The Gazette 1982

JULY/AUGUST 1982

GAZETTE

Employee Information and Consultation Procedures — The Community Proposal by Edwina Dunn M.A. LL.B. DIP. ICEI (Amsterdam) Solicitor

T HE subjection ofsizeable undertakings operating in the European Community to differentrights and duties in relation to employee information and consultation pro- cedures, due to divergences in the national legislation ofthe Member States concerned, may be deemed to constitute an obstacle hindering the realisation of a single Community market. At present, evenwhere employees have arightto be informed or consulted on certain issues, the extent of these rights depends on the scope of the individual laws of the Member States. More often than not the employee is only informed or consulted on matters which relate to the indi- vidual establishment or subsidiary where he works, as distinct from matters relating to the undertaking's overall operations in that state, or in the various states in which it is established, where a transnational undertaking is involved. Thus it was that in February 1975 the European Trade Union Federation (ETUC) called for the passingoflegisla- tion to require the creation of an institution for the informa- tion and consultation of a group's employees at group level, repeating its call in June 1977. The European Commission acknowledged this view and stated that what was required was the "creation of legal systems which "recognise the reality of group situations and permit groups to operate according to centrally co-ordinated policy, but subject to rules which safeguard the legitimate interests of those con- cerned, in particular minority shareholders, creditors and employees". The Commission presented its conclusions to the Coun- cil in October 1980 in the form of a "Proposal for a Council directive on procedures for informing and consulting the employees of undertakings with complex structures in particular transnational undertakings: 1 Article 100 ofthe EEC Treaty was deemed to be the appropriate legal basis for the proposed directive. The obligation that Member States have, to ensure that information and consultation procedures are observed with regard to employees, in the event of a collective redundancy 2 and on a transfer of all or parts ofthe enterprise 3 will be extended even further if the Proposal is adopted. Wide Scope of Obligations The controversial nature of the Proposal lies in the fact that it envisages the creation of a legal framework wherein employees will be entitled to receive specified information and will be given an opportunity to express opinions on major decisions proposed by management 4 . The Propos-

al not only applies to an undertaking which has one or more establishments and/or one or more subsidiaries within a given Member State, and whose decision-making centre is located in that same Member State, but also to an undertak- ing which controls one or more subsidiaries and/or one or more establishments in aMember State, and which has its decision-making centre in another Member State, or in a State which is not a member of the European Community. The Proposal therefore aims to subject both nationally based undertakings and transnational undertakings, to equivalent treatment, whether or not the decision-making centres of the latter are situate within or outside the Com- munity — the main question is whether the undertaking operates within the EEC. The Proposal has been criticised by the Commission on the grounds that it does not cover enterprises having a single establishment, that it does not legislate in favour of persons employed where the enter- prise has its decision-making centre, but more importantly because it operates to discriminate between multinationals operating within the EEC and those operating outside of it. The Commission on the other hand argues thatmanymulti- national firms based outside the EEC adhere to the OECD Guidelines for Multinational Enterprises and the ILO Tri- partite Declaration ofPrinciples concerning Multinational Enterprises and Social Policy, the objectives ofboth instru- ments being similar to those pursued by the Commission in its Proposal. The latter has pledged itself to work closely with the OECD and the ILO in this regard, in particular with a view to ensuring that multinationals will be subject to similar obligations whether they operate within the EEC or outside of it 5 . Whereas adherence to these international Codes is voluntary in nature, non-adherence to the proced- ures laid down by the Directive will entitle employee representatives to have recourse to legal action in the national courts and will result in the imposition of sanc- tions on the enterprises concerned. The Directive requires the management of undertakings falling within the scope of its provisions, to inform and consult with employees' representatives. The Proposal does not seek to impose new industrial relations machinery regarding representative institutions on top ofthose already existing in the Member States. The employee representa- tives, for the purposes of the Proposal, will be those recog- nised as such by the laws or practice ofthe Member States. Special provisions will be required where employees are represented at the group or international level. 149