The European Works Councils – towards building transnational industrial relations by R UDOLF T RAUB -M ERZ Copyright© F RIEDRICH -E BERT -S TIFTUNG , 2001 First published by Friedrich-Ebert-Stiftung Philippines Office 1104 Corporate Tower Galleria Ortigas, Quezon City Philippines TEL .: 63-2-6377186 FAX : 63-2-6320697 E MAIL : fesphils@info.com.ph WEBSITE : www.fes.org.ph Printed in the Republic of the Philippines by P LUS S IGN Cover design and layout by D ORIS L OIS B. R IFAREAL ISBN 971-535-021-6

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS Contents Introduction ........................................................ 1 1 Industrial relations and the treaty of the European Union(TEU) ................................... 4 2 The legal framework for the establishment of EWCs ....... 7 3 The EWCs ........................................................... 9 3.1. THREE WAYS OF ESTABLISHING EWCS .............................. 9 3.2. EWC COVERAGE ................................................... 11 3.3. EWC RIGHTS ON INFORMATION AND CONSULTATION ................. 14 3.4. IN-BUILT IMBALANCES DUE TO DIFFERENT INDUSTRIAL RELATIONS AND LINGUISTIC BACKGROUNDS ........................ 16 3.5. SANCTIONS FOR NON-COMPLIANCE ................................ 17 3.6. THE VOLKSWAGEN-GROUP-EWC .................................... 18 4 Relationship between EWCs and trade unions: Co-operation or competition? .................................. 20 4.1. 4.2. 4.3. FORMAL MEMBERSHIP OF TRADE UNIONS IN EWCS .................. 20 CO-OPERATION BETWEEN EWCS AND TRADE UNIONS ................ 20 THE FUNCTIONAL DIVISION BETWEEN WORKPLACE REPRESENTATION AND COLLECTIVE BARGAINING .................... 21 5 More scope for workplace representation .................... 24 5.1. REVIEW OF THE EWC DIRECTIVE ................................... 24 5.2. THE EUROPEAN COMPANY STATUTE AND THE SCOPE FOR CO-DETERMINATION .......................................... 24 5.3. A NEW DIRECTIVE ON THE RIGHT TO INFORMATION AND CONSULTATION AT NATIONAL LEVEL ........................... 27 6 Summary and conclusions ...................................... 29 The European Union – some explanatory notes ......................... 32 Appendix: A: COUNCIL DIRECTIVE 94/45/EC OF 22 SEPTEMBER 1994 ON THE ESTABLISHMENT OF A EUROPEAN WORKS COUNCIL .......... 35 B: VOLKSWAGEN EUROPEAN GROUP WORKS COUNCIL: TEXT OF AGREEMENT 1992 ......................................... 46 Bibliography ............................................................... 51

INTRODUCTION Introduction T HE ONGOING DEBATE ON GLOBALISA tion(WTO). Turning back on history, tion covers a wide range of economic, re-empowering national governments, social and political issues, few of which or at least moving primarily through have been finally settled to the satisregional trade blocks are presented as faction of a majority. Critics are linking alternative paths. Their common depoverty levels and social inequality nominator is the re-use of protective indicators, which have been on the inpolicies. crease over the last decades both inside The social debate on globalisation societies and between countries, to glotakes place in two different arenas with balisation. Others blame on-going poone focusing on developing countries litical interference in market affairs for and the other on the fate of the welfare any negative social outcome. Argustate in developed countries. Despite ments in many cases sound like manithe different origins, the arguments are festations of’ideologically pre-fixed guided by similar questions: can social positions’ while empirical evidence on policy still be financed at the national positive or negative linkages of glolevel when economies open up for inbalisation with social indicators is often ternational competition? How will a not convincing or even forthcoming global marketplace impact on the na(Brown, 2000). tional capacity to improve or maintain Since the 3 rd WTO Ministerial Consocial standards? ference in Seattle in 1999, globalisation What matters most for developing has assumed a new political dimencountries, however, is the erosion of sion. There is now hardly any intertheir comparative advantage if labour national meeting of political leaders standards are imposed. A positive linkthat is not challenged by a global camage, so it is feared, will negatively impaign against the world trade regime. pact on their share in international A radical transformation is requested, trade. Labour standards are thus with demands however, which are conequated as protective measures from tradictory and hardly fit into a uniform the developed world to keep them out concept. Some groups go as far as to of trade. call for the abolition of the InternaThe ILO Declaration on Fundational Monetary Fund(IMF) and the mental Principles and Rights at Work of removal of the World Trade Organisa1998 takes these fears into consi1

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS deration. Instead of a wide spectrum of where. Competition develops between measures for labour protection, they national states due to cross-country include only so-called core labour stanvariations in labour protection. Stratedards whose universality is justified on gies to gain comparative advantages by both humanitarian grounds and fair offering cheaper labour will ultimately competition in international trade. lead to a race to the bottom. They relate to basic human rights and What is at the ground of both defair play and can be established withbates is the asymmetry in opening up out regards to level of economic dedifferent sectors of society to globalivelopment. sation. While economies are integrated Indeed, a look at the core labour internationally, social policy is left bestandards reveals that they do not conhind and continues to be the domain of tain any obligation for a re-distributive national states. National governments social policy financed through budgetare caught in a dilemma: either to push ary means. In the same manner, minifor economic success and leave the mum wages have never been part of social sector to deteriorate or defend the proposal. The core labour stansocial achievements and loose out in dards are of social-regulatory character the economic front. The call for‘gloand grant organisational and collective balisation of social justice’ tries to bring bargaining rights as well as requesting this asymmetry back into balance. the policing of the territory against Maintain economic globalisation but exploitation of child labour and the use with a human face. Global economic of forced labour. The compliance with competition rules must be regulated the ILO‘s core labour standards should within a global framework for social leave the developing countries with a rights. reasonable advantage in labour costs. Globalising social justice raises at In developed countries, the debate lot of new questions. Economic glofocuses stronger on a paradigm shift balisation is in many regards a process from the welfare state to the compeof negative integration, bringing down tition state. In deregulating domestic national barriers and doing away with economies and opening it up for interregulations. Social policy, however, is national trade, capital flow, and workbased on positive integration. New ers movement, individual governinstitutions will have to be built and ments are not only giving up on policy sovereignty will have to be transferred choices in the economic field but at the to international levels. International same time, reducing their capacity to bodies will have to be equipped with socially regulate their societies. One of sufficient resources and wield powers the consequences, critics point out is to enforce implementation even inside that national employment strategies national territories. Co-ordination rules are largely reduced to offer favourable in power sharing between national conditions for foreign investors. The governments and supranational instiargument of neo-classical economists tutions will have to be agreed. The becomes even more feasible: reduce same goes for all social rights based on labour protection to increase employcontractual agreements between social ment. Domestic firms are buying in, partners. seeking lower labour standards and The process of regional integration 2 threatening to relocate production elsein Europe is a special case of this de-

INTRODUCTION bate. While it has its own uniqueness, many of the issues are nevertheless pointing to the same structural contradictions of globalisation. Within its territory, the European Union(EU) is the most radical project ever undertaken in breaking down national borders and creating a single market. At the same time, the EU has been criticised as becoming an economic project with devastating social consequences. In recent years, some progress has been made to transfer the economic union into a social union. While there is a broad-based understanding that a European welfare state is not on the political agenda and any redistribution policy will remain – at least for the foreseeable future – a national or subnational affair, social-regulatory interventions are increasingly being called for. The European legislature has started to rule on workers rights that are granted beyond the national states and are transnational in character. There is no doubt that legislation on social rights at the European level is still hampered by the very nature that the European legislature is constituted(see special chapter on The EU; Streek, 1998). It is nevertheless clear that the EU is currently the most advanced region to search for social answers to economic deregulation beyond the national state. This brochure undertakes an analysis of the so far most radical attempt to protect labour with an institution that cuts across borders. The European Works Council(EWC) is a model to regulate the power of transnational companies through an EU-wide system of employees’ interest representation. Success or failure of the EWC will, to a great extent, influence how other components of industrial relations are transformed from a national to a European level. Trade unions have entered into a strategic partnership with EWCs. Their alliance will also impact on how they go about their own core business, that is giving collective bargaining a European face. 3

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS 1 Industrial relations and the treaty on the European Union T HE TREATY ON THE E UROPEAN U NION (TEU-Maastricht Treaty) which came into force on 1 st November 1993 is widely seen as a turning point for the integration process of Europe. The earlier focus of uniting Europe along the Single Market and the Economic and Monetary Union(EMU) was complemented with an agreement on social policy, thereby raising hopes that Europe would move beyond the economic platform and develop into a social union. The Social Protocol of Maastricht 1 introduced two essential innovations which opened legal and political space to push, in certain areas, for the Europeanisation of industrial relations. The first innovation refers to the process of political decision-making within the Community. A number of social policy areas were moved from unanimous voting in the Council of the European Union(The Council) to qualified majority decision. This limited the practice of blocking social progress through a national veto whenever a proposal did not fully correspond to the views of a single Member State. The second major change increased the leverage of the social partners at the Community level. The European associations of employers and employees were given the right to enter into contractual agreements. This created the possibility of legally acknowledging the results of collective bargaining at European level. Leaving aside the wider field of social policy and looking more closely at issues concerned with workplace conditions and representation of workers’ interest, the Social Protocol effectively distinguishes four categories of European interest in industrial relations. First of all, it draws a strict dividing line between aspects of industrial relations, which are given a European legal platform, and those which stay outside the competencies of the EU lawmaker and continue to be under exclusive national jurisdiction. The Social Protocol further qualifies industrial relations according to the political voting mechanism through which national authority is replaced by European legislation. Items transferred to majority voting in the Council are separated from those, still being subjected to unanimous decision-making. 1 The Social Protocol was first only annexed to the Maastricht Treaty due to the opt-out of the UK but few years later integrated into the Amsterdam-Treaty with the return of the UK. 4

INDUSTRIAL RELATIONS AND THE TREATY ON THE EUROPEAN UNION Furthermore, it creates a new category by applying the principle of subsidiarity. The social partners at European level, under due legitimacy from their national constituencies, may conclude community-wide rules for handling their own affairs. However, while the Council is expected to just acknowledge such bilateral agreements, it still holds veto power and may prevent them from becoming legally binding. The four categories of Communityinvolvement in industrial relations under the treaty on the European Union (TEU, Art. 137-140) are the following: Social legislation: Arena I Mode of transfer to European jurisdiction : The Council adopts through qualified majority voting and the European Parliament(EP) approves under the codecision procedure. Fields of social legislation : “…improvement in particular of the working environment to protect workers’ health and safety; working conditions; the information and consultation of workers; the integration of persons excluded from the labour market, without prejudice to Article 50; equality between men and women with regard to labour market opportunities and treatment at work” (Treaty of the European Union, Art. 137[1]) 2 . Social legislation: Arena II Mode of transfer to European jurisdiction: The Council holds legislative powers through unanimous voting with the Parliament having consultation rights only. Fields of social legislation : “… social security and social protection of workers; protection of workers where their employment contract is terminated; representation and collective defence of the interests of workers and employers, including co-determination…”(Art. 137[3]). Social legislation: Arena III Mode of transfer to European jurisdiction: Not existing. The Community is effectively barred from social legislation in the labour policy areas contained on a negative list. Fields of exclusive national legislation: The Treaty explicitly states:“The provisions of this Article shall not apply to pay, the right of association, the right to strike or the right to impose lock-outs”(Art. 137[6]) 3 . Social legislation: Arena IV Mode of transfer to European jurisdiction: European social partners conclude agreements between themselves. 4 The Council adopts the agreement as a European law. 2 The numbering refers to the new numbering after the incorporation of the Social Protocol into the Treaty of Amsterdam. See European Union, 1999, p.206. 3 The Treaty of Amsterdam makes a mild concession to this harsh refusal, by declaring in Art. 140, that the Commission shall encourage cooperation between the Member States in regards to “the right of association and collective bargaining”, the instruments of cooperation however being limited to making studies, delivering opinions and arranging consultations. 4 “Should management and labour so desire, the dialogue between them at Community level may lead to contractual relations, including agreement”(Art. 139[1]). 5

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS Fields of social legislation: Employers and employees have the right to negotiate cross-sectoral as well as sectoral European framework agreements. The new arrangement in class four of allowing social partners to conclude bilateral agreements and make them binding through a European law, which is adopted by the Council, depends very much on the goodwill of both sides. No instruments of pressure such as concerted actions are applicable. Some have called this new right to industrial self-governance at the European level“a restoration of the veto in social policy, wielded not by nation-states but, primarily, by organised employers”(Streek, 1998, p. 25). Indeed, since the Social Protocol was passed, employers proved to be very reluctant to conclude on anything of European-wide relevance. So far, the social partners, represented by the European Trade Union Confederation (ETUC), 5 the Union of Industrial and Employers’ Confederation of Europe (UNICE; private sector) 6 and the European Center of Enterprises with Public Participation(CEEP; public sector) 7 have signed only three cross-sector European framework agreements on parental leave(1996), part-time work (1997) and temporary employment (1999), a figure the ETUC considers by far too low. The ETUC, hold back by an unwilling counterpart, has long called on the European legislature, to provide statutory provisions, where employers resist negotiation. The Social Protocol sets the tone: issues of workers interest, deemed to be of lower relevance, like information and consultation, were handed to the Council for majority voting; issues of middle-ranked relevance, including co-determination, are subjected to unanimous voting; and those ranked highest like bargaining on wages and the right to strike continue to remain outside the competency of the European legislature. 5 ETUC represents 74 national trade union confederations as well as 11 industry(sector) federations from 34 countries. 6 UNICE has as members the 33 principal business federations from 27 European countries. 7 The full name is“European Center of Enterprises with Public Participation and of Enterprises of General Economic Interest”. CEEP lists as members 354 enterprises and groups of enterprises from 17 countries. 6

