Introduction to EWCs
European Works Councils (EWCs) are permanent bodies that facilitate the information and consultation of employees in transnational companies with establishments in at least two European Union countries. The possibility of setting them up was established by the European Works Council Directive of 1994 (Directive 94/45/EC), which was subsequently updated and took the form of Directive 2009/38/EC .
The main motivations behind the establishment of such a mechanism were the need for a workers’ response to the developing globalisation processes in the world economy and the need for greater integration within the European Union, also in terms of social dialogue. With the greater internationalisation of companies’ activities, a level of social dialogue is needed that corresponds to the level of decision-making within the company and thus balances the position of employer and employees. European Works Councils have introduced a new European level of industrial relations. They represent the first truly European institution representing interests at the level of a transnational company. They also reflect the need to respond to the Europeanisation of companies emerging from the European single market. In this way, they complement the currently existing national channels of information and consultation.
EWCs are bodies representing EU-based employees within multinational companies. Through them, employees of companies or groups of companies operating in two or more Member States are to be informed and consulted on transnational issues affecting them. EWCs play an important role in reconciling economic and social objectives within the Single Market, particularly in a changing world of work. EWCs create a link between employees of the same company or group in different Member States and provide a structure for effective dialogue between central management and employee representatives within these entities.
The establishment of European Works Councils (EWCs) is crucial for facilitating communication, information and consultation between multinational companies and their employees. However, many organisations face challenges in setting up and effectively managing EWCs due to different legal frameworks, cultural differences and lack of knowledge and expertise. EWCs promote a common understanding of the transnational challenges facing large multinational companies and the involvement of employees in the decision-making process, with the aim of exchanging possible solutions, facilitating their implementation and increasing the impact of the strategic decisions taken by the employer.
EU legislation on EWCs aims to bridge the gap between the increasingly transnational nature of corporate decision-making and the nationally defined and nationally limited information and consultation rights of employees. When company decisions are taken at transnational level, the national system of information and consultation does not allow employees in different Member States to organise their input and express their views or concerns together on these transnational issues.
The number of companies with EWCs has remained relatively stable over the last few decades. The take-up rate and the total number of EWCs have not changed significantly since the recast, with new EWCs replacing those that have been dissolved, mainly as a result of restructuring (mergers).
According to the available data, in 2021, 3676 multinational companies operating in the EEA constituted an undertaking or group of undertakings within the scope of the Directive, employing almost 30 million employees in the EEA. 55 European Works Councils or transnational information and consultation agreements agreed between employee representatives and central management operate in around 1000 companies.
In terms of economic activity, the majority of EWCs are concentrated in large multinational companies in the metal, services or chemical sectors. EWCs can be set up in companies under the jurisdiction of an EU/EEA Member State, even if they are headquartered outside the EU. 58 Most EWCs are in multinational companies headquartered in the United States (170), Germany (124), France (102), the United Kingdom (92), Sweden (69), the Netherlands (58), Switzerland (48), Italy (38), Finland (37), Belgium (36) and Japan (31).
Self assessment questions:
- What are European Works Councils and what is the legal basis for establishing EWCs?
- What is the purpose of setting up European Works Councils?
- How have European Works Councils developed since the establishment of the Directive?
