-scale  group  of  undertakings,  all  group 
undertakings located within the Member States. 

Article  2 

Definitions 

1. 

For the purposes  of  this Directive: 

(a)  "Community-scale  undertaking"  means  any  undertaking  with  at 
1  000  employees  within  the  Member  States  as  a  whole  and  at 
100 employees  in  each  of  at least two Member  States; 

least 
least 

(b)  a  "group  of  undertakings"  means  a  controlling  undertaking  and  its  controlled 

undertakings; 

(c)  "Community-scale  group  of  undertakings" means  a group  of  undertakings  with 

the following  characteristics: 

-  at least  1 000  employees within the Member  States as a whole, 

20 

-  at least two group undertakings in different  Member  States, and 

-  at  least  one  group  undertaking  with  at  least  100 employees  in  one 
Member  State and another group undertaking  with at least  100 employees in 
another Member State; 

(d)  "employees' representatives" means the employees' representatives provided  for 

by national  law and/or practice; 

(e)  "central  management"  means the  central  management  of  the  Community-scale 
undertaking or, in the case of a Community-scale group of undertakings, of the 
controlling undertaking, or the representative agent referred  to in Article 4(2); 

(f) 

"consultation"  means  the  exchange  of  views  and  establishment  of  dialogue 
between employees' representatives and central  management  or any other more 
appropriate level of management. 

For  the  purposes  of  this  Directive,  the  prescribed  thresholds  for  the  size  of  the 
workforce  shall  be based  on the average number  of  employees, including  part-time 
employees, employed during the previous two years, calculated according to national 
legislation and/or practice. 

In compliance with the principles and objectives of the Directive, and in so far as the 
need arises, the Member States may establish special provisions to apply to the crews 
of seagoing vessels, adapted to their particular working conditions. 

Article 3 

Definition  of  "controlling undertaking" 

For the purposes  of  this Directive,  "controlling undertaking"  means  an  undertaking 
which  can  exercise  a  dominant  influence  over  another  undertaking  ("the  controlled 
undertaking") by virtue, for example, of ownership, financial participation or the rules 
which govern it. 

The ability to exercise a dominant influence  shall be presumed, without prejudice to 
proof to the contrary, when, in relation to another undertaking, an undertaking directly 
or indirectly: 

(a)  holds a majority  of that undertaking's  subscribed  capital, 

(b)  controls a maj ority of the votes attached to that undertaking's issued share capital, 

or 

(c)  can appoint more than half of the members of that undertaking's administrative, 

management  or supervisory body. 

2. 

3. 

1 

2. 

21 

3. 

4. 

5. 

6. 

For the purposes of paragraph  2, a controlling undertaking's rights as regards voting 
and appointment shall include the rights of any other controlled undertaking and those 
of any person or body  acting in his or its own name but on behalf of the controlling 
undertaking or of any other controlled undertaking. 

Notwithstanding  paragraphs  1 and  2,  an  undertaking  shall  not  be  deemed  to  be  a 
"controlling undertaking" with respect to another undertaking in which it has holdings 
where the former  undertaking  is a  company  referred  to in  Article  3(5)(a)  or  (c) of 
Council Regulation  (EEC) No 4064/89(6). 

A dominant  influence  shall  not be presumed  to be exercised  solely by  virtue  of the 
fact  that  an  office  holder  is  exercising  his  functions,  according  to  the  law  of  a 
Member  State relating to liquidation, winding up, insolvency, cessation of payments, 
compositions or analogous proceedings. 

The law  applicable  in  order  to  determine  whether  an  undertaking  is  a  "controlling 
undertaking"  shall be the law of the Member  State which governs that undertaking. 

Where the  law  governing  that  undertaking  is  not  that  of  a  Member  State,  the  law 
applicable  shall  be  the  law  of  the  Member  State  within  whose  territory  the 
representative agent of the undertaking or, in the absence of such an agent, the central 
management  of  the  group  undertaking  which  employs  the  greatest  number  of 
employees in the Community  is situated. 

7.  Where, in the case of a conflict of laws in the application of paragraph 2, two or more 
undertakings  from  a  group  satisfy  one  or  more  of  the  criteria  laid  down  in  that 
paragraph, the undertaking which satisfies the criterion laid down in point (c) thereof 
shall  be  regarded  as  the  controlling  undertaking,  without  prejudice  to  proof  that 
another undertaking is able to exercise a dominant  influence. 

Section H: Establishment  of a European committee or an employee information  and 
consultation  procedure 

Article 4 

Responsibility  for the establishment  of a European  committee or an 
employee information  and consultation  procedure 

1. 

The central  management  shall  be responsible  for  creating the  conditions  and  means 
necessary  for  the  setting  up  of  a  European  committee  or  an  information  and 
consultation  procedure  as  provided  for  by  this  Directive  in  respect  of  a 
Community-scale undertaking or a Community-scale group of undertakings. 

2.  Where  the  central  management  is  not  situated  in  a  Member  State,  the  central 
management's representative  agent in a Member  State, to be designated if necessary, 
shall  carry  out the responsibility  referred  to in paragraph  1. 

(6) 

OJNoL395,  30.12.1989, p. 1. 

22 

In the absence of  such an agent, the management  of the establishment  or the central 
management  of the group undertaking  employing the greatest  number  of employees 
in any one Member  State shall bear the responsibility  referred  to in paragraph  1. 

Article 5 

Special  negotiating  body 

1. 

2. 

The central management shall initiate negotiations for the establishment of a European 
committee or an information  and consultation procedure on its own initiative or at the 
written  request  of  at  least  100  employees  or  their  representatives  in  at  least  two 
undertakings or establishments in at least two different  Member States. 

