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Unions And Works Councils In Europe
Europe’s powerful unions and works councils can influence everything from company pay rates to holiday entitlements and even the way office furniture is arranged, so it’s important to factor their role into your local HR policy.
Trade unions and works councils are common among employers in Europe and the right of employees to join them is protected.In the UK alone, it’s estimated 6.5m people are members of trade unions while particularly strong works councils can be found in countries including France, Germany, Belgium, Luxembourg and the Netherlands.
European works council
The European works council is a right of Europe-based employees working for multinational organisations with at least 1,000 staff, and operations in two or more European Economic Area locations where more than 150 people are employed.A democratically-elected works council member from each European country where the company is active will represent colleagues in meetings with central management, monitor company compliance with local laws and exercise the right of employees to be consulted and informed about transnational issues that affect the employer and consequently, the workforce.
Termination, data protection, working conditions, hours and leave are all HR issues that require a dialogue with the works council.
France is of course known for the strength of its unions however the amount of unionised workers in the country is estimated at below 8%. The power of the unions instead comes from laws that until recently, have given them a large say into how a private company is managed.
Employees in French firms with more than 50 staff, whether paid up members or not, are automatically represented by union delegates who sit on works councils and health and safety committees. Companies in France have been required to give these delegates regular input on a wide range of management decisions in order to protect the interests of their colleagues.
However this has resulted in notoriously difficult negotiations. In order to reform the way employee representatives function, and intended to make future negotiations easier, the major law “loi Rebsamen” took effect on 18 August 2015.
Key items in the new law covering staff representation include:
- the creation of a national inter-company staff representation committee, independent from the company, which will partly cover for the absence of internal works councils and staff delegates in small companies (due to start in January 2017)
- the possibility in companies with up to 300 employees to merge staff delegates, works council and the health and safety council into a single commission, in order to reduce three obligatory meetings per month into just one meeting
- mandatory annual negotiations can now be grouped into three items: working hours and salaries, non-discrimination and work-life balance, workforce planning (due to start in January 2016)
- the option to have the staff delegate meetings over video conference instead of in person.
The Dutch labour law system is based on the relationship of authority between an employer and an employee, where the employee holds the weaker position. Although there has been a fall in the number of organised employees, Dutch trade unions still have a strong influence on the Dutch labour law system. The trade unions negotiate collective labour agreements (“CLA”) with employer associations for certain sectors, which, once agreed can be declared generally binding by the Ministry of Social Affairs. If the CLA is declared generally binding, any employer in the sector the collective labour agreement is applicable for has to adhere to its terms and conditions. This includes foreign employers, and regardless of whether an employer is a member of the relevant employer association.
The sector is allocated by the Dutch tax authorities according to the company description that is submitted to the Dutch chamber of commerce. If the foreign employer acts without permanent establishment, the company description in the articles of association and foreign commercial register will be reviewed. A CLA can also be negotiated for one specific company, usually when the company is very large. Not all employers fall under a CLA, in which case Dutch employment law is applicable.
Dutch trade unions also negotiate social plans in case of collective redundancies and must be informed and adequately consulted if there is a planned dismissal of at least 20 employees. The planned collective redundancy should also be reported to the Dutch Employee Insurance Agency (UWV), as it has an important role in collective redundancies for business economic reasons. There is a method of selection for redundancy called the “last in first out” principle, where employees are divided according to similar function and age categories. Employees with the shortest length of service per category will be selected to be dismissed first.
Employee participation and representation has a statutory basis in the Netherlands through the Works Council Act (“WCA”), which says that a works council should be established in organisations holding 50 employees or more. This is also the case if an international organisation has a branch office in the Netherlands. Works councils in the Netherlands have at least five members, and up to 25 members depending on the number of employees within an organisation. These members are elected into the works council by their fellow employees.
It is possible to have multiple works councils within one organisation, depending on how the employee participation has been structured within the organisation. The WCA grants the works council certain rights which the organisation has to recognise. If the organisation intends to take decisions that fall under the scope of the works council, the procedure as set out in the WCA should be followed.
These rights are:
- the right to information (includes details on organisation structure, finance, HR reporting)
- the right to consent (on regulations for groups of employees such as labour conditions, salary systems)
- the right to advise on economic driven, intended decisions such as a merger or reorganisation)
- the right to initiative (any formal proposal).
Works councils are usually elected every three years. They are specifically established for the best interest of the organisation and its employees, and do not act on behalf of individual employees.
In Luxembourg, it is mandatory to register with one of five professional chambers (two represent employers and three, employees). These chambers submit proposals to government and defend the interests of their members. Union membership is voluntary but high in the Grand Duchy at 65% of employees, while staff delegations must be established in the private sector where a business has at least 15 employees. A joint works council is required where there are more than 150 staff, and there should be an equal number of employee and employer representatives on the council.
Employers in Luxembourg are obligated to communicate with the joint works council or staff delegations as often as monthly in some cases on business operations and probable progression, including any impending decisions that may lead to structural or contractual changes.
Understanding your HR function’s obligation to a particular European country’s trade unions and works councils, as outlined by local law, is key to establishing sound company policy. It’s always best to work with HR experts based in-country.Find out more about how TMF Group can help.