Confidentiality challenges for UK’s life sciences businesses under new EWC rules

The European Union’s revised directive on European Works Councils is moving towards implementation and it marks the biggest overhaul of the regime in more than a decade. It will mean earlier consultation, clearer obligations on information sharing, and greater enforcement risk for multinationals. For HR teams, it’s change that needs to be factored into planning now.

One of the most challenging areas is confidentiality. The revised directive toughens the test for withholding information and narrows what employers can legitimately keep back from their EWC. That presents real difficulties for sectors such as life sciences where sensitive material such as clinical trial data, intellectual property, research pipelines and regulatory strategy, forms the core of day-to-day operations. We’ll speak to one of our lawyers advising clients in that sector how to prepare for the new rules.

Under the revised directive, the threshold for withholding information has changed significantly. Employers will now need objective, defensible criteria to justify why a particular piece of information cannot be shared with their EWC, and the bar is set high: only where disclosure could reasonably be expected to cause significant harm will withholding be permitted. For many life sciences businesses that means material previously regarded as too sensitive to distribute such as IP documentation, early-stage trial results, or R&D prioritisation, may now fall within the scope of required disclosure.

That shift means businesses need to start planning how they will classify confidential information, how they will evidence any decision to withhold it, and how they will explain that reasoning to the EWC. It also raises practical questions about the secure transmission and storage of sensitive material once it is shared. Alongside this, both management and EWC members will need training so they understand the obligations, the risks, and the protections required when handling information of this type.

So let’s hear more on this. Ben Brown is advising a number of his clients in the life sciences sector to prepare for what’s ahead and earlier he joined me by video-link from Leeds to discuss it:

Ben Brown: “Well, of course, this is of critical importance to life sciences clients because their confidential information, like their intellectual property, like their clinical trial data, like their research and development pipeline, and all the things that go along with that, is clearly business critical, but the new directive doesn't account for that. It requires that employers provide what is currently, and used to be, considered to be so confidential as to not need to be disclosed. Actually, in the new world I think it's going to be anything other than things that can reasonably be expected to cause significant harm if disclosed, are going to need to be disclosed to the EWC in order for them to provide their opinions. So it's going to be really important for employers in this space to think now about the objective criteria that are going to be applied to decision-making around the withholding of what you would classify as confidential information. So, what are those criteria that you think actually demonstrate that significant harm would be caused, and how can that be evidenced because decisions are going to have to be justified, and I think we can expect EWCs to be more empowered to make applications for specific disclosure in a litigation sense, and they are going to challenge management in respect to decision making and respective evidence that goes behind decision making. Why are you using AI in this sense? Why are you moving operations from France to Spain? Those kind of things, where is the evidence, and I think ordinarily, confidential information protections could be invoked, but going forwards, that's not going to be an option. So I think making sure you've got your objective criteria in place is going to be really important. Making sure you are starting to build templates up to justify where withholding has taken place, I think is also going to be important. It's not too early to start thinking about how we're going to define that, how we're going to communicate and I think it's certainly not too early to start thinking about how we're going to protect ourselves in terms of the transmission of confidential information to members of an EWC, and that spans the tech-enabled solutions in terms of storage and transmission – is that safe? It includes training of the members to understand and acknowledge the issues and the importance of the protection and what they need to do to protect the information that is disclosed to them, and it's really training managers about the changing nature of the obligations that we're going to have. So I think HR have got a really important role in this in leading the change and implementing the change.”

Ben is currently helping a number of his clients to prepare for the revised directive. If you are one of the many businesses likely to be affected by these changes then please do contact Ben – his details are there on the screen for you. Alternatively, of course, you can contact your usual Pinsent Masons adviser.