THE LEGAL FRAMEWORK FOR THE ESTABLISHMENT OF EWCS 2 The legal framework for the establishment of EWCs T HE M AASTRICHT T REATY AND THE (b) Attempts to provide a legal base for annexed Agreement on Social Policy workplace representation go back proved to be a decisive step to finally to 1970, but never materialised ungive reality in 1994 to the EWCder the objections of employers’ Directive. It was the first time in the associations and some EU-Member field of social policy that European States to any form of statutory legislation created a European instirights. It was the opening of the tution. This first legislation on any track through qualified voting that transnational institution of industrial gave birth to the legal instrument. relations was unique in several ways: Sidelining the more vigorous pro(a) EWCs antedated the passing of the EWC law. The first Europe-wide company council was set up in 1985 at the French undertaking, Thomson. Other French companies followed before Volkswagen in 1990 introduced this new concept to cedure of unanimous voting in the Council did not come without a political prize: participatory rights at board level, including co-determination, had to be struck out(see chapter on European Company Statute). Germany. Nevertheless, the prac(c) The EWC-Act did not come as a Retice of establishing EWCs was not gulation but through the‘milder’ yet on a broad track and the law legislative instrument of a Direcdid not just formalise what had tive. A Regulation lays down the already become an unstoppable same law throughout the Commutrend. EWCs were still scattered nity; it is binding in its entirety, between a few multinational comdirectly applicable, and puts down panies and it was the legal act itself, a unified set of rules to be followed or the threat of it, which brought by all Member States in the same the breakthrough on a wide scale. manner. A Directive is binding as to The Commission, under pressure the objective to be achieved but from critics for the one-sided Euleaves it to the national authorities ropean market project, needed a to choose the form and method. It success story on the social front and does not supersede the laws of the played the role of a lobbyist for Member States but places the counEWCs(Lecher, Nagel, Platzer, 1999, tries under the obligation to transChapter 5). pose their Community obligation 7

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS into domestic law. Instead of leading to the unification of laws, it provides for harmonisation of objectives while maintaining diversity in form. Giving birth to the EWC-Act as a Directive instead of a Regulation was the second political prize that had to be paid in order to reach consensus in the Council. In transposing the Directive into national law, the Member States had the freedom to insert national preferences. This resulted in a wide range of rules, in particular, the mode of selecting workers’ representatives and brought with it a large variety of different EWCs. (d) Subsidiarity is not only manifest in the selection of the legislative instrument; it is in the same manner expressed in the preference of contractual rights to statutory rights. To further overcome political resistance from employers and some Member States, priority had to be given to voluntary agreements between labour and management, and statutory rights became applicable only as a fallback option after negotiations failed. The Directive was adopted by the Council of Ministers on 22 nd September 1994. The UK originally opted out of the agreement but later joined in 1997. The Directive was extended to include Iceland, Liechtenstein, and Norway in 1995. The Commission set September 1996 as the deadline for transposing the Directive into national law – September 1999 for the UK – but more than half of the Member States delayed the process. It was only in 2000 when the last two countries, Portugal and Luxembourg, finally succeeded. Adoption through an act of parliament was the preferred approach for transposition(12 Member states); two countries settled for social partner agreements(Belgium, Italy) and one decided by presidential decree (Greece)(ETUC, 2001). 8

THE EUROPEAN WORKS COUNCIL 3 The European Works Council(EWC) 3.1. Three ways of establishing EWCs a. ARTICLE 13 The Directive offers three approaches for establishing EWCs. The first possibility was nothing more than an acknowledgement of existing EWCs. As the Directive became legally binding on 22 nd September 1996, all agreements concluded between management and employees before that date remained valid. Article 13 mentions that the EWC-agreement must cover the entire workforce of the European undertaking and must provide for transnational information and consultation of employees but remains silent on any further provision. In particular, no criteria was attached on the negotiation procedure or the coverage and content of information and consultation. On expiry, the agreement was open for joint renewal. If renewal failed, the Directive became applicable. This generous rule of placing EWCs outside the legal provisions of the Directive proved to be popular with employers. At no other period was the rush for management to initiate the establishment of EWCs greater than in the years from 1994 to 1996. b. ARTICLE 6 The second path for establishing EWCs is outlined under Article 5 and 6. Priority is again given to negotiated settlements and the Directive is short of substantive provisions for the functioning of EWCs. Instead, a special negotiating body(SNB) is created to represent workers’ interest and to negotiate terms and conditions of the EWC with central management. The Directive lays down procedural requirements for the elections of SNB members and the assignment of powers to the parties. On its own initiative or on the written request of at least 100 employees, the central management has to initiate discussions with the SNB, consisting of three to 17 workers’ representatives. Members of the SNB are elected or appointed according to national law. 8 The central 8 The transposition of the Directive into national law has led to a wide variety of rules, applied in deciding on membership in SNBs. Three procedures are dominant. Membership is either decided through secret balloting, selection by works councils or nominations from Trade Unions in cases, were they have a formal role in workplace representation, such as in Italy. National provisions further vary according to whether they include clauses on gender equity(Germany and Austria) and representation for manual and white-collar workers(Luxembourg) as well as participation of experts. 9

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS management and the employees’ SNB both employers and employees and then negotiate on the scope, composicreate minimum standards for Article 6 tion, function and procedure, financial agreements. resources, and terms of office of the The Default provisions contain a EWCs. No material standards are set as definition on the right of information minimum for the outcome and the parand consultation, spell out minimum ties are given freedom to reach agreerequirements for meetings, and specify ment at whatever level they feel fit. the funding of the EWC. They are specified as follows: c. ANNEX: subsidiary requirements (minimum standards) The EWC will be composed of a minimum of three and a maximum If however negotiations fail – that of 30 members. The composition is, if central management does not has to reflect the number of councommence negotiations within six tries where the companies have months after employees’ request or subsidiaries as well as the workthat negotiations are not concluded force of the respective establishwithin three years, the third path ments; becomes compulsory. EWCs are esEWC members have to be employtablished automatically through‘subees of the company. They will be sidiary requirements’ outlined in the elected or appointed according to Annex. national law or practice; The EWC has the right Chart 1. TIMETABLE FOR THE ESTABLISHMENT OF EWCs AS OUTLINED IN THE DIRECTIVE to meet with central management once a year. In the case of exceptional circumstances, the EWC is entitled to call for an extra-ordinary meeting; The central management has to inform on “…the structure, economic and financial situation, the probable deIt is true that the Directive does not velopment of the business and of set any minimum standards and gives production and sales, the situation prominence to voluntary agreements and probable trend of employment, ‘at whatever level’. The existence of investments, and substantial default provisions however exerts changes concerning organisation, pressure. The SNB‘owns’ the fall-back introduction of new working meposition as a threat to be followed autothods or production processes, matically after three years of failed transfers of production, mergers, negotiations, thereby pushing managecut-backs or closures of underment into a voluntary agreement takings, establishments or impor‘close-by’. In this regard, the subsidiary tant parts thereof, and collective requirements work as a rallying line for redundancies”; 10

THE EUROPEAN WORKS COUNCIL The EWC has the right to deliver an The figure of 1835 companies may opinion“…at the end of the meetlook modest if compared to the worlding or within a reasonable time”; wide count of TNCs, which UNCTAD The central management has to puts at 63.000. The EWC-Directive, meet the operating expenses of the however, focuses however on bigger EWC. This includes funding of one conglomerates. It is not too farfetched expert. to assume that a majority of the 1000 3.2. EWC coverage largest TNCs world-wide do have at least two large business outlets in the EU. All of them are now faced with EWCs have to be established in installing a new model of workers’ inte“community-scale undertakings” with rest representation. two workforce-size thresholds: TransThe EWC-Directive is in the same national companies should have at way impressive if it is assessed against least 1,000 employees in the EU and at the number of workers concerned. least 150 employees each in two MemTotal employment in the companies ber states. Companies, having headaffected reaches some 16 million workquarters outside the EU are covered as ers. This represents about 10% of the well. The Directive thus stretches out to whole workforce in the EU(Kerckhofs, all US, Japanese and other non-Euro2001, p.143). pean multinational companies meeting The development of European the threshold numbers with their EUWorks Councils since the early 1990s is business. shown in the following Chart. The The most comprehensive data availnumber has risen from an insignificant able on the number of companies and few in 1990 to 600 by the end of 2000. workers which fall under the EWC-Directive is availChart 2. able from the‘Multinationals Database 2000’ of the DEVELOPMENT OF EUROPEAN WORKS COUNCILS numbers up to the present day European Trade Union Institute(ETUI). ETUI lists 1835 transnational companies that are affected by the new legislation. In view of the recent wave of mergers and acquisitions, it is however not easy to establish an exact figure and to keep proper accounts on all the changes in the corporate sector. 9 Source: Lecher et. al., 2001, p. 46 9 Between 1990-1998, some 6000 to 7000 mergers and acquisitions(M&A) took place annually, involving an enterprise of the EU. In 1998, 50% of the 7600 M&A operations were of national character, 16,5% were cross-border investments involving only European companies while the remainder was shared between European enterprise investing in non-European companies(16%) and companies from outside the EU targeting European businesses(17%).(European Commission, 1999) 11

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS The big jump in the middle of the decompliance. The following reasons may cade shows the impact of the legal have some relevance: pressure. Before the EU passed legislation, only a few companies had voluntarily settled for an EWC. Then came the Directive with its policy of stick and carrot. The generous rule of Article 13 of placing EWCs outside the legal provisions of the Directive proved to be popular with employers. Some 322 agreements were concluded in 1996 alone(Kerckhofs, 2001, p. 137). At no other period was the rush by management to initiate the establishment of EWCs greater than during this phase. When the door for Article 13 agreements was closed in September 1996 and new bodies had to be negotiated under Article 6, the structure expanded on a considerably lower pace. The same legal pressure is confirmed by comparing the types of agreements. Altogether some three-quarters EWCs do not have to be established if the concerned SNB declares with a vote of two-thirds that workers have no interest. This is not likely to be a frequent case; Management may argue that the delay in transposing the Directive into national law implies an extension of the deadline. This argument may be applicable to those cases where negotiation has just been initiated; Workers in some countries may be unfamiliar with works councils and/or feel discouraged by their Government or their employers to press for them; The sanctions for non-compliance set by the individual countries may be too low to be a deterrent to all employers. of all EWCs concluded up to 2000 and Looking at EWC-coverage from the documented by the European Trade size of a company reveals an interestUnion Institute(ETUI) represent Artiing though not surprising trend. Large cle 13 agreements. Only a quarter was companies have a significantly higher finalised through negotiations between compliance-rate than smaller establishmanagement and an elected body of workers’ repreChart 3. sentatives under Article 6. While the number of EUROPEAN WORKS COUNCILS INSTALLED IN TRANSNATIONAL COMPANIES EWCs installed is impressive, the number of companies defaulting is even higher. Chart 3 indicates that two-thirds of all the companies covered still have to comply. Judging from this high rate, it may take many more years for the Directive to be fully implemented. No empirical study Note: No summing up possible as some TNCs may have more than has yet been made to exone EWC, especially if constituted through merger. Source: European Trade Union Institute(ETUI), Multinationals, 12 plain the high rate of nondatabase 2000.

