Out-Law News 1 min. read

EU proposes changes to works councils

The European Commission has proposed some changes to the European Works Councils (EWC) Directive, with the aim of improving the effectiveness of employee communication and involvement at a cross-border level.

Following a 2018 review of EWCs, this decision aims to address some of the difficulties that were found, such as a slow pace of creating new EWCs, poor communication with existing EWCs, and an absence of adequate solutions.

“In the past, European works councils did not play an important role from our experience. European works councils only exist in a few companies and even if they exist, their rights are limited to information and consultation rights,” said Lara-Christina Willems, employment law expert at Pinsent Masons.

The proposed changes cover several areas including the removal of exemptions, clarification of transnational matters and strengthening information and consultation processes, as well as improving gender balance and access to legal solutions.

The proposals seek to remove the exceptions that currently allow companies with prior cross-border information and consultation arrangements to avoid the EU EWC law. It is estimated that this exemption affects up to 320 multinational companies. The Commission also aims to provide a clearer definition of ‘transnational issues’ to prevent overlap between EWCs and national information and consultation bodies. Under the proposed changes, EWCs would be granted the right to express their opinion before decisions are made, with management being obligated to provide a timely response. They also include provisions to promote gender balance in EWCs, with a target of 40% of seats on the council to be occupied by members of either gender.

Member states would be required to notify the Commission about the procedures through which EWCs can initiate legal proceedings. Additionally, they must establish effective sanctions to be able to enforce the Directive.

The proposed amendments are also expected to have implications for multinational employers with European operations, particularly those currently benefiting from the existing exemption. The Directive would be applicable to employers who are inside or outside the EU.

Experts at Pinsent Masons said that the European Commission's proposals signal a significant potential shift in the landscape of transnational employee representation and consultation, and it will be crucial for affected stakeholders to closely monitor the progress of these proposed changes.

Employment law expert Sue Gilchrist said: “The European Commission now plans to strengthen the co-determination rights of the European Works Council. In particular, it is interesting that the member states will be obliged to put in place sanctions to enforce the Directive. This may increase the importance and impact of European Works Councils in practice.”

The Commission's proposals are subject to the EU legislative process, which involves consideration and potential amendment by the European Parliament and the Council of the European Union.

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