The European Works Council

The research was carried out by the European Works Council Service of FNV Formaat and was commissioned by the Dutch Ministry for Social Affairs and Employment. The crux of the research was the question of how the European Works Council functions in Dutch multinationals and how this relates to the context of Dutch employee participation. In total 102 Dutch companies are obliged to have a European Works Council have been identified, of which 49 actually have a European Works Council. This makes the compliance rate of the European Works Council Act 48%. More than a third of the companies that do not have a European Works Council, did start to set one up in the past but never completed it. In a number of other companies without a European Works Council its possible foundation is being discussed or informal alternatives have been developed. For the employee participation representatives, practical reasons such as a lack of time and knowledge seem to be important factors for not taking the initiative to set up a European Works Council. In addition, a lack of added value and resistance from the management are also named by one in four employee participation representatives as reasons for not founding a European Works Council. The lack of added value offered by a European Works Council seems to be an important reason for management representatives. Three quarters of the management representatives replies that the European Works Council does not fit in the culture or structure of the company.

Research shows that in a number of ways the Dutch European Works Council goes beyond the minimum conditions from the subsidiary provisions of the European Works Council Act and average European practice. For example this is the case with the number of regular meetings a year and the allocation of training rights. Analysis of the European Works Council agreements shows that in general there is no big difference between the practice of the European Works Council and what is stipulated about it in the agreements.

A number of things are remarkable when looking at how the European Works Council functions. In the greater majority of cases, the agenda is drawn up in consultation with the management representative; only in one case does the management representative determine the agenda. Absence from meetings, which can be both a reason for and a result of the poor functioning of the European Works Council, does not occur on a large scale. For the question asking about the most important topic discussed by the European Works Council during the past two years, ‘economic’ topics are named far more than ‘social’ topics.  According to the employee participation representatives ‘culture’ is the main barrier encountered when employees in the European Works Council try to arrive at a joint position. The directors feel that generally speaking the different interests of countries form the main barrier.

A relatively low number of the employee participation representatives questioned (18%) indicate that during the past three years the European Works Council had significant conflicts with the management. An even smaller number of employee participation representatives says that there has been significant tension within the European Works Council. The problem of national dominance only occurs in a small number of companies. This is also apparent from the composition of the Select Committee, where this is little evidence of striving for a dominant majority for Dutch representatives. It happens that the management refuses to discuss matters with the European Works Council. The reasons given for this are that the subject is ‘confidential’ or ‘sensitive for the stock exchange’, that it concerns matters that in the eyes of the management are not transnational or that it concerns a subject whose consequences are not drastic enough.

The research shows that the European Works Councils are only consulted in case of important changes to the company (restructuring, reorganisations, mergers and acquisitions, the sale of parts of the company). According to the employee participation representatives surveyed, in over 50% of the cases consultation did not occur or not until the decision had already been made public. In addition, the European Works Council is generally consulted later than the Central Works Council. The dynamic nature of mergers and acquisitions in business also has an impact on the functioning of the European Works Council. In particular, the continuity of the European Works Council is put under pressure. The survey shows that no fewer than 26 of the 35 European Works Councils have been faced with these issues. There are diverse consequences for the European Works Council of these mergers and acquisitions. It is certainly not standard practice that a new European Works Council is founded after a merger or large acquisition, which often does not benefit the rights of the employee representatives of the smaller party.

Analysis of the research results shows that the quality of the consultation is higher if there are more meetings between the European Works Council and the management, and that the quality of the consultation is higher in companies with fewer employees. What is noticeable is the high percentage of European Works Councils that have made recommendations independently during the past three years (42%). Most independent recommendations concern drastic change processes: reorganisation, mergers, acquisitions and outsourcing. Other ‘recommendations’ can be placed in the broad category of social policy.

The effects of the work done by the European Works Council are difficult to measure. The European Works Councils questioned above all refer to a positive involvement in a specific acquisition, sales or reorganisation process or more generally to better implementation of changes in Europe. The creation of good conditions for social dialogue is also named.

You can download the complete survey here.

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