C R I M I C
Corporate Restructuring and Innovative Management of Information and Consultation
Today, European Works Councils are regularly confronted with restructuring operations, mergers, acquisitions and relocations. Between 1990 and 2006 the number of transnational mergers have doubled and more than half of all EWC cases documented in the database run by the ETUI-REHS have reported that restructuring operations took place at their companies during the last three years.
From the point of view of EWCs restructuring operations in various forms are directly influencing the conditions of transnational interest representation, social dialogue and employee participation. However, the involvement of transnational employee representations and the quality of workers’ participation in restructuring processes largely depend on a number of factors such as
- timing and quality of information delivered by the company’s management
- national legal conditions
- available resources and efficiency of communication and co-ordination between EWC members, national employee interest representations and trade union organisations.
The issue of transnational restructuring is a complex and often conflict-ridden field of practice from the employee interest representations’ point of view. In many cases the EWC itself is driven by internal conflicts along different local, regional and national interests. Therefore, restructuring operations might be regarded as some kind of testing ground for the quality and efficient functioning of EWC practice as a whole.
The EWC Directive 94/45/EC stipulates that European Works Councils have to be informed and consulted at an early stage in the context of mergers, acquisitions and transnational relocation operations. The EWC should be able to develop and prepare its own position on the restructuring plan which might then be taken into account by the companies management. Nearly fifteen years after the publication of the EWC Directive and against the background of a growing dynamism of transnational restructuring operations the transnational level of information, consultation and employee participation has become more and more important and in particular EWCs are confronted with a lot of challenges:
- Management decisions and decision making structures have shifted from the local to the central level and that means in most cases from the national to the international and often European level. This also means that the power and influence of national structures of employee interest representation is decreasing significantly.
- Until today, European Works Councils are the sole legal form of transnational interest representation, information and consultation at the company level. At the same time recent research has shown that EWCs only in a few cases are functioning efficiently in order to meet the objectives of the Directive. In particular in restructuring situations, most EWC are likely to be “overstretched”
- In most cases, good practice of EWC functioning and efficient transnational information, consultation and employee involvement in company development is carried out in cases of large companies with strong trade union structures and well equipped employee interest representations.
- However, with regard to the majority of the approx. 800 EWC’s it is quite clear that only in a minority of cases they are informed and consulted sufficiently by the management in the context of restructuring operations. In particular in smaller and medium sized transnational companies with many subsidiaries it often is difficult to organise and establish efficient structures of employee interest representation and participation at the national level and at the transnational level this becomes even more difficult.
- Above that, most EWCs only have weak internal communication structures and thus are not able to develop joint transnational common positions and opinions sufficiently.
In order to improve the framework conditions of efficient employee participation as well as information and consultation processes for most European Works Councils the European Commission has started a consultation process with the Social Partners on a revision of the Directive. Furthermore, there are plans to develop a common framework for transnational bargaining and consultation process dealing with restructuring operations. This is building upon the experience of a growing number of “joint texts” or agreements between employees and managements dealing with restructuring plans and other issues.
Despite the outcome of these initiatives it seems to be a common challenge for all EWCs to develop and enhance internal functioning, competences and communication practice in order to meet the growing demands and tasks arsing in the context of restructuring today.
European Industry Federations like the EMF have recently concentrated on these issues as well, in particular by means of developing resources and tools supporting transnational interest representations in multinational companies to strengthen their own capacities and making use of existing rights and resources (see for example the “EMF Handbook on Transnational Restructuring”).