The  special  negotiating  body  shall  be  composed  in  accordance  with  the  following 
guidelines: 

(a)  The Member  States  shall  determine the  method  to  be used  for  the  election  or 
appointment  of  the  members  of  the  special  negotiating  body  who  are  to  be 
elected or appointed  in their territories. 

in  undertakings  and/or 
Member  States  shall  provide 
establishments in which there are no employees' representatives through no fault 
of  their  own,  have  the  right  to  elect  or  appoint  members  of  the  special 
negotiating body. 

that  employees 

(b)  The special negotiating body shall have a minimum of three and a maximum of 

17 members. 

(c)  In these elections or appointments, it must be ensured: 

-  first,  that each Member  State in which the Community-scale undertaking has 
one  or  more  establishments  or  in  which  the  Community-scale  group  of 
undertakings  has  the  controlling  undertaking  or  one  or  more  controlled 
undertakings is represented by one member; 

-  secondly, that there are supplementary  members in proportion  to the number 
of employees working in the establishments, the controlling undertaking or the 
controlled  undertakings as laid  down  by the legislation  of the Member  State 
within the territory  of which the central  management  is situated. 

(d)  The  central  management  shall  be  informed  of  the  composition  of  the  special 

negotiating body. 

3. 

The  special  negotiating  body  shall  have  the  task  of  determining,  with  the  central 
management, by written agreement, the scope, composition, powers and term of  office 
of the European  committee(s) or the arrangements for  implementing  a procedure for 
the information  and consultation  of employees. 

4.  With  a  view  to  the  conclusion  of  an  agreement  in  accordance  with  Article  6,  the 
central  management  shall  convene  a  meeting  with  the  special  negotiating  body.  It 
shall inform  the local  managements accordingly. 

23 

For the purpose of the negotiations, the special  negotiating body may be assisted by 
experts of its choice. 

5. 

The special  negotiating  body  may decide, by  at least two-thirds  of the votes, not to 
open  negotiations  in  accordance with  paragraph  4,  or  to terminate  the  negotiations 
already  opened. 

Such  a  decision  shall  stop  the  procedure  to  conclude  the  agreement  referred  to  in 
Article  6.  Where such a decision has been taken, the provisions in the Annex shall 
not apply. 

A new request to convene the special  negotiating  body  may  be made at the earliest 
within  two  years  of  the  abovementioned  decision  unless  the  parties  concerned  lay 
down  shorter periods. 

6. 

Any expenses relating to the negotiations referred  to in paragraphs  3 and 4 shall be 
borne by the central management so as to enable the special negotiating body to carry 
out its task in an appropriate manner. 

Article 6 

Content of the agreement 

1. 

The central  management  and the special  negotiating body  must negotiate  in a spirit 
of cooperation with a view to reaching an agreement. 

2.  Without prejudice to the autonomy of the parties, the agreement drawn up in writing 

between the central  management and the special negotiating body  shall  determine: 

(a) 

the  scope  and  the  composition  of  the  European  committee(s),  the  number  of 
members, the allocation of seats, the election procedures and the term of  office; 

(b) 

the functions  and powers of the European committee(s); 

(c) 

the procedure for  informing  and consulting the European  committee(s); 

(d) 

the venue, frequency  and duration  of meetings of the European  committee(s); 

(e) 

the financial and material resources to be allocated to the European committee(s); 

(f) 

the duration  of the agreement  and the procedure for  its renegotiation. 

3. 

The central  management and the special negotiating body may decide, in writing, to 
establish an information  and consultation procedure instead of a European committee. 

The  agreement  must  stipulate  by  what  method  the  employees'  representatives  shall 
have the right to meet to discuss the information  conveyed  to them. 

4. 

The agreements referred  to in paragraphs 2 and 3 shall not, unless  provision is made 
otherwise, be subject  to the subsidiary  requirements  of the Annex. 

24 

5. 

For the purposes of concluding the agreements referred  to in paragraphs 2 and 3, the 
special  negotiating body  shall act by a majority  of its members. 

Article 7 

Subsidiary  requirements 

1.  Where the central  management  and the  special  negotiating body  so decide  or if the 
central  management  refuses  to  commence  negotiations  within  six  months  of  the 
request referred to in Article  5(1), or if,  after  two years from  the date of this request, 
they  are unable to conclude  an agreement  as laid  down  in Article 6 and the  special 
negotiating body has not taken the decision provided for in Article 5(5), the subsidiary 
requirements laid  down by the legislation  of the Member  State in which  the central 
management is situated  shall apply. 

2. 

The subsidiary  requirements  referred  to in  paragraph  1 as adopted  in  the legislation 
of the Member  State must at least satisfy  the provisions set out in the Annex. 

Section III: Miscellaneous  provisions 

Article 8 

Confidential  information 

1. 

Member  States  shall  provide  that  members  of  special  negotiating  bodies  or  of 
European committees and the experts who assist them are not authorized to reveal any 
information  which has expressly been provided to them in  confidence. 

The same shall apply to employees' representatives in the framework of an information 
and consultation procedure. 

This obligation  shall continue to apply, wherever the persons referred  to in the first 
and second  subparagraphs are, even after  the expiry  of their terms of  office. 

2. 

Each Member  State shall provide, in specific cases and under the conditions and limits 
laid down by national legislation, that the central management situated in its territory 
need  not  transmit  information  when  its  nature  is  such  that  it  would  be  seriously 
prejudicial  to any of the undertakings  affected. 

A Member  State may make such derogation subject to prior administrative or judicial 
authorization. 

25 

Article 9 

Operation  of European  committees or information  and consultation  procedures 

The central  management  and  the European  committee  shall  work  in a spirit  of  cooperation 
with due regard to their reciprocal rights and obligations. 

