COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2009/38/EC as regards the establishment and functioning of European Works Councils and the effective enforcement of transnational information and consultation rights
Date: 2024-01-24
Institutions: Directorate-General for Employment, Social Affairs and Inclusion, European Commission
Subjects: European Works Council, group of companies, labour law, multinational enterprise, social dialogue (EU), worker consultation, worker information

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  EN 

   EUROPEAN COMMISSION  Brussels, 24.1.2024  SWD(2024) 11 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT  Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2009/38/EC as regards the establishment and functioning of European Works Councils and the effective enforcement of transnational information and consultation rights {COM(2024) 14 final} - {SEC(2024) 35 final} - {SWD(2024) 9 final} - {SWD(2024) 10 final}  
 
 
A.  Context 

European  Works  Councils  (‘EWCs’)  are  employee  representation  bodies  for  information  and 
consultation with management of multinational undertakings of a certain size on transnational matters. 
In  the  ongoing  transformation  of  the  world  of  work  driven  by  environmental,  economic,  and  social 
sustainability  considerations,  a  meaningful  involvement  of  workers  and  their  representatives  at  all 
levels can help anticipate and manage change, diminish job losses, maintain employability, and ease 
effects on social welfare systems and related adjustment costs. To date, EWCs or other agreements on 
transnational  information  and  consultations  exist  in  around  1000  multinational  undertakings, 
representing  ca.  16.6  million  EU  employees.  Directive  2009/38/EC  (‘the  Directive’)  provides  a 
framework with minimum requirements for the setting-up and operation of EWCs, which respects the 
autonomy  of  management  and  employees’  representatives  to  tailor  the  information  and  consultation 
process to their specific needs and preserves management’s ability to take decisions effectively. This 
initiative is about making sure that this framework is clear, effective, and enforceable. This initiative 
concerns Union-scale undertakings and their employees in the Member States. 

EWCs  and  transnational  information  and  consultation  procedures  complement  the  information  and 
consultation  of  employees  at  national  level  pursuant,  in  particular,  to  Directive  2002/14/EC 
establishing  a  general  framework  for  informing  and  consulting  employees  in  the  European 
Community, Directive 2001/23/EC on transfers of undertakings, and Directive 98/59/EC on collective 
redundancies.  This  initiative  does  not  affect  national  legislation  on  information  and  consultation  of 
employees deriving from these EU Directives.  

B.  Need for EU action 

What is the problem being addressed? 

The  Directive  does  not  always  fully  achieve  its  objective  to  improve  the  right  to  transnational 
information  and  consultation  of  employees  in  multinational  undertakings.  In  some  cases,  there  is  a 
lack  of  a  genuine  and  meaningful  dialogue  between  management  and  EWCs,  and  uncertainty  in 
relation to the process for setting up EWCs, to the scope of information and consultation obligations 
limited in the Directive to ‘transnational matters’, to  the coverage of expenses, to the conditions for 
requiring  the  confidential  treatment  of  information  or  refusing  to  disclose  certain  information  to 
EWCs, and to access to justice. Moreover, there is a clear lack of gender balance on many EWCs, and 
infringements  of  information  and  consultation  rights  are  often  not  sanctioned  sufficiently  to  ensure 
compliance.  Finally,  due  to  exemptions  from  the  scope,  the  Directive  does  not  apply  to  ca.  350 
undertakings  in  which  agreements  on transnational  information  and  consultation  exist,  which  makes 
the  regulatory  framework  complex  and  fragmented,  creating  different  levels  of  protection  for 
employees in Union-scale undertakings. 

While these issues cannot be assumed to apply on a general scale, they together lead to shortcomings 
of the effectiveness of the existing EWC framework. Consequently, the potential of EWCs is not fully 
exploited to promote employee involvement and ‘buy-in’ and sustainable working conditions, also in 
the context of structural changes linked to the green and digital transitions. 

What is this initiative expected to achieve? 

The  general  objective  of  this  initiative  is  to  improve  the  effectiveness  of  the  framework  for  the 
information and consultation of employees at transnational level. This objective is consistent with the 
aims and principles set out in the Directive. In accordance with the relevant legal basis in the Treaty on 

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the Functioning of the EU, the basic nature of the Directive as an information and consultation – rather 
than co-determination – instrument remains unchanged.  

