Commission staff working document accompanying the proposal for a directive of the European Parliament and the Council on the establishment of a european works council or a procedure in community-scale undertakings and community-scale groups of undertakings for the purposes of informing and consulting employees (recasting) - Summary of the impact assessment {COM(2008) 419 final} {SEC(2008) 2166}
Date: 2008-07-02
Institutions: European Commission
Subjects: European Works Council, European undertaking, group of companies, impact study, labour law, worker consultation, worker information

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 2.7.2008 
SEC(2008) 2167 

COMMISSION STAFF WORKING DOCUMENT 

accompanying the 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND THE COUNCIL 

on the the establishment of a European Works Council or a procedure in Community-
scale undertakings and Community-scale groups of undertakings for the purposes of 
informing and consulting employees (recasting)  

SUMMARY OF THE IMPACT ASSESSMENT 

{COM(2008) 419 final} 
{SEC(2008) 2166} 

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INTRODUCTION 

The  impact  assessment  concerns  the  envisaged  review  of  the  European  Works  Councils 
Directive  94/45/EC  and  was  carried  out  between  October  2007  and  June  2008.  An  inter-
service  steering  group  was  set  up  to  this  end,  with  the  participation  of  eleven  services.  An 
external study involving a survey of 10% of existing European Works Councils (EWCs) was 
commissioned. The second-stage consultation of the European social partners was launched in 
February 2008. While the Commission would have welcomed negotiations between the social 
partners as the solution with potentially the most positive impact, social dialogue talks were in 
the  end  not  considered  practical  by  the  European  Trade  Union  Confederation.  The  impact 
assessment has used external data and taken into account the results of academic research as 
well  as  the  views  expressed  by  social  partners  and  other  stakeholders  in  response  to  the 
consultation.  It  has  been  revised  twice  to  take  into  account  the  opinions  of  the  Impact 
Assessment Board. 

PROBLEM DEFINITION 

The  Directive  establishes  a  right  to  transnational  information  and  consultation  of  the 
workforce  on  the  progress  of  business  and  any  significant  changes  envisaged  in  large-scale 
(1 000+ employees) transnational companies. In 2007, 2257 companies employing 24 million 
workers  fell  within  the  scope  of  the  Directive.  EWCs,  whether  established  before  the 
Directive came into force, and hence excluded from compliance with the Directive, or set up 
through  an  agreement  between  a  body  representing  the  employees  and  the  central 
management, were operating in 816 companies with some 14.5 million employees.  

Fourteen years after the adoption of the Directive, there are three problems that may require 
action:  

•  The  effectiveness  of  transnational  information  and  consultation  rights  is  not  ensured, 
particularly  as  existing  EWCs  are  not  properly  informed  and  consulted  in  over  half  of 
restructuring cases and, moreover, the take-up rate of EWCs is still relatively low and has 
not increased in recent years;  

•  There are legal uncertainties giving rise to shortcomings in the application of the Directive 
and  entailing  costs  and  delays,  particularly  in  cases  of  mergers  and  acquisitions  and  as 
regards  the  interplay  between  the  national  and  European  levels  of  information  and 
consultation,  

•  The concepts of information and consultation in the 1994 EWC Directive differ from those 
contained  in  the  most  recent  Directives  in  the  field  of  workers’  information  and 
consultation, and there are no clear rules for the interplay between these directives. 

These  problems  affect  workers,  companies  and  territories  to  a  significant  extent,  and  the 
potential  role  of  EWCs  in  anticipating  and  managing  change  in  a  sustainable  way  remains 
largely  unexploited.  The  problems  would  worsen  without  new  EU  action  in  a  context  of 
increased internationalisation. Action is also necessary in order to support the completion of 
the internal market, sustainable competitiveness and social cohesion. Given the transnational 
nature of EWCs, effective remedies cannot be taken by the Member States. The legal basis for 
EU action is Article 137(1)(e) of the EC Treaty. 

