EUROPEAN COMMISSION

Brussels, 24.1.2024

SWD(2024) 10 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT REPORT

Accompanying the document

Proposal for a Directive of the European Parliament and of the Council

amending Directive 2009/38/EC as regards the establishment and functioning of European Works Councils and the effective enforcement of transnational information and consultation rights

{COM(2024) 14 final} - {SEC(2024) 35 final} - {SWD(2024) 9 final} - {SWD(2024) 11 final}

Table of contents

1.Introduction: Political and legal context

2.Problem definition

2.1.Content and objective of the Directive

2.2.Evaluation of the Directive

2.3.What is the problem?

2.4.What are the problem drivers?

2.5.How likely is the problem to persist?

3.Why should the EU act?

3.1.Legal basis

3.2.Subsidiarity: Necessity of EU action

3.3.Subsidiarity: Added value of EU action

4.Objectives: What is to be achieved?

4.1.General objective

4.2.Specific objectives

5.What are the available policy options?

5.1.What is the baseline from which options are assessed?

5.2.Description of the policy options

5.3.Options discarded at an early stage

6.What are the impacts of the policy options?

6.1.Impacts of policy options under Policy Area 1

6.2.Impacts of policy options under Policy Area 2

6.3.Impacts of policy options under Policy Area 3

6.4.Impacts of policy options under Policy Area 4

7.How do the options compare?

7.1.Effectiveness

7.2.Efficiency

7.3.Coherence

7.4.Proportionality

7.5.Comparative scoring of the options – multi-criteria analysis

8.Preferred option

8.1.Selection of the preferred policy option and analysis of combined impacts

8.2.REFIT (simplification and improved efficiency)

8.3.Application of the ‘one in, one out’ approach

9.How will actual impacts be monitored and evaluated?

Annex 1: Procedural information

Annex 2: Stakeholder consultation (Synopsis report)

Annex 3: Who is affected and how?

Annex 4: Analytical methods

Annex 5: Competitiveness check

Annex 6: Development and content of the recast Directive

Annex 7: coherence of the recast Directive with other Union legislation and policies

Annex 8: Overview of Member States’ transpositions of the recast Directive in relation to relevant policy areas

Annex 9: Examples of national case-law in relation to the problem drivers

Annex 10: External problem drivers

Annex 11: Reasons for discarding certain policy measures without detailed assessment of impacts

Annex 12: Impacts of the policy options

Annex 13: Monitoring and evaluation

Glossary

1.Introduction: Political and legal context

Workers’ right to information and consultation within the undertaking is laid down in the EU Charter of Fundamental Rights (Article 27). The Treaty on the Functioning of the European Union (TFEU) promotes social dialogue between management and labour (Article 151) and recognises the role of social partners (Article 152).

In the ongoing transformation of the world of work driven by environmental, economic and social sustainability, a meaningful involvement of workers at all levels and their representatives as regards the anticipation and management of change can help diminish job losses, maintain employability, improve working conditions, enhance competitiveness and ease effects on social welfare systems and related adjustment costs. 2  Empirical research in the fields of industrial relations and of applied psychology has shown that the involvement of workers through information and consultation at company level can have positive impacts not only on workers’ well-being, but also on labour productivity as well as on firms’ profitability. 3

In accordance with Article 153 TFEU, the EU shall support and complement the activities of Member States in the field of information and consultation of workers. A comprehensive set of directives on the information and consultation of workers establishes rules to protect their rights notably in restructuring processes. EWCs are an important piece of that policy framework. They are employee representation bodies for information and consultation with management of multinational undertakings on transnational matters, established on a voluntary basis in accordance with the European Works Councils Directive (“Directive”). Through them, the employees of undertakings or groups of undertakings operating in two or more Member States are to be informed and consulted on transnational matters affecting them. (For a brief description of the functioning of EWCs see the next section. For an overview of the development and of the content of the Directive see Annex 6.)

EWCs and transnational information and consultation procedures complement the information and consultation of employees at national level pursuant, in particular, to Directive 2002/14/EC establishing a general framework for informing and consulting employees in the European Community, Directive 2001/23/EC on transfers of undertakings, and Directive 98/59/EC on collective redundancies (see Annex 7). National legislation on information and consultation of employees derives from these EU Directives. This initiative does not affect them.

This initiative concerns Union-scale undertakings 4 and their employees in the Member States. Principle 8 of the European Pillar of Social Rights states that "workers or their representatives have the right to be informed and consulted in good time on matters relevant to them". The 2021 Commission European Pillar of Social Rights Action Plan underlines, amongst others, that information, consultation and participation of workers and their representatives at different levels play an important role in shaping economic transitions and fostering workplace innovation, in particular with a view to the ongoing twin transitions and the changes in the world of work. 5  

As a part of a broader campaign for democracy in work places, the Parliament has in its 2021 resolution on ‘ democracy at work: European framework for employees’ participation rights and the revision of the European Works Council Directive ’ and, in particular, in its 2023 resolution  ‘with recommendations to the Commission on revision of the European Works Councils Directive’, called to strengthen the role and capacity of EWCs as information and bodies in Union-scale undertakings. European worker organisations 6  and the European Economic and Social Committee 7 have made similar calls over the past years.

In the State of the Union 2023 Letter of Intent  President von der Leyen announced that the initiative on rules on EWCs is one of the key priorities of the Commission for 2024, also in the view of the recommendations of the Parliament, and of the political commitment expressed in the President's  Political Guidelines to respond to the resolutions based on Article 225 TFEU with a legislative proposal, in full respect of proportionality, subsidiarity and better law-making principles.

Based on Article 153 TFEU, the legislative initiative on revision of the Directive is subject to consultation of European social partners. The two-stage consultation took place between 11 April to 25 May 2023 ( first stage ) and between 26 July and 4 October ( second stage ). For a synopsis of social partners’ responses in the two-stage consultation, see Annex 2. 

This impact assessment considers results of dedicated evidence gathering, 8   the 2018 evaluation 9  as well as other expert analysis and studies described in Annex 1.

The initiative is relevant with regard to Sustainable Development Goal (‘SDG’) 8, as transnational information and consultation of employees can contribute to decent work. It can also promote SDG 5 by contributing to a balanced gender representation on EWCs.

2.Problem definition

2.1.Content and objective of the Directive 

The Directive aims to ensure adequate conditions for employees’ information and consultation to enable structured dialogue between the central management and employees on transnational matters. It is procedural in nature. Its history and content are set out in Annex 6. The legal framework encourages tailor-made solutions and arrangements, defined in agreements between the central management and the employee representatives as a result of negotiations. Implementation of these arrangements should ensure that employees can exercise their right to information and consultation properly while also enabling the undertakings to take decisions effectively. 10

The requirements of the Directive start applying to the undertakings as a result of a request by at least 100 employees or where the management has initiated such process voluntarily. There is no general obligation for all Union-scale undertakings to set-up an EWC. This approach is an expression of the principle of social partner autonomy, which is a basic tenet of the Directive seen by stakeholders as a key feature of effective social dialogue at company level. This initiative does not seek to amend the voluntary principle but focuses on making transnational information and consultation more effective in companies where employees have exercised their right to request the establishment of an EWC. This approach is also consistent with the complementary nature of EWCs to the obligatory information and consultation at national/local level, which remains the primary form of the involvement of employees affected by the implementation of management decisions and of information and consultation at company level (irrespective of this initiative).

2.2.Evaluation of the Directive

The 2018 evaluation of the Directive confirmed its EU added value and the improvements it had brought to the quality and scope of information to employees. The Directive was considered relevant by all stakeholders, and the need for transnational dialogue was acknowledged by social partners. The evaluation concluded that the Directive does not impose administrative, financial and legal obligations which would constitute an unreasonable burden for companies.

Nevertheless, the evaluation identified several challenges: the creation rate of new EWCs is low 17 ; the consultation of EWCs is sometimes ineffective; EWCs face obstacles in access to courts in some Member States; there is a lack of effective remedies and effective and dissuasive sanctions in some Member States. 18

In response, as concluded in its evaluation, the Commission acted through non-legislative actions: the continued financial support to social partners’ projects, proposing a handbook for EWC practitioners, 19  and engaging in a structured dialogue with Member States on enforcement. 20 These actions did not resolve the above-mentioned challenges.

2.3.What is the problem?

Despite the above-described actions, shortcomings continue to exist and the information and consultation of employees at transnational level is not always effective under the existing EWC framework.

The scale of the problem cannot be easily ascertained in objective terms, as the functioning of transnational information and consultation depends on uncertain – often behavioural – variables specific to each undertaking. EWCs remain complementary to the national employee representative bodies (e.g. trade union or works councils), which may be closer to the decision-making in the company.

As a general trend, the views of key stakeholders on the problem are polarised. Trade unions and employees’ representatives underline perceived obstacles, while employer organisations do not acknowledge that adaptations to the existing framework are needed (see Annex 2).

EWCs are considered overall useful by both employee representatives and managers, albeit to a different degree. A majority of the employee representatives consider their EWC very useful (56 %) or useful (14 %) for involvement in decision-making, whereas managers consider EWCs mostly useful (36 %) or somewhat useful (32 %). 21 With regard to the EWCs’ usefulness in reducing industrial relations conflicts in the company, a majority of employee representatives consider EWCs very useful (57 %) or useful (13 %). Most managers considered that EWCs are useful (38 %) or somewhat useful (34 %). 10 % of managers considered them very useful.

Available literature and studies 22 on the effects of employee involvement – albeit not referring specifically to EWCs for the most part – corroborate the conclusion that (well-functioning) EWCs can deliver tangible added-value in terms of the quality and acceptance of companies’ decisions on transnational matters.

The available evidence nevertheless points to shortcomings regarding the effectiveness of the existing EWC framework. Among the main issues encountered by EWCs is the timing of the consultation and the lack of a genuine and meaningful dialogue on transnational matters. EWCs that experienced such problems report for instance that their questions or opinions are not properly answered by management. 23 Conflicts also exist between EWCs and the central management on whether a matter is transnational, i.e., whether the EWC is to be informed and consulted. Moreover, there is some evidence of uncertainty regarding the process for setting up EWCs, the coverage of their expenses, access to justice and effective remedies when rights under the Directive are infringed. Specifically, as regards:

·timing of the consultation: the Directive does not unambiguously require that EWCs are involved prior to the adoption of management’s decision on transnational matters, which is an obvious condition for their effective consultation (see Section 2.4.3);

·lack of a genuine and meaningful dialogue: the Directive does not explicitly require management to respond to EWCs’ opinions. Without such a response, consultation remains a ‘one-way-street’ rather than a dialogue (see Section 2.4.3);

·uncertainty regarding the concept of ‘transnational matters’: the current definition in the Directive leaves scope for divergent interpretations and hence for disputes about the applicability of the obligation to inform and consult EWCs on given issues (see Section 2.4.3);

·resources: the Directive does not require that the coverage of certain key expenses be specified in EWC agreements; if agreements are mute on such expenses, disputes ensue and employees’ representatives can be left without the necessary means to fulfil their function (see Section 2.4.3);

·access to justice and sanctions: effective implementation of minimum requirements on transnational information and consultation depends on the prospect of enforcement if these requirements are not respected (see Section 2.4.4). Currently, as the Commission’s 2018 evaluation found, sanctions set by Member States for non-compliance are often not dissuasive, and EWCs do not have access to justice in some Member States for some of their rights. In response to the findings of the evaluation, the Commission launched a dialogue with Member States on their national enforcement procedures 24 and launched infringement proceedings against Ireland. 25  Neither of these non-legislative actions has resulted in changes to national rules so far.

The evidence is based on results of 2018 evaluation, available studies and surveys (see individual references), review of national laws transposing the Directive and of national case-law, and evidence-gathering activities for this initiative 26 , including a survey of EWCs and management and interviews with various stakeholders. 

The problem concerns primarily Union-scale undertakings and their employees, including employee representatives, although it is not possible to specify the share of undertakings affected by the lack of effectiveness of the transnational information and consultation framework. In 2021, 3676 multinational companies in the EEA came within the scope of the Directive, employing close to 30 million employees in the EEA. 28  Taking into account the annual growth rate, the estimate for 2023 is 3,970 eligible companies with a total of 31.7 million employees. 29

Of those, EWCs or agreements on transnational information and consultation have been established in around 1000 companies 30 . The estimated average number of EU employees per undertaking with an EWC or a voluntary information and consultation body is 16.600 (total population estimated at 16.6 million) (see Annex 4). The take up of EWCs has not been identified as a shortcoming in effectiveness of the legal framework. The evaluation of the Directive 31  showed that the reasons for the low-take up mainly relate to external factors, such as the fact that some Union-scale undertakings are headquartered in countries with a less developed tradition of employee information and consultation or a lack of awareness about the instrument, 32 changing company structures, existence of other social dialogue mechanisms deemed to be sufficient or the fact that the larger multinational undertakings with most to gain from establishing an EWC had already done so. EWCs are more likely to be established in bigger companies. 33 It is estimated that while less than 30 % of eligible Union-scale undertakings have established an EWC, more than 50 % of EU/EEA employees of Union-scale undertakings are covered by an EWC. The voluntary nature of EWCs will be maintained under this initiative, as well as flexibility allowing social partners to establish other procedures for informing and consulting workers than EWCs. 34  To the extent that factors contributing to a low take-up rate are linked to the effectiveness of the Directive, such as the possibility for delaying or blocking launch of negotiations of EWC agreement, they are addressed by this initiative. 

The available evidence does not support the conclusion that EWCs are generally more beneficial for undertakings than other types of transnational information and consultation procedures. Accordingly, the existence of such alternative procedures or arrangements is not identified as a problem per se. It is however considered to be a problem that by exempting undertakings with pre-existing agreements from the scope of the Directive, employees in such undertakings are denied the right to request the establishment of an EWC, unlike the employees of all other Union-scale undertakings (see Section 2.4.1).

This initiative focuses on improving the effectiveness of a specific aspect of the existing legal framework: the EU level minimum procedural requirements on transnational information and consultation of employees. The defined problem concerns shortcoming in the effectiveness of the existing EWC framework, leading to unused potential of EWCs having the following consequences.

For affected employees, the problem reduces the level of their involvement and limits the social dialogue in their company, for instance with respect to the anticipation of company developments. This might reduce their acceptance of change, and is not conducive to shared understanding and smooth implementation. Ineffective or lacking dialogue reduces the employees’ possibility to provide appropriate input, e.g. on corporate restructuring, and can reduce trust between a company’s management and its workforce. Ultimately, the lack of genuine social dialogue can lead to lower employment levels in the companies operating in the EU (e.g. relocation of production outside the EU leading to unemployment), less motivated workforce and suboptimal working conditions. When properly involved, EWCs can help achieve certain minimum standards on working conditions when it comes to downsizing and restructuring, such as on site closures. As transnational bodies, EWCs can provide views on where production can be moved to mitigate employee reductions. For example, an EWC provided decisive impetus in preventing redundancies when a multinational company's manufacturing plant was shut down in a Member State due to low-capacity utilisation as a result of the economic crisis in southern Europe. Approximately 50 employees then moved to various other plants in the headquarter country of the multinational company via a restructuring plan. 35

For affected companies, the unused potential of EWCs may lead to higher indirect costs of implementing measures in case of corporate restructuring (due to lack of common understanding and lack of compromise solutions); loss of business due to a risk of delays on decision-making and decision-implementation (including due to unclear obligations and disputes); fines for non-compliance with information and consultation requirements, as well as reputational risk as a result of a dispute. Companies report that, when properly consulted, EWCs are useful in business internationalisation and in giving company an understanding of national social dialogue culture in the context of newly acquired businesses. Some concrete examples were provided in the evidence gathering: an EWC contributed to a stronger corporate identity during a merger; an EWC made helpful contributions in getting in touch with acquired company representatives and integrating the acquired business into the new corporate culture; an EWC helped local representatives to understand the situation in the other EU countries. 36

Benefits of transnational information and consultation tend to be long-term and indirect in nature and depend on a number of factors, which are external to the scope of this initiative (i.e. national industrial relations systems, ownership structure and evolution of workforce and work practices, external shocks, internationalisation of corporate activities, trust between the employee representatives and the management). These external factors are described in Annex 10. Moreover, the Directive sets a procedural framework on transnational information and consultation that leaves broad freedom to parties to EWC agreements to tailor the information and consultation process as well as accompanying provisions on resources, training, etc. to their specific situation and needs. These factors make it fundamentally challenging to quantify/monetise the consequences of the problem.

Geographically, the consequences affect employees and companies not only in Member States 37 where the affected EWCs are based (see Annex 4) 38 , but also in Member States where undertakings belonging to the same group operate. While some of the challenges are more relevant in certain national legal systems than in others 39 , their effects nevertheless propagate across borders due to the inherently transnational nature of EWCs. Transnational restructuring and accompanying measures can have high local impacts regardless of the location of company’s headquarters, especially where the territory specialises in a particular sector, is facing high unemployment or where the undertaking is locally a major employer.

Indirectly, the consequences of the problem could also affect companies linked to Union-scale undertakings in the value chain (located in the EU or outside), as well as the regional economic systems depending on those undertakings more broadly. Subcontractors and networks of businesses, with which the directly affected companies coexist and which they support, can be affected along with their workers, for instance through loss of business due to major restructuring of the multinational undertaking, especially where sudden or unannounced. Such effects are however difficult to estimate, considering that the EWCs remain consultation bodies without having a prerogative on the management’s decision.