The  same  shall  apply  to  cooperation  between  the  central  management  and  employees' 
representatives in the framework  of an information  and consultation  procedure. 

Article 10 

Protection  of employees'representatives 

Members  of  special  negotiating  bodies,  members  of  European  committees  and  employees' 
representatives exercising their functions under the procedure referred to in Article 6(3) shall, 
in  the  exercise  of  their  functions,  enjoy  the  same  protection  and  guarantees  provided  for 
employees' representatives by the national legislation and/or practice in force in their country 
of employment, especially as regards attendance at meetings of special negotiating bodies or 
European committees or any other meetings within the framework  of the agreement  referred 
to  in  Article  6(3),  and  the  payment  of  wages  for  members  who  are  on  the  staff  of  the 
Community-scale undertaking or the Community-scale group of undertakings for the period 
of absence necessary for  the performance  of their duties. 

Article 11 

Compliance with this Directive 

1. 

2. 

3. 

4. 

Each  Member  State  shall  ensure  that  the  management  of  establishments  or  group 
undertakings situated within its territory and their employees' representatives or, as the 
case  may  be,  employees  abide  by  the  obligations  laid  down  by  this  Directive, 
regardless of whether or not the central  management  is situated within  its territory. 

Member  States shall ensure that the information  on the number of employees referred 
to in points (a) and (c) of Article 2(1) is made available by undertakings at the request 
of the parties concerned by the application  of this Directive. 

Member  States  shall  provide  for  appropriate  measures  in  the  event  of  failure  to 
comply with this Directive and shall in particular ensure that adequate administrative 
or  judicial  procedures  are  available  to  enable  the  obligations  deriving  from  this 
Directive to be  enforced. 

Where Member  States  apply  Article 8, they  shall  make provision  for  administrative 
or judicial appeal procedures which the employees' representatives may initiate when 
the management  requires confidentiality  or does not give information  in  accordance 
with that Article. 

26 

Article 12 

Link between this Directive and other provisions 

1. 

2. 

3. 

This Directive  shall  apply  without  prejudice  to  measures taken  pursuant  to Council 
Directive 75/129/EEC(7) and to Council Directive 77/187/EEC(8). 

This  Directive  shall  not  prejudice  employees'  existing  rights  to  information  and 
consultation  under national legislation. 

This  Directive  shall  not  affect  Member States'  right  to  apply  or  introduce  laws, 
regulations or administrative  provisions which  are more favourable  to employees or 
to allow or give priority  to the application  of collective  agreements which are more 
favourable to employees. 

Article 13 

Agreements  in force 

1.  Without prejudice to paragraph 2, the obligations arising from  this Directive shall not 
apply  to  Community-scale  undertakings  or groups of  undertakings  in which,  on the 
date laid  down in Article  14(1) for the transposition  of this Directive  or the date of 
its  transposition  in  the  Member  State  in  question,  where  this  is  earlier  than  the 
abovementioned  date,  there  is already  an  agreement  providing  for  the  transnational 
information  and consultation  of employees. 

2.  When the agreements referred to in paragraph 1 expire, the parties to these agreements 
may decide jointly  to renew them. Where this is not -the case, the provisions  of this 
Directive shall  apply. 

Article 14 

Final  provisions 

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative  provisions 
necessary to comply with this Directive within two years of its entry into force or shall ensure 
by that date at the latest that  employers and workers' representatives introduce the required 
provisions by way of agreement, the Member States being obliged to take the necessary steps 
enabling  them  at  all  times  to  guarantee  the  results  imposed  by  this  Directive.  They  shall 
immediately  inform  the Commission thereof. 

When Member States adopt these provisions, these shall contain a reference to this Directive 
or  shall  be  accompanied  by  such  reference  at  the  time  of  their  official  publication.  The 
procedure for  such reference  shall be adopted by Member States. 

(7) 
(8) 

OJ No L 48, 22.2.1975, p. 29. 
O J N 0 L 6 I,  5.3.1977,  p. 26. 

27 

Article 15 

Review by the Commission 

v 

Seven years after  the adoption  of this Directive, the Commission  shall  review  its operation 
and, in particular, examine whether the workforce  size thresholds are appropriate with a view 
to proposing  suitable amendments, where necessary. 

Article 16 

This Directive shall enter into force on the twentieth  day following  that of its publication in 
the Official  Journal  of the European Communities. 

This Directive is addressed to the Member States. 

Article 17 

Done at Brussels, 

For the Council 
The President 

28 

ANNEX TO THE  DIRECTIVE 

SUBSIDIARY  REQUIREMENTS 

1.  The  establishment,  composition  and  competence  of  a  European  committee  shall  be 

governed by the following  rules: 

(a)  The competence of the European committee shall be limited to those matters which 
concern 
the  Community-scale  undertaking  or  Community-scale  group  of 
undertakings as a whole or at least two of its establishments or group undertakings 
situated  in different  Member States. 

In the case of undertakings or groups of undertakings referred  to in Article 4(2), 
the  competence  of  the  European  committee  shall  be  limited  to  those  matters 
concerning  all  their  establishments  or  group  undertakings  situated  within  the 
Member  States  or  concerning  at  least  two  of  their  establishments  or  group 
undertakings situated  in different  Member States. 

(b)  The European committee shall be composed of employees of the Community-scale 
undertaking or Community-scale group of undertakings elected or appointed  from 
their number by the employees' representatives  or,  in the absence thereof, by the 
entire body of employees. 

The  election  or  appointment  of  members  of  the  European  committee  shall  be 
carried  out in accordance with national  legislation  and/or practice. 