Specifically, the initiative aims (i) to avoid unjustified differences in workers’ minimum information 
and  consultation  rights  at  transnational  level,  (ii)  to  ensure  an  efficient  and  effective  setting-up  of 
EWCs,  (iii)  to  ensure  the  appropriate  resourcing  of  EWCs  and  an  effective  process  for  their 
information  and  consultation,  and  (iv)  to  promote  a  more  effective  enforcement  of  the  Directive, 
including  through  access  to  justice  for  employee  representatives  and  effective,  dissuasive  and 
proportionate sanctions. 

What is the added value of action at EU level? 

The Directive sets out minimum standards for transnational information and consultation of employees 
in multinational undertakings. Since this is a cross-border matter, challenges must be addressed at EU 
level.  The  specific  EU  added  value  of  the  initiative  lies  in  the  development  of  these  minimum 
standards. These standards foster upwards convergence in employment and social outcomes between 
Member States. The initiative will further increase the added value also for companies, by creating a 
simpler  and  more  coherent  regulatory  framework  across  the  entire  EU.  In  geographic  terms,  all 
Member States can be affected by the problem, because its consequences materialise not only in the 
Member State where an EWC is based, but also in those where establishments belonging to the same 
group are based. 

C.  Policy options 

What legislative and non-legislative policy options have been considered?  

The  Commission  has  considered  various  policy  options,  taking  into  account  available  evidence  and 
stakeholder  views, in  particular  its  evaluation  of  the recast  Directive,  the  relevant  resolutions  of the 
European  Parliament  and  social  partners’  contributions  to  the  two-phase  consultation.  The  options 
were grouped in relation to the four distinct policy objectives mentioned above.  

In  relation  to  the  application  of  different  rules  to  undertakings  depending  on  when  they  concluded 
their  information  and  consultation  or  EWC  agreement,  there  is,  for  legal  reasons,  a  binary  policy 
choice between maintaining and removing the exemptions from the scope of the Directive.  

Concerning  the  setting-up  of  EWCs,  legislative  and  non-legislative  policy  options  involve 
clarifications regarding the resources available to employees’ representatives tasked with negotiating 
the  EWC  agreement,  and  in  particular  the  coverage  of  their  reasonable  legal  costs.  As  an 
accompanying measure,  the  options include a  clarification  of the  deadline  for  initiating negotiations 
following a request to establish an EWCs. As a more far-reaching alternative, the options also include 
an objective of a balanced gender-composition of EWCs, to be reflected in EWC agreements. 

As regards the operation of EWCs, policy alternatives to clarify the concept of ‘transnational matters’ 
range  from  non-binding  interpretative  guidance  and  a  targeted  clarification  of  the  wording  to  a 
substantial broadening of the concept, combined with an obligation on management to justify why a 
certain  matter  is  not  transnational.  Secondly,  a  requirement  for  management  to  provide  a  reasoned 
response to the EWC’s opinion was assessed, as well as a clarification that management may impose 
the confidential treatment of information only in the legitimate interest of the undertaking. Moreover, 
management would be required to specify, upon request, the grounds for declaring certain information 
confidential or refusing to disclose it. A more far-reaching alternative option would allow management 
to refuse the disclosure of information on the grounds that it would seriously harm the functioning of 

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the  undertaking  only  subject  to  prior  judicial  or  administrative  authorisation,  and  generally  exempt 
information  sharing  between  the  EWC  and  national  or  local  employees’  representatives  from 
confidentiality  restrictions.  Thirdly,  concerning  the  coverage  of  EWCs’  expenses,  policy  options 
include  non-binding  guidance  facilitating  the  application  of  existing  requirements,  or  alternatively 
more specific legislative requirements for parties to regulate in their agreement how certain expenses – 
such  as  experts’  fees  and  legal  and  training  costs  –  are  covered.  Alternatively,  more  far-reaching 
binding requirements for the coverage of costs could be laid down in the Directive. 