THE EUROPEAN WORKS COUNCIL Chart 4. EWCs INSTALLED IN TRANSNATIONAL COMPANIES BY COUNTRIES Note: Others include Portugal, Liechtenstein, South Africa, South Korea, Hongkong, Malaysia, Kuweit, Bahrain. Luxembourg is not listed. Source: Own computation based on European Trade Union Institute(ETUI), Multinationals, database 2000. ments. Of TNCs with less than 3000 of the conglomerates. Germany, UK, employees, only 20% have installed an France and Netherlands are the big EWC. On the other side, companies players, sharing between them some with more then 10000 workers are 70% of the multinational companies of mostly following the order of the DirecEuropean origin. tive. In early 2000, 62% had already The US-based undertakings are by signed an agreement(Kerckhofs, 2001, far the strongest group of the nonp.143). It is reasonable to assume that European segment, followed with within a few years, the largest players some distance by the Japanese. Comwithin the TNC-sector will reach a panies from Africa, Arabia and Asia near-complete coverage. (excluding Japan) have found their The high compliance rate of comway to the single European market but panies with large-scale employment their joint share, however, is below one changes the overall picture dramatipercent. cally. Together, the EWCs that were Chart No 4 groups the countries installed in early 2000 represent some according to their performance in im10 million employees. The compliance plementing the Directive. A listing of rate of companies may have been a countries into“good performers”, mere third; the complicance rate if ex“average performers” and“bad perpressed in workers covered was alformers” gives the following pattern. ready a high 60%. Only Norway is doing remarkably It is clear that the EWC-law impacts well, having established EWCs in two in particular on the leading economies. of every three companies. Belgium, A look at the distribution of companies Finland and Japan could be added to by countries reveals the following the group of above-average or“good picture: European enterprises are the performers”, having installed EWCs in dominant group making up some 80% 40% or more of their companies. 13

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS On the negative list(“bad perdecisions made by the company in one formers”: 20% and below) are Canada, state, affecting the workers of the comSpain and Portugal from South Europe, pany in another country, are commuIreland(who has attracted foreign dinicated to the whole workforce. The rect investment with a liberal economic rights, associated with EWCs, are lipolicy) and finally, all the transnational mited to information and consultation. companies with headquarters in Africa, The Directive does not confer rights of Arabia and Asia(excluding Japan). The co-determination or collective barlatter group, together with Portugal, gaining. may be better called zero-performers as The Directive does not contain a none of their companies have installed definition on information but outlines any EWC. However, their overall the meaning of consultation.“‘Consulweight is marginal due to the very tation’ means the exchange of views limited number of companies. and establishment of dialogue between All the big countries with high employees’ representatives and central numbers of enterprises belong to the management or any more appropriate group of“average performers”(20level of management”(Article 2f). 40%). Germany is on the lower end of Some clarifications on content and this middle segment with a performform are written into the Annex(Sect. ance rate of only 25%. This is somehow 2 and 3), thereby leaving it to the surprising as Germany’s companies transposition rules of the Member would appear to be best prepared for States or the negotiating parties of new structures in industrial relations, voluntary agreements as to how far to having half a century of experience follow these guidelines. A majority of with national works councils and praccountries appears to have leaned totising a highly sophisticated system of wards these formulations(ETUC, co-determination. The German delay 2001). may point to some reluctance at the The meaning of the right to receive level of central management if not outinformation and to be consulted in the right opposition. EU-Directive is rather vague. InformaThere is no significant difference in tion can be of general character and it attitude if Europe is distinguished from can be released at a time when the use other regions. US and Japanese comof it is meaningless. Consultation usupanies are dominating the group of ally implies that the right to forward non-European investors and they have one own position is granted, even followed the same path as their Eurothough there is no obligation for mapean competitors. nagement, that the points raised by workers representatives have to be 3.3. taken into consideration and become Rights on information and consultation part of the decision. While the practical relevance of these procedures mostly depends on The Directive defines an EWC as“a the openness and interest of manageprocedure for information and conment, to have employees’ structures sulting employees”(Article 1.2). The participating, some conditions are deEWC receives information from macisive in regard to the quality of the 14 nagement for employees to ensure that exercise.

THE EUROPEAN WORKS COUNCIL a. TIMING AND CONTENT Preparatory meetings ahead of the pleOF INFORMATION nary session can make the meeting The timing of information, the flow and the material content of it easily becomes a matter of dispute in a situation when it matters most. These with management much more focused and considerably reduce the time needed for workers’ representatives to come up with a joint position. situations arise, when a company decides on employment issues, be it to lay off workers, to re-structure the workforce, to merge with competitors, or to relocate parts or the whole of its business to another country. Putting the EWC into the proper picture at an early stage may allow workers to mount a defence if necessary. Releasing only partial information, releasing it at late time or keeping employees completely unaware, are tempting management strategies when it comes to decisions impacting heavily on employment affairs. c. ACCESS TO EXTERNAL EXPERTISE AND EDUCATION The right to information implies, as some may argue, the right to understand. EWCs consisting of elected representatives of the workforce are at a disadvantage when it comes to analysing information of a complex, legal, economic or technical nature. Training in the relevant fields is needed as much as cultural and language training is needed to cope with the diverse background of its members(see below). In the same way, EWCs need access to expertise – internal, from company and b. INTERNAL WORKING external from independent parties and STRUCTURE OF EWC individuals – in further clarifying on In transposing the Directive into national law most countries concluded issues and developing sound counter proposals. on single annual meetings as a mid. CONSULTATION DURING nimum requirement. They only give PLANING STAGE allowance to additional sessions where urgent matters arise. In most cases it is left to negotiations to approve on two main elements for the internal division of labour: preparatory meetings of all EWC-members ahead of the annual meeting with management and the setting up of an executive committee. The advantage of both structures are obvious: an executive committee will handle the affairs between annual events, provide management and Consultation becomes only meaningful if it goes beyond reverse information. Voicing an opinion by workers’ representatives after management has taken its final decisions is not substantially different from remaining silent. The right to consultation must be linked to the planning stage, when the decision process still allows new options to be considered and proposals from the EWC can still make an impact. workers with a permanent communication platform and may be used as a e. LINKING EWC WITH WORKFORCE substitute body in cases, where inforBecoming a consultative body mation and consultation is required but means more than being the recipient of a meeting can not be held with the full information and sharing views with EWC due to time or other constraints. management, even if this is done in 15

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS good time and at competent levels. An the largest segment of the total workEWC, in order to develop from a pureforce is employed. There is mostly ally information forum to a consultative ways a home-team inside the EWC that body must attain autonomy from maenjoys various advantages such as supnagement and put forward demands plying the rules of business and the which have been collectively elabomother tongue for communication. rated within the EWC but are linked Such factors of tensions must be overthrough the national EWC members come to avoid the formation of factions into the national council structures and and rivalries. the workforce. If no bottom-up apThe majority of EWCs are faced proach of voicing concerns and arrivwith a language problem. In most caing at positions is developed, the EWC ses, the national language or English is will not acquire the status of a legitiused for oral and written communimate industrial relations actor that is cation. Translation is usually provided, able to add an additional European the extent of which may depend on the component of workers interest repreagreement or the interest of the masentations to those existing at national nagement, but members not fluent in level. the language of communication are at a disadvantage, in particular during 3.4. informal contacts. A lot of US-American In-built imbalances due to different industrial relations and linguistic backgrounds and Scandinavian companies request sufficient command of English and are threatening to ease out translation services after an initial period. Language training and the resources provided for EWCs have built-in imbalances due it are major ingredients for the smooth to the fact that their members act withoperations of EWCs. in different industrial relations systems There is as well an imbalance in the at home and come from different sociourgency to which the EWC is needed. cultural and linguistic background. In many cases, home-teams have an Creating cohesion and a common work established relationship to central maculture may not be easy and these diffinagement through national represenculties can impact negatively on its tational arrangements, thus relying less capacity as a consultative body. These on EWC-procedures than those meminternal imbalances may be less artibers coming from foreign subsidiaries. culate in undertakings based primarily They are at a structural advantage as on nearby cross-border investments they are less in need of information but can be major obstacles in those and consultation and less dependent stretching out widely within Europe. on translation services and language EWCs, in most cases meet annually, training. Meetings close to the workhave the right for preparatory meetplace allow for considerable savings in ings and, where special circumstances time and financial resources, and they arise, for additional sessions. While may show less interest in bargaining meetings can rotate between the vawith management for sufficient EWCrious parts of the undertaking, they are funding. Creating a productive workmore likely to take place in the country ing atmosphere between the members 16 where the HQ is located and/or where can only be achieved by overcoming

THE EUROPEAN WORKS COUNCIL this asymmetry. This depends to a THE RENAULT CASE: great extent on the home-team of not The now famous Renault decision assuming the role of the dominant in 1997 of closing down its Belgian player. It is the majority group which plant and moving production to Spain must be in particular conscious to guide EWC-dealings by developing mutual trust based on consensus (Lecher, Nagel, Platzer, 1999: Part IV: Case Studies, and. p.221-3). became the first case, when the right on information and consultation was tested even in the court rooms. The case did not just lead to an outcry of workers at the Belgian plant when they got knowledge of the relocation plan, 3.5. Sanctions for non-compliance long after the decision had been taken. Renault workers in other countries mounted a sympathy strike, in what some have called the first European The legislative instruments of the EU vary considerably in the way they are enforced. While a Regulation is immediately binding and the Commission is in charge of enforcing compliance, the very nature of a Directive strike action. The case was in particular embarrassing for the EU-Commission, as two Directives on EWCs and on Collective Redundancies were ignored and furthermore, Renault’s motive turned out to be one of aid-shopping. The company had applied for subsidies diffuses the responsibility for using from the Community’s Regional Fund sanctions. A Directive only outlines a for its new production site in Spain, framework within which rules and and it looked as if European funds regulations are defined according to were creating incentives for relocation national law or practice. Consequently, the application of sanctions becomes primarily a matter of each Member State. The EWC-Directive, indeed, lists no sanctions for non-compliance with laid-down procedures. It only calls on Member States to ensure that management and employees abide by the obligations and instructs national governments to“provide for appropriate measures in the event of failure to comply”(Article 11). Enforceability is delegated to the Member States which have to ensure that“adequate administrative or judicial procedures are moves, destroying employment in a profitable plant. The Belgian, Spanish and French governments got evolved into a political battle over the case. Renault had an EWC established under Article 13 and the agreement did not foresee extraordinary meetings in case of relocation. Nevertheless, one Belgian and two French courts found the French carmaker guilty for not providing information‘in good time’ and consulting in advance.(Lecher, Nagel, Platzer, 1999, Chapter 4; EIRO 1997). While these court rules may be seen as precedence for a European jurisdiction on the meaning of the right to information and consultation, they did not preavailable” to ensure enforcement. A vent Renault from finally re-directing material definition for“appropriate its investment. Compensation for dameasure” is not given. mages of 15 thousand French francs, as fixed by one court, were not a deterrent to change Renault plans. Sanctions for non-compliance at the Communitylevel may have been more efficient. 17

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS 3.6. automatic right of attendance, the ExeThe Volkswagen-Group-EWC cutive Committee can resolve to invite internal or external consultants to the Volkswagen(VW) belongs to the sessions. It is in this regard that a trade group of transnational companies, union representative sits in both, the which are very supportive for a social EWC and the Executive Committee in dialogue with its workforce. The coman advisory capacity. His‘duties’ inpany introduced the EWC in 1990, clude to linking council matters to the years before the EU-Directive made the national trade union bodies. establishment obligatory. When it took The agreement between manageoff as the first council in the automobile ment and the EWC acknowledges the industry in Europe, it was composed of need“for jointly solving any conflicts 17 members coming from three countries(Germany: Volkswagen, Chart 5. Audi; Spain: SEAT; Belgium: VWBruxelles). Since then, Volkswagen has undergone several major EUROPEAN VOLKSWAGEN GROUP WORKS COUNCIL Structure according to EU-Directive and respective(German) legislation expansion projects prompting the VW-Group-EWC to adapt accordingly. Since the amendment of the agreement in 1999, the EWC comExecutive Committee President(VW) General Secretary(VW) 1 representative each from: prises now eight countries. The 25 members reflect the two criteria Audi Seat Skoda VW Brussels VW Navarra VW Slovakia VW Poznan Rolls-Royce/ Bentley AutoEuropa for representation: one each from any major business site or country and the others in relation to the workforce-size(Volkswagen, 1992; Steiert, 2000). The EWC has set up two specialised committees to give more meaning to the flow of information and consultation. They care for the needs of AUDI and issues related to the financial services and sales companies. An Executive Committee, made up of a president and general secretary, coming from the headquarters of Volkswagen-Germany, and with representation from all car brands or countries, handles the business between the plenary sessions. EWC-membership is restricted to employees of the company. Selection is done in accordance with national laws or practice. European Group Works Council: Plenary Germany 8 Volkswagen 2 Audi(incl. Speaker of Audi Committee) 1 VW Saxonia Spain 3 Seat 2 VW Navarra Speaker of Committee Belgium 2 VW Brussels Czech Republic 2 Skoda Poland 1 VW Poznan Slovakian Republic 1 VW Slovakia Portugal 1 AutoEuropa Great Britain 1 Rolls-Royce/ Bentley Other companies 1 Speaker of Committee Finance/ Sales Speaker of Committee = 25 members Trade Union Representative (Advisory capacity only) Committee„AUDI“ Germany 4 Audi Hungaria 1 AUDI Hungaria Italy 1 Lamborghini Great Britain 1 Cosworth = 7 members Committee for Financial and Sales Companies Germany 1 Financial Services AG France 1 VW Finance S.A. 1 Groupe VW France S.A. Italy 1 Autogerma Spain 1 VW Finance S.A. = 5 members 18 While non-members have no Source: Adopted from Steiert, 2000, p.7.

