IR Notes

On 23 February, the European Commission adopted a Proposal for a Directive on Corporate Sustainability Due Diligence. The objective is to hold multinational companies liable for adverse human rights and environmental impacts throughout their value chain (i.e. those created by all of their suppliers and subcontractors) (see Due diligence)..

Which companies are concerned?

This text covers two categories of company: 1) companies with more than 500 employees and a net worldwide turnover of more than EUR 150 million. 2) Those operating in “high-impact” sectors posing significant risks of adverse human rights and environmental impacts (textiles, agriculture, ore extraction), and which employ more than 250 employees and realise a net worldwide turnover of more than EUR 40 million (Article 2). This text also applies to companies from third countries active in the EU, whose turnover threshold is aligned with these thresholds. Only SMEs with 250 or fewer employees will escape this directive. However, they could still be impacted as contractors or subcontractors to companies directly concerned by the directive, and so could economic operators from third countries. That is why the proposal calls on Member States to put in place assistance, websites and platforms to help them meet these due diligence obligations.

What will their obligations be?

To comply with this due diligence requirement in terms of sustainability, they will have to: 1) Integrate due diligence into their policies, in particular by adopting a code of conduct describing the rules and principles to be followed by the company’s employees and describing the processes put in place to implement due diligence (Article 5). 2) Identify actual or potential adverse impacts of their own activities or those of their subsidiaries and, where these are linked to their value chains, their established business relationships, on human rights and the environment. To this end, companies “shall, where relevant, also carry out consultations with potentially affected groups including workers and other relevant stakeholders to gather information on actual or potential adverse impacts” (Article 6). It is worth clarifying and strengthening this provision by involving European Works Councils, where they exist, in the task of identifying these impacts. 3) Prevent or mitigate potential adverse impacts by adopting a prevention action plan, accompanied by a timeline of action and indicators that “is developed in consultation with affected stakeholders” (Article 7). Here too, it can be assumed that European Works Councils too, should be consulted about these plans. 4) Make the necessary investments and provide support for SMEs whose viability might be jeopardised by the code of conduct or prevention plan. 5) Bring actual adverse impacts to an end or minimise their extent, including by the payment of damages (Article 8). 6) Establish and maintain a procedure for dealing with complaints concerning the operations of companies, those of subsidiaries and their value chains, which must be accessible to the persons concerned and also to “trade unions and other workers’ representatives representing individuals working in the value chain concerned” (Article 9).  7) Monitor the effectiveness of the due diligence policy and measures, by means of assessments carried out at least every 12 months, based on qualitative and quantitative indicators (Article 10).  8) Publish an annual due diligence statement, whose content is yet to be specified.

How is climate change taken into account?

Larger companies will also have to adopt a plan to ensure that their business model and strategy are compatible with the transition to a sustainable economy and with the limiting of global warming to 1.5° C, in line with the Paris Agreement. The plan will have to include emission reduction objectives where risks or impacts are identified. The variable remuneration payable to company directors, chief executive officers and deputy chief executive officers should include objectives linked to combating climate change (Article 15).
The Commission plans to confer a key role on company directors in taking account of the consequences of their decisions for sustainability matters, including, where applicable, human rights, climate change and environmental consequences, including in the short, medium and long term. They are required to “adapt the corporate strategy to actual and potential impacts identified and any due diligence measures taken”.  It will be for the Member States, who will have two years to transpose the directive after it has been adopted, to lay down the rules on sanctions applicable. These must be effective, proportionate and dissuasive (Article 20). Companies shall incur civil liability if they do not meet their obligations as laid down in Articles 7 and 8, where an adverse impact should have been identified, prevented, mitigated, brought to an end or its extent minimised (Article 22).
Pending the adoption and transposition of this proposal for a directive into national laws, there is nothing to stop these matters being incorporated into the scope of competence of European Works Councils – or even better, EWCs being involved in the process of defining action plans – whenever existing EWC agreements are revised or new agreements are concluded in the meantime.