The below ‘problem tree’ illustrates how the drivers analysed in the following section relate to the problem this initiative aims at tackling, and the consequences for different stakeholders.

2.4.What are the problem drivers?

The four groups of drivers (see problem tree) will be presented below.

2.4.1Workers of certain Union-scale undertakings do not have the same minimum rights regarding establishment and operation of EWCs

The Directive excludes from its scope undertakings with voluntary agreements (323) or Article 14 EWC agreements (28), which were concluded or revised during the transposition period of the Directive. 40  These represents a significant share of the overall 1001 agreements on transnational information and consultation in Union-scale undertakings (see Annex 4).

Voluntary agreements, since not concluded under Union law, do not have to provide for the elements and rights as agreements concluded under the Directive. In contrast, undertakings with Article 14 EWC agreements are exempt only from the changes brought about by that Directive but remain subject to the national provisions implementing the original 1994 Directive. The application of the different legal regimes depending on when the agreement was signed for the first time has created a complex and fragmented framework for the undertakings and different levels of minimum rights and protection for employees in Union-scale undertakings. 41  

Though the voluntary agreements were considered by most interviewed stakeholders as equally effective as those concluded under the Directive, trade unions have reported that in some cases these agreements no longer fit the situation of the undertaking, but employees are not entitled to make a request for an EWC. Legal experts assisting EWCs state that voluntary agreements, though generally effective, are more difficult to enforce in some Member States. 42 The different minimum standards remain under the same legal instrument, resulting in unequal treatment between Union-scale undertakings and their employees, more than 30 years after its initial adoption. As the Directive respects the autonomy of the parties and provides enough scope to find company-level solutions, it does not seem justified to shield undertakings with voluntary agreements from requests for establishing an EWC in line with the requirements of the Directive. 

2.4.2. Not sufficiently efficient & effective setting-up of EWCs and gender imbalance

The existing rules do not adequately cover situations where the management fails to take action following a request to set up an EWC (see point (i)) and to provide the necessary means for the establishment of an EWC (see point (ii)). Also, the gender representation of employees in EWCs is overall unbalanced (see point (iii)).

i) Delays in setting up of Special Negotiating Bodies (SNBs): The Directive contains deadlines for the process of the setting up of an EWC. Where the central management refuses to commence negotiations within six months of the request to establish an EWC, an ad-hoc EWC based on subsidiary requirements shall be created. 43  The provision can create legal uncertainty where the management did not explicitly refuse, but at the same time did not enter into negotiations. Such situations have to be resolved through national proceedings 44 , which can be lengthy or even not accessible in some Member States (see Section 2.4.4.), or for which workers may lack resources. In the evidence gathering, the majority of EWC representatives and managers (64 % overall) did not know or preferred not to answer a question about the length of setting up of their SNB. Those who provided information about the interval between the initial request and the set up of an SNB indicated that it exceeded six months in more than half of the cases. 45

ii) Lack of sufficient resources: The Directive provides that expenses related to the setting up of the EWC shall be borne by the central management, without limiting this obligation to certain types of cost. 46  SNBs shall have in particular access to expertise 47 and necessary training without a loss of wages. 48  There is a consensus that costs, including the cost of training, are not to be borne by the employee representatives themselves. 49  Uncertainties however exist over the coverage of costs related to potential legal disputes. Solely in the NL legislation is coverage of such costs explicitly mentioned in the national transposing provisions. In other Member States, this aspect is not defined and this can lead to disputes or refusal to provide resources to the SNB. 50  

In the evidence gathering, 51  56 % of employee representatives stated to have experienced problems in setting up of an EWC (compared to 4 % of management). Of those, 42 % cited a lack of expertise. 

iii) Gender imbalance in the composition of EWCs: The Directive provides that gender balance shall be reflected in the composition of EWCs. 52  Available evidence suggests that the Directive’s requirement to negotiate, where possible, a balanced composition of EWCs with regard to their gender is not effective in achieving an equal representation of men and women as the gender composition of the EWCs is strongly skewed in favour of men. Insufficient representation of women in bodies such as EWCs might contribute to gender-specific issues or consequences not being adequately considered in the corporate decision-making process or that, conversely, information relevant to women employees might not be disseminated effectively among them. In the 2023 ICF survey, 62 % of respondents indicated that men account for more than 60 % of their EWC members. A mere 2 % reported the same for women. 24 % of respondents said that each gender was equally represented in their EWC. 53 Female EWC members are less likely to be found in more senior functions. 54  

2.4.3.Obstacles to the effective operation of EWCs

Depending on the level of detail of agreements, there can be unclarity what constitutes a transnational matter on which the EWC should be consulted on (see point (i)) and at which moment in relation to which decision of management. The EWC opinion can also remain without a follow-up (see point (ii)). EWCs’ capacity to deliver an opinion is sometimes limited due to a lack of resources or expertise (see point (iii)) or due to an excessive use of confidentiality or non-disclosure clauses by the management (see point (iv)).

(i) Legal uncertainty regarding the concept of transnational matters: EWC competence is limited to transnational matters. This distinguishes them from national bodies under other directives. 55  

The 2018 evaluation concluded that the concept under Article 1(4) has been implemented in all Member States (see Annex 8) and though it is better defined in the Directive, it often remains difficult for EWC practitioners to interpret in concrete cases. The feedback from European social partners during the evaluation revealed: difficulties in some cases over how to interpret the notion of transnationality; and some confusion over the notion of transnationality due to the strategic nature of certain decisions, stock exchange rules and the difficulty of determining if certain matters qualify as transnational.

During the evidence gathering, both employee representatives and managers identified disagreement over the concept of transnational matters as one of the main sources of problems in the information and consultation process. 56  A too narrow interpretation of ‘transnationality’ limits the effectiveness of the EWC. On the other hand, a too broad interpretation can lead to interference with the competences of the national workers’ representatives or to an unjustified additional material and financial burden on the employer. 57

Despite some existing good practices, such as the inclusion of a transnationality clause with detailed criteria in the agreement, around 36% of EWC representatives reported frequent discussions with management on whether or not an issue is transnational. 58  In the evidence gathering, 43% of employee representatives and 28% of management representatives said that they had experienced problems related to the definition of transnational issues. Some managers consider it challenging to keep EWCs as a transnational forum, as employees’ representatives tend to bring up local issues at the EWC meetings. 59  Case-studies 60  indicate that a shared understanding of the issues within the scope of EWC has developed over time in some cases, but there are still instances where EWC representatives perceive management's interpretation of transnationality to be too narrow.

Examples of different interpretations and disputes around the concept of transnational matters is reflected also in national case law (see Annex 9).

(ii) Genuine exchange of views does not take place in all cases: Two key weaknesses in relation to the exchange of views between the central management and the EWC have been highlighted during the evidence gathering: the timing of the consultation and the follow up to the EWC opinion.

The 2018 evaluation reported a vast majority of EWC agreements reflected the Directive’s definition of consultation. Some contain additional provisions such as a list of information to be provided or an extensive list of subjects for consultation. In the evaluation, most social partners considered that the Directive improved the legal framework for the information and consultation process. 61 However, the evaluation recognised that in some cases the consultation remains only a formal step rather than an opportunity to seek and consider a substantive opinion from the EWC. 62  

The timing of the consultation of the EWC depends on the specific agreement. Based on the evidence gathering, it is estimated that approximately 42% of EWC agreements contain at least some rules on the timing of consultation. Late consultation has nevertheless been reported as the most frequent problem experienced by EWCs in relation to the consultation procedure. 63  Only a small proportion (ca 20 %) of consultations takes places before the decision on the relevant issue is finalised, whereas in most cases the consultations are carried out before or close to the implementation of the management’s decision (44% before and 19% during the implementation process). Close to 10% of EWC representatives report that they were informed and/or consulted only after the implementation of the relevant decision. 64  The later the consultation of the EWC takes place in relation to the management’s decision, the less effective the consultation is considered to be by the respondents. 

For employers, the timing of information and consultation is closely linked to the issue of confidentiality (see point (iv) below). Managers have reported that the modes and timing of the information provided to employee representatives can vary, depending on the company’s need to fulfil stock market requirements. In most cases, information is provided when it is official and certain. The need to be certain is used to justify the timing of the release of information, which, in most cases, is ‘just a little before’ or ‘at the same moment’ as the formal announcement of restructuring, and it is always in accordance with confidentiality rules. 65

The Directive leaves discretion to the parties to the agreement to decide on how the EWC opinion is to be followed up. Where no EWC agreement has been concluded, subsidiary requirements (set out in Annex I of the Directive) oblige the management to provide a reasoned response to any opinion that the EWC might express. This requirement is not obligatory in the EWC agreements concluded under Article 6, so it exists only in some of them. In the evidence gathering, 46 % respondents to the survey said that their agreement contained an obligation on management to give a reasoned response and 33% said that it contained an obligation on management to take account of the EWC's opinion. 66  

(iii) Insufficient resources and subsidiary requirements for EWCs: The Directive provides that EWC agreements must include information on the financial and material resources allocated to the EWC. 67  A vast majority of agreements, including the voluntary (pre-Directive) agreements indeed include clauses on coverage of expenses. 68  Most agreements contain provisions on the EWC’s right to solicit expert advice 69 and right to training. 70  

Nevertheless, during the 2018 evaluation, employee representatives reported a lack of resources and expertise as one of the shortcomings of the information and consultation procedure. In the evidence gathering, access to external expertise and coverage of legal costs were mentioned by stakeholders as aspects that would benefit from more legal certainty. Employee representatives confirmed that the involvement of external experts is essential, especially during restructuring, and that budget constraints hinder their ability to operate effectively on all levels. Management representatives, on the other hand, expressed concern about incurring unnecessary costs. 71  Based on available data, among EWCs with access to external support on a continuous basis 68% of EWC agreements provide access to one expert, 27% to two, and 5% to three or more. 72

Regarding the coverage of legal costs (court fees or costs of a legal representation in case of a dispute), no Member State lays down an explicit requirement for a dedicated budget or coverage of such costs, although these costs are in principle part of the operating expenses of EWCs. 73  This creates legal uncertainty and can give rise to disputes on access to resources. Such disputes are difficult to quantify, as they are not generally reflected in court cases. 74  Some indications about the lack of resources stem from a previous survey, 75  in which ca. 17 % of those EWC representatives who had experienced a dispute stated that the lack of resources was a reason for not bringing a dispute before a court. Nevertheless, mostly other reasons were given for not initiating a legal case (see Section 2.4.4.).

76 77 78 For EWCs operating without an agreement the subsidiary requirements provide that operating expenses shall be borne by the central management in order to enable EWCs to perform their duties in an appropriate manner (e.g. cost of meeting organisation, of interpretation, of accommodation and travelling). While the number of EWC operating on subsidiary requirements is low, subsidiary requirements serve as benchmark in negotiations of EWC agreements and their impact goes beyond EWCs based on subsidiary requirements. The Parliament and trade unions have criticised that certain rights under subsidiary requirements are insufficient, namely, a lack of clarification of the coverage of legal costs in case of disputes and a requirement for one plenary meeting per year. Survey data shows that EWCs with multiple plenary meetings per year are more likely to consider those meetings effective as a means of consultation. 

Regardless of whether an EWC operates on basis of an agreement or subsidiary requirements, the Directive provides that EWC members shall have access to training without loss of wages. There is a consensus among stakeholders that under the existing rules costs are not to be borne by the employee representatives themselves. 79  Nevertheless, the 2018 evaluation reported that among those who requested training, some 20 % reported obstacles created by management, while a large majority of EWC members noted that there had been no particular challenges in securing it. 

(iv) Confidentiality imposed disproportionately can create obstacles to effective information and consultation: In the 2018 evaluation, workers’ representatives cited extensive use of confidentiality clauses as one of the shortcomings in implementation of information and consultation processes in practice. 80 The scale of or reasons for the issue were not identified in the evaluation, but available research indicates that when confidentiality issues do arise, they are more likely to occur in larger companies and in companies based in liberal market economies, where social dialogue at company level is more prominent. 81

Member States determine rules for the protection of confidential information within the limits set by the Directive. 82  About half of Member States apply stricter conditions for application of confidentiality clause than those in the Directive and limit the possibility of applying confidentiality to business and trade secrets, or require that confidentiality is justified by a legitimate interest of the undertaking (see Annex 8). 83  In the remaining Member States, undertakings are provided with a wide discretion, in accordance with the existing rules, to impose confidentiality to protect further circulation of information disclosed to EWCs.

Around 87% of EWC agreements contain provisions on confidentiality. 84  In spite of the fact that overall few legal cases concerning alleged abuse of confidentiality clauses have been reported, 85  in the 2018 ETUI survey over 39% of responding EWC representatives replied that management often refuses to give information due to confidentiality, compared to around 34% who disagreed or ‘absolutely disagreed’ with that statement. 86

In the evidence gathering, 87 49% of employee representatives (and 4% of managers) said that the use of confidentiality effectively limits or prevents meaningful consultation, and 15% of managers (and 3% of employee representatives) believe that consultation involves the risk of disclosure of confidential company information. In the evidence gathering workshops, both EWC members and managers highlighted the importance of striking a balance and keeping an open and transparent discussion.

On management’s side, confidentiality is an ongoing concern for companies listed on the stock exchange, principally because a trade-off exists between confidentiality and the timing of information and consultation. 88

2.4.4. Shortcomings in enforcing the Directive

The Directive contains provisions on enforcement in accordance with general principles of Union law, respecting the procedural autonomy of the Member States. Insufficient access to justice and lack of remedies (point (i)), as well as ineffective penalties and sanctions for non-compliance in some Member States (point (ii)) prevent effective enforcement of workers’ rights and contribute to the problem of ineffective information and consultation of EWCs. 

(i) Insufficient access to justice and lack of effective remedies in some Member States: Weaknesses have been identified in some Member States as regards the capacity of employees and their representatives to launch legal proceedings, either due to the lack of resources or because the national legal regimes do not provide a capacity of EWCs or SNBs to bring a legal action before a court. Some legal regimes also limit the types of disputes or infringements of rights that can brought to court.

The 2018 evaluation revealed a variety of situations in Member States regarding the capacity of EWCs to access the courts and noted overall weaknesses in the means in place allowing EWCs to enforce their rights. 89  The evaluation reported that there is no consistent practice across Member States as to whether EWCs have the legal status to bring an action before the national courts and the capacity of EWCs to seek legal redress varies across Europe and often depends on trade unions’ capacity to act. 90  

There is evidence that access to justice is more difficult in some countries than others (see Annex 8). The Commission received complaints describing a lack of access to justice in IE, against which the Commission launched infringement proceedings in May 2022 91 , and FI. It should be noted that around half of Member States (those with few or no EWCs established under their jurisdiction; as described in Annex 4) generally lack experience in enforcement of the Directive under their laws. 92  

In the evidence gathering 93 , 13.7 % respondents said there was no access to a court to enforce EWC-related rights in their respective Member State. Other reasons regularly mentioned by EWC representatives for not taking a matter to court were risk of damage of mutual trust with management (28.1%), uncertain outcomes (25%), lengthy judicial proceedings (20.3%), no clarity on how to take a matter to court (18.8 %), lack of effective remedies (15.6%), not enough financial resources (14.1%), not clear choice of competent court (10.9%). 94

(ii) Ineffective pecuniary sanctions / sanctions for non-compliance in some Member States: Furthermore, in a number of Member States, there are no effective financial penalties and sanctions for non-compliance with national rules transposing the Directive.

The 2018 evaluation highlighted significant differences in the type and level of sanctions available in Member States. 95  Employee representatives stressed that differences in the level and scope of sanctions set at national level are an obstacle to effective redress and an insufficient incentive for the respect of EWC rights. 96  The evaluation concluded that, in many cases, the nature and level of sanctions are not effective, dissuasive and proportionate. As mentioned under the previous point, lack of effective remedies and sanctions discourage the employees representatives from bringing serious disputes to a court in around 15 % of cases.

In most Member States, sanctions usually consist of a pecuniary sanction imposed on the employer. A comparison between the concrete upper thresholds in national systems shows a significant difference in levels of penalties, also reflecting the diversity of the legal procedures and practice in the Member States more broadly. 97  Only few Member States do not rely solely on penalties to provide for an effective remedy. For example, the French courts have granted in some cases cease and desist orders and obliged companies to comply with the information and consultation rules. 98 (See further Annexes 8 and 9.)

2.5.How likely is the problem to persist?

It cannot be excluded that future clarifications by the Court of Justice of the European Union (CJEU) could help mitigate certain of the issues described above, for instance by interpreting the notion of consultation as including a requirement for a written response from management; but it seems unlikely that the CJEU will in the baseline scenario play a significant role in clarifying the issues outlined above considering that, due to the low level of litigation at national level, no cases at all have been yet referred to the CJEU for a preliminary ruling in relation to the 2009 Directive.

