The European Parliament accepted a proposal this month that seeks significant changes to the current European Works Council (EWC) Directive, including strengthening the information and consultation rights of EWCs, improving enforcement by introducing exceedingly high fines for non-compliance, and creating a risk of injunctions for failure to inform and consult.
The Commission now has three months to respond to Parliament and decide whether to go forward with the amendment.
European works councils are required to represent EU workers on transnational issues affecting their jobs and conditions of employment. Specifically, this requirement applies to workers from companies with at least 1000 employees within the EU and the other countries of the European Economic Area (Norway, Iceland and Liechtenstein) and at least 150 employees in each of at least two member states. The councils have the right to be informed and consulted on transnational decisions, but management is not legally obliged to act on their opinions.
The proposal brings significant changes to how EWCs will engage with employers and the consequences of non-compliance:
- It would expand the scope of “transnational matters” subject to information and consultation obligations by removing a requirement to have a certain number of member states involved for a matter to be ‘transnational.’
- Employee representatives would be allowed to express an opinion on a proposed measure, which must then be considered by management before a decision is made.
- The response time from companies would be shortened from 3 years to 18 months.
- Financial penalties would be similar to the GDPR, and companies could face fines of between 2 and 4 percent of global turnover for failing to inform or consult European works councils.
- EWCs across all members states would have the new right to request an injunction in relation to disputed management decisions.
Outlook: If the Commission agrees with the proposal in May, it will significantly strengthen the influence and enforcement rights of EWCs and impact decision making processes for many employers.