(c)  The European  committee  shall have a minimum  of  3 members  and  a maximum 
of 30.  It  shall  elect  a  chairman  and,  where  its  size  warrants  it,  an  executive 
committee  from  among  its  members,  comprising  at  most  a  chairman  and  four 
members. It shall  adopt its own rules of procedure. 

(d) 

In the election or appointment of members of the European committee, it must be 
ensured: 

firstly,  that each Member State in which the Community-scale undertaking has 
one  or  more  establishments  or  in  which  the  Community-scale  group  of 
undertakings  has  the  controlling  undertaking  or  one  or  more  controlled 
undertakings is represented by one member; 

secondly,  that there are supplementary  members in proportion  to the number 
of employees working in the establishments, the controlling undertaking or the 
controlled  undertakings  as laid  down by the legislation  of the Member  State 
within the territory  of which the central  management  is situated. 

(e)  The  central  management  shall  be  informed  of  the  composition  of  the 

European  committee. 

29 

(f) 

If,  at the end  of this procedure, the number of  employees' representatives  on the 
European  committee  is  less  than  30,  those  establishments  or  controlled 
undertakings which did not obtain members under subparagraph  (d) shall elect or 
appoint  a member. 

(g)  Four years after the European committee is established it shall deliberate as to the 
renegotiation of the agreement referred to in Article 6 or the continued application 
of the provisions in this Annex. 

Articles 6  and  7  shall  apply,  mutatis  mutandis,  if  a  decision  has  been  taken  to 
negotiate an agreement according to Article 6 and "special negotiating body" shall 
be replaced by  "European committee". 

2.  The European  committee  shall  have the right to  meet  with the  central  management  at 
least once a year, to be informed  and consulted, on the basis of a report drawn up by the 
central management, of the progress of the business of the Community-scale undertaking 
or Community-scale group of undertakings and of its prospects.  The local managements 
shall be informed  accordingly. 

Such  information  shall  relate  in  particular  to  its  structure,  economic  and financial 
situation,  the  probable  development  of  the  business  and  of  production  and  sales,  the 
employment  situation  and  probable trend,  investment  projects,  and  substantial  changes 
concerning  the  organization,  the  introduction  of  new  working  methods  or  production 
processes, transfers of production, cut-backs or closures of undertakings,  establishments 
or important parts thereof,  or collective redundancies. 

3.  Where there  are  exceptional  circumstances  affecting  employment,  more particularly  in 
the  event  of  relocations,  the  closure  of  establishments  or  undertakings  or  collective 
redundancies, the executive committee of the European committee  - or, where there is 
no such executive committee, the committee itself  -  shall  have the right to meet,  at its 
request,  the  central  management,  or any  other more  appropriate  level  of  management 
within the Community-scale group of undertakings, with a view to being informed  and 
consulted on any measure liable to have a considerable effect  on the employees' interests. 

This  information  and  consultation  meeting  shall  take place  as  soon  as  possible  on the 
basis of a report drawn up by the central management  or any other appropriate level of 
the management of the Community-scale group of undertakings, on which the European 
committee may put forward  an opinion within  a reasonable time. 

This meeting  shall  not affect  the prerogatives of the central  management. 

4.  The European committee or its executive committee shall be entitled to meet before any 
meeting with the central management, without the management concerned being present. 

5.  The  members  of  the  European  committee  shall  be  entitled  to  inform  the  employees' 
representatives at establishment or at group undertaking level or, in the absence thereof, 
the body  of employees, of the content and outcome of the information  and consultation 
procedure carried  out in accordance with this Annex. 

6.  The  European  committee  may  be  assisted  by  experts  of  its  choice,  insofar  as  this  is 

necessary  for  it to carry  out its tasks. 

30 

7.  The  operating  expenses  of  the  European  committee  shall  be  borne  by  the  central 

management. 

The central management concerned shall provide the members of the European committee 
with  such  financial  and  material  resources  as  enable  them  to  meet  and  perform  their 
duties in an appropriate manner. 

In  particular,  the  cost  of  organising  meetings  and arranging  for  interpretation  facilities 
and the accommodation and travelling expenses of members of the European committee 
and  its  executive  committee  shall  be  met  by  the  central  management  unless 
otherwise agreed. 

31 

ANNEXES TO THE PROPOSAL 

32 

ANNEX I 

SUMMARY  OF CONTRIBUTIONS RECEIVED 
DURING THE FIRST CONSULTATION  OF SOCIAL PARTNERS 

I.  The Commission of the European Communities consulted the social partners on the basis 
of  Article  3(2)  of  the  Agreement  on  Social  Policy  appended  to  the  Maastricht  Social 
Protocol  on the topic referred  to. 

The organizations listed in Point II of this Annex sent contributions to the Commission 
whose content is summarised below. 

in  multinational  groups  and  companies,  all 

(a)  On the feasibility  and advisability of Community action on worker information and 
consultation  procedures 
the 
organizations  consulted  agreed  that  there was  a  need  for  appropriate  employee 
consultation  and information  machinery  in transnational  concerns. But there is a 
difference  of approach between the employers' organizations and the trade union 
confederations:  the latter implicitly endorse the principles and rules set out in the 
text  which  the  Belgian  Presidency  submitted  to  the  Member  States  at  the 
Employment and Social Affairs Council on  12 October  1993, and which met with 
a broad  consensus  of  the Eleven,  whereas the employers'  organizations  prefer  a 
broader  voluntary  approach which  deviates in  some respects from  the proposals 
made in the text (see below). Of the employers' organizations consulted, HOTREC, 
the ACE, the UEAPME and Eurocommerce believe that Community action in this 
field is not appropriate. 

