2025 EWC Directive …Plus ça change…

When I read Paul Dillon’s recent article in IRN on the current revisions to the European Works Council Directive (EWCD) I was left wondering if we were both reading the same text. 

The revisions currently being finalised through the European legislative process will mean some changes to the EWCD but they will not change the fundamental nature of EWCs, which is that they are transnational bodies which have the right to offer an opinion at the end of a consultation process, but that opinion does not affect management’s right to decide and act as it sees fit in the best interests of the business. 

Management must offer a written response to the EWC’s opinion, and that closes the process. It is neither “consultation with a view to an agreement”, nor any sort of codetermination. No amount of hype will change that reality. Yes, all EWC agreements are going to have to be amended, and that will take time and effort, but the required amendments will be incremental, not radical. 

Not what they wanted

Compare what the legislators have agreed with the demand from the European Trade Union Confederation (ETUC) here. This is its commentary on the opening position adopted by the European Parliament, which drove the revision of the Directive. You will see that most of the ETUC’s key demands never made it through to the final text.

Above all else, the unions wanted to give EWCs the power to apply for court injunctions to block proposed management decisions. The strategy is clear. As unions increasingly lack industrial leverage due to declining membership, they look to replace industrial leverage with legal leverage. If you don’t have the member support to deliver effective industrial action, then go to court. 

The unions wanted EWCs to be able to ask for injunctions if they “believed” they had not been properly informed and consulted. But you can’t go to court on the basis of a belief. You must show hard evidence that you were wronged in fact. The ETUC, and their European Parliamentary allies, made no attempt to define criteria that would have defined “proper” consultation. How then can EWCs claim not have been properly consulted if the law doesn’t define what proper consultation should look like? 

The unions believed that if they could get the right for EWCs to ask for injunctions they would then have the leverage to switch from “information and consultation” to “negotiations”. “Give us what we want, or we will go to court, repeatedly”.

Something that was never intended nor sustainable when the real locus of power in labour relations continues to rest at the national level. An EWC trumps the German works council … I don’t think so. Neither national governments nor the Commission were never going to buy into this. They didn’t, and it did not make the cut into the final text.

Fines

The second attempt to increase leverage was the union request for fines up to €20M or 4% of global turnover because an EWC believed it had been frustrated, and management did not take them seriously. In his article Paul says:

Crucially, member states are to be required to introduce “penalties which are effective, dissuasive and proportionate” in “cases of infringement of the rights and obligations deriving from this (sic) Directive.” 

In the case of financial sanctions, law in Member States “shall also (sic) take into account the annual turnover of the sanctioned undertaking or group or ensure that the applicable sanctions have a similarly dissuasive nature.”

However, he leaves omits the qualifying wording in the article that ties high penalties to the most egregious of management actions:

Member States shall take into consideration, when determining penalties, the gravity, duration, consequences, and the intentional or negligent nature of the offence.

Companies that wilfully refuse to honour their obligations should be fined. A proper system of labour relations only works if we all agree to abide by the rules. 

I have been working with EWCs since the beginning in the 1990s. I have been involved in the negotiation or renegotiation of over 100 EWCs, mostly in US-based companies. In all those years I am only aware of one case, and even this one is questionable, where management said: “We know we must consult the EWC on this but we are not going to do so.” It just does not happen. Why would you do something stupid and put yourself at legal risk when the consultation process is simply with a view to getting an opinion? As they say in US management-speak, it is a “no-brainer”. 

Disagreements generally arise over matters on interpretation, not wilful refusal. And you don’t impose €20m fines, or anything like it, over differences of opinion. And the traffic would all have been one way. There would have been no provisions for EWCs to be fined or sanctioned if they insisted on taking frivolous and vexatious cases.

Experts and Lawyers and “Justice”

Paul, as a consultant with the French-based business, Syndex, puts a lot of stress in his piece on access to experts and the right of EWC to pick their own expert. This is not new. It has been there from the beginning. Go and read the 1994 Directive and the 2009 Directive. 

What is new is that under the Subsidiary Requirements in the 2025 Directive the EWC will have the right to bring their expert to the meeting with management. 

As I see it, this will mean that management will review who it sends to the meeting and may well just leave it to lawyers, labour relations, and human resources folk. Why would those who run the business, the business leaders, have any interest going to a meeting dominated by experts or trade union officials with few members in the company? They won’t. Always be careful what you wish for. It may not turn out to be what you were expecting. 

Paul stresses the right of access to justice and payment for lawyers as if this was a major problem. It is not. There are maybe 1,100 EWCs. Many of these have been there for the past 30 years. In all that time there have been some 75 cases that have gone to the courts. And the majority of them were in the UK. 

I do not buy the union argument that the reason that there are so few cases is that EWCs were denied access to justice. The reason that there are so few cases is that nearly all EWCs actually work well. The relationships between EWC members and management in the vast majority of companies are good. And before anyone starts quoting ETUI EWC surveys to me, these are nearly always based on a self-selecting population of about 90-120 trade unions activists, out of more than 25,000 elected EWC members, most of whom are not union members. Surveys written up by union policy advisors most of whom have never been to an EWC meetings in their lives.

Ireland

It is an open secret that the “justice” clauses in the 2025 Directive are aimed fairly and squarely at Ireland because of the pigheadness of the Department of Enterprise, Tourism, and Employment (DETE) in refusing to accept that the existing Irish legislation was defective, even when challenged by the Commission. There are few such problems elsewhere. 

In fact, it was employers who were the first to identify the problem in Ireland and commissioned Kevin Duffy, the former chair of the Labour Court, to write a comment on the matter. The employers want a proper disputes procedure in Irish law and welcome the stress on this in the new Directive. 

Money 

Let’s me be clear about one thing. I and the companies I work with have no issues with making funds available to EWCs to take expert and legal advice when they need it. Within reasonable limits. My own preferred approach is to give EWCs a budget and let them manage their own affairs. They will soon realise what is value for money and what is not. 

But we will not agree to EWCs becoming a “cash box” for experts and lawyers. Europe is not France where trade union funds come from the extensive use of experts paid for by management through a 1% payroll levy and government subsidies in various forms and not from membership dues. 

EWCs exist to foster a culture of constructive social dialogue within large multinational undertakings between management and employee representatives. A dialogue that builds on a mutual interest in the success of the business. It is the employee representatives that are central to the process. Experts and lawyers should be little more than peripheral players, stepping up to the plate when things go wrong, which they mostly don’t. 

As I said earlier, I have assisted multiple companies to negotiate EWC agreements. There my own involvement ends. I have always refused to participate in EWC meetings because there is no useful contribution I can make. If management and EWC members need experts to explain their own company to them then that does not speak well of them.

But some experts on the employee side see themselves as “shadow” CEOs or CFOs, able to second guess management strategy, devise alternative business plans, and advise the EWC accordingly. Delusional. For the most part, these “experts” are nothing more than accountants who can read financial statements. And you don’t even have to be an accountant to do that.  

The European trade unions and their leading ally in the European Parliament, Denis Radtke, a German CDU members, a member of the centre-right EPP in the Parliament, and a former trade union official with IG Chemie in Germany, thought they could knock down the existing EWC house and rebuild it on new foundations of injunctions and GDPR-size fines. 

Instead, what they got was the house being repainted and the furniture being moved around a little. 

Plus ça change …