THE EUROPEAN WORKS COUNCIL which may arise”(Volkswagen, 1992: §1.1). Management has to provide information on subjects like job security, work organisation, production technologies and occupational health. Consultation procedures focus on planned cross-border transfers of production “which may have a substantial adverse effect on the interests of employees”(Volkswagen, 1992:§4.1). Management has to inform the EWC or the Executive Committee in‘good time’ and to provide sufficient space for consultation, emphasising in particular the right to comment within a specified period of time.“These consultations shall take place early enough for the views of the Volkswagen European Group Council to be taken account of in the decision-making process”(Volkswagen, 1992:§4.3) Over the years, the scope of issues dealt with in the EWC has widened. So has the number of meetings. While the agreement requests‘at least one meeting per year’, the practice has gone beyond with two meetings of the Executive Committee and two plenary sessions a year. The EWC has not limited its role to information and consultations but is occupied as well in developing principles of conflict resolution. It adopted a position to refuse a take-over of production, if any manufacturing plant is on strike. In the same manner, it is involved in co-ordinating workers interest on working hours and engages central management in agreeing to VW-Group-wide minimum standards. Management has supported the work of the EWC by shouldering the expenses of its activities. The annual budget is at the disposal of the council and contains provisions on funding of the following:(a) translation into major languages;(b) accommodation and travel for EWC-members;(c) costs of more than one expert;(d) costs for participation of a trade union representative; (e) separate budget for the Executive Committee; and(f) Secretarial/technical assistance for EWC. Management has further agreed to training schemes including vocational training. These schemes are not only open to EWCmembers but also accessible to trade union shop stewards. Volkswagen holds considerable investment in overseas countries like Brazil, Mexico and South Africa. Plants from these countries are not represented in the EWC. Central management first engaged in a global social dialogue with its workforce by supporting so-called‘World employee conferences’. In 1999 it signed an agreement, to establish the‘Volkswagen Group Global Works Council’. The World Works Council is modelled closely after the European Works Council(Steiert, 2000, chap. 4). 19

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS 4 Relationship between EWCs and trade unions: Co-operation or competition? I N ASSESSING THE RELATIONSHIP BET - selection process. In countries, were ween EWCs and Trade Unions, three trade unions play a formal role at the issues are of major importance: formal workplace, such as in Italy, France or membership of Trade Unions in EWCs; the UK, they hold nominating powers co-operation between Trade Unions and can arrange for their lowest tier of and EWCs; and the functional division trade union officials(shop stewards, between workplace representation and delegates) to be included in EWCs. collective bargaining. In all, the influence of Trade Unions exerted on EWCs through ordinary 4.1. membership is rather low. This picture Formal membership of trade unions in EWCs changes, by looking at informal channels. The large majority of EWCmembers are holding membership of Voluntary agreements concluded Trade Unions at the same time. under Article 13 do not have to follow legal stipulations that qualify mem4.2. bership. While they can basically allow (and in a few cases do so) to have fulltime trade union officials sitting in Cooperation between trade unions and EWCs EWCs(ETUC, 2001) among the overDuring the initial period, when whelming majority, they contain EWCs were concluded on a voluntary clauses which are restricting ordinary base, the ETUC and the European inmembership to company employees. dustry federations were in many cases Negotiated settlements under Artiinvolved in setting up the information cle 6 have to follow the transposition and consultation procedures. Accordrules. In a majority of countries, elecing to its own estimate, the ETUC partition or nomination of members takes cipated in 75% of all agreements, partly place through the national structures at as the sole bargaining agent, and partly the workplace. In countries with a dual joining national works councils. system, which separate works councils Since the introduction of SNBs, the from Trade Unions, such as Germany negotiating role of trade union bodies and Austria, the agents of collective has been significantly reduced. It is 20 bargaining are excluded from the now the policy of the ETUC to parti-

RELATIONSHIP BETWEEN EWCS AND TRADE UNIONS: CO-OPERATION OR COMPETITION? cipate in EWC affairs with trade union trade union influence on company or officers as external experts. Member sector matters. States have widely followed the sugFinancing a strong service network gestion of the Directive, to give exterfor EWCs stretches the trade union nal experts access to the SNB and the resources to the limit. While a sector EWC. A good number of agreements outlook becomes ever more important, do explicitly mention trade union rethis implies a major shift in the support presentatives to fall under the category base from national unions to the Euroof experts, while there appears to be pean industry federations. National hardly any case, were advisory status unions have to release more resources for trade unions is fully rejected. Exto their European superstructure, a perts mostly have access to preparatory particularly difficult task in times of meetings as well and the costs, usually declining membership at home. to be agreed in advance, are covered through the EWC budget, provided by 4.3. the central management. The ETUC, in pressing for the amendment of the Directive, is now demanding, that trade union representatives should receive acknowledged expert status in The functional division between workplace representation and collective bargaining all EWCs. EWCs are the first Europeanised A second approach for Trade structure of workers interest repreUnions to build a service network is sentation based on legislation. While through training, seminars and prothis pilot law can be seen as a frontjects. Efforts are made to train EWC runner of a future European industrial representatives to‘become experts on relations system, with other legal initheir own’ and to establish guidelines tiatives in the pipeline(like the Euroon negotiations and minimum stanpean Company Statute and proposed dards. Co-ordinating the flow of inDirective on information and consultaformation between different EWCs is tion) there is nothing soon to follow in another area of concern. European inthose areas considered as key elements dustry federations like the European by Trade Unions. The social policy proMetalworkers’s Federation(EMF) are tocol of the Maastricht Treaty explicitly trying to focus the EWC attention beexcludes the Council of Ministers of yond the corporate company context dealing with collective bargaining on into a sector perspective(EMB, 2000). wages and the right to strikes and the Organising multi-employer platforms employers associations are resisting or helps in the search for best practice are without mandate from their nationmodels to set standards. And it serves al members, to enter into Europeanto prevent tensions that arise between level negotiations. With no support company and sector focus. Trade Union from the political Executive – the Comstrategy towards EWCs is indeed mission and the Council – and without twofold: assisting them to function the traditional multi-employer counterbetter as a company-based system of part for negotiations, arrangements for interest representation while at the putting cross-border components into same time, not allowing employers to bargaining is left to individual emuse EWCs as a major force in fighting ployers, EWCs and trade unions. 21

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS There is uncertainty as to the future division of duties between EWCs and trade unions under the asymmetry of building European structures of workplace representation while holding back on collective bargaining. There are already a few notable exceptions of EWCs, reaching beyond consultation and getting involved with their counterpart on negotiations about training, prevention of discrimination and occupational health and safety issues. While these items still belong to the‘soft group’ of bargaining and do not yet touch the‘hard group’ of wages and working conditions, there is no reason to believe that central management of international corporations would always, and for principal matters, exclude hardcore items from a Europeanwide company agreement. Within Euro-company level, benchmarking is becoming an ever more important technique to effect changes in subsidiaries. The three step process of comparing company sites, and possibly those of competitors, identifying best practice and agreeing on a set of target between central and local management while leaving the details of implementation to the subsidiary, is still focusing on issues beyond collective bargaining Europeanisation of collective bargaining The Europeanisation of industrial relations is not likely to lead in the forseeable future to joint collective bargaining at central European level but rather to crossborder co-ordination of national bargaining. While co-ordination of wage policies may have some relevance at the central, multi-sector level, influenced in particular from macro-economic considerations under the European Monetary Union to curb inflation pressure, it is the sector level where cross-border trade union cooperation has the best chance to succeed. The pace with which it develops is likely to vary considerably between sectors and regions, leading to multi-speed Europeanisation. The European Metalworkers’ Federation(EMF) has been in the forefront in pushing for sector co-ordination. In June 1988, it adopted a European charter on working time in which the EMF affiliates agreed on a maximum time of 1750 hours per year as a European minimum standard. In December 1998, the EMF agreed to the“new European coordination rule” for national bargaining in the metal sector. Referring explicitely to the need to prevent downward competition between countries on wages and to eliminate wage dumping, the resolution states:“The key point of reference and criterion for trade union policy in all countries must be to offset the rate of inflation and to ensure that workers’ incomes retain a balanced participation in productivity gains”. While productivity-oriented wage policy is at the heart of the coordination rule the trade unions keep their full autonomy in respect to how they share these gains between the improvement of wages and employment-related issues, such as reduction of working time, early retirement or other benefits. The construction workers organized under the European Federation of Building and Wood Workers(EFBWW) are following a different path, encouraging crossborder bargaining partnership in sub-regions and emphasising coordination on working conditions. As this is the sector with the most significant numbers of crossborder movement of workers, their cooperation reaches out to joint transnational trade union membership. Literature: Marginson, Schulten, 1999; Schulten, 2000; Sisson, Marginson, 2000; Transfer, 2000. 22

RELATIONSHIP BETWEEN EWCS AND TRADE UNIONS: CO-OPERATION OR COMPETITION? agreements. But initiatives exist to include aspects related to workers compensation. Working time flexibility, such as overtime corridors and annual working hours, fixing of wage groups, wages linked to productivity and/or company profits and the like, are in some countries seen as the prerogative of trade union bargaining. These initiatives may become areas of Euro-wide company standardisation through social benchmarking. Management, entertaining such extended bargaining with their respective works councils, may be seen as piloting a crash course against traditional trade union interests. While there is need to resolve the question if EWCs should be empowered to negotiate and conclude agreements with group management at European level, the trade unions concerned exhibit wide discrepancies in their strategic positions. The differences are partly explained through the dominant collective bargaining systems at home. 10 Trade unions from countries with strong company bargaining, like in the UK, appear to be more favourable to EWCs acquiring a bargaining status than those where industry-wide settlements are dominant. Within the group of‘sector-minded’ unions, there are differences between those who want to keep EWCs out from concluding any agreement and those who are supporting the transfer of negotiating powers to EWCs, under the condition that they are linked to agreements concluded at sectoral levels and do not enjoy a life of their own. There is further distinction between trade unions, whose geographical or industrial scope embraces many multinationals and therefore would loose a substantial part of their national bargaining arena once EWCs become a European negotiating forum, and those who do not see their national power base being effected at all 11 . Whether or not trade unions will finally push to empower EWCs for collective bargaining, is likely to be decided by how strong they will advance their own European agenda for industry-wide bargaining(see special box – Europeanisation of collective bargaining). If they fail in pushing for European wage co-ordination along sectors, they may settle for‘the smaller package’ of empowering EWCs under the condition that they can play a dominant role inside them. 10 For an overview on collective bargaining in the EU-Member States, see: Schulten, Stueckler, 2000. 11 For a short discussion of Trade Union positions in France, Italy, Germany and UK, see Lecher, Nagel, Platzer, 1999, p.232-4. 23

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS 5 Expanding workplace representation 5.1. It is therefore likely that the legal Review of the EWC Directive and political emphasis for workers Article 15 of the Directive set“not later than 22 September 1999” as the date to review its operation. The ETUC has made its areas of criticism known to the Commission. According to the ETUC, central management in many companies does not co-operate with EWCs in good faith but rather use it as rights will shift to two other Directives: The European Company Statute and a separate Directive on Information and Consultation. Amendments to the EWC-Directive are likely to take shape only when the fate and the practical implications of these two other Directives become clearer. a body for acclamation and confront it 5.2. with a fait accompli. The right to inThe European Company formation and consultation must be Statute(Societas Europeae) strengthened by including in the defiand the scope nition timing, form and content. It furfor co-determination ther requests to lower the workforce size threshold for the purpose of coWhen the debate on workers partivering more companies. A special call cipatory rights at European level took by the ETUC is to apply sanctions at off in the 1960s, it originally did not the Community-level for non-comcenter around the Directive on Europliance with laid down procedures pean Works Council(EWC) but had a (see special box: ETUC Proposals on much wider and more comprehensive Amending of the EWC’s Directive). approach in the conceptualisation of While the ETUC is pressing for its the European Company Statute. Since demands, there currently appears not the legal instrument of an European much interest by the Commission nor Company – known by its Latin name the employers for a fast process of of‘Societas Europeae’(SE) – was first amending the Directive. The European proposed in 1970, it got into a political Commission, in particular, holds the deadlock and it took three decades of view that the EWCs need more time to constant revising and compromising. It develop its potential before a final aswas only the EU’s Council of Ministers sessment can be drawn on its shortmeeting in Nice December 20, 2000 that 24 comings. an agreement was finally reached.

