Goodbye “Article 13 agreements” - A Summary of...

HR Policy Global Europe Summary: EU Commission’s Proposals to Rewrite the EWC Directive

Analysis

Goodbye “Article 13 agreements” is the key takeaway from the EU Commission’s proposals to rewrite the EWC Directive which were published today. 

However, the demand from the European Parliament, and the trade unions, that EWCs be given the right to seek injunctions to block management decisions has not been included in the proposals.

The exemption from the Directive for the 350 or so undertakings with pre-September 1996 information and consultation arrangements is to be ended. Employees in companies with such arrangements will now be entitled to submit requests to open negotiations to conclude EWC agreements within the framework of the Directive. This right will apply once the new Directive is transposed into national law. What happens with A13 arrangements in the interim is outside the scope of the Directive. But the requirement to negotiate an EWC agreement would not exempt management from honouring the A13 agreement during the negotiations. A lot will depend on the terms of the A13 arrangement, as well the disposition of the parties.

Undertakings with A13 arrangements will no longer be outside the Directive and even if a request to negotiate an EWC is not immediately triggered, the undertaking will be at risk of one been triggered at any time. Requests to open negotiation will follow the Special Negotiating Body (SNB) procedure set out in Article 5. The fact that the existing transnational employee representative body may not want to change things will not be a consideration.

Undertakings with Article 6 agreements will also need to bring them into line with the requirements of the new law. They will have two years to do so from the date management receives a written request to renegotiate from at least 100 employees, or their representatives, from at least 2 EU Member States.  Management can also initiate these negotiations. A failure to agree within the two years will see the Subsidiary Requirements apply. We think it is reasonable to assume that members of the EWC will initiate the process at the earliest opportunity if management has not already done so.

Once agreed, Member States will have just one year to transpose the new Directive into national law. 

National governments will be expected to impose, through the courts, proportionate fines on undertakings that breach EWC information and consultation requirements, but whether the breach was “intentional or negligent” will have to be taken into account. 

In future, an EWC will be entitled to a written response from management to any opinion it might offer after being informed and consulted about a proposed decision. 

Article 6 agreements must include provisions on the resources available to EWCs to engage experts and lawyers.  The nature and extent of these resources are purely a matter for agreement between the parties. 

EWCs working under the Subsidiary Requirements will be entitled to meet with management twice a year, and experts are to be given the right to attend the meeting between the EWC and management. 

There is some wording on confidential information but the right of management to class information as confidential or to withhold information on the grounds that its release would damage the undertaking remain. 

Summary of the Commission’s Proposals

The proposals from the Commission can be summarised as follows:

1. The exemption for voluntary arrangements that were in existence prior to 22 September 1996, the date of which the EWC Directive first came into force at national level, generally known as Article 13 agreements, is to be ended. Once the new Directive comes into force, employees in those companies will be entitled to submit “SNB” request as provided for in Article 5 of the Directive.
2. All existing Article 6 agreements will have to be brought into line with the new requirements within two years after they receive a written request to do so from 100 employees or their representatives, or else the Subsidiary Requirements will apply. Management itself can also initiate these negotiations.
3. The definition of “transnational” is amended to incorporate the language from Recital 16 of the 2009 Directive. 
4. The definition of “consultation” is amended to provide an obligation on management to give a reasoned reply to the EWC’s opinion, provided the opinion is provided within a reasonable time. The management response should be given prior to the finalisation of the decision under consideration.
5. Agreements should specific the resources to be made available for expert, legal, and training costs. Such costs must be “reasonable”. Unlimited legal costs are specifically ruled out. The financial resources to be made available are a matter for agreement between management and employees’ representatives during the renegotiation process.
6. There is some new wording around in the provisions on confidential information but the right of management to classify information as confidential and to withhold “super confidential” information is not impaired. Management will have to explain why information is being labelled confidential or is being withheld completely.
7. The Subsidiary Requirements will in future provide for 2 meetings a year between management and the EWC. 
8. The wording on “exceptional circumstances” is amended to take account that in future there will be two meetings between the EWC and management.
9. Under the Subsidiary Requirements, experts are given the right to attend meetings between the EWC and management. 
10. The wording that management need only fund one expert under the Subsidiary Requirements has been removed, but Member States may write budgetary rules governing such matters.
11. The first meeting between management and an SNB must be held within six months of the request being received. Otherwise, the Subsidiary Requirements apply.
12. There is a new emphasis on gender balance in EWCs, SNBs, and select committees.
13. Member States should make the financial penalties for breach of EWC agreements more stringent and proportionate to the size of the company. However, the demand from the European Parliament that fines should be up to 4% of global turnover has not been included. Further, in imposing fines, courts will have to take into account whether the breach of EWC obligations was “intentional or negligent”.
14. The demand of the European Parliament that EWCs be given the right to look for injunctions to block management decisions has not been included.
15. Once the text is agreed between the Council and the Parliament and legally promulgated in the Official Journal, Member States will have one year to transpose it into national law. However, the revised provisions will not come into force for a further two years to allow for A6 agreements to be brought into line with the new law.

Next Steps

The proposals published this week will now have to be considered by both the Council of Ministers and the European Parliament. Given that parliamentary elections are scheduled for June of this year, with a new Commission to be appointed towards the end of the year, it is unlikely that agreement on the Commission’s proposals will be reached until sometime in 2025, meaning the terms of the new Directive entering into force in 2026. However, this timeline could be shortened if the Council and Parliament were to reach an agreement before the Parliament is dissolved ahead of the June elections.

It is likely that the Parliament will now push to have the Commission’s proposals amended in line with “Radtke”. However, as the Council showed with the Platform Workers Directive, it will look closely as any proposals for changes in the law that could adversely impact European businesses and competitiveness. 

One Final Point

Where will these changes, or whatever changes are finally agreed, leave so-called “UK EWCs”, EWCs under UK law for undertakings that are headquartered in the UK? The changes in the EU Directive will distance authentic EWCs from their UK “pale shadows”. Will the UK government update its EWC legislation to keep in step? Probably not, as any attempt to put such legislation before parliament would show it up for the nonsense that it is. 

As EU and UK employment law continues to diverge and the gap grows wider by the day, the question for management will be this. If you have to update your EWCs agreement as a result of the revised Directive, do you want employee representatives from a non-EU country involved? If you are negotiating a new agreement through an SNB to replace A13 arrangements, then membership of the SNB will be restricted to representatives from EU member States.

Questions, not for now, but for when the rewrite is finally agreed by the legislators.

You can also find our comparison tables for the Commission's proposed EWC changes here