Overview

European Works Council


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(EWC)

A representative body of workers established for the purpose of information-sharing and consultation on transnational issues in multinational companies operating in Europe. Although there are examples of EWCs being established voluntarily, the majority have been created as a result of the European Works Council Directive of 1994. This required that EWCs be set up in companies operating in the member states of the European Economic Area (i.e. the member states of the EU plus Iceland, Liechtenstein, and Norway), provided they employed 1,000 employees with at least 150 in each of two countries. All companies above this size threshold are affected regardless of their country of origin; that is, Japanese and American firms are covered as well as Dutch, French, and German. Initially the UK was excluded from coverage by the directive under its opt-out from the Social Protocol. Under the Labour government elected in 1997, the opt-out has been abandoned and the UK has implemented the directive through the Transnational Information and Consultation of Employees Regulations 1999. The main features of the directive are as follows: (a) multinational companies above the size threshold must establish information and consultation procedures (i.e. an EWC); (b) membership should be drawn from existing representatives at national level within the company; (c) a maximum of thirty representatives will constitute the EWC; (d) there will be an annual information and consultation meeting with central management; (e) extra meetings between management and a smaller select committee are possible where business restructuring impacts significantly on employee interests; (f) the remit of the committee is confined to transnational issues; (g) the substance of meetings will cover issues such as the enterprise's structure and financial situation, business plans and prospects, the level and trend in employment, and substantial changes in technology, location, and organization; and (h) the operating costs are to be met by the employer. These arrangements, however, constitute a fallback position, and there is flexibility built into the provisions if certain conditions are met. For example, companies that had established voluntary arrangements before the final implementation date for the directive are exempt (see Article 13 agreement) and the directive allows for the creation of a Special Negotiating Body, drawn from existing representatives, that can negotiate a tailor-made procedure. The purpose of the directive is to extend the rights to employee participation in management that exist in most EU states at national level to the transnational level (see works council), reflecting the increasingly international scope of business activity. By 2000, more than 600 EWCs had been established and they now constitute an established element of the machinery of industrial relations in large European companies. Opinions vary, however, as to their significance. For some, they represent a major step towards the emergence of a truly European system of industrial relations: there is evidence of EWCs stimulating networks of trade union activity within large companies and, in a tiny minority of cases, they have successfully negotiated company-wide framework agreements. For others, however, EWCs are marginal and employer-dominated bodies that lack the crucial right to codetermination and exert little influence on business strategy. Elements of both interpretations may be right, and it is likely that the role, activities, and significance of EWCs are highly variable, depending on management's orientation and level of support for the new institution and the extent to which worker representatives can draw upon the resources of external trade unions.

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Subjects: Human Resource Management.


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