Changes to European law mean employers must now fund expert advice for their works councils reps
Over the last 18 months, revisions to the European directive have triggered continental-style changes to many European works councils (EWCs), and some multi-national employers have had requests to set up an EWC for the first time. These strengthened EWC information and consultation rights are proving difficult and costly in practice for employers.
Transnational consultation
The directive requires large multi-national employers to set up an EWC, or a procedure for information and consultation, if requested by employees or their representatives. European works councils are concerned only with transnational issues (those that cross EU borders): either those involving the employer as a whole or those which cross the borders of at least two member states. Typically, an EWC will require an organisation to provide employee representatives with regular updates on company performance and to engage in more in-depth information and consultation on changes such as cross-border redundancies, mergers and aquisitions, or new working methods. Developing an effective approach to transnational EWC consultation is costly, time intensive and can present significant employee relations challenges.
The recent changes to the EWC directive give employee representatives greater access to more detailed company information and enhanced consultation rights, including the right to put forward a formal opinion to counter the employer’s proposals for change.
External experts
When forming their opinion EWC representatives are increasingly looking towards external experts, such as accountants, to assist them in challenging the employer’s business plans, and to the employer to meet the costs of providing this advice. European-based financial experts with a history of supporting continental works councils and EWCs have now arrived in the UK to provide such services, often working alongside trade union officials. Their approach is detailed and extensive. They often request comprehensive information, site visits, and meetings with management, prior to completing their report for the representatives. This approach to transnational consultation, which can take weeks to complete, represents a significant cultural shift for many UK EWCs, generates suspicion and is often viewed as interfering with the prerogative of management to make business decisions.
Information
Another major challenge for companies is deciding how early they must share information with representatives and what level of information should be provided. Legislation and case law has continued to broaden employer obligations in this respect and employers need to be aware that providing information on pre-determined decisions, without genuine consultation on proposals and alternatives, is a high risk strategy which raises the likelihood of a legal challenge from employee representatives.
A practical side-effect of the move towards sharing comprehensive information with representatives at an earlier stage is an increase in the risk of a confidentiality breach, particularly where the information involves sensitive commercial issues or triggers stock market regulatory controls. Employers should ensure they have robust confidentiality safeguards in place and that representatives, and their experts, understand their responsibilities.
Different forums
Managing the potential overlap in consultation between EWCs, local works councils and national trade unions, is also proving challenging in practice. It is important to recognise that employers are subject to legal obligations both locally and on a transnational level, each with different penalties for a breach. Getting it right entails detailed planning in advance and an acceptance that while the various consultations may happen around the same time, the content and focus of each will differ depending on the subject matter and forum. An EWC should concern itself with the transnational implications of a proposal and not the finer detail as it applies to individual sites and employees.
Employer hostility to these changes can be counter-productive. Successful EWCs have worked hard to develop mutual trust and cooperation, for example, by agreeing a process for managing transnational information and consultation, with specific timescales for information to be shared and opinions delivered, to avoid unacceptable delay in corporate decision-making. Ensuring employee representatives are properly equipped and trained to perform their roles, and to understand and analyse corporate data, can reduce their reliance on outside experts and help to build a productive relationship between them and the organisation’s management.
Thomas Player is a partner at Eversheds
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