IR Notes

On 21 May, European Parliament and Council negotiators reached a provisional agreement on the proposal for a directive to revise European Works Council legislation. Although the updated text is not yet available, the press releases issued by both institutions state that it is intended to provide a clearer definition of what comes within the scope of transnational matters, so that decisions substantially affecting workers in more than one EU Member State will trigger an obligation to inform and consult an EWC, “without this being extended to day-to-day decisions or issues that only affect employees in a trivial way” (see Council and Parliament press releases). The final wording of the definition will reveal whether it delivers clarity or introduces further ambiguities.
The directive provides for the inclusion of a target aimed at promoting a more balanced gender representation on EWCs, by assigning at least 40% of their seats to members of one or other sex. A key addition to the revised text addresses a delicate question: the capacity of EWCs to assert their rights via legal means, “including by ensuring that costs relating to legal representation and participation are covered”. In other words, employers will have to pay the legal costs if a EWC decides to take legal action. In addition, Member States – and Ireland in particular – will have to adapt their domestic law to ensure that EWCs can actually exercise this right. Companies will also be required to grant access to relevant information and to justify any refusal to disclose this, especially in cases where they cite confidentiality reasons.
To ensure that EWCs’ rights are properly applied, the Council has emphasised that the financial penalties imposed “should be sufficiently dissuasive, while also taking into account different factors such as the gravity, duration, consequences, and intentional or negligent nature of the offence”. Parliament, which wanted the level of these penalties to be based on those imposed by the GDPR regulation (fines of up to 4% of the company’s global turnover), has had to revise its position. Nevertheless, it has made progress in other areas, such as raising the number of EWC meetings from one to two per year, with a clear stipulation that these meetings must be held “in person”. MEPs have also strengthened the role of workers’ representatives “by making sure that experts assisting EWCs, including trade union representatives, can attend management meetings in an advisory capacity”. After the provisional agreement has been scrutinised by lawyer-linguists, it will be submitted for formal approval by the Council, possibly at the Employment and Social Affairs Council meeting on 19 June, and by Parliament, at the plenary session commencing on 16 June.

Strengthening the single market : On 21 May, the European Commission presented a communication on a Single Market Strategy, which seeks “to create a more simple, seamless and strong European home market” by tackling “the ‘Terrible Ten’ Single Market barriers” identified by the Commission (see press release and European single market). This document, which is inspired by the recommendations contained in the Draghi and Letta reports, addresses a large number of topics, including some in the social field. The communication adopts the idea of creating a 28th regime tailored to businesses operating across the single market, with simplified rules applicable to relevant areas of law, including “insolvency, labour and tax law”. The Commission suggests several changes to be introduced by the 4th quarter of 2026, in order to facilitate recognition of professional qualifications (faster procedures, automatic recognition, etc.). The Commission plans to simplify posting procedures (see below), including issuing A1 certificates to prove that posted workers have contributed to the social security system in their country of origin. As previously indicated, it wants to limit the information that large companies can ask SME in their value chain to provide for inclusion in their sustainable development reports. It is also announcing a recommendation on the Voluntary SME standard developed by the European Financial Reporting Advisory Group (EFRAG), to be published by summer 2025.

Electronic declaration of posted workers : On 22 May, the Council adopted its position (general approach) on the proposal for a regulation to facilitate the electronic declaration of posted workers. This regulation is designed to reduce “the administrative burden for businesses by fully digitalising the submission of posting declarations and for national authorities by facilitating the monitoring of the compliance with the posting of workers directive.” (see press release). The Council is therefore mandating its presidency to commence negotiations with Parliament, and these will start as soon as the latter has adopted its own position. It should be borne in mind that this regulation is being contested both by the European Trade Union Confederation (see position) and by European social partners in the construction sector, who are critical of plans to abolish the mandatory prior notification for posted workers (see joint position).

Plans to simplify and cut SMEs’ costs : On 21 May, the European Commission presented its Omnibus IV package, which is intended to cut companies’ administrative costs by 400 million euros per year (see press release). One of its flagship measures is the creation of a new category of company: small mid-caps (SMCs), i.e. companies with fewer than 750 employees and up to €150 million in turnover (see the various texts concerned). It is thought that 38,000 companies in the EU come into this category. Companies in this intermediate category – i.e. between SME (fewer than 250 employees) and large enterprises (from now on, those with at least 750 employees) – will have access to some of the existing SME benefits, such as specific derogations under the General Data Protection Regulation (GDPR). The package also postpones, by two years, the deadline for implementation of the due diligence obligations applicable to companies in the battery industry, to 2027 (see proposal for a regulation).

Revision of the EWC directive (reactions) : The trade-union world has welcomed the provisional agreement reached on 21 May in trilogue negotiations (see Lead story). Isabelle Barthès, Deputy General Secretary of industriAll Europe said: “while restructuring is on the rise and thousands of jobs are at risk everywhere in Europe, this should give additional tools to our European Works Councils and empower them to effectively exercise their rights to information and consultation.” (see press release).  However, IndustriAll Europe and the European Trade Union Confederation (ETUC) insist that “a final assessment can only be made once the full text is available” (see press release). The ETUC highlights three of its main requirements: more effective sanctions; granting courts the right to suspend a decision taken by the employer; and a guarantee that EWCs will have the necessary legal standing and resources to take their case to court. These positions are shared by IndustriAll Europe, which moreover takes the view that “it is expected that important progress was made on critical aspects such as the definition of transnational matters” and “limitations on the use of confidentiality”. Neither of these two press releases, nor those issued by Parliament and the Council, make any reference to the opening of a renegotiation period for EWC agreements, for the purpose of bringing them into line with the future directive. European employers’ organisations have not reacted to the provisional agreement.

