Analysis: 2025 European Works Council Directive

What the EWCD says

Our thoughts and reflections…

Controlling Undertakings: Contractors, franchises and gig workers

The Directive replaces the word “employees” with “workers” and this could be taken to include contractors, franchisees and gig economy workers. 

It can be expected that in certain sectors, such as hospitality, unions will test what the wording means and to see if it can be interpreted to bring franchise operations within scope.  The Expert Group (see later) that will be set up to discuss transposition issues may offer clarity. 

We are not persuaded that the slight change to the wording is as far-reaching as some have suggested. Nonetheless, it is something to be watched carefully, and if you are in the hospitality business with franchise arrangements, then you should be thinking carefully about how you will deal with the issue should the situation arise.

The more precise legal definitions may vary across Member States and these will probably be refined through later court decisions.

Article 13 agreements are no longer exempt from the Directive.

As of the date of the transposition of the revised Directive into national law, likely by September or October 2027, this exemption will be removed. Workers in these companies will then be able to submit requests for the establishment of a Special Negotiating Body (SNB) to negotiate a new EWC agreement. Management will then have two years to negotiate a new agreement; if negotiations fail, the subsidiary requirements of the Directive will automatically apply.

The existing Article 13 agreement is not automatically terminated by the rewritten EWCD.  However, the existence of an Article 13 agreement will no longer be a defence against an SNB request.

Article 6 agreements can only be negotiated between management and an SNB. It will not be possible to negotiate the transition from the Article 13 agreement to an Article 6 EWC with the existing Article 13 forum. An SNB will have to be set up if a valid, written request is received.

The existing EWC, unless terminated, will run alongside any SNB negotiations. Whether the existing A13 EWC can be terminated will depend on the terms of the agreement and may also vary from country to country. (See addendum). 

Companies with  Art 13 agreements that are headquartered outside the EU, should take a decision now as to where they will locate their “representative agent” within the framework of the law for the purposes of negotiating with the SNB.

Management can choose any EU Member State it wishes as the site of its representative agent, provided it has a legal entity in the country. If the existing Article 13 agreement is subject to, say, Dutch law, there is no reason why the representative agent must continue to be located in the Netherlands. Pick the Member States that best suits your circumstances. 

There is no procedure set out in the Directive for appointing a representative agent. We advise that the CHRO write to the lead manager in the country of your choice (an email will suffice), informing them that the legal entity they head is being designated as the ”representative agent” should the need arise. 

It is always best to have a “paper trail” in these matters.

Article 6 agreements to be revised 

Article 6 agreements are EWC agreements negotiated within the framework of the Directive as transposed into the governing national laws. 

These agreements will have a year for discussions between the management of undertaking that has a negotiated EWC agreement and their EWC to allow them to be brought into line with the rewritten Directive. 

At the end of the year, if agreements have not been updated in line with the changes in the rewritten Directive, it will be open to 100 employees, or their representatives, from at least 2 EU/EEA Member States to ask for the establishment of an SNB to negotiate a new agreement.  

While the SNB is in place, the existing EWC will continue with business as usual. Management and the SNB have two years to reach an agreement, otherwise the Subsidiary Requirements will apply.

During the year after transposition, it will be open to management to negotiate the update with the EWC in accordance with provisions in the existing agreement for renegotiation. 

It will be up to companies to decide whether to take the short or longer routes. Much will depend on how happy the company is with current EWC arrangements and the potential disruption of having an EWC and SNB meeting frequently and concurrently.

Scope of information, consultation and transnational

The information and transnational definitions under the EWCD are further clarified.

On consultation, management must respond to EWC opinions with a “reasoned” written reply.

The definition of transnational in our view does not provide clarity on the matter and remains open to multiple interpretations.  It is likely that EWCs will push to establish that most issues are transnational. 

Nonetheless, Recital 5 makes it clear that “transnational matters” must have a substantial impact to fall within the remit of an EWC. “Substantial” is an important criteria that needs to be kept in mind.

The Directive does not support the slowing of decision making through delaying tactics, such as refusing to offer an opinion within a reasonable time.

We believe that agreements should define timelines for the information and consultation process, from the time an EWC is informed of an upcoming “exceptional circumstance”, through the time allowed for information and consultation, to an agreed time for an EWC to offer an opinion, and the time in which management must respond. “Substantial” should also be defined by, for example, a reference to the percentage of the workforce potentially impacted. 

EWC Funding

All agreements will be required to specify provisions covering the financing of experts. This includes legal experts who may be involved in dispute resolution. The Directive suggests that EWCs could be allocated a dedicated budget for such expert assistance.  

Agreements will also have to make provision for the funding for training.

Under the Subsidiary Requirements, national governments can set out “budgetary rules” governing the operation of Subsidiary Requirement EWCs and such rules will be important in establishing benchmarks against which Article 6 agreements can be negotiated.

Article 10 of the Directive says:

In so far as this is necessary for the exercise of their representative duties in an international environment, the members of the special negotiating body and of the European Works Council shall be provided with training without loss of wages.

Without prejudice to agreements concluded pursuant to Article 6(2), point (f), the reasonable costs of such training and related expenses shall be borne by the central management, provided that the central management has been informed thereof in advance.

National laws on this will most likely vary depending on the assistance currently given to trade unions and works councils at the national level. The solution may be to negotiate a budget with the EWC  to cover expert and legal costs.

Companies should assure that training is agreed between management and the EWC. We do not believe that the Directive gives EWCs, either as collective bodies, or individual EWC members, the right to make unilateral decisions on training programs. 

There is an apparent contradiction between the first and second paragraphs of Article 10. The first says “shall be provide with training”, but does not say by whom, while the second paragraph seems to suggest that EWC members can organise training unilaterally. 