Concerning  the  issues  of  enforcement  and  access  to  justice,  the  policy  options  pertain  to  sanctions 
applicable when the national legislation transposing the Directive is infringed, and remedies available 
to rightsholders in such cases. Binding options involve, at one end of the spectrum, measures to clarify 
and  strengthen  the  general  requirements  in  the  Directive,  including  through  a  requirement  to  take 
undertakings’  turnover  into  consideration  when  determining  pecuniary  sanctions,  as  well  as  an 
obligation on Member States to notify the Commission of how access to justice and effective remedies 
are ensured in respect of all the rights under the Directive. At the other end of the spectrum are more 
far-reaching options  consisting  of  introducing the  possibility  for  EWCs to request the  suspension of 
management decisions and laying down specific ceilings for pecuniary sanctions of 2% (in the case of 
unintentional  infringements)  and  4%  (in  the  case  of  intentional  infringements)  of  undertakings’ 
worldwide turnover. 

In  designing  the  policy  measures  and  packaging  them  to  form  policy  options,  the  Commission  was 
guided  by  the  following  key  considerations:  (i)  the  need  to  leave  discretion  to  Member  States  in 
implementing  any  revised  minimum  requirements  on  transnational  information  and  consultation, 
allowing them to integrate them into their respective rules, industrial relations traditions and practices, 
in  accordance  with  the  principle  of  subsidiarity  and  the  Treaty  legal  base;  (ii)  full  respect  of  the 
autonomy of social partners in giving practical effect to the minimum requirements; (iii) the fact that 
business stakeholders generally favour  non-binding measures  whereas  trade  union  organisations and 
employee  representatives  support  legislative  amendments.  Therefore,  while  various  possible 
alternative  combinations  between  legislative  and  non-legislative  measures  could  be  envisaged  in 
theory,  stakeholder  feedback  did  not  indicate  any  particular  such  combination;  (iv)  non-legislative 
measures, such as the funding of projects to promote the awareness of the transnational information 
and consultation framework, and the Commission’s monitoring of the implementation of the Directive 
by  the  Member  States  form  part  of  the  baseline  scenario.  A  legislative  initiative  would  therefore 
automatically be combined with such continuing non-binding measures. 

Who supports which option? 

As part of a broader campaign for democracy in workplaces, the Parliament has in its 2021 resolution 
on  ‘democracy  at  work’  and,  in  particular,  in  its  2023  resolution  with  recommendations  to  the 
Commission to  revise  Directive  2009/38/EC,  called  to  strengthen the role  and  capacity  of  EWCs as 
information and bodies in Union-scale undertakings operating in the European Union. The European 
Economic  and  Social  Committee  has  made  similar  calls  over  the  past  years.  European  trade  union 
organisations generally support the more far-reaching binding amendments outlined above, which take 
up the European Parliament’s recommendations, whereas business organisations dispute the existence 
of  shortcomings  warranting  EU  policy  action,  and  caution  against  creating  additional  costs  and 
negative impacts of some options on competitiveness.  

What is the preferred choice and why? 

The preferred policy option combines the following measures: 

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(i) The exemptions of certain Union-scale undertakings will be ended, to simplify the framework for 
transnational information and consultation and guarantee equal access of employees to the rights under 
the Directive. The ‘voluntary agreements’ of previously exempted undertakings were  concluded and 
operated outside the scope of EU law, so once the exemption is removed an EWC may be set up upon 
request of employees or on management’s own initiative, or the voluntary agreements may continue if 
no such request is made. 

(ii)  The  resources  available  to  employees’  representatives  during  the  negotiation  of  new  EWC 
agreements, in particular the coverage of reasonable legal costs, will be clarified, as will the wording 
of  management’s  obligation  to  initiate  negotiations  within  six  months  of  a  request  to  establish  an 
EWC. In addition, a gender-balance objective is to be reflected in EWC agreements, as the currently 
unbalanced composition of EWCs would otherwise be perpetuated. 