(b)  On the possibilities  for  negotiating  an agreement between the social  partners, in 
accordance with Article 4 of the Agreement on Social Policy. UNICE and CEEP 
were  willing  to  begin  negotiations  with  ETUC,  while  other  employers' 
organizations  preferred  not  to  state  their  position  until  the  second  stage  of 
consultation. ETUC did not pronounce on this topic.  The CEC said that they were 
open  to  negotiations,  particularly  within  the  scope  of  Article  2.2  of  the  social 
agreement  (Directive).  UEAPME  has  declared  that  -  were the  Commission  to 
decide that  Community  action  was necessary  -  an  agreement  between  the  social 
partners was the most appropriate solution. 

(c)  On  the  feasibility  and  advisability  of  proposing  Community  legislation  under 
Article 2(2) of the Agreement  on Social Policy. ETUC's verdict was  favourable, 
taking  the view,  as  mentioned  above,  that  the  proposal  should  be  based  on  the 
Belgian  Presidency's  text.  In  general,  the  employers'  organizations  expressed  a 
preference for a Recommendation, but were prepared to accept a more binding act 
of  Community  legislation  (Directive)  as  a  last  resort.  The  exceptions  were 
HOTREC, the ACE and UEAPME who were opposed to any form of Community 
legislation, and EUROCOMMERCE, which would only accept a Recommendation. 

33 

(d)  On the subject of restricting the scope of proposals to large concerns or groups of 
companies operating in  several Member  States, the organizations  consulted were 
generally in favour,  but did not mention any size limits or other conditions, apart 
from  UEAPME and EUROCOMMERCE, which suggested a threshold of  10 000 
full-time  workers over the whole group and at least  1 000 in at least two Member 
States.  The CEC would like to clarify  the proposal's field of application to small 
and medium transnational  companies. 

(e)  On  the  subject  of  channelling  information  and  consultation  procedures  via 
appropriate machinery or bv way of alternative procedures, the employers generally 
felt  that procedures  should  be adapted to  suit the real  situation  and the  structure 
of  the  company  or  group  and  based  on  voluntary  cooperation,  without  binding 
standard  procedures  laid  down  by  Community  legislation.  Although  there  was 
broad acceptance that minimum binding requirements would have to be laid down 
if  no  agreement  could  be  reached,  it  was  felt  that  any  requirements  should  be 
sufficiently  flexible  to safeguard  the abovementioned  principle. 

(f)  On the advisabilitv of concluding an agreement on the powers, area of competence 
and mode of functioning  of the of the information  and consultation machinery, or. 
in the absence of  an agreement  laying down the minimum  requirements. ETUC 
and the CEC implicitly  endorsed the principles and rules outlined in the Belgian 
Presidency text; UNICE and CEEP emphasised that information  and consultation 
arrangements should depend on voluntary cooperation, and the agreements reached 
should not form  part of rules laid down in the statutes. Since UNICE, CEEP and 
the other employers' organizations listed in the Annex, apart from  HOTREC and 
EUROCOMMERCE, accepted that minimum requirements could be laid down in 
the  absence  of  an  agreement,  the  Community  legislation  should  be  sufficiently 
flexible  in this respect to allow companies and groups to adapt the procedures to 
their  structure.  According  to  UNICE,  these  minimum  requirements  should 
state that: 

- 

- 

information  and consultation of workers or their representatives is carried out 
by the employer,  especially  at local level; 
the  employer  is  obliged  to  provide  information  at  least  once a  year  on  the 
functioning  of the company  or group; 
consultation  takes  place  on  all  transnational  matters  liable  to  have  serious 
consequences for  workers' interests; 
CEEP wishes the general  information  and consultation  obligations to include 
in addition the obligation to hold a dialogue with workers' representatives on 
all topics of general  interest liable to have consequences for  the personnel of 
two or more establishments in different Member States of the European Union. 

34 

II. 

ASSOCIATIONS. FEDERATIONS  AND CONFEDERATIONS 
WHICH WERE CONSULTED 

AECM (Association  européenne des classes moyennes) 
BIPAR (Bureau  International  des producteurs d'assurances  et de réassurances) 
C.E.C. (Confédération  Européenne des Cadres) 
C.E.E.P.  (Centre Européen  des Entreprises à Participation  Publique) 
C.E.S. (Confédération  Européenne des Syndicats) et ses comités syndicaux 
COPA (Comités des organisations professionnelles  agricoles de la CE) 
ECSA (European  Shipowners  Association) 
European Federation  of Banks 
European  Saving Banks Groups 
EUROCOMMERCE (Retail, Wholesale and International Trade Representation to the EC) 
et d'autres organisations patronales 
FIEC (Fédération de l'Industrie  européenne de la  construction) 
UEAPME (Union Européenne de l'Artisanat  et des petites et Moyennes Entreprises) 
UNICE (Union des Confédérations de l'Industrie et des Employeurs d'Europe (EC) et ses 
organisations  sectorielles 
ERA.  (European Regional  Airlines Association) 
ACCA (Association  of Charter Companies Airlines) 
ACCI Europe (Airports Council  International) 
ACE.  (Abelag Aviation) 
A.E. A. (Association  of European  Airlines) 
IRU (International  Road  Transport Union) 
UNO7 (Union Internationale de la Navigation Fluviale) 
Groupe des Assistants Communauté des Chemins de Fer Européennes 
HOTREC (Confédérations des Associations Nationales de l'Hôtellerie et de la restauration 
de la CE) 
Groupement  des Banques Coopératives de la CE 

