Trade unions have persistently complained over the past 10 years that the 900-plus existing European works councils (EWCs) are sidelined by employers during transnational restructuring, with information sharing reduced to announcements of decisions already made. The EU has responded by giving EWCs greater rights. The new Transnational Information and Consultation of Employees Regulations 2010, which implement the revised directive and set rules governing the creation, operation and enforcement of EWCs in the UK, are effective from 5 June 2011.

The key change is a stricter duty to inform and consult an EWC. This probably spells the demise of the annual meeting in favour of more extensive information sharing with employee representatives on pan-European restructurings, transfers, or mergers and acquisitions activity, followed by one or more consultation meetings to discuss representatives’ opinions and the management response. The strengthened directive requires consultation on “proposals”, as opposed to decisions. Employers will need to consider the role, and associated costs and risks, of EWCs much more carefully, particularly where confidential information is involved. Working out how EWC cross-border consultation links in with existing national consultation rights will also be vital.

Other changes provide for unions to become more involved in advising employee representatives on the establishment of an EWC, even in a non-unionised workplace. There is also a requirement to provide council representatives with paid time off for training, funded by the employer, and with the means required to fulfil their duties.

Some argue that “means” should include employers funding litigation brought by the EWC against them for non-compliance.

The changes have also introduced new uncertainty as to when the duty to consult is triggered. There is now a broader interpretation of what could constitute a “transnational” issue, potentially including major changes happening in a single country.

Government figures suggest that 57 per cent of employers covered by the rules do not have an EWC and so are vulnerable to a request for one. There may be a lower risk of receiving a request where employee relations are good. But as the threshold for a valid request is low, and unions are becoming more active in orchestrating them, a contingency plan is essential. There is a legal obligation to establish an EWC arrangement once a valid request is received, and a maximum penalty of £100,000 for non-compliance under the new rules, so doing nothing is not an option.

The changes may not apply to existing EWCs; whether they do depends on when the council was established, whether it has been revised in the two years to 5 June 2011, and whether the business undergoes significant change in the future, including a merger. Consequently, deciding whether existing councils should continue unchanged is complex. Unions and employee representatives are already seeking major revisions to agreements based on the new rules, so those entering negotiations should undertake their own risk assessment before making decisions.

Key points
- Pan-European organisations will have to consult European works councils earlier under new regulations
- Employers should expect an increase in requests for EWCs even in non-unionised workplaces
- ‘Transnational’ could now include single country issues