EXPANDING WORKPLACE REPRESENTATION After formal adoption during 2001, it ETUC proposals on amending the EWC Directive will become a reality three years thereafter in 2004. The new Community law will allow companies established in The workforce size threshold for commore than one Member State to opepanies covered should be lowered to 500 employees; rate throughout the EU on the basis of a single set of rules, therefore avoiding The respective European industry federation and external experts should have the right to participate in the negotiations for an agreement; EWCs should be opened to workers’ representatives from Non-EU-countries; The following definition should be applied for information: “the written and comprehensive information of the employee representatives, given in good time and on a continuous basis. Information is given at a the need to set up subsidiaries governed by different national laws. Unified operation throughout the EU would also apply to management and report systems. Substantial savings on administrative costs and a speedier way to react on investment opportunities in other countries are envisaged for companies under SE-registration. The SE-project for decades came never close to adoption as Member time and with a content, which allows the employees’ representatives to undertake an in-depth assessment of the possible impact and, where appropriate, prepare consultations with central management or any other more approStates made it a case for labour regime competition. The original concept of a European Company gave workers representatives full rights of information, proposed the establishment of works priate level of management. Information and documents shall be given in languages that are understandable for the employee representatives”; The following definition should be applied for consultation: “consultation takes place in good time before decision-making by central management or any other more appropriate level of management, so that councils and required the inclusion of employee representatives at board level. The early drafts were close to the German model of workplace representation and co-determination, thus calling for one of the best models of workers rights to become the European standard(Streek, 1996). One of the fundamental, if not the the opinion of employees’ representatives can still be considered during planning. The employee representatives shall be given an adequate delay for delivering an opinion. If they deliver their opinion in writing, they have the most fundamental disagreement between Member States, was on the presence of employee representatives in the decision making structures of the company. Some countries were comright to be consulted orally”; pletely set against any participation of Decisions by management affecting workers representatives while others, workers should be without legal effect if the information and consultation procedure was not followed. The company should as well be excluded from the awarding of public contracts and from financial support in the context of an under pressure from their national trade unions, would not agree to any statute without employee involvement. The wide gap between national industrial relation systems is shown by European measure. the fact that there are only seven EU Source: ETUC, 2000; ETUC 2000 b. member states having national legislation on workers involvement in 25

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS management or supervisory boards. Changes of articles of European Treaties, dealing with representation of the interest of workers and employers, including co-determination, are subject to unanimous decision. Proposals for lowering the standards of workers role at board level did not break the deadlock. Whenever a new initiative was started, rules on unanimous voting were effectively applied to block any progress on harmonising national differences. After two decades of virtual standstill, the EU commission, eager to see at least partial progress, changed its strategy and used a two-track approach thereon. Issues more agreeable to Member States were separated from the European Company Statute and dealt with separately by the 1994 Directive on European Works Council, which focused only on a procedure for information and consultation and kept board level participation of workers representatives excluded. Since replacing disparities of national systems with a uniform set of provisions at whatever level of participatory rights completely failed, the harmonisation approach through statutory rights had to be abandoned. The new approach was to give prominence to contractual rights. Employer and workers representatives were to negotiate an agreement without any consideration for minimum rules. Only in cases of failure would a reference provision apply. For such a fallback, the Davignon report(1997) recommended 20% of seats at board level should be taken up by workers’ representatives. Despite wide-shared enthusiasm for the compromise – voluntary agreement in the first degree, harmonisation on a second degree – the Davignon recommendations were held hostage to Spanish veto. The Council only consented to a breakthrough after the uniform set of rules in the reference provisions were skipped as well with“a flexible formula that would leave the essential features of the different national systems intact”(European Commission, 2001). It included the option for Member States to not transpose into national law the fallback reference provisions and still having, under certain criteria, their companies getting SEregistration. The European Council agreement in Nice(December 2000) can be summarised as follows: a. VOLUNTARY AGREEMENT WITH NO MINIMUM STANDARD The creation of a European Company 12 requires negotiations on the involvement of employees with a body representing all employees of the companies concerned. No minimum standard is set for these negotiations. If no agreement is reached, the reference provision in the Annex of the proposed Directive shall apply. b. RIGHTS ON INFORMATION AND CONSULTATION The provisions in the Annex allow for two different forms of workers involvement. Essentially, the principles oblige SE management to provide to a 12 There will be four ways of forming a European company(SE): merger, formation of a holding company, formation of a joint subsidiary, or conversion of a public limited company previously formed under national law. The SE must have a minimum capital of 100 000 Euro. SE registration must take place in the country where it has its central administration. 26

EXPANDING WORKPLACE REPRESENTATION body of employees’ representatives regular reports on company business on the basis of which consultation shall take place. In this regard, the Annex covers the same ground like the EWC Directive for a slightly different group of companies, using however, definitions that increase workers rights on information and consultation. c. RIGHTS ON BOARD LEVEL PARTICIPATION OF WORKERS If companies involved in the creation of a SE were previously covered by board level participation of workers, the Annex attempts to safeguard these workers rights as follows: In the case of a holding company or a joint venture, participatory rights will apply to all employees, if prior to SE registration, the majority of the employees in the companies concerned were entitled to such rights; In the case of conversion from a National to a European company, the participatory arrangement prior to conversion shall continue to apply; In the case of a SE created by merger, participatory rights would be extended to all employees, when at least 25% of employees had such rights before the merger. companies involved has been previously governed by board-level arrangements for workers The Annex will largely impose the highest form of participatory rights available in some parts of the SE to all other parts of the company. However, it will not harmonise the practice between different undertakings but will allow diversity between companies to be maintained according to differences of the national industrial relations systems. The proposed Directive can thus be assessed from two opposing angles. It will not be the legal instrument to spread workers co-determination across Member States. No harmonisation was achieved, no minimum standard was applied, no new and unified European practice will take off. On the other hand, it is an instrument in reducing regime competition for lower labour standards. It closes the door for companies which opt for a SE registration for the purpose of getting rid of social standards at home. By forcing companies to take along their codetermination practice when applying for SE registration, the new Directive will contribute to safeguard higher social standards in some Member States. 5.3. A new Directive on the right to information and consultation d. SPECIAL RIGHT OF NON-COMPLIANCE The Directives on EWCs and the European Company Statute are focusing on transnational companies. The The Spanish veto was withdrawn threshold numbers effectively keep a after a clause was introduced that the sizeable portion of TNCs outside their Council could authorise a Member realm. The same is the case with naState not to implement the Directive on tional enterprises. They are covered by participatory rights in the case of SEs national law alone and no European formed by merger. SE registration legal instruments sets a framework for would still be possible, if none of the the right of workers on information 27

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS and consultation. A new Directive, pro- The first group rejects the proposed posed by the Commission in 1998, tries Directive outrightly by challenging to bring some change. As is the case the legitimacy of the European with other legal instruments on social community to set guidelines or rights, the initiative is hotly debated. principles for companies that opeThe Commission proposes that the rate within national boundaries. new Directive applies to all companies Europe should get involved only with at least 50 employees. For the on business issues of cross-border trade unions, this threshold would still nature; exempt some 97% of companies and about 50% of the workforce in the EU. They demand a lowering to 20 employees, to make the new legal instrument relevant for small and medium-sized companies. They also request the application of the Directive to the Public Sector(ETUC, 2001b). A definition of information and consultation is not easily agreeable. Existing national provisions are very uneven. While the right on information and consultation is granted in almost all the Member States, it is very restrictive in the Mediterranean(Spain, Portugal, Greece) and Anglo-Saxon counThe second group wants to avoid ‘upward pressure’ by agreeing to a Directive which establishes minimum requirements at the lower end and gives preference to voluntary agreements; The third group tries to maintain high standards in some countries and to avoid‘downward pressure’. Their members push for a Directive, which establishes minimum requirements while at the same time, maintaining legal provisions at national levels if they are more advantageous for employees. tries(United Kingdom, Ireland). Access At the time of writing this study, to investment documents in a systemthe Council reached an agreement by atic manner is limited to a few counsoftening the Directive on two points: tries(e.g. France and Germany). While (a) countries will be allowed to delay some states provide consultation at the implementation of the Directive for plant or company level, less are doing smaller-sized companies(150 employso at the level of the group of underees and below) for a few years;(b) takings(France, Germany, the Netherprovisions on sanctions will not be lands, Austria). The list of significant included into the Directive. It will be distinctions could be extended by the left to the Member States to clarify if right to be assisted by an economic and company decision can take legal effect financial expert, the protection of in cases where an employer has not workers representatives, the right to complied with provisions of the Directraining, and many more. tive(EIRO 2001). The debate on the relationship betThe Directive falls under the coween a new European framework and decision procedure with the European existing national provisions reproduces Parliament having the power of dethe three main groups of proponents: manding substantive changes or finally dissenting on the measure. After formal adoption, Member States will have three years to transpose the European 28 law into national law.

SUMMARY AND CONCLUSIONS 6 Summary and conclusions The EWC is a procedure in a trans- As is mostly the case with national national company for the purpose of structures of workplace representainforming and consulting employees tion, management shoulders the exon matters which concern business penditures of the EWC. It would in at least two Member States of the have been difficult, if not impossible, EU. It is a cross-border workplace to otherwise meet costs for meetings representation that covers the rights such as for travelling, accommodaof workers where decisions at comtion, translation and secretarial serpany headquarters impact on com- vices, and the expenses for external pany employees in other countries. experts. The EWC procedure complements national systems of workplace representation without replacing them. The international trade union movement, during the 1960s and 1970s, pushed with limited success for The EWC is the first transnational ‘World Company Councils’ of multiinstitution of industrial relations national enterprises. They were based on legislation. Its legal origin composed of trade unions only and is unique in so far as Member States although some 50 bodies were estabhave ceded some of their sovereign lished, they were never recognised rights to the EU and have conferred by employers and finally failed in on it powers to act independently. taking up a role in collective barThe EU can thus come up with Comgaining and in securing funding. munity law and override national With the EWCs in place, initiatives in law. building company structures for While transnational works councils do not have to be based on legislation – and in a number of cases were indeed created long before the Directive was passed – it was the workers representation on a global scale are more promising. In the coming years, we are likely to see more‘World Works Councils’ established and modelled after the EWC. ‘shadow of(the coming) law’ and In coming-up with the new legal later, the compliance with the legal instrument, the European legislature act, which explains their impressive was caught in its own contradictions growth. Fewer companies would with individual Member States in have opened up for a new social the Council applying veto over veto dialogue with workers had they not and watering down minimum stanbeen under the pressure of law. dards to safeguard their home 29

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS models. To built consensus, the the new institution. With full coverEWC-law did not come as a Reage, the number will ultimately ingulation but as a Directive. It gave crease to some 50,000. This may sound priority to contractual rights against small compared to the 200,000 works statutory rights. And it came without councillors for the German national sanctions for non-compliance, leavsystem alone. Nevertheless, it is a criing enforcement exclusively to inditical mass and will positively impact vidual governments. In the conseon a European workers consciousness. quence, the EWCs vary considerably between countries and companies. Instead of bringing European harmonisation, the law tries to balance between fixing minimum standards and justifying national practice. The establishment of EWCs brings the growing importance of the European reality home to national trade unions and opens them for closer cross-border cooperation. In the same way, the EWC-project has visibly In the absence of a strong regulatory strengthened the European industry framework, which puts more then a federations in taking the lead to push few minimum provisions in place, for further Europeanisation of inthe support for the company workdustrial relations along sector lines. force from national and internationDespite the impressive growth, there al trade union bodies is of utmost are serious shortcomings. About importance. Trade unions were the two-thirds of companies had not yet main force in the initial phase in neinstalled EWCs when the deadline gotiating agreements with manageset in the Directive run out in Sepment. While this role is now turned tember 1999. The delay in implemenover to the elected‘special negotiatation is likely to be linked to three ting body’(SNB), trade unions are major reasons: low level of sanctions still influencing the direction of the at national level, defensive behaEWC in providing expertise, training viour by many management groups and networking with other EWCs. and little resources available on the The European Commission, eager to side of trade unions. see the first European cross-border institution based on its own intervention succeed, provided funds for European industry federations to develop their support infrastructure for EWCs. While there are differences in compliance between individual countries with Norway representing the best case, and Spain and Portugal featuring on the negative side, the ‘big countries’ in terms of numbers One of the biggest challenges for the of companies all fare the same. In EWCs lies in the variety of national particular, there is no significant difindustrial relations and cultural and ference in coverage between Anglolinguistic backgrounds from where Saxon countries and those with a its members are coming. Overcomstrong tradition in corporate maing such disparities is a major task in nagement like Germany, Austria or developing cohesive structures and Netherlands. US and Japanese coman efficient working atmosphere. panies, the dominant Non-European Some 15,000 workers representatives players, are adjusting themselves to are currently involved in building be‘average performers’. 30