LIST OF ORGANIZATIONS  WHICH SENT CONTRIBUTIONS  TO THE 
COMMISSION  ON THE CONSULTATION DOCUMENT 

the  Committee  of  Agricultural  Organizations  in  the  EEC  (COPA-

Association  of Cooperative Banks of the EC 
CEC (European federation  of managerial  staff) 
CEEP (European  Centre of Enterprises with Public Participation) 
ECSA (European  Community  Shipowners Association) 
Employers'  Group  of 
COGECA) 
ETUC (European  Trade Union  Confederation) 
Eurochambres 
EUROCOMMERCE  (Retail, Wholesale and International  Trade Representation  to the EC) 
European Federation  of Banks 
FIEC (European  Construction  Industry  Federation) 
HOTREC (Committee of the Hotel  and Restaurant Industry  in the EC) 
UEAPME (European  Union  of Crafts  and  SmajJ  and Medium-Sized  Enterprises) 

35 

European  Savings Banks Group 
IRU (International  Road  Transport Union) 
ACI Europe (Airports Council  International) 
Euro-Fiet  (European  Regional  organization  of the International  Federation  of  Commercial, 
Clerical, Professional  and Technical  Employees) 
Community  of European  Railways 
ACE (The European  Community's Independent  Airline Association) 
AEA (Association  of European  Airlines) 

36 

ANNEX  H 

The Commission  consulted the social partners at Community  level between  8 February and 
30 March  1994, pursuant to Article 3(3) of the Agreement on Social Policy. To that end, the 
Commission sent them a consultation document which included a draft proposal for a Council 
Directive, and asked them to present whatever remarks or suggestions they found appropriate. 
They were also asked to inform  the Commission  of their intention to initiate the procedure 
provided  for  in  Article  3(4)  of  that  Agreement,  aimed  at  negotiating  and  concluding  an 
agreement between them. 

The answers received by the Commission by 30 March  1994 were as follows: 

ETUC (EUROPEAN TRADE UNION CONFEDERATION) 

ETUC  informed  the  Commission  of  its  imtiative  to  "propose  to  UNICE  and  CEEP  an 
exploratory  debate  aimed  at  testing  the  possibility  of  initiating  negotiations  to  reach  an 
agreement". 

ETUC considers that its efforts  failed  "due to the fact that UNICE and CEEP were not able 
to commit themselves unreservedly and unambiguously on the essential elements which would 
ensure the exercise of the right (to transnational  information  and consultation)". 

ETUC thinks that the Commission  should initiate the legislative procedure according to the 
provisions  of  the  Agreement  on  Social  Policy,  on  the  basis  of  "the Belgian  compromise, 
which has already  achieved a political consensus". 

UNICE  (UNION  OF  INDUSTRIAL  AND  EMPLOYERS'  CONFEDERATIONS 
OF EUROPE) 

UNICE acknowledges that its efforts  to "take this issue to the negotiating table have failed" 
but says that the offer  to the ETUC remains open. 

Regarding  the  consultation  document  of  8  February  1994,  UNICE  "much  appreciates  the 
greater  flexibility  introduced  by  the  Commission  in  its  text,  which  is  a  considerable 
improvement  on  previous  drafts".  Nevertheless,  UNICE  considers  that  this  text  remains 
unacceptable  because  it  "requires  companies  to  set  up  a  special,  centralised  structure  to 
negotiate mechanisms for information  and consultation  ... and the minimum provisions of the 
Annex will in most cases serve as a starting point for any negotiations, and thus will bias the 
outcome in favour  of centralized, rigid and bureaucratic structures...". 

In its detailed comments, UNICE raises, among others, the following issues: 

the subsidiary threshold  in Article 2(1) should be raised to 200 employees; 
the provisions related  exclusively  and expressly to the UK should be deleted; 
the  central  management  should  have the  possibility  to  delegate  to  a more  appropriate 
level of management its obligations and duties under this Directive; 
part-time employees should be included pro rata temporis: 
the  crews  on  seagoing  vessels  and  employees  of  undertakings  pursuing  the  aim  of 
ideological  guidance  with  respect  to  information  and  expression  of  opinion  should  be 
excluded from  the Directive; 

37 

the provisions  which  give  experts the right to  participate  in  the  meetings  and  comply 
employers to pay for  their activities should be deleted; 
there  should  be  no faculty  for  the Member  States to  establish  subsidiary  requirements 
more favourable  to the workers than the ones of the Annex; 
prior administrative or legal authorization should not be required to withhold  prejudicial 
information; 
acceptance  of  the  principle  of  the  non-application  of  the  provisions  of  the  Annex  to 
voluntary  agreements and existing agreements; 
companies  that  do not want  to negotiate  should  be able to  refuse  and thereby  only be 
subject  to the minimum  requirements; 
the Annex  should be  entirely  suppressed  and  replaced  by  a formula  similar  to the one 
which  has  been  introduced  in  Article  2(4)  of  Directive  75/129/EEC  (collective 
redundancies) by Directive 92/56/EEC. 

CEC (EUROPEAN FEDERATION  OF MANAGERIAL STAFF) 

CEC  supports the objectives  of the  directive  and the  specific  solutions  provided  for  in the 
consultation document,  subject to the following remarks: 

the wording  "mechanisms for  informing  and consulting"  should be replaced by another 
expression more related to a definite  structure; 
managerial  staff  should have the right to be represented in the negotiating bodies and in 
the structures for  informing  and consulting; 
the  provision  which  provides  for  an  obligation  to  invite  the  management  and  the 
employees of the undertakings in the UK is welcome; 
the threshold in Article 2(1) should be reduced to 50 employees; 
the  requirements  relating  to  the  initial  demand  to  initiate  negotiations  should  not  be 
reinforced; 
Article 7 should provide for  a one-year negotiation  period; 
the provisions of the Annex relating to consultation  should be mentioned directly in the 
Directive. 

