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European Commission bound to make transnational co-determination more difficult

On 2 October 2018, the Institute for Co-Determination and Corporate Governance (IMU) of the Hans Böckler Foundation hosted the first “Worker’s Voice” breakfast debate at the Representation of North Rhine-Westphalia to the European Union. The main focus of the discussion was on “best practice” examples regarding the cooperation of social partners at the global level. However, the proposal of European company law means that things will get significantly worse for transnational co-determination.

“Best Practice” example in Belgium

Following some introductory remarks by the Scientific Director of IMU Dr. Norbert Kluge on the subject of co-determination in the Federal Republic of Germany, Albert Kruft, Works Council of the Belgian chemicals company Solvay, talked about cooperating with the employer side.

After initial teething problems, it had been possible to establish a successful social dialogue with the management, which constantly grew alongside the economic success of the company. Subsequent to Solvay's rise to become a global company, contracts were concluded with the global union federation “IndustriALL”. An attempt was made to enforce equal standards at all the company’s locations and the “Solvay Global Forum” was organised for this purpose. Through this forum, it had been possible to achieve some voluntary measures, such as global standards in respect of parental leave and support in the event of death. However, at the same time there are always new problems that need to be solved. In particular in the USA, where the number of union members is low, Kruft and his colleagues do a lot of work concerning works council organisation. In the meantime it has been possible to ensure that locations with low trade union organisation are able to at least select one contact person for the Global Forum.

According to Kruft, the dialogue in many companies would be significantly better than required by European legislation. Subsequently, directing his request at the present Commission representative, he demanded that the Directive on the establishment of a European Works Council is specified in more detail. Here, Kruft was considering an annual mandatory meeting between management and works council for example. However, the Commission did not show any interest to amend the Directive and referred to its inadequate implementation; the intention was to issue a manual to ensure an improved implementation. However, questions as to more detailed information on this manual remained unanswered.

From the point of view of the AK, a global social partner model, which would raise social standards in all countries, would be desirable.

European company law - an obstacle for co-determination?

In the opinion of the Chamber of Labour, concerning the subject of co-determination, great importance should be attached to the current proposal on European Company law, which had been presented by the EU Commission in April this year. Based on the Polbud ruling by the ECJ in autumn 2017, the European Court of Justice had allowed companies to transfer their registered office to another Member State, even if a company does not pursue any real economic activity in another Member State. Hence, bypassing national rules, which are perceived as a nuisance, among them also co-determination regulations of employees, was made significantly easier. In order to counteract this development, one would need - from the point of view of the Chamber of Labour - the introduction of a “real seat” principle, which has already been requested by ETUC in an open letter. Even though the Commission proposal deals with problems raised by the Polbud ruling, from the point of view of the AK they are not sufficient, to stem the trend to avoid stronger co-operation rights. This is in complete contrast to the report of EP rapporteur Evelyn Regner, who wants to use her report to prevent “artificial associations and arrangements”. The vote on the report in the Legal Committee has been scheduled for 19/20 November 2018.

Further information:

AK Position Paper: Proposal on the establishment of a European Works Council

AK Position Paper: Company Law Package of the European Commission

A&W Blog: Social Partnership reality check im Reality-Check

Hans Böckler Foundation

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