SUMMARY AND CONCLUSIONS Of the EWCs installed so far, a sigtions for non-compliance are likely nificant number – some say up to to meet more resistance from the 50% – are not(yet) performing in a Commission, the Council and the satisfactory manner. Some are reemployers. stricting their activities to the legal minimum and are mere symbolic. Even where they act as service provider, handing information from management down the line to national representative bodies or the workforce, they hardly engage in developing a common policy. Their role in consultation is negligible(Lecher et. al., 2001). With the Directive on the European Company(‘Societas Europeae’-SE), co-determination will reach European level and workers representatives will have voting powers in supervisory boards of transnational companies. While it is not yet clear how co-determination in SE-companies will be linked to other representative structures of employees – The other EWCs belong in different negotiations take priority again – stages to the participatory councils. and how it will impact on the work They use preparatory meetings, seof EWCs, it will create an additional lect committees and external expermomentum to press for further Eutise to process information and to ropeanisation of industrial relations. improve on dissemination. They develop early warning systems, consult ‘lower’ structures, work towards a common position between the EWC members by balancing conflicting interest of different national workforces. And they present counterproposals to the management, which can not easily be dismissed, as they are based on expertise and a mandate from the workforce. The involvement of EWCs in collective bargaining is possibly a major factor in deciding about the future profile of European industrial relations. A significant number of trade unions, possibly a good majority, want to maintain sector bargaining and will not allow their core business to slide in more substance down to company level. They opt for a dual structure of keeping the decisive ETUC call for a review of the Direclevels of wage negotiations to themtive to further strengthen the EWCs. selves while allowing elected workSome of the demands like stronger force representatives to care for definitions of the meaning of inforother company affairs. A few EWCs mation and consultation and a rehave already gone beyond consultacognition of the role of trade unions tion and have successfully concludby granting them EWC membership, ed negotiations with management. may be easier to agree than others. These are however dealings on Two new draft-Directives on Euro‘softer issues’ and not entering the pean Company Statute and on a hard terrain of bargaining on wages framework for workers right on inwith the right to strike. If EWCs take formation and consultation at naup these subjects with management tional level already contain stronger while trade unions are pushing for definitions. A lowering of the workEuropean wage co-ordination along force threshold to include more comsectors, their strategic alliance may panies and the application of sanccome to an abrupt end. 31

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS The European Union – some explanatory notes T HE E UROPEAN U NION (EU) HAS COME A LONG entity to which the Member States as well way. Preserving peace and creating a as their citizens are subject. In exercising better Europe through closer economic this jurisdiction, the Community law is ties were the two original cornerstones, directly applicable within the area of to which was added later the will of national law and, in cases of conflicts, building a political union. The EU has no Community law overrides national law constitution written down in a single doc(see European Commission, 2000, p. 94). ument. It grew out of the European Coal and Steel Community(Treaty of Paris, 18 th April 1951, entry into force 23 rd July … but less than a state 1952), the European Atomic Energy ComWhile the EU has acquired areas of munity and the European Community competencies, which constitute elements (Treaties of Rome, 28 th March 1957, entry of statehood, vast powers enjoyed by into force 1 st Jan. 1958). The three foundsovereign states continue to lie beyond its ing Treaties were amended and supplereach. The Treaties usually do not confer mented with various instruments, chiefly on the Community and its institutions any the Single European Act(1987), the vageneral power to take all measures necrious accession treaties and the Treaties essary to achieve the objectives,“but lay of the European Union(Treaty of Maas- down in each chapter the extent of the tricht, 7 th Feb. 1992, entry into force 1 st powers to act(principle of specific conferNov. 1993 and the Treaty of Amsterdam, ment of powers)”(European Commission, 2 nd Oct. 1997, entry into force 1 st May 2000, p.27). The EU can not establish 1999). Currently under way is the ratiadditional responsibilities, as it holds no fication process in the Member States to ‘jurisdiction over jurisdiction’. This is in make the Treaty of Nice(December 2000) particular expressed through the subsilegally binding. diary principle which“debars the Community institutions from extending their More than an association of states… powers to the detriment of those of the Member States”(European Commission, The EU is to be distinguished from 2000, p. 28) other types of association of States in The EU is more than an international “that the Member States have ceded organisation, an intergovernmental consome of their sovereign rights to the EU ference or an association of states, but and have conferred on it powers to act less than a federal State of Europe. Poliindependently. In exercising these potical scientists are using now the term wers, the EC is able to issue sovereign ‘supranational organisation’. But the EU is acts which have the same force as laws in still in the process of evolving and its final individual States”(European Commission, form can not be predicted. Current de2000, p.7). The EU is thus an autonomous bates on its future focus on new forms of 32

The European Union – some explanatory notes cooperation between essentially soveproached from the viewpoint of collecreign Nation-States on the one side, and tively empowering the weaker actors in more elements of statehood, if not a full the markets by strengthening their barfledged federal state for the EU, on the gaining position, the instruments turned other hand. The key to any structural over to the Community’s jurisdiction are change is held by the European Council, still wanting. Works councils’ rights on where the governments of the Member information and consultation have been States meet to agree on the structures added to the list of EU competencies, as and responsibilities of the Community and is the right of co-determination. However, its institutions. their mode of transfer to EU-legislation is leaving them vulnerable to individual naThe tasks of the EU: More economic than social tional governments controlling influence. Furthermore, the Community is still completely barred from dealing with collective The range of matters covered by the bargaining and the right to cross-border specific conferment of powers varies from strikes. sector to sector. At the center is the single market, built around the four freedom principles(free movement of workers, goods, services and capital). To this was The Parliament and the Council: No equal footing yet added the Economic and Monetary Union The European Parliament(EP) was (EMU), with its two main pillars: Single first constituted as Common Assembly of European currency, the Euro, administhe European Coal and Steel Community tered through the European Central Bank in 1951. The 1957 Rome Treaty granted and a stability pact on fiscal policy, putthe EP very limited rights of participation ting ceilings on national budget deficits in the legislative process. The Commisand public debts. sion drafted, the Council adopted, and the While the Community institutions EP was confined to a single consultation hold far-reaching powers on economic procedure. and monetary policies, aiming for gradual Subsequent amendments to the Treaapproximation of national policies, the ty, in particular the 1986 Single European scope is far less pronounced in the social Act – introducing the co-operation and area. Some progress has been achieved, assent procedures – and the 1992 Treaty when the social protocol, originally only on European Union – introducing coannexed to the Maastricht Treaty – due decision – have significantly reinforced to the ‚opt-out‘ of the UK – was finally the EP’s role in Community legislation. integrated into the revised Treaty of Since co-decision establishes veto rights Amsterdam, and a chapter on European to reject Council proposals, and the conemployment policy was added. But deciliation committee provides for sorting spite the creation of Community responout differences between the two institusibilities for policies on employment, tions, the EP has been empowered to act social welfare and social cohesion, naas co-legislator on an equal footing with tional policies continue to play the printhe Council. However, in areas not open cipal role(On European employment for co-decision a major imbalance repolicy, see: Keller, 1999). mains between the two legislative bodies. If social policy is looked upon as comThe Council meets in two forms: as pensation for the uneven results of marEuropean Council, comprising the Heads ket activities through budgetary spendof States or Governments of the Member ing, the EU hardly qualifies for any social States, and the President of the Commisimpact. The EU budget is kept at a low sion, who come together at least twice a level of 1,27% of overall Union GDP, year. And as Council of the European where financing of welfare programmes Union, made up of Ministers of the Memor major employment initiatives remain ber States, which assemble according to out of question. If social policy is apministerial portefeuilles, the four most 33

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS important groupings of which are the General Affairs Council(Foreign Ministers), the Economic and Financial Affairs Council, the Transport Council and the Agriculture Council. Over time, decision-making inside the Council has moved from unanimous voting to majority voting, making the latter now the general rule. In most cases of majority voting, the Treaty provides for qualified voting, giving larger Member States greater influence through vote weighting. When it is not further specified, simple majority is sufficient. Nevertheless, the earlier practice of granting Member States the right to veto a Community measure in cases where its vital national interest is at stake(The Luxembourg Agreement), remains a political force. Unanimity is still required for the Council’s decisions such as taxes, the free movement of workers, or certain rights and obligations of employees. Looking at the power balance between the EP and the Council, there is still a gap between the responsibilities already transferred to the Community level and the efficacy of the parliament to control and have oversight functions over them. The non-elected Council remains the dominant legislative chamber. Even so, the EP has closed down the gap through acquiring additional responsibilities such as the right of co-decision. No law can be passed if the Council does not consent. In certain sensitive sectors, the Council remains to play the role of monopoly legislature. The EU-institutions, governed by the Treaties, including the EP, play no prominent role in transferring additional sovereignty rights from Member States to the Community level. This sovereignty transfer is left to the intergovernmental conference of the European Council whose dealings, despite being formally an EU institution, remains largely outside the Treaty. It is the summit of the Head of States which holds the constitutionmaking powers. Intergovernmentalism remains to be the prevailing mode in decision-making and the avenue through which national concerns are safeguarded in the making of the EU. Legislative instruments: Regulations and Directives The Treaties provide the Community with five legislative instruments that impact on the national legal systems to varying degrees: regulations, directives, decisions, recommendations and opinions. The two most important forms are regulations and directives. Regulations have general application. They lay down the same law throughout the Community, are binding in its entirety and directly applicable – without national legislation – in all Member States. Regulations confer rights or impose duties on the Community citizen in the same way as national law. Directives are‘milder’ legislative instruments as they try to reconcile the need for uniformity of Community law with the diversity of national traditions and structures. A directive is binding as to the objective to be achieved but leaves it to the national authorities to choose form and method. It does not supersede the laws of the Member States but places the Member States under an obligation to transpose their Community obligation into domestic law. A Directive is thus a two-stage law-making process. It does not lead to the unification of law, but to the harmonisation of objectives while maintaining diversity in form. Main source: European Commission(2000), The ABC of Community Law, by Dr. Klaus Dieter Borchardt. Luxembourg: Office for Official Publications of the European Communities, Fifth Edition, ISBN 92828-7803-1. Maurizio Foraci(1996), The role of the European Parliament in decision-making process in the European Union, Florence: European University Institute, June 28. 34

Appendix A: Council Directive 94/45/EC of 22 September 1994 Appendix A COUNCIL DIRECTIVE 94/45/EC OF 22 SEPTEMBER 1994 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees * MENU Article 1 Article 2 Article 3 Article 4 Article 5 Article 6 Article 7 Article 8 Article 9 Article 10 Article 11 Article 12 Article 13 Article 14 Article 15 Article 16 ANNEX Objective Definitions Definition of‘controlling undertaking’ Responsibility for the establishment of a European Works Council or an employee information and consultation procedure Special negotiating body Content of the agreement Subsidiary requirements Confidential information Operation of European Works Council and information and consultation procedure for workers Protection of employees’ representatives Compliance with this Directive Link between this Directive and other provisions Agreements in force Final provisions Review by the Commission Addressing of this Directive SUBSIDIARY REQUIREMENTS referred to in Article 7 of the Directive * Downloaded from the European Union at www.europa.eu.in; download does not include preamble to the Directive. 35

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS THE COUNCIL OF THE EUROPEAN UNION… HAS ADOPTED THIS DIRECTIVE SECTION I GENERAL Article 1 OBJECTIVE 1. The purpose of this Directive is to improve the right to information and to consultation of employees in Community-scale undertakings and Community-scale groups of undertakings. 2. To that end, a European Works Council or a procedure for informing and consulting employees shall be established in every Community-scale undertaking and every Community-scale group of undertakings, where requested in the manner laid down in Article 5(1), with the purpose of informing and consulting employees under the terms, in the manner and with the effects laid down in this Directive. 3. Notwithstanding paragraph 2, where a Community-scale group of undertakings within the meaning of Article 2(1)(c) comprises one or more undertakings or groups of undertakings which are Community-scale undertakings or Community-scale groups of undertakings within the meaning of Article 2(1)(a) or(c), a European Works Council shall be established at the level of the group unless the agreements referred to in Article 6 provide otherwise. 4. Unless a wider scope is provided for in the agreements referred to in Article 6, the powers and competence of European Works Councils and the scope of information and consultation procedures established to achieve the purpose specified in paragraph 1 shall, in the case of a Community-scale undertaking, cover all the establishments located within the Member States and, in the case of a Community-scale group of undertakings, all group undertakings located within the Member States. 5. Member States may provide that this Directive shall not apply to merchant navy crews. Article 2 DEFINITIONS 1. For the purposes of this Directive: (a)‘Community-scale undertaking’ means any undertaking with at least 1,000 employees within the Member States and at least 150 employees in each of at least two Member States; (b)‘group of undertakings’ means a controlling undertaking and its controlled undertakings; (c)‘Community-scale group of undertakings’ means a group of undertakings with the following characteristics: • at least 1 000 employees within the Member States, • at least two group undertakings in different Member States, and • at least one group undertaking with at least 150 employees in one Member State and at least one other group undertaking with at least 150 employees in another Member State; (d)‘employees’ representatives’ means the employees’ representatives provided for by 36 national law and/or practice;

