Newsletter - Revision of the EWC Directive: the EU Parliament strikes back?

We recently reported about the EU Commission’s proposal for a revised Directive on European works councils (Great expectations but limited outcome: on the EU Commission draft proposal for a revised EWC Directive, Newsletter, 13 February 2024) (‘the Proposal’).  As noted, many of the more controversial suggestions for revision, as proposed by the EU Parliament and the trade union movement, were not retained by the Commission.  

The ongoing legislative process now requires the different parties to find a compromise, to be finally approved by the EU Council.

In this context, the committee on employment and social affairs of the EU Parliament has come up with its report on the Proposal.  As could be expected, in line with the EU Parliament request for a thorough review of the EWC Directive of 2009 (An (un)expected revision of the EWC Directive underway?, Newsletter, 31 January 2023), the report challenges the Proposal on various accounts, and basically reiterates most of the initial claims for change.

These include matters which may have a considerable adverse impact on business, including

• the timeframe for setting up an EWC and concluding an EWC agreement before the subsidiary requirements kick in (brought back from 3 years to 18 months),
• the concepts of ‘transnationality’ (a decision in one country with effects in one other suffices), and ‘consultation’ (requiring a reasoned management response to any opinion issued by the EWC prior to adopting any decision),
• the central and unescapable role and responsibilities entrusted to the trade union movement (in negotiations, the operation of an EWC and disputes/conflict management alike),
• the restrictions on confidentiality of information (incl the requirement that a court order allows dispensation from disclosure of business sensitive info),
• the open-ended number of experts the EWC can use (incl in judicial proceedings), with commensurate explosion of the financial cost to be borne by management,
• -on remedies, the introduction of injunctive relief mechanisms (suspending management decisions in case of dispute),
• generally, on enforcement, the ban from public tenders and exclusion from public funding, but predominantly the introduction of financial penalties based on the GDPR financial sanctions mechanisms (2 up to 4% of the worldwide turnover of the group),
• the automatic abolishment of any legacy EWC agreements within 2 years after the deadline for transposition of the revised Directive, without any need for renegotiation.

The report is likely to be approved in the plenary session of the EU Parliament.  With these comments on the Commission Proposal, the full range of initial requests for revision of the legal framework of EWC’s – including the highly controversial enforcement mechanisms – is back on the table.

To be continued…..