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OBJECTIVES 

The main goal of this initiative is to put EWCs in a position where they can fully play their 
role  with  regard  to  developments  in  undertakings,  the  anticipation  and  socially  responsible 
management  of  change,  and  the  fostering  of  genuine  transnational  social  dialogue.  The 
specific objectives are as follows: 

•  To ensure the effectiveness of employees’ transnational information and consultation rights 

in existing EWCs; 

•  To increase the take-up rate (the proportion of established EWCs compared to the number 

of companies falling within the scope of the Directive); 

•  To ensure legal certainty in the setting up and operation of EWCs ; 

•  To  ensure  better  coherence  and  interplay  between  Community  legislative  instruments  on 

information and consultation of employees. 

POLICY OPTIONS AND ASSESSMENT 

In order to achieve these objectives, three main options have been identified and, for each of 
them, the main potential impacts have been assessed: 

•  The  first  option  No  new  EU  action  does  not  present  any  ability  to  meet  the  specific 

objectives. 

•  The  second  option  Non-regulatory  approach  —  additional  promotion  of  best  practice 
would include an increase in communication actions, possibly followed by a proposal for 
an increase in existing financial support for promotion actions and a recommendation  on 
the setting up and functioning of EWCs. It has the potential to improve the dissemination 
of  best  practice  and  encourage  a  more  efficient  functioning  of  EWCs,  without  entailing 
additional direct costs for companies. However, by nature, it can address only to a limited 
extent  the  objective  of  ensuring  legal  certainty  and  coherence  in  Community  legislation 
and therefore needs to be associated with legislative action (third option). Also, one needs 
to take into account that non-regulatory measures are already in place and, therefore, any 
new measure could only have an additional impact.  

•  The third option Review of existing legislation would include amendments to the 94/45/EC 
Directive, mainly aimed at further specifying the concepts of information and consultation, 
defining  what  is  meant  by  transnational  competence,  linking  the  national  and  European 
levels  of  information  and  consultation,  adapting  the  subsidiary  requirements,  which  are 
used  as  benchmarks  for  negotiation,  establishing  a  right  to  training,  introducing  an 
adaptation  clause  in  the  event  of  significant  change  in  the  structure  of  companies,  and 
recognising  the  role  of  trade  unions.  For  each  sub-option,  the  costs  and  benefits  are 
discussed  and  a  balance  is  established  between  the  interests  expressed  by  the  different 
stakeholders. Two sub-options — lowering thresholds for the establishment of EWCs and 
registering  agreements  —  are  discarded  as  they  are  less  cost-effective.  The  other  sub-
options have the best prospects of achieving the specific objectives and show greater cost-
effectiveness.  These  sub-options  should  be  implemented  together  as  none  would  be 
sufficient by itself to achieve the desired result. The content of the third option has been 

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adapted in some areas to take into account the results of the consultation and assessment 
exercise,  as  well  as  the  interest  of  the  various  stakeholders  particularly  regarding  the 
content of the subsidiary requirements. However, as the capacity of such option to improve 
awareness-raising  and  disseminate  best  practices  is  limited,  it  should  therefore  be 
combined with awareness-raising actions from the second option. 

CONCLUSION 

Taking into account its impact on established objectives and cost-effectiveness, the preferred 
option  is  the  third  option  Review  of  existing  legislation,  combined  with  awareness-raising 
actions  from  the  second  option  Non-regulatory  approach  —  additional  promotion  of  best 
practice, starting with communication actions. The likely overall impact of this option would 
be  to  improve  the  quality  of  dialogue  within  companies  and  enable  all  parties  to  better 
anticipate  and  manage  change,  while  imposing  some  additional  direct  costs.  However,  it  is 
difficult  to  see  this  entailing  significant  additional  costs  for  companies  already  complying 
with the requirements and aims of the existing Directive. It would also contribute to making 
the  existing  Community  instruments  on  information  and  consultation  more  coherent  (same 
definitions, interplay between national and transnational rules). 

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