> See also: European social partners’ reactions (below, Social update)

Activation of temporary protection : On 4 March, the Council of the EU unanimously adopted a decision establishing the temporary protection provided for by Council Directive 2001/55/EC of 20 July 2001 on minimum standards for giving temporary protection in the event of a mass influx of displaced persons. This initiative was presented by the Commission on 2 March (see press release). The aim is to reduce pressure on national asylum systems and to allow displaced persons to enjoy harmonised rights across the European Union. These include residency rights, access to the labour market and to housing, medical assistance and children’s access to education (see Council press release). Article 12 of the directive stipulates that the “Member States shall authorise, for a period not exceeding that of temporary protection, persons enjoying temporary protection to engage in employed or self-employed activities, subject to rules applicable to the profession, as well as in activities such as educational opportunities for adults, vocational training and practical workplace experience”. Moreover, “the general law in force in the Member States applicable to remuneration, access to social security systems relating to employed or self-employed activities and other conditions of employment shall apply.”

• Directive on carcinogens, mutagens and reprotoxic substances: After Parliament gave it the green light on 17 February (see IR Notes 177), on 3 March, the Council of the EU definitively adopted the revision of the Directive on Carcinogens and Mutagens, which will now also include exposure to reprotoxic substances, i.e. chemical substances likely to interfere with the human reproductive system (see Carcinogens directive revision). Member States will have two years in which to transpose the directive, which will shortly be published in the OJEU, into their domestic legislation (see Council press release).

Reactions to the proposal for a directive on due diligence (see Lead story) : The first criticism made by the European Trade Union Confederation (ETUC) is the insufficient involvement of workers and trade unions in shaping and monitoring business due diligence strategies. ETUC Confederal Secretary Isabelle Schömann comments as follows: “The Commission seems to have opted for the lowest common denominator, as a baseline” (see ETUC press release).  The European trade-union federation EFFAT adds: “Self-evidently, intense lobbying activity by industry groups has jeopardized the text, which appears full of shortcomings and exemptions” (see EFFAT press release).  Although IndustriAll Europe welcomes the initiative, it urges for solutions to the massive and unacceptable loopholes in the text (see IndustriAll Europe press release). The federation is also concerned about the leeway left to companies to decide on their own, about their code of conduct and due diligence strategy. “Because workers are not just one stakeholder out of many, a dedicated dialogue with trade unions and their representatives must take place at company level on the design, implementation and reporting of due diligence plans”. The ETUC also considers that the application thresholds in terms of employee numbers are too high. As far as the employers are concerned, BusinessEurope believes that this proposal adds to the already excessive cumulative burden imposed on European business over the last years and that it is “unrealistic to expect that European companies can control their entire value chains across the world, including ‘indirect’ third party suppliers or even customers” (see press release). SGI Europe, for its part, “welcomes the fact that the proposal foresees that only ‘large undertakings’ with high net turnovers” are concerned by the proposal (see press release).

International Women’s Day and poverty : The gender pay gap and the various forms of discrimination faced by women continue to be a major problem in the member states of the European Union, and more broadly, of the Council of Europe, whose female Secretary General has called on men to take action and tackle inequality (see press release). As well as the gender pay gap, there is also the issue of poverty among women, which has been emphasised by several trade unions across the EU. In Germany, the move to raise the classification threshold of “mini-jobs” to 520 euros/month on 1 October 2022, is a matter of concern to all trade unions. “For women in particular, a mini-job is frequently a one-way ticket to poverty in old age”, says Anja Piel, a board member of the German Trade Union Confederation (DGB) (see press release). Ver.di President Frank Werneke claims that “mini-jobs are a poison” (see press release). “It is scientifically proven that having a permanent mini‑job leads to deskilling and thus undermines qualifications previously earned through a great deal of effort”, adds IG Metall’s female Vice-President Christiane Benner (see press release). In Portugal, a recent study (by the CGTP trade-union confederation) of poverty among women, shows that women are at higher risk of poverty than men are (19.2% compared to 17.5%), due to their very low wages – which are even lower than men’s wages (see press release). Since 2020, the number of women at risk of poverty has risen faster than the equivalent figure for men (+138,000, compared to +120,000). In Spain, the UGT trade-union confederation highlights the impact of part-time working on poverty, and points out that “women do not freely choose to work part-time: only one in ten woman who works part-time, does so for work-life balance reasons, compared to one man in three” (see press release).

• Combating racism and antisemitism: On 4 March, the Council of the EU adopted conclusions on combating racism and antisemitism. This text invites Member States to develop action plans and strategies by the end of 2022, to implement the EU anti-racism action plan (2020) and the EU strategy on combating antisemitism (2021) (see Council press release). When it comes to developing these action plans, Member States are invited to work with various stakeholders, including the social partners (point 6).