In absence of future clarifications by the CJEU or in the absence of EU action, the above described drivers are likely to persist, although the driver related to the scope and coverage of the Directive (see Section 2.4.1.) could gradually become less relevant, through a gradual dissolution of pre-Directive agreements (e.g. due to restructuring) and through setting up of new ones under the current rules. This process would however be slow and unsystematic, since the pre-Directive agreements can provide for clauses allowing them to stay in force even when the undertaking changes significantly its structure. The risk is then that the agreement no longer corresponds to the needs of the restructured undertaking.

For the remaining drivers, there are no indications or trends which would lead to the conclusion that the existing problems may resolve.

It is not expected that the drivers would be addressed by the individual Member States. Considering its transnational and procedural nature, very few Member States have adopted national legislation going beyond the prescriptive norms of the Directive. Where the Directive leaves autonomy to the Member States to define their rules or procedures (such as enforcement procedures and sanctions), Member States’ laws differ according to their industrial relations regimes and existing administrative and judicial structures (see Section 2.4.4.).

The increasing transnational character of economic activities, companies and restructuring processes are intensifying the need for proper information and consultation at transnational level. Certain problem issues could be partly mitigated through digitalisation. For instance, the use of digital working methods can allow for efficient solutions in EWCs’ access to training and ad hoc meetings, as evidenced during the Covid 19 pandemic.

Despite these trends, given the context of increased internationalisation and challenges demanding quick management decisions (e.g. due to pandemic, energy crisis), there is a risk of an increasing gap between employees’ needs and expectations regarding transnational information and consultation, and the actual operation of EWCs. 

3.Why should the EU act?

3.1.Legal basis

The Directive was adopted under Article 137 of the Treaty establishing the European Community. In the current Treaty framework, the appropriate legal basis for a revision of the Directive is Article 153(1)(e) in conjunction with Article 153(2)(b) TFEU. Article 153(1)(e) TFEU provides the legal basis for the Union to support and complement the activities of the Member States to improve the information and consultation of workers. In this field, Article 153(2)(b) TFEU empowers the European Parliament and the Council to adopt – in accordance with the ordinary legislative procedure – directives setting minimum requirements for gradual implementation, having regard to the conditions and technical rules obtaining in each of the Member States. Possible adjustments to the existing EU rules must hence be without prejudice to Member States’ responsibility and discretion to integrate those requirements into their respective legal and industrial relations systems, particularly with regard to the arrangements for designating or electing employees’ representatives, their protection and the appropriate sanctions. The initiative will also preserve the nature and basic purpose of EWCs as an information and consultation – rather than co-determination – instrument. 99  Moreover, the social partners in Union-scale undertakings play a key role in implementing the legislation via the negotiation of EWC agreements. Their autonomy, enshrined specifically in the Directive, is another guiding principle for this initiative.

3.2.Subsidiarity: Necessity of EU action

Only an EU initiative can set common rules on information and consultation of workers at transnational level within the EU. The identified problem drivers (see Section 2) are closely linked to the coverage and content of the obligations under the Directive and create effects in companies and their workers across the EU.

Common minimum requirements at EU level remain necessary to improve workers’ right to information and consultation at transnational level across all Member States. 100 Given the cross-border nature of the undertakings/groups within the scope of the Directive and the transnational nature of the matters subject to the information and consultation, individual Member States cannot enact the basic regulatory requirements to define a coherent framework for such information and consultation. Challenges which reduce the effectiveness of workers’ right to transnational information and consultation must be addressed at EU level, in particular where they relate to the scope and substance of information and consultation requirements under EU law.

Given the transnational nature of EWCs, actions of individual Member States could address the identified issues only to a limited extent (e.g. by revising their laws on enforcement and sanctions). As described in Section 2.3., in geographic terms, the effects of the problem materialise not only in the Member State where the EWC is based, but also in all those were undertakings belonging to the same group operate. No Member State can thus be excluded from the outset. Consequently, EU action is needed to clarify and further develop the minimum standards that apply to all multinational undertakings of a certain size operating in the EU.

3.3.Subsidiarity: Added value of EU action

The specific EU added value lies in the establishment of minimum standards, below which Member States cannot compete on the single market. These contribute to upwards convergence in employment and social outcomes between Member States, whose economies and labour markets are increasingly interlinked.

By reinforcing the effectiveness of the existing minimum requirements for EWCs, the initiative aims to create a simplified and more consistent legal framework regarding the minimum level of protection of workers. EWCs’ potential should be fully exploited in the current context of the twin digital and green transitions and profound industrial transformations, bearing in mind the need to avoid unnecessary burdens, preserve competitiveness and the ability of undertakings to react to rapidly changing market circumstances, and the need to ensure adequate working conditions.

These considerations are consistent with the 2021  European Added Value Assessment prepared by the Parliament in support of its legislative own-initiative resolution on a revision of the Directive. That assessment concluded that in the future, more systematic information and consultation of workers at transnational level could lead to even greater economic benefits – by fostering job quality, reducing the rate at which people leave their jobs (’quit rate’), reducing the number of redundancies, limiting the costs of structural adjustment, helping to eliminate distortions of competition within the single market and inequalities in treatment of workers, and/or easing the burden on social welfare systems.

4.Objectives: What is to be achieved?

The initiative is intended to address challenges, through EU-level action, related to several principles set out in the European Pillar of Social Rights (‘Pillar’), most importantly principle 8 on Social dialogue and involvement of workers, principle 2 on Gender Equality and Principle 5 on Secure and adaptable employment. 

4.1.General objective

The general objective of this initiative is to improve the effectiveness of the framework for the information and consultation of employees at transnational level. This objective is consistent with the existing aims and principles set out in the current Directive: to improve the right to information and to consultation of employees in Union-scale undertakings and groups (Article 1(1)), and to define and implement the arrangements for informing and consulting employees in such a way as to ensure their effectiveness and to enable the undertaking or group of undertakings to take decisions effectively (Article 1(2)). For the purposes of this general objective, effectiveness is to be understood as described in the context of the general problem (Section 2.3.). The basic nature of the Directive as an information and consultation instrument will not be changed in the context of this initiative, given the choice of the legal basis, which allows for the establishment of minimum requirements as to the procedural framework but not for guaranteeing that management decisions are aligned in substance with the opinions of EWCs 101 (see Section 3.1.). This approach and perspective are reflected in the specific policy objectives.

4.2.Specific objectives

The specific objectives through which the general objective will be addressed are to:

(1) Avoid unjustified differences in workers’ minimum information and consultation rights at transnational level.

(2) Ensure an efficient and effective setting-up of EWCs by preventing delays in the setting up of EWCs, ensuring appropriate resourcing of special negotiating bodies and improving gender-balance on EWCs and special negotiating bodies).

(3) To ensure appropriate resourcing of EWCs and an effective process for their information and consultation by improving legal certainty of key concepts and strenghtening genuine exchange of views between EWCs and central management on transnational matters (see Section 2.3.).

(4) Promote a more effective enforcement of the Directive, including through access to justice for employee representatives, SNBs and EWCs and effective, dissuasive and proportionate sanctions.

The specific objective are further clarified by the indicators used to assess the degree to which different policy options would achieve those objectives (“effectiveness”), see Section 7.1.

5.What are the available policy options?

5.1.What is the baseline from which options are assessed?

The policy options include a no-policy-change scenario, which serves as a baseline for assessing and comparing the policy options described under Section 5.2. 102  As the policy options include amendments to the Directive, a timeframe of 10 years is assumed for the baseline. 103  

All relevant EU-level policies and measures described in Annex 7 are assumed to remain applicable under the baseline scenario. The national legislation implementing the existing EU level requirements would also continue to apply during the baseline scenario. The fact that no major changes to the national provisions in the field of the Directive have been notified following the transposition of that Directive indicates that the national legislation is stable and unlikely to change. 104  

The proposed Directive on Corporate Sustainable Due Diligence (CSDDD) 105 is likely to be adopted during the baseline period. It would set out obligations for large companies regarding the information and consultation of employees in relation to adverse environmental and human rights impacts in their global value chains. The CSDDD has the potential to achieve synergies with the Directive, as EWCs’ opinions can contribute to the development and dissemination of the due diligence policy of multinational corporations. However, that Directive would not affect the legal framework for the operation of EWCs.

Considering the evolution of EWCs over the last years, the number of EWCs is expected to increase at a low linear rate of 9 per year, and the number of Union-scale undertakings at a rate of 3,9%, similarly to the number of employees of those undertakings (see Annex 4).

Under the baseline scenario, the Commission would continue its longstanding and substantial support of projects raising awareness of transnational information and consultation and promoting best practices. 106  Such projects can help alleviate some of the identified problem drivers under the baseline scenario, such as legal uncertainty regarding certain concepts laid down in the Directive and EWC members’ perceived lack of expert advice. The Commission would also continue to monitor the correct transposition of the Directive through a structured dialogue with Member States, and if necessary, infringement procedures. 107

Despite the actions outlined above, it is unlikely that the identified problem and its drivers will become significantly less relevant in the absence of additional policy measures on EWCs, as evidenced by the fact that the issues identified in the 2018 evaluation since remained unresolved. As the Directive sets minimum requirements and thus a benchmark for individual agreements between central management and employees’ representatives, the effectiveness of information and consultation activities on transnational matters is likely to remain suboptimal if the relevant drivers are not tackled through EU action.

Undertakings with a well-functioning EWC could continue to reap the benefits of constructive dialogue at transnational level. In contrast, undertakings experiencing disputes and uncertainty regarding information and consultation requirements would continue to be ill-equipped to implement the radical changes required in the context of climate change and increased automation and digitalisation. Without EU action addressing the problem drivers, it is unlikely that this potential can be harnessed on a larger scale, to benefit the competitiveness of the EU economy as a whole and improve working conditions.

As stated above under Section 2.5., it is unlikely that the CJEU will play a significant role in the baseline scenario. Although the Commission may be able to take up certain grievances by means of infringement procedures, for example, for a lack of conformity with the requirement to provide effective enforcement mechanisms, Member States are much less likely to address that deficit systematically if they are not required to do so by a new EU initiative.

See Annex 12 for detailed explanations of impacts of no EU policy action over the baseline period, by problem area, including quantification where possible. There is no indication of any significant variance in the real costs identified in relation to the problem drivers over the baseline period.

5.2.Description of the policy options

5.2.1. Structure and logic of the policy options

The structure of the policy options mirrors that of the drivers in four distinct problem areas. Therefore, it is appropriate to aggregate the policy measures at the level of problem areas, in accordance with the specific policy objective they aim to achieve. The policy options thus consist of alternative packages of measures addressing a specific problem driver. 108  To ensure a proportionate and targeted impact assessment, the analysis focuses on substantive policy measures likely to have a significant impact on stakeholders. Accompanying measures are identified as such and are not assessed individually. Some measures were discarded for reasons of legality or a clear lack of coherence or proportionality (see Annex 11). The effectiveness, efficiency, coherence and proportionality of the policy options linked to the same policy objective are compared, considering their impacts, to identify the preferred option taking into account the necessary trade-offs between different approaches (see Section 7). 109 In combination, the preferred policy options form the overall preferred policy option for which joint impacts are analysed in Section 8.

Except for problem driver 1, which is linked to the exemptions laid down in Article 14 of the Directive and can therefore not be addressed by a non-regulatory measure, each group of policy options contains a non-regulatory alternative as well as different combinations of legislative amendments. For each specific policy objective, the policy options are organised in the order of escalating intensity of the envisaged policy interventions. Furthermore, a distinction is made between policy measures that entail substantive changes and therefore require an assessment of their significant impacts, and policy measures which are of an accompanying and/or clarifying nature. As the latter merely reinforce the effects of the initiative and address drafting issues in the legal text without changing the existing provisions in substance, they do not warrant a detailed assessment of impacts, in line with the proportionality principle applicable to the better regulation process.

In designing the policy measures and packaging them to form policy options, the Commission was guided by the following key considerations:

(i) the need to give sufficient discretion to Member States in implementing any revised minimum requirements on transnational information and consultation, allowing them to complement those requirements as appropriate and to integrate them into their respective rules, industrial relations traditions and practices, in accordance with the principle of subsidiarity and the Treaty legal base for social policy measures;

(ii) full respect of the autonomy of social partners in giving practical effect to the minimum requirements, which is generally accepted as a key factor for effective information and consultation; the principle of social partner autonomy also entails preserving the possibility for social partners to choose other forms of company-level social dialogue on transnational matters, or to agree to limit themselves to employee involvement at national or local level;

(iii) the fact that business stakeholders generally favour non-binding measures over legislative amendments whereas trade union organisations and employee representatives generally consider non-binding measures ineffective and hence support legislative amendments. Therefore, while various possible combinations between legislative and non-legislative measures could be imagined in theory, stakeholder feedback did not indicate any particular such combination;

(iv) Non-legislative measures, such as the funding of projects to promote the awareness of the transnational information and consultation framework, and the Commission’s monitoring of the implementation of the Directive by the Member States form part of the baseline scenario. A legislative initiative would therefore automatically be combined with such continuing non-binding measures. Indeed, the clarifications and specifications to the Directive envisaged in the policy options will enable more effective monitoring measures by the Commission, as the vague and general nature of some key requirements – for instance regarding sanctions and access to justice – has thus far hampered a more frequent pursuit of infringement cases.

For information on the need for adapting the existing national implementing rules in light of specific options, see Annex 8.

The following section describes considered policy options for each of the four main problem areas. The intervention logic below provides an overview of the policy options and their links with the problem drivers and policy objectives.

5.2.2. Policy options aimed at avoiding unjustified differences in workers’ minimum information and consultation rights at transnational level (Policy Area 1)

Policy option 1a would bring currently exempted undertakings in the scope of the Directive. This concerns undertakings with ‘voluntary agreements’, which were concluded before Union law was established in this field, and ‘Article 14 agreements’, concluded or revised during the transposition period of the recast Directive (see Section 2.4.1). This option ensures a consistent, clear, and comprehensive framework for information and consultation at transnational level for all Union-scale undertakings. It aims to guarantee equal access of employees to the rights under the Directive and make all Union-scale undertakings subject to the same obligations to negotiate an EWC agreement on receipt of a valid request. Only one option has been identified, since there is no plausible alternative that could avoid unjustified differences in workers’ information and consultation rights.

With respect to undertakings with Article 14 agreements, this option would provide for the application of the revised requirements of the Directive, in the same way as those requirements will apply to agreements that are currently already subject to the Directive. The application of revised minimum requirements is likely to entail the need to adapt at least some of the pre-existing EWC agreements. This would be consistent with the approach followed by the 2009 Directive. The transitional period for the adaptation of Article 14 agreements would be two years, just as for undertakings with pre-existing EWC agreements that are not currently exempted from the Directive.

With respect to ‘voluntary agreements’, since they were concluded outside the scope of EU law and since, in the absence of a request by the requisite number of employees or employees’ representatives, establishment of EWCs is not obligatory in Union-scale undertakings, removing the exemption of undertakings with such agreements cannot trigger the automatic application of the Directive’s requirements to these agreements. Following the removal of the exemption, the employees and management of these undertakings can maintain their existing arrangements and agreements for information and consultation on transnational measures, without an obligation to renegotiate them in accordance with the revised Directive. Employees or management will, however, have the possibility to request and initiate negotiations of an EWC agreement in accordance with the Directive’s procedures. 110  As a result, unless the management and employees agree otherwise, a newly established EWC under the Directive would replace the transnational information and consultation body based on the previous voluntary agreement.

5.2.3. Policy options aimed at ensuring an efficient and effective setting-up of EWCs (Policy Area 2)

Policy options under Problem Area 2 to would provide more legal certainty in relation to the timeframe for the initiation of negotiations as well as the resources available to SNBs.

Option 2a involves the issuing of non-binding interpretative guidance by the Commission on the rules governing the setting up of EWCs, based on established best practice and with due consideration to the views of European social partners. Such guidance could for instance clarify the timeframe for setting up of the SNB and initiating negotiations, the coverage of SNBs’ costs, including legal costs, and how to achieve a balanced gender composition of EWCs.

Option 2b would cover some of the same issues as Option 2a but translate the envisaged clarifications into binding legislative amendments to the Directive.

Substantive changes under option 2b would include a clarification in the Directive that the central management’s obligation to bear SNBs’ expenses includes also the coverage of reasonable costs of legal advice, representation and proceedings. The limitation to “reasonable” legal costs is designed to prevent cost coverage for frivolous legal actions. The approach of using an abstract legal term is consistent, e.g. with Union rules on legal aid which use the concept of “appropriate” legal aid. 114 It is not possible to pre-determine more concretely in the legislation whether legal action is warranted in an individual case.

Accompanying measures under option 2b include: 

(i) the provision of the Directive prescribing the application of subsidiary requirements “where the management refuses to commence negotiations” would be reformulated to clarify that management is to convene the first SNB meeting within six months of the request. The deadline remains unchanged under this option, which merely aims to address the ambiguity of the existing wording.

(ii) The existing right of SNBs to training “without loss of wages” would be clarified to address any doubts as to whether undertakings must cover the costs of necessary training and related expenses.