For this reason, it is important that the issue of training be dealt with clearly and precisely in agreements. The training must be necessary to enable members of the EWC to do their job properly.   

Number of meetings per year

EWCs operating under the Subsidiary Requirements are granted the right to meet with management in person twice annually.

This will spill over as a minimum in most negotiated agreements. However, in agreements the format of meeting is negotiable - in-person, virtual, or hybrid are all possibilities.

It is important to underscore that it is only EWCs working under the Subsidiary Requirements that are entitled to two in-person meetings a year. Negotiated agreements obviously need to provide for at least one meeting a year, but how that meeting is organised is open to negotiations. 

Likewise, whether there are additional meetings is open to negotiations, as is the format of such meetings. 

Experts

EWCs operating under the Subsidiary Requirements can invite experts to attend meetings with management in an “advisory” capacity, including “exceptional circumstances” meetings. 

There is no limit on the number of experts that can be involved. However, as already noted, national governments can determine budgetary rules governing Subsidiary Requirements EWCs and such rules can put limits on expert payments.

Attempts will be made to build this provision into negotiated agreements. 

Experts are not members of the EWC. They are there to assist members of the EWC in an advisory capacity. Their remit should be limited to offering comments on the information provided by management to the EWC, and this should not require extensive days of “preparation.” 

The mandate of EWCs as set out in the Directive is to be informed and consulted on basis of the information provided by management and offer an opinion on the impact of proposed transnational decisions on employees. 

Negotiated agreements should limit the number of experts that can be used and define their mandates precisely.

Links with local works councils and other bodies

The way EWC discussions relate to consultations on the same subject locally have to be defined in the agreement.

It is important to make it clear in the agreement that EWC and national/local consultations can begin at the same time and run independently of one another. 

Generally, local consultations will take longer than EWC consultations so it should be stressed  in negotiations on agreements that if the EWC wants its opinion to feed into national/local consultations then the EWC will need to deliver that opinion in a timely manner. 

However, national/local consultations are not dependent in any way on the EWC process. 

Communication

EWC members have the right to communicate to local representatives and where there are none, to the workforce.

This clause does not imply a right for EWC members to travel around Europe visiting sites. Communications between the EWC and works councils, or the wider workforce, should be set out in the agreement.

Where possible, internal company electronic means of communicating with employees should suffice.

Gender balance

The EWC should include proportional representation of men and women, if this is possible. However, the Directive accepts that this is an aspiration and that the selection of EWC members is governed by national law. Where an appropriate gender balance is not achieved the company’s workers should be given an explanation.

Note it is for the EWC to provide the explanation and not management. Management should avoid getting drawn into the selection of EWC members.

Confidentiality

The definition of confidentiality is extended to include reference to time and when the confidentiality of information lapses. 

Further, management must provide reasons for confidentiality decisions. 

Detailed discussions around confidentiality will be very much determined by what is set out in national law. We do not believe that the provisions in the rewritten Directive will prevent management labelling information as confidential or in withholding “super confidential” information. Management will simply have to explain its reasons for doing so. Best to wait for national law provisions on this matter. 

Digital meetings

Remote meetings can be utilised by agreement.

The trend for remote meetings has continued to an extent post COVID. Particularly for select committee meetings.

Other    than under the Subsidiary Requirements, beyond the annual meeting, the number and format of all other meetings is negotiable.

Special Negotiating Body (SNB)

SNBs will continue to be constructed as provided for in the 2009 Directive. Management must convene the first meeting with the SNB within six months of receiving a valid, written request otherwise, the Subsidiary Requirements apply. 

Management must schedule regular meetings with the SNB. 

Undertakings with Article 6 agreements of Article 13 Forums who receive an SNB request the timeline for negotiations is reduced to two years. 

For undertakings that do not already have an EWC, the timeline for negotiations with an SNB stays at three years.

What regular meetings will mean in practice is unclear but overt delaying tactics may be challenged. Holding a meeting every six months would seem to be reasonable. The Subsidiary Requirements provide for two meetings a year between management and the EWC, so six-month gaps between meetings between SNB meetings would fall into the same pattern. 

Because regular meetings have to be scheduled does not mean that management is constantly obliged to change its proposals on the terms of an EWC agreement. In our view, there is nothing to prevent management proposing an agreement at the first meeting with the SNB and making it clear that this is its “best and final” offer and it will not change no matter how many meetings there are.

At the end of the process, if no agreement is reached the Subsidiary Requirements apply. Nothing else can be imposed on management. In our view, the Subsidiary Requirements are better than a bad agreement. 

Undertakings open to an SNB request should put a plan in place now so that they can move quickly if they do get a request and be able to meet the six months deadline.  

Penalties

Penalties, as determined by national governments, for breach of information and consultation obligations, must be “dissuasive” and should take into account the size and turnover of undertakings. However, penalties should further take into account the nature of the offence and whether it was intentional and deliberate.

Disputes generally arise over matters of interpretation and large fines are inappropriate in such circumstances. 

What is required is guidance from courts or tribunals as to how the agreement should be interpreted in the future.

National laws will be important.

Disputes

National governments, in the transposing legislation, will have to set out clear and precise administrative and judicial procedures for resolving disputes that may arise between EWCs and management and notify these procedures to the European Commission.

This provision is included to make sure that issues that have arisen in several countries about the judicial procedures available for resolving disputes do not reoccur in the future.

It must be remembered all courts can do is to impose financial penalties, calibrated to the seriousness of the breach of information and consultations obligations.

They cannot set aside or reverse management decisions.  The European lawmakers explicitly rejected the trade union demand for EWCs to have the right to ask for injunctions.