BEERG Newsletter - EWCs: What is transnational?

A couple of weeks ago, the Belgium supermarket Delhaize announced that it planned to franchise the 128 supermarkets that it currently runs directly, impacting some 9,200 workers. At the same time, 247 jobs would go at its central office, with 72 new positions being created to manage the new franchises. Delhaize already has over 600 franchised outlets throughout Belgium. Delhaize is owned by the Dutch company, Albert Heijn. 

The trade unions representing the workers in the 128 supermarkets that are currently in direct Delhaize ownership immediately demanded that the decision be reversed and that the 9,200 workers continue to be employed directly. Strikes have closed many of the shops since the decision was announced. 

Leave to one side the question as to who decides the appropriate business model for a company in a social market economy, management, or the trade unions. The Delhaize decision to franchise out its stores could have been one of those decisions that the company’s EWC could have sought to injunct under the European Parliament’s proposals to revise the Directive. The fact that the Delhaize decision only has effect in Belgium would be irrelevant.

The Parliament’s proposals as to what constitutes a “transnational matter” reads as follows:

Matters shall be considered to be transnational where their potential effects concern, directly or indirectly, a Union-scale undertaking or a Union- scale group of undertakings as a whole, or at least two undertakings or establishments of the undertaking or group situated in two different Member States.

In order to determine the transnational character of a matter, the scope of its possible effects and the level of management and representation involved shall be taken into account. This includes matters which, irrespective of the number of Member States involved, are of concern to workers in terms of the scope of their potential impact, as well as matters which involve the transfer of activities between two or more Member States. Undertakings or establishments situated in different Member States are deemed to be concerned where it can be reasonably expected that a matter affecting one undertaking or establishment entails, or may entail in the foreseeable future, effects on undertakings or establishments in other Member States, including where decisions envisaged by an undertaking or a group of undertakings are taken in a Member State other than that in which those effects are produced.  (Our underlining). 

There are enough ambiguous phrases in this definition of “transnational” for practically any decision taken in a multinational company to be regarded as transnational or potentially transnational. Where an EWC asserts that an issue is transnational, the burden of proof to claim that it is not transnational falls on management. 

If there is a dispute between the central management and the European Works Council or the employees' representatives as to whether an information and consultation is to be carried out, the central management shall provide duly substantiated grounds in writing for the reasons why the information and consultation requirements under this Directive or under agreements concluded pursuant thereto do not apply, including the reasons that justify the absence of transnational issues.

In other words, every issue is transnational until proved otherwise. Those of us who have been involved with EWCs over the years know that the provisions from the Parliament’s proposals quoted above would be made use of “early and often” by EWCs and where management pushed back, they would refer the matter to the courts. 

If the EWC Directive is going to be rewritten, then precision and metrics are what is required, not nebulous, theological language about “transnational effects”.