Option 2c would introduce, in addition to option 2b, a new substantive requirement for the SNB and central management to include an objective of gender-balanced representation when negotiating new or re-negotiating existing EWC agreements. More specifically, that objective would be for the underrepresented sex to account for at least 40% of EWC members, and where applicable select committee 115 members. In line with the approach of the Directive on gender balance on company boards 116 , the gender composition of EWCs would not necessarily be representative of the overall workforce in order to meet that objective. Indeed, it would not be conducive to achieving the policy objective if EWCs were to mirror a possible general lack of gender balance in the undertaking. In order not to compromise the functioning of EWCs, the option would however not take the form of a fixed binding quota but allow for a certain flexibility. Parties could tailor the arrangements they agree concerning the gender-balance objective to take full account of the case law of the CJEU on positive action 117 , practical constraints linked to the possible lack of suitable candidates of the underrepresented sex in some cases, and the national rules and practices on the election of employees’ representatives. The measure would aim to achieve changes in the composition of the vast majority of existing EWCs during the renegotiations (see Section 2.4.2). The same accompanying measures as under option 2b would be taken also under 2c.

5.2.4. Policy options aimed at ensuring the appropriate resourcing of EWCs and an effective process for their information and consultation (Policy Area 3)

Policy options under Policy Area 3 pertain to various contributing factors: the issue of legal certainty regarding the concept of ‘transnational matters’, requirements for consultation, including as regards the timing of the follow-up to EWCs’ opinions, appropriate resourcing of EWCs to carry out their role effectively, and the matter of confidentiality or non-disclosure of sensitive information.

Option 3a involves the issuing of non-binding interpretative guidance clarifying the concept of transnational matters, the need for management to provide a reasoned response to EWCs’ opinions, the timing of information and consultation, the coverage of training expenses and the conditions for restricting information based on confidentiality grounds resp. withholding sensitive information from EWCs.

Option 3b would introduce substantive amendments (see below) in the Directive. Except for the measures concerning the subsidiary requirements set out in the Annex to the Directive, all Union-scale undertakings and their EWCs are potentially directly concerned by the amendments described below. Member States would need to implement the amendments into national law and enforce the amended requirements.

Substantive changes under option 3b:

(i) The concept of transnational matters would be clarified without significantly broadening it. For this purpose, certain elements of recital 16, such as the scope of the potential effects of a matter, would be incorporated into the enacting terms.

(ii) As regards the procedural requirements for consultation, an obligation on management to provide a reasoned response to EWCs’ opinions prior to the adoption of a decision on transnational matters would be laid down in the Directive. It implicitly requires management to take EWCs’ opinions into account, because a reasoned response cannot be provided without having first considered those opinions on their merits. 120  

(iii) The types of financial and material resources that must be determined in an EWC agreement would be specified, in particular the access to and costs of support by experts, and the costs of legal advice, representation and proceedings. In accordance with the principle of party autonomy, no fixed requirements would be imposed. 121  The option would instead require the SNB and central management to negotiate and determine the coverage of those costs in their EWC agreement, in accordance with applicable national law.

(iv) In order to ensure that effective information and consultation is not undermined by excessive recourse to non-disclosure and confidentiality restrictions, it would be clarified that central management may declare information confidential only in the legitimate interest of the undertaking. To increase transparency and enable employees’ representatives to challenge confidentiality restrictions or non-disclosure, management would be required to inform them, upon request, of the grounds justifying the confidentiality/non-disclosure.

(v) Finally, the subsidiary requirements would be amended to require at least two annual plenary meetings of central management with the EWCs that function on the basis of those requirements.

Accompanying clarifications under option 3b: To address uncertainty regarding the interpretation of the requirement to provide EWC members with necessary training “without loss of wages”, it would be clarified that undertakings have to cover the costs of such training and related expenses. Such clarification would be in line with the existing interpretation of the provision by stakeholders (see Section 2.4.3). It would also be clarified that the parties should agree on the format for EWC meetings, which may make use of virtual as well as physical formats, which is not explicit in the current wording.

Option 3c would involve a more far-reaching policy intervention, by introducing the following substantive amendments, in addition to the targeted measures under option 3b:

(i) The concept of transnational matters would be substantially expanded to include notably matters with potential effects indirectly concerning employees in two different Member States, as well as any matters decided in a Member State other than the one in which they produce their effects, even if those effects are confined to a single Member State. Such amendments would substantially broaden the competence and scope of action of EWCs to matters for which the national or local level of employee representation was thus far considered appropriate. Moreover, in the case of a dispute between the central management and the EWC as to whether an information and consultation is to be carried out, the central management would be required to justify the absence of transnational issues in writing. (ii) In terms of resources, a general right of EWCs to be supported by experts of their choice at the expense of the Union-scale undertakings would be introduced, instead of leaving it to the parties to the EWC agreement to negotiate the conditions for involving experts. (iii) The sharing of information with employees’ representatives at national or local level would be exempt from confidentiality restrictions, provided that those employees’ representatives are subject to equivalent restrictions. In addition, the dispensation of management from its obligation to provide information to EWCs if that disclosure could seriously harm the undertaking would be made subject to a general condition of prior administrative or judicial authorisation.

5.2.5. Policy options aimed at promoting a more effective enforcement of the Directive (Policy Area 4)

The effective enforcement of the rights guaranteed by the Directive depends on several factors: (i) compliance monitoring by the European Commission (and if necessary, infringement proceedings), (ii) appropriate sanctioning by national competent authorities, and (iii) effective judicial and/or administrative remedies available to the rightsholders (primarily employee representatives and members of the special negotiating bodies and the EWCs). For the purposes of the first component, Member States would be required to provide the Commission with (and update as necessary) the information on how access to justice is provided for each right. Regarding the other two components, the requirements regarding access to justice and penalties could be clarified or strengthened. The policy options in Problem Area 4 could be combined with either non-binding or legislative measures relating to the coverage of reasonable legal costs (see options 2a, 2b, 2c, 3a and 3b above).

Option 4a consists of specific Commission recommendations addressed to Member States, clarifying how the latter can comply with their obligation, in accordance with the general principles of Union law, to apply administrative or judicial procedures, as well as sanctions that are effective, dissuasive and proportionate in cases of infringement of the obligations arising from the Directive.

Option 4b would include the following substantive changes:

(i) To enable the Commission to effectively monitor and ensure the requirement of effective access to justice, Member States would have to notify the means by which EWCs, SNBs and employees’ representatives can bring judicial proceedings in respect of all their rights under the Directive. 124 This one-off information requirement could be discharged in the framework of the notification by Member States’ of the measures transposing the revision of the Directive. As the relevant information concerns the rules on judicial remedies under national law, it is fully available to the national authorities. Consequently, this option would not impose any reporting or administrative obligations on businesses.

(ii) The level of pecuniary sanctions should take account of the annual turnover of the sanctioned undertaking or group of undertakings, as well as of any relevant aggravating and mitigating factors related to the gravity, scope, impacts and duration of the offence. Sanctions have to be determined in accordance with principles of effectiveness, dissuasiveness and proportionality (see accompanying clarification below). The rationale of explicitly prescribing the turnover criterion is that the existing fixed lump sums as pecuniary sanctions in the Member States are in practice disproportionately small for undertakings with a large turnover, and thus devoid of any dissuasive effect, see Section 2.4.4.(ii). 125  The payable amount needs to be related to the financial capacity of sanctioned Union-scale undertaking or group 126 , in order to ensure the dissuasiveness and effectiveness of this type of sanctions. At the same time, the option requires Member States to ensure the proportionality of any sanctions. The fact that the impacts of non-compliance with the Directive might be limited, including in terms of their geographical scope, must therefore be taken into account by national courts and administrative authorities when determining the percentage of turnover to be levied as a sanction. This option does not specify percentages by way of thresholds or limits for the imposition of fines and leaves it for Member States to define how individual sanctions are to be determined, having regard to the sanctioned undertaking’s turnover. Member States must in any case avoid potentially excessive penalties.

Accompanying clarification under option 4b: The existing requirements under general principles of Union law for access to judicial remedies and effective, dissuasive and proportionate sanctions would be incorporated into the enacting terms of the Directive. This would clarify that these requirements apply whenever rights under the Directive are infringed, e.g., where undertakings restrict the dissemination of information on transnational matters or refuse to disclose such information to EWCs on confidentiality grounds, without sufficient justification.

Option 4c would go further by introducing, in addition to the measures under policy option 4c, the following further substantive changes:

(i) Determining specific maximum shares of undertakings’ net turnover that could be imposed by way of pecuniary sanctions: up to 4% where a violation of rights and obligations under the Directive is found to be intentional, or else up to 2% of global annual net turnover. (ii) Introducing a right to injunctive relief allowing EWCs to request the suspension of management decisions taken in violation of the information and consultation requirements under the Directive.

5.3. Options discarded at an early stage

A number of policy measures that have either been considered at the early preparatory stages of this initiative or were put forward by social partners during the consultation process have been discarded without a detailed assessment of their impacts, either because it was not possible to establish sufficient evidence to confirm the issue that those measures would have aimed to address, or because the measures were unsuitable to achieve the policy objectives, clearly disproportionate, or incoherent with the existing legal framework. Annex 11 contains a description of those policy measures and the reasons for discarding them.

6.What are the impacts of the policy options?

This section presents key findings with details in Annex 12. However, certain points warrant general clarification, by way of introduction. First, the analysis focuses on the impacts of implementing the policy options in the EU Member States, in line with the geographic scope of a possible amending Directive or non-binding Commission instrument. As the Directive applies also to other EEA countries 129 , it is reasonable to assume that clarifications or amendments to that Directive would eventually also be adopted EEA-wide. EEA countries have therefore been included in the assessment of impacts. 130  There are no indications that the impacts in the EEA would substantially diverge from those in EU Member States. Second, as undertakings with EWCs are primarily concentrated in the metal, services, chemicals, building, food, agriculture and tourism sectors, the identified social and economic impacts across all policy areas will materialise also primarily in those sectors. 131  Third, due primarily to the geographic distribution of undertakings’ headquarters, most EWCs are located in seven Member States, namely DE, FR, BE, SE, NL, IE, IT. 132  Nevertheless, the impacts policy options would affect employees across Member States where the undertaking operates, primarily in the abovementioned sectors, because they are represented by the EWCs. 133  Fourth, most EWCs are subject to the national law of the seven Member States, whereas around 10 Member States have either no or only one EWC body established under their law. The impacts of certain policy measures can vary depending on which national law is applicable to an EWC. Some national laws may already contain rights and obligations in line with certain policy measures, which would therefore not require any amendments to the relevant national law. The respective measure would thus not change the situation of undertakings and EWCs subject to those laws. Such cases are pointed out in the presentation of impacts below. Fifth, for the reasons presented in more detail in Annex 12 (Section 1), the initiative will not have any relevant or foreseeable impacts on consumers, SMEs 134 , or the environment. These types of impact are therefore not discussed separately under each policy area. Sixth, possible impacts on employment are discussed only where relevant in this section, in relation to policy options 2c and 4c, whereas Annex 12 (Sections 2-5) contain further explanations about the reasons why no effects on employment can be anticipated for the rest. Seventh, the accompanying measures described above in Section 5 do not involve substantive changes to the existing provisions but mere technical drafting clarifications. These measures are generally assumed to reinforce the effects of the options without producing significant self-standing impacts. Therefore, they do not warrant a detailed analysis of impacts. Eigth, available cost estimates are presented below in terms of average unit costs per option, in relation to the average turnover of the Union-scale undertakings. 135 However, for the following reasons, the scope for meaningful quantification of impacts is limited: (i) the specific characteristics of the transnational information and consultation framework make it fundamentally challenging to establish a causal link between the policy options seeking to develop or clarify that framework, and specific economic or social outcomes. This challenge pertains for instance to the autonomy of social partners in designing and handling the information and consultation process in their respective undertaking, the fact that the establishment of EWCs is only mandatory when employees representatives request it, and external – often behavioural – factors such as the established culture of employee involvement in the respective undertaking. (ii) Costs and benefits of transnational information and consultation tend to be long-term and indirect in nature. (iii) Due to often polarised stakeholder views, key evidence sources are affected by selection-bias and the risk of inaccurate self-reporting by stakeholders.

6.1.Impacts of policy options under Policy Area 1

6.1.1. Economic impacts

Costs for Union-scale undertakings: By removing the exemptions from the scope of the Directive, option 1a would expand the right to request the establishment of an EWC to employees of the 323 undertakings with voluntary agreements. Where such requests are made, the latter undertakings may hence face the one-off adjustment costs and possible marginal opportunity costs of negotiating new EWC agreements in accordance with the Directive. There is no way reliably to estimate the likely incidence of such requests, as it depends on internal dynamics within each individual undertaking and EWCs remain voluntary instrument (i.e. a request is needed either by workers or initiated by the management). The average overall costs per negotiation were estimated at ca. EUR 148 000. 136  They may be considered negligible as they correspond to only 0.0006% of the average global turnover of Union-scale undertakings with an EWC or voluntary agreement. 137  These one-off adjustment costs could be offset to some extent where, due to the negotiations of the new agreement, undertakings do not incur baseline costs of renegotiating existing voluntary agreements. 138 For undertakings with voluntary agreements, the upper number of potentially affected companies is 323, whereas there are 28 companies with Article 14 agreements (see Section 2.4.1.). The latter would become subject to the Directive following the removal of the exemptions and hence may have to be re-negotiated to comply with the revised requirements unless they already cover all requirements. The available evidence suggests that most Article 14 agreements (ca. 16 out of 28) are already aligned with the current Directive, but a revision of that Directive is likely to require a renegotiation for adapting the agreement to the new EU requirements. Evidence suggests that re-negotiations on average take less time than the process for setting up a new EWC, but may require multiple meetings in complex cases. Based on the available evidence, it was possible to monetise certain costs linked to meetings (ca. EUR 18 400 per meeting 139 ) between management and EWC representatives for the renegotiation of existing agreements. This partial monetisation can provide an indication of the order of magnitude of the overall costs related to renegotiations, bearing in mind that it should not be taken as an approximation of those overall costs. In any case, the costs of renegotiation even if several meetings are needed should not have any significant economic consequences for businesses. Furthermore, the data gathered indicates that agreements are regularly re-negotiated (on average every 5 years). Therefore, the re-negotiation linked to option 1a could take place within the framework of this regular negotiation, entailing no or limited costs compared to the baseline scenario. There are no indications that option 1a would result in higher running costs of EWCs and therefore no recurrent adjustment costs have been identified in relation to this option (cf. Annex 12 Section 2).

Benefits for undertakings: Option 1a would ensure the equal application of rights and obligations under the Directive to all Union scale undertakings and thus establish a simpler and more coherent legal framework.

Impacts on competitiveness: No such impacts have been identified in relation to option 1a. There is no evidence that the setting-up or operation of an EWC under the Directive would have negative impacts on the competitiveness of companies which are currently exempted. The costs for setting up and operating EWCs are negligible in relation to the turnover of companies with EWCs or with voluntary agreement (see above ‘Costs for Union-scale undertakings’ and Annex 12). Likewise, while studies have shown that the involvement of employees is linked to better performance of undertakings 140 , potential positive impacts of policy option 1a on the competitiveness of companies cannot be estimated with any degree of certainty.

Impacts on internal market: Although the deletion of the exemptions under option 1a would lead to a less fragmented legal framework at EU level, the associated economic benefits in terms of market efficiency are likely negligible. First, the establishment of an EWC remains a discretionary choice of the social partners in Union-scale undertakings and the take up of EWCs under the revised rules cannot be reliably estimated. Second, the available evidence does not suggest important differences in overall functioning and operational costs of the voluntary agreements and EWCs agreements.

6.1.2. Social impacts

Benefits for employees: While there is no conclusive evidence that the operation of voluntary agreements is less effective than of EWC agreements, option 1a would ensure the equal application of minimum rights and obligations to all Union scale undertakings and to their EU employees. Replacing voluntary agreements, where so requested by employees or initiated by the management, with EWC agreements can also facilitate redress because the rights of EWCs are enforceable under EU law, in line with the fundamental right to an effective remedy (Article 47 CFR). Potentially ca. 5.4 million employees could benefit from this alignment of the minimum rights if all 323 undertakings with voluntary agreements would instead establish EWCs operating under the Directive. It is however also possible that the parties will opt to preserve well-functioning voluntary agreements.

6.2. Impacts of policy options under Policy Area 2

6.2.1.Economic impacts

Costs for undertakings: All policy options – with regard to the clarification of coverage of reasonable legal costs - could entail some adjustment costs when setting up an EWC (one-off costs) or renegotiating an EWC agreement with an SNB (recurrent costs, renegotiations are estimated to occur on average every five years, 141 but do not necessarily involve an SNB). A small increase in costs linked to the coverage SNBs’ expenses for legal advice can be expected due to more requests for legal advice from employees’ representatives. This is more likely for options 2b and 2c owing to their binding character. The data does not allow for a precise estimation of these incremental costs. They would represent only a negligible share of the one-off cost of setting up an EWC (estimated at EUR 148 000 per negotiation procedure, representing ca. 0.0006 % of the average global annual turnover of Union-scale undertakings), or cost of renegotiation of an existing EWC agreement. 142  No additional costs are expected from actions to ensure gender-balance (option 2c) as this objective would need to be taken into account when renegotiating an existing EWC agreement or creating a new EWC. Thus, no additional/ad-hoc renegotiation is needed. See Section 3 of Annex 12 for details.

