Revised EWC Directive: Analysis by Tom Hayes

As we reported in last week’s newsletter, negotiators from the Council, Parliament and the Commission reached agreement on a revision of the EWC Directive on Tuesday, May 20^th.  The EWC Directive was first agreed in 1994, then revised in 2009. Last week marks the second time the original Directive has been rewritten. 

We have now seen the text of the agreement reached between the EU institution negotiators. The most significant change is the ending of the “Article 13 exemption”. The agreement reached between the EU negotiators is, in our view, a balanced package that will improve the workings of EWCs without putting unnecessary obstacles in the way of efficient decision making.

Executive Summary: 

• No injunctions. No GDPR-sized fines
  1. The final agreement avoids heavy sanctions (e.g., injunctions, large fines) to protect company decision-making and competitiveness. The “big ask” of the Parliament and the unions that EWCs be given the right to look for injunctions and that courts could impose GDPR-size fines did not make it into the final text.
• End of Article 13 Exemption:
  1. The longstanding “Article 13 exemption” (covering ~320 undertakings with pre-1996 arrangements) will be abolished.
  2. Once the revised Directive becomes national law (expected September/October 2027), employees in these undertakings can request the establishment of a Special Negotiating Body (SNB) to create a European Works Council (EWC).
  3. Transition from Article 13 to Article 6 agreements to occur via an SNB.
• Expert Involvement:
  1. All EWC agreements will have to include wording on the possible use of experts and their participation in meetings, including legal experts in the event of disputes that require the involvement of such experts. 
  2. The Directive’s Recitals say EWCs could be given a budget to cover such costs, should they arise. In the case of legal disputes, the possibility of access to national legal aid schemes is also mentioned. 
• Consultation Procedure changes:
  1. Consultation procedure is amended to require management to give the EWC a “reasoned” response to any opinion the EWC might offer on decisions under consideration. 
  2. However, there is no suggestion in the revised Directive that EWCs have any delaying or veto powers on proposed decisions. Management must provide a “reasoned” response to any EWC opinion on decisions under consideration.
• Subsidiary Requirements:
  1. EWCs operating under the Subsidiary Requirements will have the right to meet with management, in person, twice a year. Such EWCs will also have the right to invite their expert(s) to attend meetings with management in an advisory capacity.
• National Government Roles:
  1. Governments can set budgetary rules for EWC operations.
  2. Dispute resolution procedures must be transparent, clear, and easily accessible.
• Next Steps:
  1. Our detailed analysis will follow release of the official legal text. Discussions at our June meeting in Sitges. 
  2. Possible in-depth workshop on the new Directive in October. Contact Tom Hayes, if this would be of interest to you.

The bottom line…

The outcome of the trilogue negotiations contains no great surprises. It is largely in line with what we have been predicting for the past few years. The Council and the Commission had stated their opposition to injunctions and GDPR-size fines. Further, the biggest party in the Parliament, the EPP, was not in favour of these measures. Understandably so, as they would have been a significant brake on the ability on major undertakings located in the EU to make and implement decisions necessary to maintain and improve their competitiveness. 

What has been agreed between the institutional negotiators increases the need for precision and preciseness in EWC agreements. If EWC information and consultation procedures are set out in the agreement in a clear and straightforward manner and management respects those procedures, then decision making will not be adversely impacted or subject to unacceptable delays. 

In the next section we set out the major changes agreed between the negotiators. The text we have for now is the text of the agreement between the institutional negotiators. We will write a much fuller comment on the revised Directive when we have the final, official text. For now, we just highlight the major changes. 

We will have a full discussion on what all of this means at our upcoming meeting in Sitges.