Appendix A: Council Directive 94/45/EC of 22 September 1994 (e)‘central management’ means the central management of the Community-scale undertaking or, in the case of a Community-scale group of undertakings, of the controlling undertaking; (f)‘consultation’ means the exchange of views and establishment of dialogue between employees’ representatives and central management or any more appropriate level of management; (g)‘European Works Council’ means the council established in accordance with Article 1(2) or the provisions of the Annex, with the purpose of informing and consulting employees; (h)‘special negotiating body’ means the body established in accordance with Article 5 (2) to negotiate with the central management regarding the establishment of a European Works Council or a procedure for informing and consulting employees in accordance with Article 1(2). 2. For the purposes of this Directive, the prescribed thresholds for the size of the workforce shall be based on the average number of employees, including part-time employees, employed during the previous two years calculated according to national legislation and/or practice. Article 3 DEFINITION OF‘CONTROLLING UNDERTAKING’ 1. For the purposes of this Directive,‘controlling undertaking’ means an undertaking which can exercise a dominant influence over another undertaking(‘the controlled undertaking’) by virtue, for example, of ownership, financial participation or the rules which govern it. 2. The ability to exercise a dominant influence shall be presumed, without prejudice to proof to the contrary, when, in relation to another undertaking directly or indirectly: (a) holds a majority of that undertaking’s subscribed capital; or (b) controls a majority of the votes attached to that undertaking’s issued share capital; or (c) can appoint more than half of the members of that undertaking’s administrative, management or supervisory body. 3. For the purposes of paragraph 2, a controlling undertaking’s rights as regards voting and appointment shall include the rights of any other controlled undertaking and those of any person or body acting in his or its own name but on behalf of the controlling undertaking or of any other controlled undertaking. 4. Notwithstanding paragraphs 1 and 2, an undertaking shall not be deemed to be a ‘controlling undertaking’ with respect to another undertaking in which it has holdings where the former undertaking is a company referred to in Article 3(5)(a) or(c) of Council Regulation(EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings 6 . 5. A dominant influence shall not be presumed to be exercised solely by virtue of the fact that an office holder is exercising his functions, according to the law of a Member State Note: Footnotes 1 to 5 are contained in the preamble and are not shown in this print 6 OJ No L 395, 30. 12. 1989, p. 1. 37

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS relating to liquidation, winding up, insolvency, cessation of payments, compositions or analogous proceedings. 6. The law applicable in order to determine whether an undertaking is a‘controlling undertaking’ shall be the law of the Member State which governs that undertaking. Where the law governing that undertaking is not that of a Member State, the law applicable shall be the law of the Member State within whose territory the representative of the undertaking or, in the absence of such a representative, the central management of the group undertaking which employs the greatest number of employees is situated. 7. Where, in the case of a conflict of laws in the application of paragraph 2, two or more undertakings from a group satisfy one or more of the criteria laid down in that paragraph, the undertaking which satisfies the criterion laid down in point(c) thereof shall be regarded as the controlling undertaking, without prejudice to proof that another undertaking is able to exercise a dominant influence. SECTION II ESTABLISHMENT OF A EUROPEAN WORKS COUNCIL OR AN EMPLOYEE INFORMATION AND CONSULTATION PROCEDURE Article 4 RESPONSIBILITY FOR THE ESTABLISHMENT OF A EUROPEAN WORKS COUNCIL OR AN EMPLOYEE INFORMATION AND CONSULTATION PROCEDURE 1. The central management shall be responsible for creating the conditions and means necessary for the setting up of a European Works Council or an information and consultation procedure, as provided for in Article 1(2), in a Community-scale undertaking and a Community-scale group of undertakings. 2. Where the central management is not situated in a Member State, the central management’s representative agent in a Member State, to be designated if necessary, shall take on the responsibility referred to in paragraph 1. In the absence of such a representative, the management of the establishment or group undertaking employing the greatest number of employees in any one Member State shall take on the responsibility referred to in paragraph 1. 3. For the purposes of this Directive, the representative or representatives or, in the absence of any such representatives, the management referred to in the second subparagraph of paragraph 2, shall be regarded as the central management. Article 5 SPECIAL NEGOTIATING BODY 1. In order to achieve the objective in Article 1(1), the central management shall initiate negotiations for the establishment of a European Works Council or an information and consultation procedure on its own initiative or at the written request of at least 100 employees or their representatives in at least two undertakings or establishments in at least two different Member States. 2. For this purpose, a special negotiating body shall be established in accordance with the following guidelines: 38

Appendix A: Council Directive 94/45/EC of 22 September 1994 (a) The Member States shall determine the method to be used for the election or appointment of the members of the special negotiating body who are to be elected or appointed in their territories. Member States shall provide that employees in undertakings and/or establishments in which there are no employees’ representatives through no fault of their own, have the right to elect or appoint members of the special negotiating body. The second subparagraph shall be without prejudice to national legislation and/or practice laying down thresholds for the establishment of employee representation bodies. (b) The special negotiating body shall have a minimum of three and a maximum of 17 members. (c) In these elections or appointments, it must be ensured: • firstly, that each Member State in which the Community-scale undertaking has one or more establishments or in which the Community-scale group of undertakings has the controlling undertaking or one or more controlled undertakings is represented by one member, • secondly, that there are supplementary members in proportion to the number of employees working in the establishments, the controlling undertaking or the controlled undertakings as laid down by the legislation of the Member State within the territory of which the central management is situated. (d) The central management and local management shall be informed of the composition of the special negotiating body. 3. The special negotiating body shall have the task of determining, with the central management, by written agreement, the scope, composition, functions, and term of office of the European Works Council(s) or the arrangements for implementing a procedure for the information and consultation of employees. 4. With a view to the conclusion of an agreement in accordance with Article 6, the central management shall convene a meeting with the special negotiating body. It shall inform the local managements accordingly. For the purpose of the negotiations, the special negotiating body may be assisted by experts of its choice. 5. The special negotiating body may decide, by at least two-thirds of the votes, not to open negotiations in accordance with paragraph 4, or to terminate the negotiations already opened. Such a decision shall stop the procedure to conclude the agreement referred to in Article 6. Where such a decision has been taken, the provisions in the Annex shall not apply. A new request to convene the special negotiating body may be made at the earliest two years after the abovementioned decision unless the parties concerned lay down a shorter period. 6. Any expenses relating to the negotiations referred to in paragraphs 3 and 4 shall be borne by the central management so as to enable the special negotiating body to carry out its task in an appropriate manner. In compliance with this principle, Member States may lay down budgetary rules regarding the operation of the special negotiating body. They may in particular limit the funding to cover one expert only. 39

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS Article 6 CONTENT OF THE AGREEMENT 1. The central management and the special negotiating body must negotiate in a spirit of cooperation with a view to reaching an agreement on the detailed arrangements for implementing the information and consultation of employees provided for in Article 1(1). 2. Without prejudice to the autonomy of the parties, the agreement referred to in paragraph 1 between the central management and the special negotiating body shall determine: (a) the undertakings of the Community-scale group of undertakings or the establishments of the Community-scale undertaking which are covered by the agreement; (b) the composition of the European Works Council, the number of members, the allocation of seats and the term of office; (c) the functions and the procedure for information and consultation of the European Works Council; (d) the venue, frequency and duration of meetings of the European Works Council; (e) the financial and material resources to be allocated to the European Works Council; (f) the duration of the agreement and the procedure for its renegotiation. 3. The central management and the special negotiating body may decide, in writing, to establish one or more information and consultation procedures instead of a European Works Council. The agreement must stipulate by what method the employees’ representatives shall have the right to meet to discuss the information conveyed to them. This information shall relate in particular to transnational questions which significantly affect workers’ interests. 4. The agreements referred to in paragraphs 2 and 3 shall not, unless provision is made otherwise therein, be subject to the subsidiary requirements of the Annex. 5. For the purposes of concluding the agreements referred to in paragraphs 2 and 3, the special negotiating body shall act by a majority of its members. Article 7 SUBSIDIARY REQUIREMENTS 1. In order to achieve the objective in Article 1(1), the subsidiary requirements laid down by the legislation of the Member State in which the central management is situated shall apply: • where the central management and the special negotiating body so decide, or • where the central management refuses to commence negotiations within six months of the request referred to in Article 5(1), or • where, after three years from the date of this request, they are unable to conclude an agreement as laid down in Article 6 and the special negotiating body has not taken the decision provided for in Article 5(5). 2. The subsidiary requirements referred to in paragraph 1 as adopted in the legislation of the Member States must satisfy the provisions set out in the Annex. 40

Appendix A: Council Directive 94/45/EC of 22 September 1994 SECTION III MISCELLANEOUS PROVISIONS Article 8 CONFIDENTIAL INFORMATION 1. Member States shall provide that members of special negotiating bodies or of European Works Councils and any experts who assist them are not authorized to reveal any information which has expressly been provided to them in confidence. The same shall apply to employees’ representatives in the framework of an information and consultation procedure. This obligation shall continue to apply, wherever the persons referred to in the first and second subparagraphs are, even after the expiry of their terms of office. 2. Each Member State shall provide, in specific cases and under the conditions and limits laid down by national legislation, that the central management situated in its territory is not obliged to transmit information when its nature is such that, according to objective criteria, it would seriously harm the functioning of the undertakings concerned or would be prejudicial to them. A Member State may make such dispensation subject to prior administrative or judicial authorization. 3. Each Member State may lay down particular provisions for the central management of undertakings in its territory which pursue directly and essentially the aim of ideological guidance with respect to information and the expression of opinions, on condition that, at the date of adoption of this Directive such particular provisions already exist in the national legislation. Article 9 OPERATION OF EUROPEAN WORKS COUNCIL AND INFORMATION AND CONSULTATION PROCEDURE FOR WORKERS The central management and the European Works Council shall work in a spirit of cooperation with due regard to their reciprocal rights and obligations. The same shall apply to cooperation between the central management and employees’ representatives in the framework of an information and consultation procedure for workers. Article 10 PROTECTION OF EMPLOYEES’ REPRESENTATIVES Members of special negotiating bodies, members of European Works Councils and employees’ representatives exercising their functions under the procedure referred to in Article 6 (3) shall, in the exercise of their functions, enjoy the same protection and guarantees provided for employees’ representatives by the national legislation and/or practice in force in their country of employment. This shall apply in particular to attendance at meetings of special negotiating bodies or European Works Councils or any other meetings within the framework of the agreement referred to in Article 6(3), and the payment of wages for members who are on the staff of the Community-scale undertaking or the Community-scale group of undertakings for the period of absence necessary for the performance of their duties. 41

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS Article 11 COMPLIANCE WITH THIS DIRECTIVE 1. Each Member State shall ensure that the management of establishments of a Community-scale undertaking and the management of undertakings which form part of a Community-scale group of undertakings which are situated within its territory and their employees’ representatives or, as the case may be, employees abide by the obligations laid down by this Directive, regardless of whether or not the central management is situated within its territory. 2. Member States shall ensure that the information on the number of employees referred to in Article 2(1)(a) and(c) is made available by undertakings at the request of the parties concerned by the application of this Directive. 3. Member States shall provide for appropriate measures in the event of failure to comply with this Directive; in particular, they shall ensure that adequate administrative or judicial procedures are available to enable the obligations deriving from this Directive to be enforced. 4. Where Member States apply Article 8, they shall make provision for administrative or judicial appeal procedures which the employees’ representatives may initiate when the central management requires confidentiality or does not give information in accordance with that Article. Such procedures may include procedures designed to protect the confidentiality of the information in question. Article 12 LINK BETWEEN THIS DIRECTIVE AND OTHER PROVISIONS 1. This Directive shall apply without prejudice to measures taken pursuant to Council Directive 75/129/EEC of 17 February 1975 on the approximation of the laws of the Member States relating to collective redundancies 7 , and to Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of businesses 8 . 2. This Directive shall be without prejudice to employees’ existing rights to information and consultation under national law. Article 13 AGREEMENTS IN FORCE 1. Without prejudice to paragraph 2, the obligations arising from this Directive shall not apply to Community-scale undertakings or Community-scale groups of undertakings in which, on the date laid down in Article 14(1) for the implementation of this Directive or the date of its transposition in the Member State in question, where this is earlier than the abovementioned date, there is already an agreement, covering the entire workforce, providing for the transnational information and consultation of employees. 7 OJ No L 48, 22. 2. 1975, p. 29. Regulation as last amended by Directive 92/56/EEC(OJ No L 245, 26. 8. 1992, p. 3). 8 OJ No L 61, 5. 3. 1977, p. 26. 42

Appendix A: Council Directive 94/45/EC of 22 September 1994 2. When the agreements referred to in paragraph 1 expire, the parties to those agreements may decide jointly to renew them. Where this is not the case, the provisions of this Directive shall apply. Article 14 FINAL PROVISIONS 1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive no later than 22 September 1996 or shall ensure by that date at the latest that management and labour introduce the required provisions by way of agreement, the Member States being obliged to take all necessary steps enabling them at all times to guarantee the results imposed by this Directive. They shall forthwith inform the Commission thereof. 2. When Member States adopt these measures, they shall contain a reference to this Directive or shall be accompanied by such reference on the occasion of their official publication. The methods of making such reference shall be laid down by Member States. Article 15 REVIEW BY THE COMMISSION Not later than 22 September 1999, the Commission shall, in consultation with the Member States and with management and labour at European level, review its operation and, in particular examine whether the workforce size thresholds are appropriate with a view to proposing suitable amendments to the Council, where necessary. Article 16 ADDRESSING OF THIS DIRECTIVE This Directive is addressed to the Member States. Done at Brussels, 22 September 1994. For the Council The President N. BLUEM ANNEX SUBSIDIARY REQUIREMENTS REFERRED TO IN ARTICLE 7 OF THE DIRECTIVE 1. In order to achieve the objective in Article 1(1) of the Directive and in the cases provided for in Article 7(1) of the Directive, the establishment, composition and competence of a European Works Council shall be governed by the following rules: (a) The competence of the European Works Council shall be limited to information and consultation on the matters which concern the Community-scale undertaking or Community-scale group of undertakings as a whole or at least two of its establishments or group undertakings situated in different Member States. 43