Benefits for undertakings: The policy options could lead to certain benefits for undertakings setting up an EWC. The interpretative guidance (option 2a) could speed up the negotiation process only to some extent and thereby slightly reduce costs of negotiations, as the number of meetings or disputes could be marginally reduced. The positive impacts are likely to be limited as it would depend on the extent to which the guidance would be taken into account by the stakeholders. The improved legal clarity (options 2b and 2c) would improve accessing the required legal expertise and avoiding discussions about the scope of the SNB’s costs that are to be covered by the management, leading to a more efficient process. Cost savings linked to a reduction of the frequency of issues associated with unclear resourcing of SNBs (for example, reduced risk of disputes, and hence reduced opportunity costs for companies), would compensate some of the above-mentioned additional costs. Given the negligible share of overall negotiation/renegotiation costs in comparison to turnover, the potential direct benefits are however negligible. In light of research showing the beneficial effects of gender balance 143 , option 2c could have a positive effect on the quality of EWCs’ non-binding opinions, and thus indirectly on management decisions on transnational matters.

Impacts on competitiveness: No negative impacts on competitiveness have been identified in relation to any of the options in Policy Area 2. The costs for setting up EWCs are overall negligible in relation to the turnover of companies with EWCs and the clarification of the obligation to cover reasonable legal costs in the process of negotiation or renegotiation would contribute to improved legal clarity regarding the setting up procedure (see above ‘Costs for Union-scale undertakings’ and Annex 12). Given the evidence from studies showing a positive relationship between female representation and business performance 144 , and the potential contribution of more gender-balanced EWCs to the quality of management decisions, it is plausible that option 2c might contribute to some extent to fostering companies’ competitiveness.

Impacts on internal market: There is no firm evidence of significant direct impacts of the policy options in area 2. Nevertheless, as regards the objective of gender-balanced composition of EWCs under option 2c, it can be expected, considering the abovementioned research demonstrating economic benefits of gender balance in relation to various aspects of the economy 145 , that increased gender balance on EWCs will contribute, in conjunction with the general benefits of a more effective information and consultation process described above, to delivering benefits such as a higher level of employment and productivity. These benefits however cannot be quantified.

6.2.2.Social impacts

Benefits for employees and undertakings (quality of social dialogue): The interpretative guidance (option 2a) is likely to entail only limited positive impacts on the process of setting up EWCs and renegotiations involving the establishment of an SNB. Through guidance on access to legal advice, this option could indirectly improve the quality of future or renegotiated EWC agreements. It could also contribute to a better gender balance within these EWCs by clarifying how the parties may take this need into account. A better informed, smoother negotiating process could also benefit management and the undertaking, e.g., by decreasing legal uncertainty and facilitating clearer and more targeted EWC agreements. However, these positive effects are likely to be limited due to the non-binding nature of the measure and would depend on the extent to which the guidance would be followed by the stakeholders. By providing important binding clarifications of employees’ rights during the (re)negotiation process, options 2b and 2c entail stronger social benefits. It is however not possible to quantify them. In addition, option 2c would also ensure, through specific objectives, a better gender balance in current and future EWCs. Around 60 % of existing EWCs could benefit from this measure. This could improve the quality of social dialogue, with possible indirect positive impacts on working conditions and employment. Therefore, option 2c is likely to entail significant positive impacts for employees. 

Impacts on fundamental rights: Policy options under Policy Area 2 would improve employees’ rights to information and consultation within the undertaking (Article 27 CFR) and would also indirectly bring benefits regarding the right to an effective remedy (Article 47 CFR) and equality between women and men (Article 23 CFR). While benefits under option 2a would be limited due to its non-binding nature, option 2b, by ensuring that reasonable legal costs are covered by the management, would contribute positively to the quality of the dialogue between employees and management and of the resulting agreements, as well as to the capacity of employees and their representatives to access legal advice and justice. Option 2c, would in addition to the coverage of reasonable legal costs also entail positive impacts in achieving a more equitable environment in EWCs by setting specific objective for gender balance in EWCs and thus contribute to better equality between men and women.

6.3. Impacts of policy options under Policy Area 3

6.3.1. Economic impacts

Costs for undertakings: Option 3a could create some one-off adjustment costs where parties choose to renegotiate their EWC agreement specifically to align it with the non-binding guidance, which is however not expected to occur often. Partial monetisation of the renegotiation costs (see Section 6.1.1. above) suggest the costs of renegotiation, even if several meetings are needed in most complex cases, should not have any significant economic consequences for businesses. Furthermore, the data gathered indicates that agreements are regularly re-negotiated (on average every 5 years). Where such renegotiations lead to expanding EWCs’ right to the coverage of expenses, such as legal costs and expert fees, they could entail an incremental increase in undertakings’ costs of running an EWC. However, given that the average overall costs linked to the operation of an EWC are estimated at ca. EUR 300 000 146 (representing ca. 0.0012 % of the average global annual turnover of Union-scale undertakings) such incremental recurrent adjustment costs would likewise account only for a negligible share of undertakings’ turnover. The requirement under option 3b to address the questions of access to expertise, coverage of training costs (including expenses) and legal costs in EWC agreements would require renegotiation of EWC agreements that do not yet cover those issues. While it is not possible, for lack of comprehensive information about the content of all EWC agreements, to estimate the incidence of such renegotiations with certainty, most agreements include at least some clauses on coverage of expenses (e.g., coverage of expertise, training) (see Section 2.4.3.). 147 In any case, one-off renegotiation costs would account only for a negligible share of undertakings’ turnover. Moreover, in a substantial number of cases, the necessary adaptations of EWC agreements could be agreed as part of regular renegotiations, entailing no or only very limited additional costs compared to the baseline. 148  Option 3b could entail also limited recurrent adjustment costs for undertakings. Specifically, for each of the undertakings with EWCs based on subsidiary requirements (20), the increase in the number of annual plenary meetings is expected to lead to an additional cost of ca. EUR 42 000 per year. 149 Moreover, the requirement to address the issues of access to experts, legal costs and costs of training (including related expenses) in EWC agreements could lead to adjustment costs for undertakings in respect of those EWCs where these aspects were not yet clearly regulated. However, the scale depends on the results of autonomous negotiations between parties so cannot be estimated. All of the possible costs described above could at least partially be offset by the benefits for undertakings described further below.

According to management representatives, the requirement of a reasoned response to EWCs’ opinions prior to the adoption of a decision on transnational matters (options 3b and 3c) could also lead to indirect recurrent costs due to delayed decision-making. 150  However, these concerns are not expected to materialise on a significant scale in practice, as EWCs would remain information and consultation bodies without substantive powers over management decisions, and no such impacts have been substantiated with respect to other types of worker representation bodies that are already entitled to a reasoned response. 151  Furthermore, during the two-stage consultation, employer organisations responded that an obligation to provide a reasoned response to an EWC opinion already exists in many agreements (see Section 2.4.3.).

The amendments under option 3c regarding the concept of transnational matters, access to external experts and confidentiality restrictions could incrementally increase one-off renegotiation costs compared to the baseline, as the parties to the agreement may need more time to agree on how to implement these requirements in practice. Moreover, several measures under option 3c are expected to entail recurrent adjustment costs: a broader concept of transnational matters, combined with management’s obligation to justify why a matter is not transnational in order to be discharged of the obligation to inform and consult the EWC, is likely to lead to more information and consultation procedures and require increased capacity and resources allocated to EWCs; increased recourse by EWCs to external expertise and related fees; costs linked to the requirement to obtain a prior authorisation in order to withhold information the disclosure of which would seriously harm the undertaking. In proportion to the global turnover of the undertakings concerned, these costs are nevertheless expected to be moderate as they would only incrementally increase the current costs of operating an EWC, described above. However, the indirect costs linked to a substantially broadened concept of transnational matters are likely to be more significant, due to frictions, overlaps and unclear delineation between information and consultation procedures at different levels. 152 Likewise, requiring a mandatory prior judicial authorisation in order to avoid the disclosure of potentially harmful information could lead to delays in decision-making and economic harm, depending on the length of the relevant authorisation procedures.

Benefits for undertakings: Option 3a would promote legal clarity regarding the relevant issues to a limited extent and thus potentially deliver small cost savings due to a marginally smaller number of disputes. The general benefits for undertakings linked to having an EWC 153 would likewise be increased due to option 3a, by means of smoother information and consultation procedures, but only to a negligible extent. As Option 3b would clarify the binding legal requirements with respect to several potentially contentious issues regarding those procedures, it is expected to increase legal certainty significantly and ensure more efficient information and consultation, delivering time and potential cost savings for undertakings. Particularly the requirement of a reasoned response prior to the adoption of a decision on transnational matters is expected to promote the trustful relationship between the parties, and thus enable them to exploit better the potential of EWCs to facilitate smooth structural changes in the context of the challenges linked to the digital and green transition. As regards the common elements under options 3b and 3c the described benefits would also apply under option 3c, but due to the risk of frictions and overlaps between information and consultation requirements at different levels of representation (due to broadening of the concept of transnational matters), as well as the potential delays and indirect costs described above (e.g. prior authorisation requirement), option 3c is not expected to overall increase the benefits of EWCs for undertakings compared to the baseline, and potentially to create negative consequence compared with undertakings without EWCs.

Impacts on competitiveness: Considering that the costs for the renegotiation and operation of EWCs are negligible in relation to the turnover of undertakings with EWCs it is not expected that the options in this policy area would substantially affect undertakings’ competitiveness (see above ‘Costs for Union-scale undertakings’ and Annex 12). In particular, option 3b does not contain far-reaching enforcement measures of the kind that were mainly opposed by business organisations and management in the social partner consultation and other evidence-gathering activities. Conversely, while option 3b is expected to have significant positive impacts on social dialogue, potential positive effects on the competitiveness of companies cannot be estimated with any degree of certainty. As the ability to take decisions quickly and flexibly are key competitiveness factors for companies, the identified indirect costs under option 3c could have a moderate negative impact in this regard, due to possible inefficiencies and delays in the decision-making process (linked to the requirement of a mandatory prior authorisation when withholding potentially harmful information) as well as frictions with information and consultation procedures at national level (due to the broadened concept of transnational matters). Moreover, exempting information-sharing between EWCs and employee representatives at national or local level from confidentiality restrictions would lower the protection of undertakings.

Costs for Member States: Under option 3c, Member States would be required to ensure the availability of procedures for the prior authorisation of the non-disclosure of transnational information that could harm the respective undertaking. Although Member States are expected to recoup procedural costs from undertakings through fees, they are likely to incur some additional adjudication costs due to the urgent and novel nature of such procedures, which none of the Member States has thus far established in national law.

6.3.2. Social impacts

Benefits for employees and companies (quality of social dialogue): Option 3a is expected to bring limited positive impacts. While it would contribute to better application of information and consultation rights of EWCs, the non-binding status of this option would make its effects uneven. Option 3b would create significant positive impacts on the information and consultation process of EWCs. By introducing binding clarifications regarding the concept of transnational matters in the enacting terms of the Directive, it would clarify the scope of EWCs’ information and consultation rights, potentially reducing disputes. Since about 40% of stakeholders (43,3 % of employees and 28,3 % of managers) report problems interpreting this concept, this would have a positive impact for a high number of employees and their representatives. Under option 3b, the requirement for management to provide a reasoned response to EWC opinions prior to the adoption of a decision on transnational matters, and the limitation of confidentiality to justified cases 154 , would also positively impact the quality of the dialogue at company level. It would namely allow for a timely information exercise and a possibility for the employee representatives on EWCs to share their views and contribute to the decisions of management. For undertakings with EWCs operating on the basis of subsidiary requirements (20), the requirement of at least two plenary meetings per year would lead to a more regular information and consultation on transnational matters, which would positively impact the quality of the social dialogue. There would also be an unquantifiable spill-over effect on undertakings with EWCs operating on the basis of agreements (of which ca. 50 % currently require only one annual plenary meeting). The requirement under option 3b for the parties to agree on appropriate resourcing, including on coverage of legal costs, of the EWCs could also lead to higher quality information and consultation processes and decision-making, with potential benefits leading to a more involved workforce, improved working conditions across the Union-scale undertaking and alternative solutions or mitigating measures to prevent job losses and promote better adaption to change. Option 3c would bring moderate benefits. Some measures under this policy option would clearly be beneficial for employees. For example, broadening the scope of transnational matters would allow for a higher number of issues to be discussed as part of the information and consultation at EU level. However, as the elements of transnationality considered under this option are defined in very broad terms, they could also lead to additional legal uncertainty compared to the baseline 155 . Although these impacts cannot be quantified, it can be assumed that this extension of the definition of transnational matters would be overall negative, leading to conflict with national and local levels of information and consultation. The obligation for management to justify that a matter is not transnational could lead to EWCs’ members receiving more information. However, this is rather an indirect impact. On balance, the social impact of broadening the concept of transnational matters under option 3c is likely to be limited. A general right to assistance from experts under option 3c could optimise the information and consultation process, with efficiency gains. This is corroborated by the 2018 ETUI survey, which indicates that, in case of restructuring, the support of a trade union coordinator or expert contributed to better decision making. In relation to information and consultation process, option 3c would exempt from the confidentiality obligation EWC members when sharing information protected by confidentiality with national or local representatives. This could facilitate the coordination between employees’ representatives at different levels with potential benefits for the effective presentation of employees’ interests in the consultation procedure. However, the facilitation of cross-border exchange of confidential information could also lead to difficulties in practice (including legal risks for the employee representatives) due to the differences of national legal regimes on protection of confidential information.

Impacts on fundamental rights: Policy options under Area 3 would promote employees’ right to information and consultation within the undertaking (Article 27 CFR) and indirectly also the right to an effective remedy (Article 47 CFR). While benefits under option 3a would be limited due to its non-binding nature, option 3b, by significantly improving conditions for a genuine dialogue on transnational matters, as described in detail in the section on ‘social impacts’ above, is expected to have a significant positive impact on the effectiveness of the fundamental right set out in Article 27 CFR. The requirement under that option for the parties to agree how to cover EWCs’ legal costs (and in the case of EWCs operating on the basis of subsidiary requirements for management to cover such expenses as far as they are reasonable) would also positively contribute to the capacity of employee representatives to access legal advice and justice. Such benefits would be moderate under option 3c. While that option would significantly strengthen EWCs’ right to involve external experts (including legal experts) and improve EWCs’ access to relevant information by limiting the possibility of management to impose confidentiality or withhold information, the broader concept of transnational matters risks creating new issues of delineation between information and consultation requirements at different levels of representation, possibly legal uncertainty and disputes, and frictions with procedures at national/local level.

6.4. Impacts of policy options under Policy Area 4

6.4.1. Economic impacts

Costs for undertakings: Option 4a is expected to entail only very limited additional enforcement costs for undertakings. While no certain assumptions can be made about the implementation rate, there is a plausible risk that those Member States which have thus far not ensured effective sanctions and remedies will be least inclined to follow the Commission recommendations. In such a case, there would be limited impact on undertakings’ enforcement costs compared to the baseline. Option 4b could create significant enforcement costs for sanctioned undertakings, as the requirement to ensure dissuasive and effective sanctions, and in particular to take into account their annual turnover when determining pecuniary sanctions , could lead to a substantial increase in the amounts of fines imposed in all Member States, considering that penalties are generally negligible under the baseline scenario. 156  However, it is important to note that the national authorities and courts must, when determining the level of sanction, observe the principle of proportionality in relation to the gravity, scope, impacts, duration and other relevant factors characterising the offence. Moreover, these costs would materialise only in a small number of cases: although some policy measures such as the clarified coverage of legal costs (options 2b and 3b) and the improved access to justice under option 4b might facilitate legal actions, the incidence of legal disputes and sanctions in this policy area is expected to remain low, as the prospect of the possible imposition of dissuasive and effective sanctions by Member States’ authorities is expected to have rather a deterrent effect which could reduce the number of offences giving rise to legal actions. Moreover, while option 4b cannot entirely overcome the existing fragmentation of national provisions on sanctions, given that the relevant Treaty legal basis only allows for the establishment of minimum requirements, it is expected to decrease fragmentation and improve legal certainty compared to the baseline scenario, as Member States would be provided with significantly more specific guardrails than under the current Directive. Under option 4c, sanctioned undertakings would face very significant costs in the form of pecuniary sanctions, which based on average turnover of undertakings with an EWC, could be up to 4000 times higher than the highest administrative sanctions currently available in any Member State. 157 Moreover, the possibility of suspending management decisions in the case of a claimed violation of information and consultation requirements could lead to substantial economic losses in the form of foregone business opportunities. 

Impacts on competitiveness: Option 4a is unlikely to lead to significant changes in Member States’ enforcement practice, and any possible impacts on undertakings’ competitiveness (cost and price competitiveness or undertakings’ capacity to innovate) would therefore be null or negligible. Such impacts, if any, are also expected to be negligible or very limited under option 4b, considering the low incidence of legal action in this policy area and the principle of proportionality that has to be observed when determining the level of sanctions. For sanctioned undertakings, the drastic sanctions and remedies envisaged under option 4c are likely to have a moderate to significant impact on competitiveness. While the fines approaching the ceiling of 4% of global turnover are unlikely to be imposed in any but in the most extreme cases, the suspension of management decisions could affect undertakings’ ability to seize business opportunities quickly. In the targeted survey 158 , a strong majority of management representatives considered that the sanctions envisaged under option 4c would have a negative or very negative impact on the international competitiveness of EU-based companies. Considering that effective and agile decision-making is a key factor for undertakings’ competitiveness, it is expected that option 4c would have tangible negative effects on competitiveness.

