EU Council Approves Stronger Rules for Employee Representation in Multinationals

Brussels (Brussels Morning) – The EU Council has approved a new directive to improve employee representation in large multinational companies. The European Works Council Directive will streamline and enhance the setup, funding, and protections for EWCs.

The EU Council has approved its negotiating position (‘general approach’) on a new directive that aims to make the representation of employees in large multinational companies more useful. The European Works Council Directive will alter the existing directive on European Works Councils (EWCs), making them more comfortable to set up, better financed and better protected. Current immunities from the application of the directive will no extended apply, indicating that all relevant companies will be subject to the exact rules when it comes to reporting and consulting employees. 

What Changes Are Proposed in the New EWC Directive?

EWCs represent European workers in extensive multinational firms that operate in at least two EU or European Economic Area (EEA) states. They are the major instrument for informing and consulting workers on planned decisions linked to transnational issues. 

The new directive aims to make the law governing EWCs clearer, more effective and more comfortable to enforce, including a more precise definition of transnational matters, stronger rules for setting up an EWC, and clearer and more rigorous requirements in cases where a company declines to provide access to information or demands that the information be treated as confidential. EWCs will also be ensured effective access to judicial proceedings to enforce their rights.  

Other offered changes include clarifications of the charges to be borne for EWCs by the company, greater gender balance among EWC representatives, and a prerequisite for companies to confer EWCs in a timely manner to make the data and consultation procedure of the EWC more practical, including by providing the EWC with a reported response before a decision is taken.

How Does the EU Council Aim to Strengthen EWCs?

In its general direction, the EU Council notes that the commitment to strive for gender-balanced membership of EWCs should not favour national laws and practices on electing and assigning employees’ representatives. It highlights that EWCs should be given sufficient time to communicate their views ahead of any judgment that might affect them, while also taking into account the urgency of the issue and ensuring that companies are not precluded from adopting decisions in cases where an EWC has not delivered its opinion within a reasonable time. 

What Are the Key Features of the New EWC Directive?

It strengthens conditions on access to judicial proceedings and (where relevant) administrative proceedings, including assuring that costs relating to lawful representation and participation are covered. It streamlines the regulations on penalties while maintaining the list of elements that can be taken into concern when deciding penalties, such as the size and financial position of the company, the gravity of the wrong, and whether the offence was intentional or negligent

In the next steps, once the European Parliament has approved its mandate, negotiations will start between the two co-legislators with a view to reaching an understanding of the directive. The new regulations will then be adopted following legal-linguistic revision, and member states shall transpose the requirements of the directive into national regulation within two years of its entry into force.