(iii) Targeted clarifications of the concept of transnational matters will be introduced in the Directive 
to address the existing uncertainty and reduce the risk of disputes.  An obligation for management to 
conduct information and consultation in a way that  enables worker’s representatives to express their 
opinion prior to the adoption of the decision and to provide a reasoned response to EWCs’ opinions 
before adopting a decision on transnational matters will be laid down, to strengthen the effectiveness 
of dialogue on transnational matters. With respect to the coverage of EWCs’ expenses, the preferred 
option upholds the principle of party autonomy, requiring that potentially contentious points such as 
the  coverage  of  legal  costs,  experts’  fees  and  training  costs  be  addressed  in  EWC  agreements.  For 
EWCs  operating  based  on  subsidiary  requirements,  their  right  to  coverage  of  reasonable  legal  costs 
will  be  spelled  out  in  those  requirements.  The  wording  of  the  existing  requirement  to  provide 
necessary  training  “without  loss  of  wages”  for  members  of  EWCs  and  special  negotiating  bodies 
(SNBs) will be adapted to clarify that undertakings are to cover the costs and expenses related to such 
training.  Furthermore,  to  ensure  that  confidential  treatment  of  information  is  not  imposed  without 
justification, the preferred option will limit that possibility to cases where it is in the legitimate interest 
of the undertaking. For reasons of transparency and effective redress, management will be required to 
specify, upon request, the grounds justifying confidentiality or non-disclosure. 

(iv) Member States will be required as part of their transposition obligation to notify information about 
their  enforcement  framework  in  respect  of  rights  guaranteed  by  the  Directive,  with  a  view  to 
facilitating compliance monitoring and enforcement by the Commission, and the general obligation to 
ensure effective sanctions and access to justice will be reflected in the Directive. Financial penalties to 
sanction  infringements  of  transnational  information  and  consultation  rights  are  to  be  determined  in 
consideration of undertakings’ turnover, to ensure their proportionality and dissuasiveness. 

D.  Impacts of the preferred option 

What are the benefits of the preferred option? 

The currently 678 undertakings with active EWC agreements and their ca. 11.3 million EU employees, 
as  well  as  parties  to  future  EWC  agreements,  stand  to  benefit  from  increased  clarity  of  the  legal 
requirements, which is expected to reduce the risk of disputes and associated costs. 

By removing exemptions from the scope of the Directive, all eligible undertakings (ca. 3970) would 
be placed on an equal footing, simplifying and reinforcing the coherence of the regulatory framework. 
The  ca.  5.4  million  EU/EEA  employees  (and  their  representatives)  or  management  of  the  currently 
exempted  undertakings  with  ‘voluntary  agreements’  (323)  would  gain  the  right  to  request  the 
establishment  of  an  EWC  in  order  to  benefit  from  an  equal  application  of  minimum  rights  and 

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obligations  enforceable  under  EU  law.  Together  with  management,  they  could  also  opt  to  preserve 
well-functioning voluntary agreements. In the context of requests to establish a new EWC, employee 
representatives would have a clear entitlement to the coverage of their reasonable legal costs and more 
legal  certainty  regarding  management’s  obligation  to  initiate  negotiations  within  six  months.  The 
workforce  of  Union-scale  undertakings  would  also  benefit  from  the  objective  of  a  gender-balanced 
composition of EWCs, which is to be reflected in newly concluded or renegotiated EWC agreements. 
Improved  gender-balance  in  EWCs  would  improve  quality  of social  dialogue  and  may  contribute  to 
more equitable management decisions on transnational matters.   

During the information and consultation process, EWCs which are not yet entitled to a timely reasoned 
response from management to their opinion would gain such a right. This will help them to engage in 
dialogue  with  central  management  on  transnational  matters.  This  dialogue  is  also  facilitated  by 
clarifications  of  the  essential  concept  of  transnational  matters,  which  defines  the  scope  of  the 
information  and  consultation  activities  of  EWCs,  and  by  the  application  of  the  confidentiality 
obligation  solely  when  objectively  justified.  For  EWCs,  SNBs  and  employees’  representatives  who 
currently do not have effective remedies to enforce all their rights under the Directive, the initiative 
would improve access to justice. 

The  overall  increased  effectiveness  and  quality  of  transnational  social  dialogue  in  Union-scale 
undertakings  would  enable  a  better-informed  strategic  decision-making  by  companies  and  reinforce 
mutual  trust  between  management  and  the  workforce.  However,  the  analysis  of  such  benefits  is 
necessarily qualitative in nature, as they tend to be long-term and indirect and depend on intangible 
factors such as the established culture of employee involvement in the respective undertaking.  