Impacts on consumer prices: Despite the described implications of option 4c for the competitiveness of sanctioned undertakings, noticeable consumer price effects are considered unlikely even under this most far-reaching option. Firstly, sanctions and remedies will apply only in a small number of individual cases and are thus unlikely to feed into the pricing considerations of Union-scale undertakings. Secondly, it is expected that competitive pressures on sanctioned undertakings will disincentivise them from passing enforcement costs on to consumers.

Costs for Member States: The one-time notification obligation under options 4b and 4c would entail limited administrative costs for Member States which would need to collect and send to the Commission information on how EWCs, SNBs and employees’ representatives can bring judicial proceedings in respect of all their rights under the Directive. This obligation could be discharged as a part of the standard process of notifying transposition measures via the available IT systems, thus creating only negligible added costs.

By promoting a more effective access to courts, the recommendations under option 4a could entail limited adjudication costs for Member States choosing to facilitate actions, considering in particular that EWCs are exempted from court fees in eight Member States. 159 The evidence remains inconclusive to what extent option 3b would lead to an increase in the number of legal actions brought by rightsholders under the Directive, and thus adjudication costs. Social partners in undertakings usually consider such actions as a last resort and the risk of higher sanctions could also contribute to a better compliance rate. Moreover, the expected higher pecuniary sanctions imposed under this option could offset additional adjudication costs, as such penalties are assumed to accrue to Member States’ budgets. This effect would be more pronounced under option 4c, which involves the imposition of very significant fines. The drastic sanctions under this option, including also the suspension of management decisions, are also expected to have a strong dissuasive effect and therefore to lead to an overall decrease of infringements, and consequently, legal actions.

6.4.2. Social impacts

Benefits for employees and undertakings: As a general rule, strengthened enforcement promotes compliance with information and consultation requirements and thus has a positive impact on application of employees’ rights and social dialogue on transnational matters. Under option 4a, this benefit is expected to materialise to a limited extent, owing to the non-binding nature and possibly limited take-up of the Commission recommendations. Option 4b is expected to significantly improve the implementation of the Directive, and thus social dialogue on transnational matters, as it would ensure improved access to justice for an estimated 4.3 million employees 160 and facilitate compliance oversight by the Commission. The requirement to determine pecuniary sanctions taking account of undertakings’ annual turnover is also expected to provide an effective incentive to respect employees’ information and consultation rights. While option 4b does not lead to a full harmonisation of national enforcement provisions as it leaves autonomy to Member States to determine the types of sanctions for specific infringements and the methodology for determining their level, the explicit requirement that account must be also taken of the sanctioned undertakings’ turnover, in addition to other aggravating or mitigating factors (eg. duration, seriousness, impacts of offence), would significantly improve the implementation compared to the baseline. Option 4c would create very far-reaching sanctions and remedies, thus ensuring strong deterrence of violations of rights under the Directive. On the other hand, although they remain highly uncertain, potential negative impacts on employment under option 4c, which could significantly affect the financial situation of the sanctioned undertakings, cannot be ruled out given the competitiveness implications described above. 

Impacts on fundamental rights: For the reasons set out under ‘social impacts’, option 4a is expected to promote the fundamental rights to an effective remedy and to information and consultation to a limited extent. As mentioned, option 4b would deliver better access to justice for a large number of employees and further the quality of social dialogue by ensuring more dissuasive penalties. These effects could amount to moderate to significant benefits in terms of upholding said fundamental rights. The same is true for option 4c.

7.How do the options compare?

Having regard to the assessment of impacts of the policy options described in Section 6 and Annex 12, the options are compared per Policy Area based on the criteria of effectiveness, efficiency, coherence and proportionality. A table at the end of this section provides an overview of the comparative scoring of the options against the baseline, in accordance with the considerations in Sections 7.1. to 7.4.

7.1.Effectiveness 

Policy area 1: Option 1a can effectively expand minimum transnational information and consultation rights to employees of all Union-scale undertakings, overcome the complexity created by the co-existence of multiple legal regimes and achieve a simplified and more coherent legal framework for those undertakings. Option 1a could further improve the quality of transnational social dialogue as it would provide social partners in currently exempted undertakings with an opportunity to establish an EWC, subject to the complete set of rights of the Directive.

Policy area 2: While interpretative guidance (option 2a) is expected to facilitate the process of setting up EWCs, its take up is likely to be uneven so it is unlikely to deliver legal clarity and certainty to a large extent. The clarifications of the binding requirements under options 2b and 2c, in conjunction with the accompanying measures, significantly reduce the risk of disputes and delays following a request to set up an EWC and ensure that SNBs have the means to secure necessary legal support during the negotiations. Option 2c scores highest because it also contributes to achieving a gender-balanced composition of EWCs.

Policy area 3: All options would contribute to increasing legal clarity regarding the operation of EWCs and to promoting a genuine exchange of views. Options 3b and 3c are likely to be effective in this regard, while the take-up rate of non-binding interpretative guidance (option 3a) is uncertain. Specifically, the requirement for a reasoned response to EWCs’ opinion prior to the adoption of a decision on transnational matters, common to options 3b and 3c, is an effective tool to improve the timeliness and quality of social dialogue on transnational matters. Option 3b is also expected to pre-empt disputes and divergent interpretations by clarifying the concept of transnational matters and management’s right to impose confidentiality or withhold information. Option 3c would be moderately effective in that regard, as it would increase overlaps between transnational matters and matters reserved to information and consultation at national/local level and create frictions and disputes. The far-reaching measures concerning confidentiality envisaged by option 3c could unbalance the relationship between management and EWCs.

As regards the coverage of EWCs’ expenses, all options could contribute to increased clarity, but only options 3b and 3c, including their accompanying measures, would ensure enforceable rights. However, insofar as option 3c confers a broad right on EWCs to involve any experts at the cost of undertakings, it overshoots what is appropriate in the context of this instrument, under which modalities of EWCs’ operation, including resources, are to be determined by the parties in their agreement. In this respect, option 3c is therefore less targeted and effective.

Policy area 4: Option 4a scores lowest in terms of effectiveness, primarily because the Member States which have thus far not ensured sufficient enforcement of transnational information and consultation rights are least likely to implement non-binding recommendations in this area. Option 4b would incrementally strengthen existing general rights to adequate redress, increase the deterrent effect of pecuniary sanctions and facilitate monitoring by the Commission. Its effectiveness would be reinforced also by the accompanying measure. Option 4c would introduce the most powerful sanctions and remedies, including the possibility to suspend the effect of management decisions. On the other hand, option 4c might impinge on undertakings’ decision-making prerogative, safeguarded under the Directive. This raises doubts as to its effectiveness.

7.2.Efficiency 

Policy Area 1: The deletion of the exemptions under option 1a is an efficient way to achieve the social benefits linked to the application of the Directive to all Union-scale undertakings and to their EU employees. The possible one-off adjustment costs and marginal opportunity costs due to the establishment of new EWCs in some of the 323 undertakings with voluntary agreements 161 and the renegotiation of some of the 28 Article 14 agreements represent a negligible share of undertakings’ turnover. 162  While the economic and internal market benefits of creating a simplified and more coherent legal framework are expected to be negligible, the identified negligible economic costs are expected to be outweighed by the social benefits of giving all employees the same right to request the establishment of an EWC. The efficiency of option 1a is amplified, for instance, by the fact that the inclusion of currently exempted undertakings in the scope of the Directive ensures justiciability under EU law, in line with the fundamental right to an effective remedy.

Policy Area 2: Option 2a is moderately more efficient compared to the baseline, as it is expected to deliver limited positive impacts on the functioning of SNBs while creating only negligible compliance costs for undertakings. Although under option 2b undertakings are more likely to incur limited adjustment costs due to SNBs’ possibly more frequent recourse to legal advice and remedies, this option performs well against the criterion of efficiency because it promotes a smoother process of negotiating and renegotiating EWC agreements as well as the quality of those agreements. The costs are expected to be negligible considering the turnover of the relevant undertakings. Option 2c is highly efficient as it, in addition, promotes a more gender-balanced composition of EWCs without imposing additional costs on undertakings. Costs linked to legal uncertainty or procedural frictions are minimised by the envisaged flexible approach, which consists in allowing parties to agree on arrangements towards achieving the gender balance objective without imposing a hard quota. The risk of tensions with the CJEU case law on positive action or the various national rules and practices governing the selection of employees’ representatives is thus avoided. Improved gender balance is expected to be conducive to a better quality of EWCs’ opinions, which can in turn positively impact management decisions on transnational matters and thus contribute indirectly to improved working conditions.

Policy Area 3: As option 3a could deliver limited social benefits, in terms of a smoother information and consultation process and prevention of disputes due to improved legal clarity, while creating only negligible adjustment costs for undertakings, it is considered moderately efficient. Although option 3b would entail certain one-off and recurrent adjustment costs for undertakings with an EWC, those costs should be outweighed notably by the expected social benefits. For instance, option 3b is expected to significantly improve legal clarity and the smooth functioning of the transnational information and consultation process. Consequently, undertakings stand to benefit from the opportunity to better exploit EWCs’ potential to facilitate sustainable management choices. Employees, on the other hand, could benefit from a more effective representation of their interests, potentially resulting in better working conditions. In contrast, option 3c, while likely to achieve certain social benefits by strengthening the resourcing and information of EWCs, performs worse than the baseline in terms of efficiency as undertakings could incur significant indirect costs linked to slower decision-making if a broadened concept of transnational matters entails frictions, overlaps and unclear delineation between information and consultation procedures at different levels of representation, as well as potentially higher direct costs for companied due to an increased need for capacity and resources of EWCs. Similarly, the need for management to obtain a prior authorisation to withhold potentially harmful information could entail delays in decision-making and hamper the efficiency of the information and consultation process overall.

Policy Area 4: Although option 4a would entail only very limited enforcement costs for undertakings and adjudication costs for Member States, it is expected to strengthen the enforcement of rights under the Directive only to a limited extent. In contrast, option 4b is considered highly efficient, as it is expected to improve compliance with information and consultation requirements significantly, by facilitating monitoring by the Commission, requiring pecuniary sanctions to be set at a meaningful level, and promoting access to justice for an estimated 4.3 million employees at an overall moderate cost. Considering the associated social benefit of an improved social dialogue on transnational matters, the fact that option 4b could entail significant enforcement costs for sanctioned undertakings does not negate its efficiency, because this measure is mainly expected to have a deterrent effect, and the incidence of legal actions and pecuniary sanctions is likely to remain low. The requirement to consider turnover when determining pecuniary sanctions is not expected to create disproportionate costs even for non-compliant undertakings, because Member States would be legally required to levy sanctions in proportion to the gravity, scope, impacts, duration and other relevant factors characterising the respective offence. Consequently, option 4b is expected to affect competitiveness only to a negligible extent, if at all. In contrast, under option 4c, sanctioned undertakings would face the risk of – possibly costly – delays in decision-making and pecuniary sanctions representing a significant share of their global turnover, since the upper limit of 2% or 4% risks acting as an indicator of the very substantial level of pecuniary sanction expected. Although such drastic sanctions are likely to be rare in practice and to nevertheless deliver a strong dissuasive effect and associated social benefits in terms of compliance with information and consultation requirements, their ability to affect the international competitiveness of sanctioned undertakings prevents a positive efficiency score compared to the baseline.

7.3.Coherence 

Policy Area 1: Option 1a is coherent with the general principles of legal clarity and equal treatment, and employees’ right to information and consultation expressed in Article 27 CFR and Principle 8 of the Pillar. By removing the exemptions from the scope, employees of all Union-scale undertakings would be entitled to request the establishment of an EWC, in line with the revised Directive, while having the choice to continue with the voluntary agreement. This approach is consistent with the legislator’s choice not to make EWCs mandatory in all Union-scale undertakings.

Policy Area 2: All options in this policy area are coherent with Article 27 CFR and Principle 8 of the Pillar. Option 2c is most conducive to increasing balanced representation of men and women in the EWC context, and thus most coherent with Article 23 CFR, Article 6(2)(b) of the Directive and the Commission’s Gender Equality Strategy 165 , which aims to mainstream the gender perspective into different policy areas. Therefore, option 2c is most coherent overall.

Policy Area 3: All options in this policy area are coherent with Article 27 CFR and Principle 8 of the Pillar. They aim to address the lack of clarity of the concept of transnational matters and limit the scope for dispute. Both options 3b and 3c require a reasoned response by management to the EWC’s opinion, reinforcing an effective dialogue, so giving expression to Article 27 CFR and Principle 8 of the Pillar. On the other hand, option 3c, which substantially expands this concept, is less coherent with the relevant EU acquis, which requires that employees and their representatives be guaranteed information and consultation at the relevant level of management and representation, according to the subject under discussion. To achieve this, the competence and scope of action of EWCs must be distinct from that of national representative bodies – contrary to them, EWCs are not bodies for negotiating with the management 166 – and must be limited to transnational matters. 167

Concerning resources, option 3b is coherent with the principle of party autonomy enshrined in the Directive, by leaving the necessary flexibility to design solutions corresponding to the specific needs and situation of each EWC and Union-scale undertaking. In contrast, option 3c sets binding requirements regarding EWCs’ resources and thus is not coherent with this principle.

The existing provisions of the Directive on confidentiality are generally consistent with the corresponding provisions in other relevant EU Directives 168 . By limiting management’s right to require confidentiality to cases of legitimate interest, options 3b and 3c would further align the Directive with the wording of Directive 2002/14/EC. Unlike the other options. option 3c imposes a new mandatory requirement of prior authorisation where management withholds potentially harmful information. This requirement could lead to significant delays in companies’ decision making, which would also not be coherent with Article 1(2) of the Directive and may interfere with the freedom to conduct a business enshrined in Article 16 CFR. It is also not coherent with the existing national laws on the matter, as none of the Member States has thus far used the option to impose such a requirement. Likewise, under option 3c, exempting information-sharing between EWCs and national or local employee representatives from confidentiality restrictions creates issues of coherence as it falls within the competence of each Member State to determine the criteria and conditions for imposing confidentiality. National laws could be breached if EWCs were authorised to share information with employee representatives in another Member State where the same information is not subject to an equivalent obligation of confidentiality.

Policy area 4: Options 4a and 4b would be coherent with the existing provisions of the Directive and relevant general EU law principles concerning sanctions, remedies and access to justice. They are also aligned with the principle of effective company decision-making (Article 1(2) of the Directive) and the freedom to conduct a business (Article 16 CFR), as they do not introduce specific binding enforcement measures that could interfere with companies’ ability to implement the necessary management decisions quickly. However, insofar as a recommendation on enforcement matters in the field of information and consultation (option 4a) and the determination of pecuniary sanctions in proportion to company turnover (option 4b) would represent novel approaches in the EU’s legislative framework on information and consultation, these options are not entirely aligned with other legislation in this field. The high maximum levels of pecuniary sanctions and the possibility to suspend management decisions under option 4c are less coherent with those principles and with other EU labour law directives, none of which provides for a concrete set of sanctions, leaving their determination to Member States’ procedural autonomy. This autonomy is subject to the general requirement for penalties to be ‘effective, dissuasive and proportionate’.

7.4. Proportionality 169

Policy Area 1: Option 1a promotes the objective without going beyond what is necessary to achieve it, while allowing for the possibility to continue transnational social dialogue based on voluntary agreements if neither employees nor management choose to initiate the establishment of an EWC. This option would preserve the principle of social partner autonomy regarding the choice between setting up an EWC or following a different approach with regard to employee involvement on transnational matters. This approach is expected to lead to an expansion of the application of the Directive only to those previously exempted undertakings in which, in the eyes of employees representatives or management, a pre-existing ‘voluntary’ agreement did not ensure a sufficiently effective framework, compared to the Directive, for transnational information and consultation.

Policy Area 2: Option 2a, being the least intrusive, appears rather weak in relation to the challenges in the set-up phase, and thus scores low on proportionality. Option 2b is suitable to increase legal clarity regarding the setting-up of SNBs and their resources but does not address gender-balance. Option 2c would also improve gender balance, without going beyond what is necessary or imposing an excessive burden on undertakings or employees’ representatives. Accordingly, Option 2c performs best in terms of proportionality. In particular, it would allow for sufficient flexibility to implement the envisaged gender-balance objective without compromising the functioning of EWCs, and to take full account of the case-law of the CJEU on positive action as well as the established national rules and practices for the nomination of employees’ representatives.

Policy Area 3: While option 3a entails the least costs and no binding new requirements, it is also less likely to ensure the appropriate resourcing of all EWCs and a more effective information and consultation process. Option 3b strikes the most proportionate balance between promoting that policy objective and avoiding excessive burden or restrictions on undertakings, whereas several elements of option 3c go beyond what is necessary and appropriate. Specifically, option 3b clarifies the concept of ‘transnational matters’ without encroaching on subject-matters of purely national relevance for which EWCs are not the appropriate level of employee involvement. Option 3b also does not curtail the autonomy of the parties to the EWC agreement to negotiate tailor-made solutions (e.g. regarding access to experts and training, and coverage of costs). It leaves broad discretion to Member States in implementing the revised minimum requirements, allowing them to integrate those requirements into their respective rules and traditions on the involvement of employees, which vary widely, and where appropriate to complement them. Regarding confidentiality, the compatibility of option 3c with the proportionality principle is doubtful insofar as it would require management to seek prior judicial or administrative authorisation to withhold information from an EWC to prevent serious harm to the undertaking. Such a burdensome requirement was thus far not considered appropriate by any Member State.