EUROPEAN FEDERATION OF BANKS 

The European Federation of Banks holds the view that information  and consultation  of staff 
are beneficial  both for  employees and for the institution itself. Nevertheless, it reaffirms  its 
preference  for  a  recommendation  and  for  the  setting-up  of  information  and  consultation 
mechanisms "as close as possible to the employee's workplace". It welcomes "the introduction 
of a certain amount of flexibility  into the body  of the Directive". 

The main criticisms from  the Federation regarding the consultation document are as follows: 

the  Annex,  which  imposes  a  "rigid  and  centralized  structure  for  information  and 
consultation"  should be deleted; 
the thresholds in Article 2(1) should be raised to  150 employees; 
Article 5(5) should  provide for  a majority  of votes and not two thirds of votes; 
the confidentiality  clause and the possibility to withhold information should be reinforced. 

38 

HOTREC (COMMITTEE OF THE HOTEL AND RESTAURANT INDUSTRY IN 
THE EC) 

HOTREC reaffirms  its previous opposition to the Commission's initiative.  It emphasizes in 
particular now its strong opposition to the inclusion of part-time workers in the thresholds in 
Article 2(2). 

EUROCOMMERCE - THE RETAIL, WHOLESALE AND INTERNATIONAL TRADE 
REPRESENTATION  TO THE  EUROPEAN  UNION 

EUROCOMMERCE  reaffirms  its previous position,  emphasizing now the following  issues: 

only employees should be authorized to participate in the negotiations and in the resulting 
structures or procedures; 
part-time workers should be considered pro rata temporis: 
the consultation requirement should be suppressed or, at least, it should be clear that the 
consultation  should not automatically  precede the adoption of decisions. 

AEA (ASSOCIATION  OF EUROPEAN AIRLINES) 

AEA is completely against any form  of Community intervention  in the field of  information 
and consultation  of workers, on the basis of  subsidiarity. 

LIST OF ORGANIZATIONS WHICH WERE CONSULTED 
IN THE SECOND-STAGE  CONSULTATION 

UNICE (Union of Industrial  and Employers' Confederations  of Europe) 
CEEP (Centre Européen  des Entreprises à Participation  Publique) 
ETUC (European Trade Union  Confederation) 
European  Association  of  Craft,  Small  and  Medium-Sized  Enterprises  (UEAPME, 
EUROPMI and other associated  organizations) 
CEC (Confédération Européenne des Cadres) 
Eurocadres 
EUROCHAMBRES 
BIPAR (International  Association of Insurance and Reinsurance  Intermediaries) 
CEA (European  Insurance Committee) 
Euro-Fiet (European Regional organization of the international Federation of Commercial, 
Clerical, Professional  and Technical Employees) 
EUROCOMMERCE (Retail, Wholesale and International Trade Representation to the EC) 
European Federation  of Banks 
European  Savings Banks Group 
Groupement Européen  des Banques Coopératives 
FETBB (Fédération Européenne des Travailleurs du Bâtiment et du Bois) 
FBEC (Fédération de l'Industrie Européenne de la Construction) 
CEI Bois (European  Confederation  of Woodworking industries) 
EFA (European Federation  of Agricultural  Workers' Unions) 

39 

COPA/COGECA (Groupe  Employeurs  des  Organisations  Professionneles  Agricoles  de 
la CE) 
HOTREC (Confédération des Associations Nationales de l'Hôtellerie et de la Restauration 
de la CE) 
ACE (The European  Community's Independent  Airline  Association) 
ACI Europe (Airports Council  International  - European  Region) 
AEA (Association  of European  Airlines) 
Community  of European Railways 
CSTCE (Comité  Syndical  des Transport dans la Communauté  Européenne) 
ECSA (European Community  Shipowners  Association) 
IRU (International  Road Transport Union) 
SETA-UITA (Secrétariat Européenne des Travailleurs  de  l'Alimentation) 

40 

ANNEX  HI 

IMPACT ASSESSMENT  FORM 
THE  IMPACT  OF  THE PROPOSAL  ON  BUSINESS 

with  special  reference  to  small  and  medium-sized  enterprises  (SMEs) 

TITLE  OF  PROPOSAL: 

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 

REFERENCE  No:  COM(94)  134  final 

THE  PROPOSAL: 

1.  Taking  account  of  the  principle  of  subsidiarity,  why  is  Community  legislation 

necessary  in  this  area  and what  are  its  main  aims? 

The completion of the internal  market is bound to generate a process of  concentrations 
of  undertakings,  cross-border  mergers,  takeovers, joint  ventures  and,  consequently,  a 
transnationalization  of undertakings and groups of undertakings.  If economic  activities 
are to  develop  in  a  harmonious  fashion,  this  situation  requires  that  undertakings  and 
groups  of  undertakings  operating  in  more  than  one  Member  State  must  inform  and 
consult the representatives  of their employees  affected  by their decisions. 

As a result of changes in the structure of undertakings, the procedures for consulting and 
disclosing information are often no longer consistent with these new structures. Whereas 
firms have become more complex, in that they have grown or expanded their operations 
by  setting up subsidiaries or establishments in  several  Member  States, their employees 
continue to be informed  and consulted  in a segmented  fashion,  reflecting  the scope  of 
existing national  laws and practices. 

Existing procedures for informing  and consulting  employees in a national  context only 
have effect  within the legal  framework  of  that country,  only benefit  the  employees  of 
that State and generally  only relate to activities carried out within national boundaries. 
Community  legislation  intended  to overcome the territorial  limitations  of  national  law 
with  respect  to  information  and  consultation  of  employees  of  Community-scale 
undertakings  or groups is therefore needed. 

