The threshold of 'transnationality' in EWC matters

By Pieter De Koster


The European Works Council ('EWC') is a body of workers information and consultation in the European Union.  Its material scope of authority is limited to transnational matters, i.e. matters that concern the Community-scale undertaking or Community-scale group of undertakings as a whole, or at least two undertakings or establishments of the undertaking or group situated in two different Member (Recast Directive 2009/38, art 1.4).  The transnational character of a matter should be determined on the basis of both the scope of its potential effects and the level of management and representation that it involves. This includes matters which involve transfers of activities between member states or which are of importance for the European workforce in terms of the scope of their potential effects, regardless of the number of member states involved (Recast Directive, pre-amble, consideration (16)).  

1. In addition to subject matter authority, where parties to a EWC agreement have a wide margin of contractual freedom to exclude matters from the EWC's scope of competence, the threshold of transnationality is the key distinguishing factor between national level bodies of worker participation and the EWC.  The EWC is supposed to only deal with matters of transnational relevance.

So far the ECJ has not been called upon to interpret this notion.  National courts, on the other hand, have done so on a few occasions.

2. Most recently a Dutch court in Rotterdam was called to answer the question of whether a local collective lay-off in Spain carried out by Alcoa could be considered a transnational matter which comes into the remit of the EWC (Court Rotterdam, summary proceedings, 27 November 2018).    

The court answered the question in the affirmative on different grounds.  First, it held that the collective lay-off in Spain which would affect about 20% of the group's overall headcount in Europe had an important impact on employment in Europe and hence warranted a discussion at EWC level.  Second, the Court considered that the local collective lay-off might eventually and possibly have an adverse impact on the group's shared services centre in Hungary, although the plans as communicated by the group did not raise that point at all.  Both these arguments seem unconvincing, not in the least because of their speculative nature. 

Finally, the third and last argument developed by the court appears to be more convincing:  the company itself had informed the EWC of the start of the proceedings in Spain, and so appears to have acknowledged that the matter was transnational.  Nevertheless, also this latter argument is subject  to challenge.  If the company simply informed the EWC (on the same day) of the start of the Spanish procedure on collective lay-offs, that may have been a matter of courtesy, but would in itself not be equivalent to the actual calling of an extra-ordinary meeting as would be required under the Directive (and under Alcoa's EWC agreement).   The Rotterdam court's reasoning is therefore open to scrutiny as regards its legitimacy in considerably lowering the threshold for matters to be considered as transnational.   

For the sake of completeness it should be noted that the company successfully challenged the EWC's claim that it had been informed too late of the intended lay-off plans. The Rotterdam Court rejected this claim on the basis that the process of informing the EWC coincided with the start of the local information proceedings in Spain, and that neither the Directive nor the Alcoa agreement spells out any priority in sequence (at EWC and national level).  

3. In this context, union-inspired legal doctrine often refers to a Belgian court decision of 2006 (British Airways) to support the view that even matters which have a direct impact in a single member state can be held to be transnational or cross-border (Brussels, Labour Court, 6 December 2006, summary proceedings).   In that particular case the company was sued in summary proceedings because it had refused to call on its EWC in a project of outsourcing  of client services at Vienna airport (involving 17 employees !).  The unions considered the matter to be transnational because the decision to outsource had been taken in one country with an effect in another member state.  The Brussels court readily followed that reasoning, thereby reducing the threshold of transnationality to an absolute minimum, i.e. the mere fact that a decision is taken at HQ level in member state A with effect only in member state B.  However, the legal value of this particular court decision must not be overestimated, since this judgment was rendered by default:  the defendant company failed to intervene in the  proceedings as it was unaware of  the writ of summons that had been notified on the eve of a week-end.  The judge in the Brussels court therefore based its decision only on the trade union's arguments as developed in their submissions, without any counterweight being given from a company point of view.

4. Whatever the true (precedent) value of certain court cases, companies should bear in mind that the notion of transnationality remains difficult to interpret (EU Commission Report on the Implementation of Recast Directive 2009/38, 14 May 2018).  

Companies should also be aware that projects of change which may appear to only involve a single country could nevertheless be seen to have a cross-border dimension – and hence arguably be subject to the information/consultation rights of the EWC - if there is (or possibly could be) an adverse effect on employment in affiliated companies elsewhere in the EU, or if transfers of activities are being organised.   

Obviously, the exact scope of the company's obligations in this context would directly depend on the wording of its agreement governing the establishment and operation of the EWC.  A carefully drafted EWC may thus – to a certain extent - help to determine the threshold of transnationality which governs the remit of the EWC.