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS In the case of undertakings or groups of undertakings referred to in Article 4(2), the competence of the European Works Council shall be limited to those matters concerning all their establishments or group undertakings situated within the Member States or concerning at least two of their establishments or group undertakings situated in different Member States. (b) The European Works Council shall be composed of employees of the Communityscale undertaking or Community-scale group of undertakings elected or appointed from their number by the employees’ representatives or, in the absence thereof, by the entire body of employees. The election or appointment of members of the European Works Council shall be carried out in accordance with national legislation and/or practice. (c) The European Works Council shall have a minimum of three members and a maximum of 30. Where its size so warrants, it shall elect a select committee from among its members, comprising at most three members. It shall adopt its own rules of procedure. (d) In the election or appointment of members of the European Works Council, it must be ensured: • firstly, that each Member State in which the Community-scale undertaking has one or more establishments or in which the Community-scale group of undertakings has the controlling undertaking or one or more controlled undertakings is represented by one member, • secondly, that there are supplementary members in proportion to the number of employees working in the establishments, the controlling undertaking or the controlled undertakings as laid down by the legislation of the Member State within the territory of which the central management is situated. (e) The central management and any other more appropriate level of management shall be informed of the composition of the European Works Council. (f) Four years after the European Works Council is established it shall examine whether to open negotiations for the conclusion of the agreement referred to in Article 6 of the Directive or to continue to apply the subsidiary requirements adopted in accordance with this Annex. Articles 6 and 7 of the Directive shall apply, mutatis mutandis, if a decision has been taken to negotiate an agreement according to Article 6 of the Directive, in which case‘special negotiating body’ shall be replaced by‘European Works Council’. 2. The European Works Council shall have the right to meet with the central management once a year, to be informed and consulted, on the basis of a report drawn up by the central management, on the progress of the business of the Community-scale undertaking or Community-scale group of undertakings and its prospects. The local managements shall be informed accordingly. The meeting shall relate in particular to the structure, economic and financial situation, the probable development of the business and of production and sales, the situation and probable trend of employment, investments, and substantial changes concerning organization, introduction of new working methods or production processes, transfers of production, mergers, cut-backs or closures of undertakings, establishments or important parts thereof, and collective redundancies. 44

Appendix A: Council Directive 94/45/EC of 22 September 1994 3. Where there are exceptional circumstances affecting the employees’ interests to a considerable extent, particularly in the event of relocations, the closure of establishments or undertakings or collective redundancies, the select committee or, where no such committee exists, the European Works Council shall have the right to be informed. It shall have the right to meet, at its request, the central management, or any other more appropriate level of management within the Community-scale undertaking or group of undertakings having its own powers of decision, so as to be informed and consulted on measures significantly affecting employees’ interests. Those members of the European Works Council who have been elected or appointed by the establishments and/or undertakings which are directly concerned by the measures in question shall also have the right to participate in the meeting organized with the select committee. This information and consultation meeting shall take place as soon as possible on the basis of a report drawn up by the central management or any other appropriate level of management of the Community-scale undertaking or group of undertakings, on which an opinion may be delivered at the end of the meeting or within a reasonable time. This meeting shall not affect the prerogatives of the central management. 4. The Member States may lay down rules on the chairing of information and consultation meetings. Before any meeting with the central management, the European Works Council or the select committee, where necessary enlarged in accordance with the second paragraph of point 3, shall be entitled to meet without the management concerned being present. 5. Without prejudice to Article 8 of the Directive, the members of the European Works Council shall inform the representatives of the employees of the establishments or of the undertakings of a Community-scale group of undertakings or, in the absence of representatives, the workforce as a whole, of the content and outcome of the information and consultation procedure carried out in accordance with this Annex. 6. The European Works Council or the select committee may be assisted by experts of its choice, in so far as this is necessary for it to carry out its tasks. 7. The operating expenses of the European Works Council shall be borne by the central management. The central management concerned shall provide the members of the European Works Council with such financial and material resources as enable them to perform their duties in an appropriate manner. In particular, the cost of organizing meetings and arranging for interpretation facilities and the accommodation and travelling expenses of members of the European Works Council and its select committee shall be met by the central management unless otherwise agreed. In compliance with these principles, the Member States may lay down budgetary rules regarding the operation of the European Works Council. They may in particular limit funding to cover one expert only. 45

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS Appendix B VOLKSWAGEN CONTENTS: Agreement of 7 February 1992 AGREEMENT ON COOPERATION BETWEEN THE MANAGEMENT OF THE VOLKSWAGEN GROUP AND THE VOLKSWAGEN EUROPEAN GROUP WORKS COUNCIL * PREAMBLE With this agreement concerning the Volkswagen European Group Works Council, the Management of the Volkswagen Group and the elected employee representative bodies of the Group companies wish to establish a social dialogue at European level. They seek in this way to make an active contribution to future understanding and structuring within the framework of the development of Europe into a political union of European states with a single market. With its European marques of Volkswagen, Audi, SEAT and Skoda, and the setting up of new European production facilities, the Volkswagen Group has accepted responsibility in the development of Europe which includes the social obligation towards the workforces and locations on the basis of active collaboration with employee representatives and unions. The signatories to this document are agreed that a successful social development is dependent on international competitiveness achieved through a high level of productivity and flexibility, making constantly increasing demands in respect of the quality and environmental acceptability of the products. oo0oo The following agreement is entered into between the Management of the Volkswagen Group and the Volkswagen European Group Works Council which was set up on 30th August 1990 by the elected employee representative bodies of Volkswagen AG, Audi AG, SEAT SA and Volkswagen Bruxelles SA on a voluntary basis: 1. PRINCIPLES 1. The Management of the Volkswagen Group shall collaborate with the Volkswagen European Group Works Council in accordance with the provisions of this agreement. * Downloaded from European Foundation for the Improvement of Living and Working Conditions – European Works Council Database at www.eurofound.ie/ewc. 46

Appendix B: Volkswagen European Group Works Council – Text of agreement 1992 Both parties regard this agreement as a basis within the Volkswagen Group for working together at European level in the spirit of constructive dialogue and cooperative surmounting of economic, social and ecological challenges and for jointly solving any conflicts which may arise. 2. The statutory rights and duties of the individual national employee representative bodies are not affected by this. 2. ORGANISATION 1. The individual companies represented in the Volkswagen European Group Works Council and the number of employee representatives in the Volkswagen European Group Works Council and in its executive committee are laid down in a statute of organisation(rules of procedure). The same applies to purview and location of headquarters. These provisions of the statute of organisation in the draft of 30th August 1990 shall be recognised by the Management of the Volkswagen Group (Appendix 1: Members of the Volkswagen European Group Works Council; Appendix 2: Statute of organisation). 2. Should alteration become necessary to the statute of organisation or the scope of companies represented, both parties shall declare after joint deliberations whether this alteration is to become a part of the agreement. Until such time the existing provisions shall continue to apply. 3. The special protection afforded by the mandate and the obligation to observe confidentiality in connection with company and business secrets apply, in conformity with the national law applicable, to membership of the Volkswagen European Group Works Council. 4. The members delegated to the Volkswagen European Group Works Council by the employee representative bodies of the Group companies represented must be renominated after every new election of a company’s employee representative body. 3. EXCHANGE OF INFORMATION 1. The Management of the Volkswagen Group and the Volkswagen Group Works Council shall meet in session at least once per year. Both parties can designate the participants at this meeting in accordance with the topics to be dealt with. The Managements of the companies represented in accordance with 1.1 and 2.1 above should be represented. 2. The topics to be dealt with at the meetings, to the extent that they are of general importance for the European production plants, shall relate primarily to the following areas: • securing of jobs and plants, and plant structures; • development of Group structures; • productivity and cost structures; • development of working conditions(e.g. working hours, wages and salaries, job design); • new production technologies; • new forms of work organisation; • work safety, including plant environment protection; • the effects of political developments and decisions on the Volkswagen Group. 47

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS 3. Discussion of these topics should at the same time serve an exchange of information on development trends and strategies and promote progress to the benefit of all concerned. 4. CONSULTATION 1. The Volkswagen European Group Works Council or its executive committee shall be informed in good time regarding planned cross-border transfers of production (main investment emphases, production scope, essential company functions). This applies to transfers which may have a substantial adverse effect on the interests of employees at production plants of the Volkswagen Group in Europe. 2. The Volkswagen European Group Works Council or its executive committee shall have the right of comment within an appropriate period which shall be agreed upon by both parties in each case immediately on receipt of the information. 3. In its comments the Volkswagen European Group Works Council or its executive committee can require explanation of the planned transfer in the framework of consultations to be jointly laid down. These consultations shall take place early enough for the views of the Volkswagen European Group Council to be taken account of in the decision-making process. 4. The rights and duties of the responsible company bodies in each case remain unaffected. 5. COSTS The Volkswagen Group undertakes to bear the costs of the work of the European Group Works Council in accordance with the ruling as set out in Appendix 3. 6. FUTURE DEVELOPMENT Both parties declare their willingness to alter this agreement as required and to adapt it dynamically to new requirements of the social dialogue in Europe in mutual agreement. Brussels, 7th February 1992 Management of the Volkswagen Group Dr. Carl H. Hahn Dr. P. Frerk D. Goeudevert Dr. G. Hartwich Dr. M. Posth Dr. W.P. Schmidt Prof. Dr. U. Seiffert D. Ullsperger D. Alvarez Dr. F. Piech Volkswagen European Group Works Council K. Volkert H.-J. Uhl G. Mogwitz W. Klever K.-H. Mihr J.-P. Janssen H. Buhmann E. Kuballa T. Schirmer J. Villanueva J. Lara M. Gallardo A. Rodriguez P. Vazquez D. Rega P. Uyttersprot B. Sudholt 48

Appendix B: Volkswagen European Group Works Council – Text of agreement 1992 Enclosure 1 Members of the European Volkswagen Group Works Council Following companies with number of employee representatives are involved: • Volkswagen AG 8 members • Audi AG 2 members • SEAT SA 5 members • Volkswagen Bruxelles SA 2 members Enclosure 2 The statute of Organisation of the European Volkswagen Group Works Council As per No. 2 of the Agreement on the European Volkswagen Group Works Council, the following points of business regulations are recognised by the management of the Volkswagen group: I. NAME, PURVIEW AND LOCATION OF HEADQUARTERS 1. The name of the organisation:“European Volkswagen Group Works Council”. 2. The purview of the European Volkswagen Group Works Council comprises of all Volkswagen companies in Europe, which are predominantly owned by VW AG. Exceptions are possible only on consent. The joining to the European Volkswagen Group Works Council is voluntary. The working principles and these business regulations will be recognised by joining the council. 3. The location of headquarters of the European Volkswagen Group Works Council is Wolfsburg. II. MEMBERS 1. The members of the European Volkswagen Group Works Council can only be freely elected democratic legitimated employee representatives of the company. They should according to existing legal regulations adequately represent the subsidiaries of the VW Group in the respective country. 2. The delegation of members to the European Volkswagen Group Works Council should be regulated by the individual national employee representative bodies of the respective VW Group subsidiaries. To this respect, it may be necessary to constitute national coordinating committees in the subsidiaries of the VW Group. 3. The number of delegates of the individual employee representative bodies will be decided unanimously by the European Volkswagen Group Works Council. Thereby the number of employees will be taken into consideration. 4. Through the resolutions of the Executive Committee, internal or external consultants can be invited to the meetings of the European Volkswagen Group Works Council. 49

THE EUROPEAN WORKS COUNCILS — TOWARDS BUILDING TRANSNATIONAL INDUSTRIAL RELATIONS III. STRUCTURES 1. The European Volkswagen Group Works Council elects a president who is at the same time member and Chairman of the Executive Committee. 2. The European Volkswagen Group Works Council elects a general secretary who is at the same time member of the Executive Committee. 3. The European Volkswagen Group Works Council elects an Executive Committee. At least one member must represent each country in this Executive Committee. The Executive Committee can include additional members for consultation. 4. The European Volkswagen Group Works Council shall meet in session at least once a year. The meetings will be called for and organised by the Executive Committee. Enclosure 3 Cost Sharing 1. BUDGET The Management of the VW Group undertakes to bear the costs for the work of the European Group Works Council(including the cost of translation and the cost of trade union representative to be nominated by the Executive Committee) and provides an annual budget at the disposal of the council. The extent of cost will be decided by the Management of the VW Group and will be unanimously agreed upon with the European Volkswagen Group Works Council. The cost for meetings will be borne by the guest group companies after prior consultations. 2. TRAVELLING COSTS The travelling costs of the VW Group employees will be borne by the respective group companies according to their travelling cost regulations. 3. INFRASTRUCTURE The included group companies are obligated to provide a reasonable infrastructure that is necessary for the members of the European Volkswagen Group Works Council to carry out their functions and duties. 50

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