The UK and Portugal produce new EWC legislation

The new EWC Directive, which came into force on 06 May 2009, stipulates that all EU Member States must adjust their national EWC legislation by 05 June 2011.  This means 30 new laws, with the 27 Member States and the 3 countries from the European Economic Area.  Portugal has already prepared its new EWC legislation.  The United Kingdom is also ready.

The UK legislation is significant, because 265 multinationals falling under the recast Directive are headquartered in the UK.  Fewer than 40% of these have an EWC so we can expect a great many new European Works Councils based on UK law.  Furthermore companies that are not headquartered in Europe often choose to have UK law govern their EWC.

The draft law was submitted to the British Parliament on 06 April last, after an extensive consultation procedure.  This procedure gives individual Members of Parliament some more time to request a debate, but if they do not, and it is not expected that they will, the law will come into force in June 2011.  Some aspects are an improvement on the EWC Directive.  Others are not.

- Information and consultation now have their own article in the UK law including both definitions and conditions.  The text follows the EU Directive on this point.  Upon the insistence of the employers a phrase was added that states that managers must be able to actually make decisions.  
- The European Directive lays down that SNB and EWC members are entitled to training with no loss of salary. The British text explicitly states that the company is not obliged to make the time needed for training available or to compensate for it.  It would appear that the matter is not closed.
- In the European Parliament there were lengthy discussions about the concept of ‘transnational’.  This led to recitals that broaden the old description: in principle the EWC is only competent in matters affecting at least two Member States, but there are circumstances under which this can be derogated from.  The British text does not include this broadened definition, much to the workers’ disappointment.

- In the recast Directive there is the obligation to precisely lay down the link between local and European worker participation in the EWC agreement. The Directive also stipulates what rules apply when this is not provided for (information and consultation have to take place at both levels). The UK legislator has actually made this system more stringent: both the central management as well as the levels of local management are responsible for information and consultation. The UK legislator also sets out that multi-level procedures have to aligned with each other in a reasonable manner.

- The UK legislator chose to include some of the provisions from the EU Directive on Temporary Agency Work in the EWC law.  When answering the question whether a company ahs to have an EWC, temporary agency workers do not count in the tally.  But they do count when it comes to providing information about headcount.

- UK law traditionally makes it difficult for worker representatives to take a case to court.  The worker representatives have to bear their legal costs, and if the court rules against them they even have to pay the opposing party’s legal costs.  Moreover the deadlines are tight and the sanctions that can be imposed on the management not very dissuasive.

Up to now central management received a fine of GBP 75,000 if it did not abide to the EWC agreement.  This amount has been increased to GBP 100,000. It would have been much better to give the judge the possibility to suspend the implementation of decisions. This appears to be far more effective than a fine in other European countries.  Multinationals can easily pay fines.

- The fact that an EWC gets 6 months to bring a case before the courts is an improvement.  The UK legislator recognizes that it is time-consuming for an EWC to exchange information and to come to a decision. Another improvement is that an EWC can go to a ‘Central Arbitration Committee’ at first instance. This is not costly.  However fines can only be imposed by a higher court, the ‘Employment Appeal Tribunal’, and proceedings there can be considerably more expensive.

The UK EWC law is available. Click here

This article is a summary of a more extensive article published on our website.  Please click here for the original article.

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