In light of these considerations, option 3b is assessed most positively in terms of proportionality, followed by option 3a.

Policy area 4: Option 4b would set out Member States’ general obligation to ensure an adequate enforcement of the Directive in a binding manner and facilitate a more effective supervision by the Commission of the relevant implementing provisions. Due to their more targeted and effective nature, these measures are more proportionate than the non-binding recommendations under option 4a. Specifically, the requirement to take into account turnover when determining pecuniary sanctions ensures that sanctions are proportionate to the financial capacity of non-compliant undertakings, and thus dissuasive and effective, while national authorities and courts must at the same time ensure that the percentage of turnover levied as a sanction is fully proportionate in relation to the gravity, scope, impacts, duration and other relevant factors characterising the offence. In contrast, Option 4c clearly does not pass the proportionality test. Potentially vast pecuniary sanctions and the possibility to suspend the effects of undertakings’ decisions represent excessive burdens, given the limited purview of the Directive to lay down minimum information and consultation requirements leading to non-binding opinions without prejudice to undertakings’ decision-making ability.

7.5. Comparative scoring of the options – multi-criteria analysis

Based on the above considerations, policy options are scored from “0” to “+++” (“---”) depending on the direction of the impact. “+” (“-“) represents a very small positive (negative) effect and “+++” (“---") a very large positive (negative) effect compared to the baseline. 0 means that the option would not constitute a significant deviation from the baseline scenario. The baseline scenario is rated 0. Based on this assessment, a preferred option is identified for all policy areas and then described in Section 8. As regards the criteria of coherence and proportionality, the highest score was not awarded to any policy options including those assessed most positively because, firstly, the Commission’s 2018 evaluation established that the Directive is to a large extent already coherent and proportionate as it stands, so there is no scope for drastic improvements against these criteria. Secondly, certain caveats were identified as regards the proportionality and coherence even of the preferred policy options.

8.Preferred option

8.1. Selection of the preferred policy option and analysis of combined impacts

In light of the comparison in Section 7, options 1a, 2c, 3b and 4b, including their respective accompanying measures, present the most appropriate approach to address the problem drivers in light of the initiative’s objective. In their combination, they therefore form the preferred overall policy option for this initiative.

The preferred option will in principle lead to a cumulation of the impacts of options 1a, 2c, 3b and 4b, as presented in Section 6 for each area and in more detail in Annex 12. The potential cumulative costs would thus account only for a very small part of the turnover of the affected undertakings and are not – unlike some of the non-preferred options - expected to affect market efficiency or undertakings’ competitiveness. Moreover, these costs may be offset by efficiencies generated through increased legal clarity and certainty, although this effect cannot be quantified. The preferred option is in strict compliance with the proportionality principle and ensures the continued internal and external coherence of the Directive, while delivering a simplified and more coherent legal framework for Union-scale undertakings and necessary improvements to the process for the creation, information, and consultation of EWCs as well as the enforcement of the rights under the Directive.

The options forming the preferred overall policy option follow a consistent logic across all policy areas, as they are all designed to improve the effectiveness of the framework for transnational information and consultation while preserving undertakings’ ability to take decisions effectively. Therefore, when combined, the options are expected to mutually reinforce one another and achieve synergies, so the overall preferred option surpasses the sum of its parts. These effects are subsequently summarised in qualitative terms:

(i) By creating legal certainty about the coverage of legal costs, options 2c and 3b facilitate the exercise of the right to access to justice (option 4b). These options are thus synergetic.

(ii) Conversely, by strengthening access to justice and the enforceability of EWCs’ rights, option 4b bolsters the social benefits under options 1a, 2c and 3b. The case for making minimum transnational information and consultation rights available to employees of all Union-scale undertakings (options 1a) is stronger if those rights can be enforced effectively. Likewise, improving the processes for setting-up and operating EWCs (options 2c and 3b) depends on effective enforcement. At the same time, option 4b respects the subsidiarity principle by not intruding on Member States’ procedural autonomy and the proportionality principle by avoiding imposing disruptive remedies or sanctions liable to unbalance the relations of the parties, which could significantly increase costs for undertakings and threaten the constructive dialogue necessary to put options 1a, 2c and 3b into practice.

(iii) In the same vein, the clarifications to the legal framework under options 2c and 3b (e.g., regarding the concept of transnational matters, conditions for imposing confidentiality, coverage of legal and training costs, access to experts, format of meetings) are expected to reduce the risk of disputes and thus limit the potential enforcement costs under option 4b.

(iv) As option 3b, in particular the new requirement for a reasoned response to EWCs’ opinions prior to the adoption of a decision on transnational matters, may give rise to a renegotiation of existing agreements, it could speed up the implementation of gender objectives (option 2c) to some extent, although this effect is likely to be limited as EWC agreements are in any case subject to regular renegotiations.

(v) Where several policy options require adaptations to existing EWC agreements, the parties can address them in a single round of renegotiations, so possible additional renegotiation costs would accrue only once for the overall preferred policy option.

vi) Given that the preferred package is expected to increase the effectiveness of the Directive, notably by improving the process for setting-up and operating EWCs (options 2 and 3), allowing the employees in the exempted undertaking to request an EWC (option 1), and improving the enforcement of the rights under the Directive (option 4), it is plausible that the take-up rate of EWCs could increase as a result of this initiative. However, there is insufficient evidence to support or estimate this assumption.

As regards the choice of policy instrument, due to the need to amend the Directive, the preferred option can only be implemented by means of a Directive under the same legal basis. 170  

8.2.REFIT (simplification and improved efficiency)

The 2018 evaluation confirmed that the minimum requirements set out in the Directive do not impose any obligations that would constitute an unreasonable burden for companies. By setting a procedural framework for transnational information and consultation, the Directive allows social partners the autonomy to agree on appropriate solutions in light of their specific needs and circumstances. For example, the Directive does not restrict the use of ICT technologies for information and consultation purposes. Parties may thus choose, for instance, to use online meeting software or automatic translation tools to save costs and achieve efficiencies. They are also free to agree on simplified language regimes for EWC meetings to lower the costs of simultaneous interpretation. Indeed, the Directive does not impose any specific budget to cover EWCs’ expenses, including for expert advice or training. Against this baseline, the scope for burden reduction by this initiative is limited. Nevertheless, the need to keep costs for undertakings to the necessary minimum and avoid administrative burdens is taken into account, in accordance with concerns raised by business organisations in the consultation of social partners, throughout the design and assessment of the proposed measures.

8.3.Application of the ‘one in, one out’ approach 

The initiative does not impose any administrative burden 171  on businesses or citizens and therefore does not require offsetting. The adjustment costs created by the preferred option are limited to possible incremental increases of the baseline costs of running EWCs (costs of meetings, training, expertise, legal advice), as well as in certain cases the costs of negotiating new EWC agreements. No reporting or other administrative requirements are imposed on undertakings, and the Directive’s flexible approach is maintained by the preferred option, which focuses on ensuring legal certainty and effectiveness and minimising the risk of disputes or delays. Policy options that might have negatively affected undertakings’ ability to take decisions effectively were not retained, in strict compliance with the proportionality principle and priorities stressed by business organisations during the consultation of social partners.

9.How will actual impacts be monitored and evaluated?

Progress towards achieving the objectives of the initiative will be monitored by a series of core indicators related to the policy objectives. These and the related data sources are summarised in Annex 13. The monitoring framework will be subject to further adjustment according to the final legal and implementation requirements and timeline. Taking into account a two-year transposition period and another transitional regime for the adaptation of existing agreements by the parties, the initiative could be evaluated 7 years after it enters into force. This would allow sufficient time for the effects on the setting up and operation of EWCs to materialise and for the evaluation of those effects, with a particular focus on previously exempted undertakings. 

Annex 1: Procedural information

1.Lead DG, Decide Planning/CWP references

The lead DG is DG EMPL, DG Employment, Social Affairs and Inclusion.

Agenda planning: PLAN/2023/664 

Work Programme reference:  Commission work programme 2024 (Annex 1, initiative no. 9)

The initiative is prepared by the Commission in response to the European Parliament’s 2023 resolution under Article 225 of the Treaty on the Functioning of the European Union.

2.Organisation and timing

An Interservice Steering Group (ISSG) was established to accompany the work on the initiative. The following DGs participated in the ISSG: SG, SJ, EMPL, BUDG, COMP, EAC, ECFIN, ESTAT, GROW, JRC, JUST, REGIO, TRADE.

The Impact Assessment was discussed in the ISSG on 11 October 2023 (present DGs: SG, EMPL, ECFIN, JUST, ESTAT, SJ, BUDG, COMP).

The Analytical Document accompanying the second phase consultation of social partners on which the Impact Assessment is based, together with the second stage consultation document, was assessed by the ISSG on 14 June 2023 (present DGs: SG, EMPL, BUDG, ECFIN, ENV, ESTAT, JRC, JUST, LS) and adopted following ISC (DGs consulted: SG, SJ, ECFIN, JUST, BUDG, CLIMA, CNECT, COMM, COMP; ENV, ESTAT, FISMA, GROW, JRC, REGIO, TRADE).

The first stage consultation document was assessed by the ISSG on 6 March 2023 (present DGs: SG, EMPL, COMM, ECFIN, ENV, ESTAT, GROW, JUST) and adopted following ISC (DGs consulted: SG, SJ, ECFIN, JUST, DGT, FISMA, TRADE, COMM, GROW, REGIO, ENV, COMP, CNECT, CLIMA, ESTAT, BUDG, JRC).

3.Consultation of the RSB

The draft Impact Assessment was assessed by the Regulatory Scrutiny Board (RSB). The RSB meeting was held on 29 November 2023 and the RSB delivered a positive opinion with reservations on 30 November 2023. The revisions made to address the RSB opinion are summarised in the table below.

4.Evidence, sources and quality

The following Commission reports have fed into the Impact Assessment:

·Report on the implementation by Member States of Directive 2009/38/EC on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees (Recast)  COM(2018) 292 final and accompanying Staff Working Document SWD(2018) 187 final .

The following expert advice has fed into the Impact Assessment:

1)External studies commissioned from external experts:

·ICF(2023) Study exploring issues and possible solutions in relation to the Recast Directive 2009/38/EC on European Works Council. Available . online HYPERLINK "https://op.europa.eu/en/web/general-publications/publications"

·ICF(2016) Evaluation study on the implementation of Directive 2009/38/EC on the establishment of a European Works Council, p. 96. Available online .

·Reviews by the European Centre of Expertise in the field of labour law, employment and labour market policies (ECE):

Review of national provisions transposing Directive 2009/38 on European Works Councils on confidentiality, non-disclosure of information and gender balance (2023, unpublished analysis)

Review of national rules on enforcement of rights and obligations arising from Directive 2009/38/EC on European Works Councils (2019, unpublished analysis)

2)The European Parliament reports:

·2021 resolution on Democracy at Work .

·2023 resolution on revision of European Works Councils Directive

3)Ad-hoc data collections:

·Eurostat, ad-hoc extraction from the EuroGroups Register (2023)

·Data extractions from ETUI EWC Database and ETUI survey of EWC and SEWC representatives (2018) (Overview published online )

4)Eurofound research:

Turlan, F., Teissier, C., Weber, T., Kerckhofs, P., & Rodriguez Contreras, R. (Eurofound) (2022) Challenges and solutions: Case studies on European Works Councils. Available online .

Relevant academic literature, as referred to in footnotes.

Annex 2: Stakeholder consultation (Synopsis report)

1.Results of the first phase Social Partners’ consultation

In line with Article 154 of the Treaty on the Functioning of the European Union (TFEU), the Commission carried out the first phase consultation of European social partners to seek their views on the need for, and possible direction of, EU action to address the challenges related to the operation of EWCs. This first phase consultation was launched on 11 April and ended on 25 May 2023.

1.1 Overview of responses

Twelve recognised social partners sent replies during the first-phase consultation.

Four trade union organisations contributed to the consultation: European Trade Union Confederation (ETUC), European Confederation of Independent Trade Unions (CESI), European Managers (CEC), Eurocadres.

Eight employer organisations sent replies: Business Europe, SGI Europe, SMEunited, European Chemical Employers Group (ECEG), Council of European Employers of the Metal, Engineering and Technology-Based Industries (CEEMET), European Cleaning and Facility Services Industry (EFCI), Hotels, Restaurants and Cafés in Europe (HOTREC), European Confederation of Woodworking Industries (CEI–Bois)

1.2Social partners’ views on the completeness of the issues identified and the general need for a revision of Directive 2009/38/EC 

Trade unions see a need for a legally binding revision of the recast Directive. ETUC and Eurocadres expressly endorse the Parliament’s recommendations for such a revision and stresses that the information and consultation process at transnational level can be regulated only by an EU legal act guaranteeing a level playing field by means of minimum requirements. ETUC submits that a right for trade union experts to participate in all SNB, EWC and select committee meetings and to have access to all sites is a necessary condition for supporting and coordinating EWCs’ work more effectively. It therefore calls to lay down such rights in the Directive. ETUC queries that the Commission’s consultation paper does not address the issue of concretising the definition of ‘controlling undertaking’ to clarify the inclusion in the scope of the directive of companies operating through management, franchise systems and 50:50 joint ventures. In addition, ETUC states that the consultation paper is missing an opportunity to draw links between due diligence and EWCs. According to ETUC, EWCs must be fully involved in all steps of companies’ due diligence plans and policies, including the mapping of potential risks on human rights and the environment across the company operations as well as its supply and subcontracting chains.

The large majority of employer organisations argue against a revision of the Directive, considering it fit for purpose. Business Europe stresses the need to give the social partners at enterprise level the space to negotiate agreements that suit their circumstances. According to ECEG, the heterogeneous landscape of EWCs is an accurate reflection of the original intention of the European co-legislators and should be preserved as a key element of the European system of information and consultation of workers in multinational companies. CEI-Bois considers that EWCs’ practices need to remain flexible to be applied effectively to different sectors and companies across the Member States and that the Commission should refrain from adding additional regulatory burden on companies that have already opted for the creation of EWCs. CEEMET cautions that a revision of the EWC Directive would be another setback in the competitiveness of European businesses. If the Directive was nevertheless to be revised, CEEMET urges to propose specific measures alleviating companies from administrative and financial burden and adapting to the new reality of online meetings. EFCI thinks that a legislative intervention increasing companies’ responsibilities would weaken EWC’s prospects to serve as a shared and constructive solution for all parties involved. HOTREC and CEI-Bois call on the Commission to present a Commission Recommendation and a code of practice / handbook on the matter instead of revising the Directive. CEI-Bois argues that the Commission should refrain from adding additional regulatory burden on those companies who have already opted for the creation of an EWC. Rather, it should aim at simplifying the implementation of the existing rules. BusinessEurope also maintains that a code of practice could be a good basis to help social partners at company level to identify ways of improving their own practice.

Among employer organisations, SGI’s members recognise that it may be justified to revise the Directive in order to provide greater clarity of the rules and to organise regular genuine ex ante consultations of workers representatives in EWCs on transnational matters. SMEunited recognises the existence of a certain justification to amend the directive without ignoring the current general good functioning of it.

1.3Willigness to enter into negotiations

The vast majority of responding social partners replied that they were open to negotiations in accordance with Article 154(4) TFEU in principle. ETUC reaffirmed its full commitment to social dialogue and Article 155 TFEU and all responding trade union organisations were open to negotiations. Nevertheless, Eurocadres believed that in the case of EWCs strong legislation is the only way to improve the Directive. Business Europe confirmed that it would look constructively into the possibility of offering negotiations to ETUC with a view to revising the EWCs recast directive under the procedure set out in Article 155 TFEU, if the Commission’s second stage consultation of social partners provides a balanced basis for social partners to negotiate. This position was seconded by ECEG, SMEunited, CEI-Bois, HOTREC, and EFCI.

1.4Social partners’ views regarding specific issues and policy options

Regarding the scope of the recast Directive, trade unions support ending the exemption of undertakings with pre-existing information and consultation agreements at transnational level. ETUC argues that the provisions of the Directive must apply to all undertakings to ensure a level playing field and stresses the need for a comprehensive definition of the concept of ‘controlling undertaking’ to clarify the inclusion in the scope of companies operating through contract management, franchise systems and 50:50 joint ventures. While CESI does not refer to specific policy option, it submits in general terms that the scope could be widened to cover more workers.

Among responding employer organisations 5 out of 8 argue in favour of keeping the existing exemptions. EFCI stresses that the grandfathering rules have proven themselves in practice, as the longstanding information and consultation bodies in exempted undertakings are often particularly effective and characterised by a deep level of trust and cooperation between workers’ representatives and central management. ECEG does not support an automatic transformation/adaptation of the different types of EWCs into one single model. Instead, ECEG would favour a reflection on how Article 13 of the recast Directive could serve to modernise those agreements. CEI-Bois states that no additional regulatory burden should be added on companies who already have opted for the creation of an EWC.

