Workers’ rights in the EU: strengthening social dialogue and collective bargaining

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The Commission started the second-stage consultation with the social partners in the member states on a possible revision of the European Works Councils Directive – the first-stage took place in April; so far the Commission received replies from eleven social partners. The general idea of the new consultation is towards further EU-wide actions on improving the three decades-old directive.

    Social dialogue and the involvement of workers (through the EU-wide Works Councils, EWCs) are important tools in securing workers’ rights in transnational and/or multinational companies; the European Pillar of Social Rights (principle 8) specifically underlines these rights. In those EU states where social dialogue is strong, economies are more competitive and socially resilient: such dialogues help reconciling economic and social objectives within the single market. First-phase consultation of social partners on a possible revision of the European Works Council Directive (Directive 2009/38/EC) took place in April 2023.
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    Information and consultation processes in companies play an important role in shaping economic transitions and fostering workforce’s adaptation, which is particularly vital in the ongoing EU-wide twin transitions, as well as in changes in the world of work and mitigation of the negative aspects of socio-economic impacts of inflation and high energy prices.
Besides, constructive dialogue can help ensure positive implementation of reform and restructuring processes, find balanced solutions and promote trust and partnership. Fostering such dialogue is essential to support efforts to actively promote and modernise the EU industrial fabric, notably in view of the recent Green Deal Industrial Plan and long-term competitiveness strategy aimed to tackle climate change and to uphold social standards.
More in the following European Commission Communications: a) “Green Deal Industrial Plan for the Net-Zero Age”, 1.02.2023, COM (2023) 62 final; b) “Long-term competitiveness of the EU: looking beyond 2030”, 16.3.2023, COM (2023)168 final.

Legal background
There is a comprehensive set of the EU directives on information and consultation of workers establishing protection rules in corporate’s restructuring processes: national authorities and social partners must respect these rules. Among the most vital directives are the following:
a) Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies, OJ L 225, 12.8.1998, p. 16–21;
b) Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community, OJ L 80, 23.3.2002, p. 29–34;
c) Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the member states relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses, OJ L 82, 22.3.2001, p. 16–20;
d) Council Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies, OJ L 225, 12.8.1998, p. 16–21.
e) Directive 2022/2041 of the European Parliament and of the Council on adequate minimum wages; OJ L 275, 25.10.2022, p. 33–47.

    Besides, the EU Quality Framework for anticipation of change and restructuring provides further support to employees, social partners and regional and national agencies to follow best practice in anticipating company change and restructuring.
More recently, the Directive on adequate minimum wages (adopted in 2022), constitutes another major contribution to support social dialogue as an effective mechanism for wage setting. The Council Recommendation on ensuring a fair transition towards climate neutrality also encourages the states (in close cooperation with social partners) to provide for the full and meaningful involvement, including information and consultation, of workers at all levels and their representatives as regards the anticipation of change and the management of restructuring processes including those linked to the green transition.

On “works councils”
The origin of information and consultation processes in large transnational companies, which has led to the presently applicable EU law, dates back to the 1980s with the very first proposal known as the ‘Vredeling directive’. However, this proposal was not adopted due to a lack of agreement between European social partners; several multinational companies voluntarily started creating transnational bodies to facilitate exchanges between management and worker representatives.
After analysing available experiences, and taking them into consideration, the Commission prepared a proposal for the first Directive on European Works Councils; hence, the first EWC directive was finally adopted in 1994 as a Council directive under the Agreement on social policy.
The directive has been created by the initiative of the employees; the councils may issue non-binding opinions to management on relevant transnational matters. The Directive requires the EU states to adopt adequate administrative and judicial procedures for the establishment and operation of national EWCs: about 20 new councils are created in the EU each year. Besides, around 1,000 companies have active EWCs, which is less than a third of the over 3,600 eligible companies.
The Commission is seeking social partners’ views in line with Article 154(2) TFEU; the process involves a two-stage consultation of European social partners for proposals in the social policy field based on Article 153 TFEU. Presently, the social partners may decide to enter into negotiations among themselves following the first or the second stage of the consultation.
Main source: Council Directive 94/45/EC of 22 September 1994 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees, OJ L 254, 30.9.1994, p. 64–72.
For more details: Article 4(2) of the of Directive 2009/38/EC on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees (Recast). On “recast”, see: ETUC and Business Europe (2008), Joint advice by the social partners on the European Work Council ‘recast’ Directive. See key documents in:
Basic analysis of the EU-wide employment legislation in: Catherine Barnard, EU Employment Law, 4th ed., Oxford 2012, p. 664.

    The Commission supports the European Trade Union Confederation’s work on EWCs through various grants program (e.g. the ETUC annual EWC conferences); other projects carried out by the sectoral ETUC events are also regularly co-financed to assist better functioning of EWCs in consolidating good practices of EWCs in particular corporate sectors.

    In 2018, the Commission evaluated the directive’s effect and concluded that the EWCs remained relevant “instrument” in ensuring and organising transnational social dialogue in multinational companies, while providing the states’ governance with flexibility to adapt it to national systems. However, the evaluation also found shortcomings, for instance regarding the consultation process of EWCs and the means for representatives to enforce their rights.

Suggested revision
The Commission proposed the following directions in possible updates:
= As soon as there are no unjustified differences in workers’ information and consultation rights at transnational level it would mean having one set of rules for all EWCs, in order to overcome the existing exemptions of certain companies from the common minimum requirements.
= The process of setting-up the EWCs becomes more efficient and effective: this would, e.g. further streamline the process following the request by employees to set up new EWCs and remove risks of unnecessary delays or of lack of resources for employee representatives.
= All EWCs can rely on an effective process for their information and consultation, as well as appropriate resources, for example by providing more certainty to the concept of transnational matters.
= The EU states shall enforce the directive more effectively, e.g. through effective, dissuasive and proportionate sanctions, as well as simplifying access to justice for employee representatives and the EWCs.
Reference to:

Commission’s opinion
Social dialogue is a key part of making the green and digital transitions a success, and for the EU’s social laws and systems to meet future challenges. When it comes to larger companies operating in more than one EU country, European Work Councils bring a clear European dimension to dealing with changes. Following the European Parliament’s legislative resolution and Commission’s consultations with social partners, there is scope for further improving the EWCs operation. In the second-stage consultation the Commission asks workers and employers for their views on potential areas for action as well as towards making a well-balanced proposal that protects workers’ rights, respects different industrial relations systems and preserves companies’ ability for agile and effective decision-making.
Dombrovskis V. Executive Vice-President for an Economy that Works for People – 26/07/2023

European Works Councils have an important role to play in facilitating the exchange of information and constructive discussions within large multinational companies. With the second-phase consultation, the EU wants to hear social partners’ views on how to make these avenues for exchange even more effective, ensuring the European Works Council Directive provides a solid basis for quality consultation and information processes.
Schmit N. Commissioner for Jobs and Social Rights – 26/07/2023
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