European Labour Authority : On 26 May, the European Commission presented its Evaluation report on the European Labour Authority (ELA), aimed at learning lessons from the first mandate of this body, which was established in 2020 (see European Labour Authority) but without any of the powers normally devolved to an “authority”, as it is unable to take almost any serious measures without the consent of Member States (see IR Notes 128). The Commission suggests a revision of its ‘Founding Regulation’, so that the ELA can enhance its capacity to handle personal date; strengthen its ability “to request cooperation from Member States on concerted and joint inspections (CJIs)”; and “better address the situation of third-country nationals” (see press release). Isabelle Schömann, ETUC Deputy General Secretary, argues that the report shows that the ELA “clearly needs more powers and resources to tackle the huge scale of exploitation faced by cross-border workers” (see press release).

Direct discrimination : When he took his retirement pension, a Spanish former employee disputed the amount awarded to him, which did not take account of the pension supplement provided for by social legislation to reduce the gender gap. This supplement is intended to reduce the existing gender gap in matters of social security by compensating for the financial prejudice suffered by mothers in their professional career on account of the prominent role they play in raising their children. Among other things, this prejudice results in them paying lower contributions into the social security system, and therefore receiving lower social security benefits. The retired employee, who is a father of two children, believes that this legislation treats men less favourably than it does women, insofar as women who benefit from a retirement pension and have one or more children are automatically granted the pension supplement, whereas men in a comparable situation have to meet a number of additional conditions that take account, among other things, of any career break they have taken and the contributions they have paid into the social security system. In a judgment dated 15 May, the Court of Justice confirmed that this represents direct discrimination on grounds of sex and that it is not justified, especially given that such a pension supplement “does not appear to compensate for the disadvantages to which women are exposed by helping them in that career and, thus, to ensure full equality in practice between men and women in working life.”

A more flexible migration policy : Royal Decree 155/2024 of 19 November 2024, which is intended to make the country’s migration policy more flexible, entered into force on 20 May (see press release). The changes introduced include extending the validity period of a job seeker’s visa from 3 to 12 months; and introducing new integration criteria (an arraigo) that will allow undocumented immigrants to be granted the right to remain in Spain, taking account of factors such as social integration, socio-professional development or vocational training, and their family ties. In addition, in several cases, the minimum qualification period for applying for an arraigo has been reduced from three to two years of residence. These measures are intended to facilitate the social and professional integration of foreign nationals who have links with Spain.

Labour market reforms : The Ministry of Economic Affairs and Employment has set up three tripartite working groups to make preparations for three measures being taken by the Government (see press release). Firstly, it wants to cut the threshold at which employee representation has to be put in place within a company, from 150 to 100 employees. Secondly, employers will be able to decide when employees can take their carried-over holiday entitlement (this was previously a decision taken solely by the employee). And thirdly, the government also wants to clarify the law governing Protection of Privacy in Working Life and to reduce administrative burdens.

Greater security for temporary workers : A draft law designed to make flexible jobs more secure is being presented to Parliament (see press release). Temporary workers should be entitled to enjoy the same working conditions as employees who are on a permanent contract, thereby reducing the risks of exploitation. This new law will limit companies to three temporary contracts of employment during a 36-month period. It also seeks to replace zero-hours contracts with contracts that stipulate a minimum and maximum number of hours. The difference between the two must not exceed a figure of 130%. The sole exception concerns secondary occupations for young people, such as students. If both chambers approve the bill, it will pass into law in January 2027. The VCP trade union, and the employers’ organisations VNO-NCW and MKB-Nederland, say that this is an important stage in the new package of measures aimed at creating a better labour market (see press releases issued by VCP and VNO-NCW).

A new EWC : Following the purchase, in 2022, of some of the businesses owned by publishers Thomson Reuters in Spain, and by Wolters Kluwer in Spain, France and Portugal, the Swedish publisher Karnov has negotiated the creation of a European Works Council covering its 1200 employees in the EU. The agreement, which was signed on 12 March, is fairly brief and adopts the main provisions of the directive. In the name of seeking to ensure that discussions are as open as possible, it imposes limitations on the circulation of information. The rule agreed is that everything is to remain confidential, unless management has explicitly indicated, in writing, that a specific piece of information or document is not subject to the confidentiality obligations in place. The EWC meets quarterly via videoconferencing, without management being present (though the EWC can invite it to attend if necessary), and once a year for a plenary session, held face-to-face. Communication and exchanges take place solely in English.

Trade union recognition : On 14 May, the management of the Danish cooperative group Arla Foods (19,500 employees) and the IUF trade union federation signed a memorandum of understanding following on from an initial transnational agreement to fight sexual harassment. In this new agreement, the two parties “affirm their commitment to continue the meetings between senior Arla Foods labour relations management and representatives of the IUF and its affiliates” in order to “maintain a constructive ongoing dialogue”. They will meet twice a year. Arla Foods acknowledges that collaboration with the IUF will help it to meet its human rights and due diligence obligations under the European directive. Other subjects for discussion may include climate change mitigation, sustainable employment, occupational safety and health, forced labour, sexual harassment and gender equality.