The principal  objective of the proposal is thus to create a Community  legal  framework 
with a view to improving the information  and consultation  of workers in transnational 
undertakings  and  groups  of  undertakings  covered  by  the  proposal,  by  way  of  the 
establishment  in  such  undertakings  and  groups  of  European  committees  or  other 
information  and consultation  procedures. 

41 

2.  Who will  be affected  by the  proposal? 

This proposal is intended to apply to: (a) undertakings with at least  1000 employees in 
all the Member States and with at least two establishments in different  Member States, 
each  employing  at  least  100  workers;  and  (b)  groups  of  undertakings  with  at  least 
1000 employees in all the Member  States and with at least two group undertakings in 
different Member States which each employ at least 100 employees. Small and medium-
sized undertakings are not covered. 

The proposal  applies to all  sectors of business throughout the European Union. 

3.  What will business  have to do to comply with  the  proposal? 

Undertakings  and  groups  of  undertakings  covered  by  this  proposal  must  establish 
European committees or set up some other procedure for informing and consulting their 
employees. 

The  European  committee  encompasses  all  the  establishments  or  group  undertakings 
located  within  the  Member  States  which  employ  at  least  100  workers.  Their 
composition,  functions  and  mode  of  operation  may  be  determined  by  a  written 
agreement between  the representatives  of  employees  and the management  concerned. 
If there is no agreement a standard model will apply. 

The standard model lays down rules on the composition, function and powers, and mode 
of  operation  of  the  European  committee.  It  will  be  composed  of  employees' 
representatives and feature a minimum of three members and a maximum of 30. It must 
meet with management once a year to be informed  and consulted  on the status of the 
Community-scale  undertaking  or  group  of undertakings.  If  consultation  is  necessary, 
further  meetings may be called with the executive committee. 

4.  What  economic effects  is the proposal likely to  have? 

(a)  on employment 

Difficult  to measure but the Commission believes that the proposed Directive will 
have a highly beneficial  effect  on workers' productivity  and commitment to their 
firm, on the competitiveness of undertakings and hence on employment. 

(b)  on investment  and the creation of new businesses 

No direct  effect. 

(c) 

on the competitive position of businesses 

The competitiveness of a company depends on a number of factors, one of them 
labour  costs.  The  costs  involved  in  setting  up  and  maintaining  a  European 
committee can be considered as an element of labour costs. For the calculation of 
the costs of a meeting of the committee the following  factors  are essential: 

42 

1.  The  number  of  participants  -  the  proposal  in  the  Annex  is  for  a  maximum 

of 30. 

2.  The number of Member States covered  - between two  and  12. 

3.  Travel  expenses. 

4.  The need for  interpreters and the requisite equipment  (e.g.  booths  and other 

equipment). 

5.  Accommodation. 

6.  Absence  from  work  on the part of  employees  attending the meeting. 

7.  Costs of preparation of the meeting, including documentation  in a number of 

languages. 

A Community undertaking which is concentrated only in a number of Member 
States,  e.g.  the  Benelux  countries  or the  Iberian  Peninsula,  will  have  much 
lower costs and probably fewer participants than a company with a European 
committee  with  representatives  from  12 Member  States.  Even  in  this  latter 
situation, the cost picture will vary greatly. In some cases, interpretation into 
nine  languages will  be necessary;  in  others there may  be  a company  culture 
with work being done in the "company language" or in only a few languages. 
It  may  be  necessary  to  hire  a  meeting  room  and  install  all  the  requisite 
interpretation facilities. Participants might have to travel by air and spend two 
nights in a hotel. 

The  undertaking  might  have  its  own  facilities,  or  the  meeting  might  be 
combined  with  other meetings. 

Another difficult  element to calculate is the cost of preparation. In some cases 
special  reports,  paper,  etc.  have  to  be  prepared  and  other  preparatory  work 
done. In other cases, existing material - available in a number of languages  -
can be used. 

Taking these elements into account, a theoretical  calculation based on dubious 
assumptions does not seem very useful.  Still  taking as a basis for  calculation 
figures used for meetings organized by European institutions, a meeting of 30 
experts from  most of the Member  States, with  interpretation  in  a number  of 
languages,  will  cost  some tens of thousands  of  ECU.  In  such cases, though, 
a  Community-scale  undertaking  will  have  at the very  least  several  thousand 
workers throughout the Community, thus increasing the wage cost per worker 
by  a  maximum  of  ECU  10  per  year.  In  most  cases,  the  actual  wage  cost 
increase per worker is likely  to be less. 

It may  be  said  that a small  increase  is  necessary  to  complement  the  process 
of  concentration  of  undertakings  brought  about  by  the  completion  of  the 
internal  market. 

43 

It  should be added that labour  costs themselves  are not the crucial  factor  in 
terms  of  competitiveness,  but  rather  unit  labour  costs  taking  into  account 
productivity.  When  -  as  the  Commission  expects  -  industrial  relations  are 
improved  by  the  setting up of  a European  committee  and increased  worker 
involvement,  this might lead to an increase in productivity  which will  more 
than compensate for this marginal  cost increase. 

5.  Does  the  proposal  contain  measures  to  take  account  of  the  specific  situation  of 

small and medium-sized  firms  (reduced  or  different  requirements, etc.)? 

The proposed Directive does not apply to small and medium-sized businesses. 

6.  List  the organizations  which  have been  consulted  about  the  proposal  and outline 

their main views 

See Annexes  1 and 2. 

44 

ISSN 0254-1475 

COM(94) 134 final 

DOCUMENTS 

EN 

04 

Catalogue number : CB-CO-94-150-EN-C 

ISBN 92-77-67648-5 

Office for Official Publications of the European Communities 

L-2985 Luxembourg