EEF Response to DTI Discussion Paper on “The UK Experience of European Works Councils”

The EEF (Engineering Employers’ Federation) is the representative voice of engineering manufacturing and is a national federation of 13 regional Associations and ECIA (the Engineering Construction Industry Association). It has a growing membership of nearly 6,000 companies of all sizes, employing over 900,000 people, from every sector of engineering manufacturing, engineering construction and technology-based industries. The EEF’s response to the DTI discussion paper on “The UK Experience of European Works Councils” has been drawn up following consultation with members of the EEF’s Employment Policy Committee and discussions with some EEF members with practical experience of operating European Works Councils (EWCs).

General Comments

1. The practical experience of EEF members on the value of EWCs to their business is quite varied. Whilst a number of them have identified that it has added some value to their business, particularly in terms of enabling employee representatives to have a better appreciation of the way in which a multinational company operates and the issues it has to address, many others do not consider that, as yet, they have added much, if any, value to their business. Irrespective of their views on the value of EWCs to their business, all EEF members with EWCs consider that they are relatively expensive to operate and involve a considerable amount of management time and effort.

2. As a result of consulting its members, the EEF is firmly of the view that the evolutionary nature of the development of EWCs means that it is too early for the legislation about them to be changed. Accordingly, the EEF considers that the review of the EWC Directive that will be undertaken by the European Commission in the near future should not result in any changes being made to this Directive.

3. The reasons why the EEF considers that the EWC Directive should not be changed are:

a) The transnational nature of EWCs means that they involve management and employee representatives from a number of Member States which often have quite different employee relations systems, histories and cultures. These, together with their different languages, means that it will inevitably take a number of meetings of the EWC before the interpersonal relationships between management and employee representatives have developed in such a way that the necessary trust and confidence for effective and meaningful information and consultation has been established. Many EWCs have still only been operating for a few years and it is clear from our members that they are gradually evolving, both in terms of the way they operate and the issues that they discuss, as this trust and confidence develops. It would therefore be inappropriate for changes to be made to the EWC Directive whilst many EWCs are still in this initial period of evolution and development.

b) The practical experience of EEF members with EWCs is that there is no underlying demand from either management or employee representatives for changes to be made to the EWC Directive. To the best of our knowledge, there have been no significant differences or disputes about the operation of individual EWCs. Moreover, where management and employee representatives have experienced some difficulties with their EWC, we understand that these have been able to be resolved satisfactorily as a result of discussions between the parties.

c) At the moment, nearly two-thirds of the multinational companies that are technically within the scope of the EWC Directive have not received a formal request to establish an EWC from the required number of employees or their representatives. This would seem to demonstrate quite clearly that there is currently only limited employee support for the establishment of EWCs.

d) The imminent enlargement of the European Union with a number of new Member States joining in 2004 means that, for a number of existing EWCs, consideration will then have to be given to the inclusion of employee representatives from these new Member States for the first time. Many of these new Member States have very different employee relations systems, histories and cultures so that it will inevitably take a further period before these new employee representatives become fully involved in the operation of the EWC.

4. Whilst the EEF does not feel that the EWC Directive should be changed, it considers that the publication of some examples of “good practice” on various issues relating to the operation of EWCs, which identifies the different ways in which companies have handled them, would be helpful. One current issue on which it would be helpful to have some examples of “good practice” would be the way in which companies are seeking to integrate employee representatives from the Member States who will be joining the EU in 2004 into their EWCs.

Comments on the Specific Questions Raised in the DTI Discussion Paper

5. All the evidence from EEF member companies is that the way in which their EWCs were initially established and are now organised, together with the range of issues that they discuss, varies quite significantly from company to company. This is because they are largely dependant on and related to the individual company’s organisational structure and their employee relations history and culture.

6. The EEF does not consider that any changes should be made to the level of the Directive’s threshold especially as nearly two-thirds of the companies that are currently within the scope of this Directive have not received formal requests to establish an EWC from the required number of employees or their representatives.

7. The experience of EEF members is that the process of reaching agreement on establishing an EWC with a Special Negotiating Body (SNB) comprising a relatively large group of representatives from different Members States is almost inevitably a complex and time-consuming exercise that requires consensus to be reached with representatives who possibly have conflicting interests. As a result, the EEF does not consider that the period of time that is currently available for reaching agreement with a SNB should be reduced.

8. Those companies that have established EWCs under the Article 13 provisions in the Directive feel very strongly that they should be able to continue operating these agreements for all long as they and their employee representatives wish to continue doing so. They would have very serious concerns if, as is being proposed by the ETUC, these Article 13 agreements were automatically time limited as this would go against the very spirit of the Directive which gave employers and employee representatives the opportunity to reach an agreement that met their specific circumstances.

9. A number of EEF members have expressed some concerns about the practicality of undertaking effective information and consultation with the large number of employee representatives who are currently members of their EWC. As a result, the EEF would resist any increase in the maximum number of employee representatives. It considers that the best way of incorporating representatives from the Member States which are joining the EU in 2004 would be to re-allocate the existing number of employee representatives between Member States rather than automatically increase the number of representatives on the EWC which would inevitably make effective information and consultation more difficult.

10. In our experience, companies provide the employee representatives on their EWC with training on a number of different subjects which they feel will help their employee representatives to have a better appreciation of the company and the way in which it is managed so that more effective information and consultation can be undertaken. It is therefore not considered that there is a case for providing further rights in this area although this is a subject on which the publication of some examples of “good practice” might be helpful.

11. The practical experience of EEF member companies is that the way in which “experts” are involved in EWCs is quite varied and is based upon the agreement on their involvement that has been reached between the company and the employee representatives. The EEF believes that this is the correct approach to the involvement of “experts” and would therefore oppose any proposal to require the automatic involvement of “experts” in the setting up and running of EWCs.

12. The EEF considers that the requirement for sanctions for non-compliance with the provisions in the EWC Directive to be “effective, proportionate and dissuasive” is sufficient and would strongly object to the introduction of the type of prescriptive and more penal sanctions that have been put forward by the ETUC.

13. The EEF is firmly of the view that the EWC Directive and the implementation of the EU Directive on “Information and Consultation at National Level” should be treated as separate pieces of legislation, with the EWC Directive dealing solely with transnational issues, and that there should be no direct relationship between them. In particular, the EEF would be very concerned to ensure that companies with EWCs did not potentially have to face a hierarchy of information and consultation arrangements with issues being able to be automatically referred from individual sites to their EWC.

14. As indicated above, the EEF acknowledges that the involvement of employee representatives from the Member States which will be joining the EU in 2004 raises a number of issues. In our view, this important development is one of the reasons why it would be inappropriate for the EWC Directive to be changed. As we have argued in paragraph 11 above, we feel that the re-allocation of representatives between Member States, rather than increasing the number of representatives on the EWC, is the most effective approach.

15. As stated in paragraph 6 above, the EEF considers that the publication of examples of “good practice” could be helpful both for companies that already have EWCs and for those which are in the process of establishing them. Some issues on which examples of “good practice” might assist these companies are the training of employee representatives and the incorporation of employee representatives from the new Member States into an existing EWC.

16. The EEF does not consider that the UK legislation that implements the EWC Directive needs to be amended.