Companies with branches in several European countries may be confronted with the European Works Council (EWC).
Pursuant to the European directive and the Dutch European Works Councils Act (WEOR), employees of a multinational at European level are entitled to information and consultation. Participation rights apply to cross-border decisions of the company, such as the financial and economic situation of the group, relocation of production, restructuring and reorganisations. In this way, European employees can influence decision-making. On the other hand, the company receives useful input and advice from multiple sides about the intended course and decision-making of the company.
Starting point for the EWC
If a group has at least 1,000 employees in EU Member States and 150 employees in at least two EU countries, it qualifies as a Community Enterprise and the employees have the right to set up an EWC. The EWC then falls under the legislation of the country of the parent company. So if the parent company is in the Netherlands, then Dutch law applies and the Dutch court is competent in discussions between the EWC and the company, for example about the scope of the EWC’s information and consultation rights. The starting point for the creation of an EWC is usually a request from the local Works Council or a trade union to the multinational to take steps to set up an EWC.
Consultation about EWC agreement
The company then has to sit down with a delegation of employees from the branches from the various EU countries to negotiate an agreement between the EWC and the company. This is done in a so-called Special Negotiating Body (SNB). The aim from the employees and the company is to stipulate within an EWC agreement the scope of the information and consultation rights, how often consultative meetings should take place, which costs the company reimburses to the EWC members, and other practical agreements about the proper functioning of the EWC. The EU directive and the WEOR only provide a framework for establishing and working with the EWC. The EWC agreement must specify the cross-border participation rights of the EWC specific to that multinational. As such, an EWC always requires customisation.
Enlisting experts and costs
Both the SNB and the EWC can engage experts and (legal) advisors, the costs of which are borne by the company. This is similar to the deployment and cost reimbursement for the Dutch Works Council. Of course, it is also advisable for the company itself to seek (legal) advice, for example, for the drafting of the EWC agreement, and in the event of a conflict or procedure with the EWC.
In practice, for example, discussions may arise between the company and the EWC if the company is late in providing or consulting the EWC, or about whether the information provided is sufficient, or whether a specific issue is of a cross-border nature. The EWC cannot go to the Enterprise Chamber if the company does not follow an advice on a proposed cross-border decision. However, the EWC can start a procedure at the Dutch court for (non-)compliance with the law and the EWC agreement.
We advise both multinationals and European Works Councils on the process of establishing an EWC, on drafting the EWC agreement and on any disputes.
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