None of the responding employer organisations elaborated specifically on the idea of including undertakings linked through contractual arrangements into the concept of controlling and controlled undertakings, and thus into the scope of the recast Directive, but SMEunited underlines generally that a possible initiative should not expand the scope of the Directive.

Regarding the procedure on the setting up of EWCs, among trade unions, ETUC states that it is not uncommon for central management to delay the establishment of the SNB, and calls for a requirement to constitute and organise a first meeting of the SNB meeting within 6 months of the request, or the subsidiary requirements would automatically apply. While CESI and CEC support the Parliament’s recommendation to shorten the three-year deadline for negotiations, ETUC disagrees because that proper coordination, training and agreement on common demands take time. In contrast, according to CESI, practical experience appears to suggest that negotiations can be concluded in a shorter timeframe if both sides are willing and engage constructively. ETUC also calls for objective criteria to determine the location of the “representative agent” and “central management” to avoid regime shopping and use of letterbox companies."

None of the responding employer organisations argue in favour of adapting the framework for setting up EWCs. Business Europe takes the view that the challenges identified in the setting up and functioning of EWCs are practical rather than legal and would not be tackled by a revision of the directive. ECEG explains that in the European chemical industry, the establishment of EWCs can easily be arranged in most cases, and that the existing rules are sufficient to fulfil the objectives. CEEMET argues that it is best not to rush the negotiations by reducing the timeframe. HOTREC states that a shorter negotiation deadline could be considered, as long as proportionate and relevant. HOTREC also cautions that some topics require long discussions and that subsidiary requirements should apply only when strictly necessary.

With regard to the consultation procedure, among trade unions, CESI considers that it should be specified that consultations must necessarily be taken into account by management, and this in a meaningful way. CESI argues that, in the longer-term, ways could be envisaged to turn EWCs more into negotiating bodies, where their opinions could have even more weight and are not only ‘taken into consideration’. ETUC generally supports recommendations of the Parliament, stressing that transnational information and consultation process must be properly conducted and completed before management takes a final decision. According to ETUC, in order for the consultation to be meaningful, EWCs must have sufficient time to carry out an in-depth assessment of the information provided, included when needed with the support of experts, as well as to consult national and regional workers’ representatives.

In contrast, among employer organisations, Business Europe argues against a ‘one-size-fits-all' approach to consultation, suggesting that many EWC agreements either already provide for specific timeframes for information and consultation procedures and a formal response by management to EWC opinions, or the parties to agreements tend to work out the timeframes according to the issue which is being addressed. This view is seconded by ECEG, which advises that neither the existing legal concept of consultation nor its implementation are liable to create any hindrance for the proper functioning of the EWC Directive, workers’ representatives usually having sufficient time to review the facts and produce a written opinion. According to CEEMET, the Parliament’s recommendations would put employees’ representatives in a position to delay important decisions by central management indefinitely, which would reduce management’s agility needed in a fast-changing economic world. EFCI recognises that a discussion could take place on the issue of timing, but cautions that the role and function of EWCs should not evolve in the direction of de facto parallel collective bargaining or co-determination powers.

All the responding trade unions submit that EWCs are not assured necessary resources (covering e.g. expert advice, training or legal costs). ETUC stresses in particular the importance of guaranteeing access to recognised trade union organisation expertise and suggests that trade union experts should have a right to participate in all SNB, EWC and select committee meetings and have access to all sites. CEC refers to the need to fund training of EWC members as well as EWCs administrative and logistical costs.

These views are not shared by the responding employer organisations, who stress the importance of reducing the financial strain on companies rather than increasing EWCs’ entitlements. CEEMET considers that the existing obligations to reimburse the trips, accommodation, paid leave for employee representatives, and translation/interpretation costs already puts a heavy financial burden on companies.

The trade unions see a need to set out specific criteria circumscribing the possibility for management to impose the confidentiality of information or to withhold certain information from EWCs. ETUC calls for clear provisions on criteria for withholding of information, and on the grounds based on which EWC members’ right to share information with relevant stakeholders (in particular workers’ representatives) can be restricted. CESI refers to the risk of companies using ‘confidentiality restrictions’ in an abusive way.

In contrast, the responding employer organisations reject potential amendments to the Directive’s provisions on confidentiality and non-disclosure of information. ECEG stresses that the effective protection of confidential information given to EWC members is a basic prerequisite for successful cooperation between management and workers representatives. CEEMET explains that listed companies have to comply with strict rules on when and to whom price sensitive information can be given before public disclosure. CEEMET states that limiting the scope of confidentiality provisions endangers the competitiveness of companies with the consequence of weakening Europe as an innovative and forward-looking industrial and business location. EFCI would also not support a revision of the text that would limit the autonomy of the management when deciding about the confidential nature of the issue being discussed. While SMEunited recognises that some work on confidentiality might be necessary, it also emphasises that trade secrets must be protected and adding red tape must be avoided. HOTREC argues against reducing the scope of the existing confidentiality provisions, pointing out that consultations take place on sensitive decisions such as mergers or acquisitions.

Concerning enforcement, all responding trade unions consider that the remedies and sanctions for the enforcement of the rights guaranteed by the Directive are not sufficiently effective. ETUC and CEC specifically endorse introducing provisions on pecuniary sanctions, as recommended by the European Parliament. ETUC supports introducing a right to injunctive relief, enabling EWCs to request the suspension of management decisions taken in violation of their information and consultation rights. In this respect, ETUC requests that administrative or judicial systems are put in place to allow for swift decisions on EWCs’ requests for the suspension or nullification of management decisions ‘24/7 in a few hours’. ETUC further calls for recognising the legal personality of EWCs and requiring central management to provide the necessary financial support for legal proceedings. CESI suggests that the Commission should first further assess why Member States have not been ensuring provision of effective sanctions.

Among employer organisations, Business Europe points out that there have been only a limited number of court cases and argues that this is not because EWCs lack the means to go to court but because most EWCs work satisfactorily. Whilst ECEG recognises difficulties in the effective enforcement of EWC rights in some jurisdictions, it does not see them as an expression of a weakness of the Directive but of its flawed transposition at the national level. SGI, CEEMET, HOTREC and EFCI consider the recommendation of the European Parliament for increased pecuniary sanctions disproportionate and unrealistic, arguing that the determination of the level of penalties is a prerogative of the Member States. Regarding the idea of introducing a right to injunctive relief into the Directive, Business Europe submits that this would create significant risks of imposing on companies to freeze or delay decision making, leading to disproportionate penalties, an undermining of the trust and confidence of companies in EWCs and undermining the role of social partners at company level. CEEMET argues that a temporary suspension of the implementation of management decisions would hamper the decision-making process in companies and be a serious intrusion in the corporate governance. CEEMET stresses that the legal framework must not hinder appropriately flexible and responsible entrepreneurial action and must avoid creating a hostile culture where employee representatives may use the tool of preliminary injunction as a threat in the consultations forcing the company to undesired decisions.

In the first stage consultation, on the issue of gender representation on EWCs and special committees, CEC and ECEG supported the objective of achieving a gender-balanced composition of those bodies.

2.Results of the second phase Social Partners’ consultation

The second stage social partners’ consultation was open from 26 July to 4 October 2023. In total, 12 replies from recognised social partners were received. 4 trade union organisations and 8 employers’ organisations sent their replies. 

2.1Overview of responses

4 trade union organisations contributed to the consultation: European Trade Union Confederation (ETUC), European Confederation of Independent Trade Unions (CESI), European Managers (CEC), Eurocadres

8 employers’ organisations sent replies: Business Europe, SGI Europe, SMEunited, European Chemical Employers Group (ECEG), Council of European Employers of the Metal, Engineering and Technology-Based Industries (CEEMET), EuroCommerce, Hotels, Restaurants and Cafés in Europe (HOTREC), European Confederation of Woodworking Industries (CEI–Bois).

Business Europe, Hotrec, Ceemet, ECEG and SGI Europe do not provide responses to the questions in the consultation document but state their willingness to enter into negotiations with ETUC with a view to concluding an agreement under Article 155 TFEU to improve Directive 2009/38/EC.

2.2Objectives of a possible EU action

Trade unions and ETUC in particular, support the overall objective to improve the effectiveness of information and consultation of workers at transnational level, as well as the specific objectives of the initiative. ETUC believes that the first specific objective should be ‘to ensure that every worker in the EU enjoys the same effective minimum transnational information and consultation rights defined at a high uniform level’.

Employers’ organisations believe that an EU initiative should not overly regulate details such as the number of meetings, the manner in which meetings should be conducted, or requirements for a specific type of experts at the European level. EuroCommerce would prefer making use of digital communications. SMEunited considers that the objective to avoid unjustified differences in workers’ information and consultation rights at transnational level is too far-reaching. Setting one-fits-all solutions to all companies could be counterproductive for companies.

Trade unions see a need to ensure more effective enforcement and access to justice, fully supporting the measures proposed by the European Parliament to strengthen sanctions. This view is not shared by employers’ organisations.

2.3Possible avenues for EU action

Regarding the scope and coverage of the rules, ETUC argues that legal uncertainty and regulatory complexity should be reduced by ending exemptions from the scope of the Directive of undertakings with pre-existing agreements. ETUC also demands that franchising and contract management arrangements be brought within the calculation thresholds of community-scale undertakings and within the definition of controlling undertaking. CEC proposes extending the scope of eligible companies to joint ventures.

Among employers, SMEunited, EuroCommerce and CEI-Bois argue for keeping exemptions from the scope of undertakings with pre-existing agreements. EuroCommerce and SMEunited argue that the definition of a controlling undertaking and its application to structurally independent undertakings can be ambiguous and complex. Expanding the scope of the Directive to include such entities requires a clear and evidence-based definition to avoid unnecessary compliance burdens and further complexities. SMEunited states that imposing a ‘one-size fits all’ uniform information and consultation right disregards the diverse nature of businesses and the variations in their employees’ structures

With regard to the process of setting-up of EWCs, CESI and CEC agree with the proposal to set a maximum period of 18 months instead of three years for concluding an agreement. In contrast, employer organisations EuroCommerce, SMEUnited, CEI Bois but also, from among trade unions, ETUC, affirm that reducing the negotiation period to less than three years may impose undue pressure on the parties. ETUC also states that clarifications are needed to ensure that the resources to which the SNB is entitled must also clearly include the costs of legal assistance and legal representation as well as assistance by experts and training. ETUC points to the existing legal uncertainty in the directive regarding the management’s obligation to convene the first SNB meeting and to carry out negotiations in regular intervals. Further, ETUC reiterates its call to strengthen the position of the trade union representative as a permanent expert assisting the work of the SNB and EWC. CEC and ETUC support achieving a gender-balanced composition of EWCs and their select committees. Among employers, EuroCommerce and SMEunited believe that imposing a gender quota could pose practical challenges given that employees should be free to nominate their representatives.

Regarding the consultation framework, trade unions reiterate their call made during the first stage consultation to clarify key notions of transnational matters, confidentiality and the information and consultation procedure. ETUC reiterates that the end of the information and consultation process must precede the date on which the management takes the final decision. ETUC and Eurocadres support the sharing of information between the EWC representatives and national or local trade union representatives. Among employers, SMEunited considers that a clearer definition of transnational matters would be desirable. They consider the current definition very broad, lacking specific thresholds of employees affected by the matter. CEI Bois and SMEunited believe that the regulation concerning confidentiality is a matter of national concern, and that the consultation process does not require any further definition at EU level. SGI Europe opposes widening the concept of transnational issues.

ETUC asks the Commission to develop the minimum list of issues on which EWCs operating based on subsidiary requirements are to be informed and consulted. 173 Trade unions support at least two plenary meetings per year under subsidiary requirements. ETUC stresses that plenary meetings should not be held online.

ETUC, CEC and Eurocadres agree that companies should provide for appropriate resourcing of EWCs. All responding trade unions endorse strengthening the position of the trade union representatives in EWCs. Among employers, EuroCommerce states that the allocation of resources for EWCs should be left to the discretion of employee representatives and central management. SMEunited states that no additional costs should be imposed on companies.

With regard to enforcement, ETUC proposes to establish a permanent Monitoring Committee (consisting of Member States’ representatives, EU-level social partners and the Commission) to ensure the correct application of the Directive through regular exchanges and, in particular, to address and resolve practical problems arising from its implementation. Trade unions generally reiterate their support for the European Parliament’s recommendation for pecuniary sanctions at the GDPR level, considering them dissuasive, and for guaranteed access to injunctive relief. They state that all EWCs should have a status ensuring that they have access to judicial remedies. Employers’ organisations consider that sanctions involving injunctive relief whereby a company’s decision may be suspended if information and consultation requirements were alleged to have been infringed or pecuniary sanctions up to EUR 20 million or 4% of annual turnover for breaches of EWC rights, are neither proportionate nor necessary.

2.4Views on the possible legal instruments

Trade unions share the Commission's view that the issues and deficits identified can only be addressed with a legally binding instrument and urge the Commission to present a legislative proposal. Those employers’ organisations which did not limit their response to offering negotiations with ETUC disagree and express preference for a non-binding instrument, such as non-binding guidelines or a Code of Practice drafted with the active participation of EU-level social partners, or a Commission recommendation.

2.5Willingness to enter into negotiations

Employers’ organisations express their willingness to enter into negotiations, believing that only a social partner negotiation could reach optimal results when it comes to the revision of the recast Directive. Trade unions, while reaffirming their full commitment to social dialogue, do not intend to negotiate with employer organisations, apart from CEC which favours negotiations. ETUC, CESI and Eurocadres consider that it is urgent to act through a legally binding instrument and that a legislative initiative of the Commission is the most suitable for substantial improvements of the rights of EWCs in this legislature period.    

3.Other consultations of stakeholders

3.1Views of EU institutions 

The European Parliament adopted, in 2021 and 2023, two resolutions on workers’ involvement at company level as a way to support democracy at work, and particularly to reinforce the operation of EWCs. The 2021 resolution on Democracy at Work  covers areas of worker information, consultation and participation, trade unions, works councils as well as some aspects of company law and corporate governance. It calls for a revision of the recast Directive.

The 2023 resolution on revision of European Works Councils Directive aims at ‘strengthening EWCs and their ability to exercise their information and consultation rights, as well as to increase the number of EWCs, while taking into account the different industrial relations systems in the Member States’. It contains an annex setting out proposals for legislative amendments to the recast Directive, including:

-a wider concept of ‘transnational matters’ on which information and consultation of the EWC should take place;

-an amended definition of ‘consultation’, i.e. requiring that EWCs receive a reasoned response to their opinion prior to management adopting the decision, and providing that that opinion must be taken into account by management;

-an obligation on Member States to provide for injunctive relief whereby a company’s decision may be suspended if information and consultation requirements were infringed, and for pecuniary sanctions of up to EUR 20 million or 4% of annual turnover, and exclusion from public procurement and subsidies;

-an obligation on companies to provide EWCs with objective criteria for determining if a matter is confidential and for which duration, and requiring companies to secure prior judicial authorisation before restricting access to information which they consider could seriously hamper the company’s activities;

-stricter deadlines for setting up an EWC;

-an end to the exemption of undertakings with pre-Directive agreements from the scope of the Directive and subjecting undertakings with all types of existing information and consultation agreements to the revised rules.

The European Economic and Social Committee (EESC) has issued a number of opinions, in which it stresses the need for an enhanced role of European Works Councils in the event of large company transformationsand in transnational restructuring processes in the context of the twin transitions. 174  In April 2023, the EESC has adopted an exploratory opinion on Democracy at Work , which points to the need to substantially improve effectiveness and resources of EWCs: “e.g. any circumvention or infringement of EWC participation rights should be sanctioned effectively and access to justice should be facilitated. In this context, the EESC welcomes the European Parliament's recent resolution on the revision of the EWC Directive and calls on the Commission to take legal measures in a timely manner.”

3.2Stakeholders’ consultation activities 

In parallel with the Treaty-based formal consultation of the social partners described in Sections 1 and 2 of this annex, extensive consultation activities were conducted in the context of the supporting study 175 , gathering insights from a diverse pool of stakeholders including workers’ organisations, employers’ organisations, policy makers, EWC representatives, management of the Union-scale undertakings, legal and academic experts.

These activities consisted of:

·Semi-structured stakeholder interviews

·Online survey of companies with EWCs 176 ’ – management and employee representatives

·Evidence gathering workshops with management and employee representatives

A public consultation on this initiative was not conducted.

Semi-structured interviews were conducted from mid-April to August 2023 with the following stakeholders:

Figure 1: Overview of targeted interviews of stakeholders

Source: ICF(2023), Section 5.2.1.

The on-line survey was launched on 18 April and closed on 26 May. It targeted management representatives and employee representatives in identified multinational companies with an EWC. With the aim for answers to be representative of EWCs / companies rather than of individual employee or employer representatives, where there was more than one respondent per company on the management or the employee/EWC side, only the response from the most highly placed representative (e.g., EWC Chair over EWC member) was kept in the sample of responses.

A total of 233 responses were included in the final sample: 180 responses from employee/EWC representatives (77% of responses) and 53 responses from management representatives (23% of responses).

The table below provides a breakdown of the sample of responses by EWC type.

Figure 2: Overview of survey respondents by EWC type