What are the costs of the preferred option? 

In  the  currently  exempted  undertakings  with  ‘voluntary  agreements’,  central  management  could 
initiate negotiations of a new EWC or would have to initiate  them, if  so requested by employees in 
accordance  with  the  Directive.  This  will  entail  estimated  average  costs  of  ca.  EUR 148 000  per 
negotiation for those undertakings. Generally, during negotiations or renegotiations involving an SNB 
, undertakings will be legally required to cover – in addition to other costs incurred in the setting-up 
phase – also reasonable legal costs, currently not explicitly required in the large majority of Member 
States.  Where  necessary  to  align  existing  EWC  agreements  with  the  revised  requirements  –  e.g.,  to 
address the coverage of EWCs’ expenses for legal or expert advice and training – central management 
must engage in renegotiations. Average costs of renegotiations could not be reliably quantified as they 
are  highly  variable.  Evidence  suggests  that  a  re-negotiation  process  is  shorter  than  the  process  for 
setting up a new EWC, while  it may also require multiple meetings in complex cases. Based on the 
available evidence, it was possible to monetise certain costs linked to meetings between management 
and EWC representatives for the renegotiation of existing agreements (ca. EUR 18 400 per meeting). 
In  a  substantial  number  of  cases,  the  necessary  adaptations  of  EWC  agreements  could  be  agreed  as 
part  of  regular  renegotiations,  which  occur  on  average  every  five  years,  entailing  no  or  only  very 
limited  additional  costs  compared  to  the  baseline.  Undertakings  could  also  face  an  incremental 
increase in the costs of running an EWC (ca. EUR 300 000 on average per year per EWC under the 
baseline), for instance in relation to the obligation to provide a reasoned response to the EWC. Finally, 
in cases of  breaches  of  obligations, the  undertakings would face a risk  of  higher financial  penalties. 
The occurrence of legal disputes and application of penalties is however expected to remain low.  

For assessing the impacts of the policy options, available cost estimates have been presented in terms 
of average unit costs per option, in relation to the average turnover of the Union-scale undertakings. 

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When comparing the quantifiable  unit costs to the turnover of relevant undertakings and taking into 
account the projected trends, the economic costs of the preferred option are expected to be and remain 
negligible. Accordingly, no impacts on competitiveness of companies could be identified as a result of 
the preferred option 

Estimates of aggregate costs of the initiative  have been developed to indicate potential costs based on 
hypothetical  assumptions,  due  to  the  multiplicity  of  factors  influencing  the  operation  of  social 
dialogue,  which  cannot  be  reliably  estimated  (for  example,  it  cannot  be  reliably  estimated  in  how 
many undertakings with voluntary agreements employees or management would initiate a process for 
setting up of an EWC, or how many of the existing EWC agreements would be adapted as a result of 
this initiative). The fact that the Directive leaves broad freedom to parties to EWC agreements to tailor 
the information and consultation process as well as resources, training, etc. to their specific situation 
and  needs  makes  it  fundamentally  challenging  to  establish  a  causal  link  between  the  policy  options 
and specific economic or social outcomes.  

Will SMEs or consumers be affected? 

The  envisaged  policy  measures  would  not  apply  to  SMEs  and  no  indirect  effects  on  SMEs  are 
foreseeable. It is also highly unlikely that the possible marginal increases in the costs of setting-up or 
running of EWCs would be passed on to consumers. 

Will there be significant impacts on national budgets and administrations? 

All  Member  States  would  have  to  amend  their  legislation  implementing  the  Directive.  They  would 
need  to  collect  and  notify  to  the  Commission  information  on  how  EWCs,  SNBs  and  employees’ 
representatives  can  bring  judicial  proceedings  in  respect  of  all  their  rights  under  the  Directive.  This 
obligation  would  entail  limited  administrative  costs,  which  would  be  minimised  by  discharging  it 
through  the  standard  process  of  notifying  transposition  measures  via  the  available  IT  systems.  The 
initiative is unlikely to entail increased enforcement/adjudication costs for national authorities. 

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