European Works Councils
The European Union responded to the increasing integration of multinationals’ operations in different countries with the European Works Council Directive, adopted in 1994 and recast in 2009.
This directive concerns all companies with more than 1,000 employees and workforces of more than 150 employees in at least two EU countries.
Its articles stipulate that these multinationals must establish works councils or appropriate procedures for employees to be informed and consulted on transnational decisions involving major organisational or employment contract changes.
In addition to encouraging their implementation, the recast version of the directive aimed to improve the functioning of EWCs through a more fluid dialogue between company management and employee representatives.
Not enough European Works Councils
The reality is that in 2011 only 40% of the multinationals targeted by the directive had set up a European Works Council. And there were considerable differences between them in the extent of transnational dialogue.
One of the reasons for this heterogeneous implementation is that the directive leaves a wide margin of manoeuvre to company management with regard to the committees. Moreover, the practices of the committees often deviate from what was initially agreed upon.
On the other hand, both management and employee representatives sometimes see advantages in establishing a European Works Council, while in some cases, neither sees any added value.
Several factors influence the establishment of EWCs and the implementation of their work. Both the organisation of the workforce and the degree of international integration of management and operations are important. However, the study showed that the internationalisation of the human resources function is the most important determinant.
This suggests that the creation of EWCs is more conditioned by the design of the HR function itself than by decisions related to the integration of operations and organisational structure.