• Night-time working hours: The Court of Justice has provided details of the application of the provisions relating to night work, appearing in Directive 2003/88 of 4 November 2003, concerning certain aspects of the organisation of working time (see Night work).It has indicated that EU law does not require national legislations to stipulate a maximum length of night-time work that is shorter than day-time work. There may also be a variation between the private sector and the public sector in terms of the length of night work, provided that this difference in treatment is based on an objective and reasonable criterion, i.e. it is linked to a lawful goal pursued by national legislation, and that it is commensurate with this goal (CJEU, 24 February 2022, Case C-262/20, VB (not available in English).


• Unemployment cover for domestic staff: Where their employers are private individuals, domestic staff in Spain are subject to a special social security regime covering all of the normal risks faced by employees, except that of unemployment. As a result, domestic staff are unable to pay contributions to insure themselves against this risk, and thus do not qualify for unemployment benefit when they lose their job. The Court of Justice regards this as indirect discrimination against women and can find no valid justification for it (CJEU, 24 February 2022, Case C-389/20, CJ (not available in English).

• Labour market reforms : The federal government has put forward a plan to reform the labour market, with the goal of achieving 80% employment in 2030. These proposals (see press release) relate among other things to increased flexibility in working hours, and granting employees the option of completing their weekly working hours in four days, or working more one week and less the next. This plan is also intended to facilitate night work in the field of e-commerce, to provide better protection for platform workers and to extend the right to disconnect to companies with more than 20 employees. Trade-union confederations have condemned the lack of consultation and criticised some of the measures announced (see press releases issued by the FGTB and the CSC). For their part, FEB employers are satisfied with the plan overall, but have identified a risk that it may contain an “overabundance of rules” (see press release). The draft text has been submitted to the social partners for their opinion.

European Works Councils confronting the war in Ukraine: IR Notes has spoken to several EWC secretaries. These European bodies have mobilised strongly to help their Ukrainian colleagues. The executive committee of the BNP Paribas EWC held a meeting to discuss the situation in Ukraine, where 5,000 employees work at its Ukrsibbank subsidiary. “We contacted management to ask it to organise an extraordinary meeting of the executive committee”, explains Gabriel Di Letizia, secretary of the BNP Paribas EWC. Colleagues who become involved with humanitarian organisations lending assistance to Ukrainian refugees, must be able to make use of more “solidarity hours”. At Veolia, the subject of Ukraine, where the company has approximately 300 employees, is being discussed today at a meeting between management and the secretaries of the France group council and the European Works Council. At SAP, “the EWC is being kept informed on a daily basis about the general situation in Ukraine, and about the situation of our employees and their families”, says Catherine Bordelon, who is a member of the SAP European Works Council. Likewise, at Nexans, an EWC executive committee meeting was held on 2 March, to take stock of the situation of the 2,800 employees working at the company’s three sites in Ukraine. “Members asked management about solidarity actions that might be envisaged, especially from the countries bordering Ukraine”, says Bertrand Jullian, EWC secretary. On 2 March, following a meeting of executive committee members, Frédéric de Fondaumière, deputy secretary of the Société Générale EWC, sent a letter to management, calling for an extraordinary meeting of the European Works Council. The very next day, management agreed to hold a meeting on 10 March, on line. EWC members are asking management to provide information on the war’s economic consequences for the bank’s business and on its direct and indirect impacts in European countries where the group is present (Poland, the Czech Republic, Romania, Germany, France, etc.), as well as in Ukraine and Russia. They would like to know about the measures being taken to protect employees in Ukraine, French nationals and also Ukrainian citizens wishing to move either temporarily or permanently to France, Poland, the Czech Republic, Germany or Romania. Another request relates to measures to ensure the safety of the 12,000 employees working at the bank’s various sites in Russia.

European Works Councils have even embarked on initiatives at groups that have no employees in Ukraine. At Safran, the EWC issued a message of solidarity with employees who are impacted by the conflict, and especially those working at the Polish sites close to the Russian border, and Ukrainian employees “working at Safran Cabin Plzeň and their families”. Regular discussions are also taking place between management and the council, especially regarding the situation of Safran employees in Russia. At Generali, the EWC questioned management about the fate of countries bordering Ukraine, in which the group has employees (Poland, Romania and Slovakia). It issued a press release aimed at all employees, and asked management to distribute this on the Group’s intranet. It also sent a message to management, suggesting initiatives that the latter should take, such as: setting up a support fund, which has been done; making the best possible arrangements for the Ukrainian employees who work for the group, and for their families; letting the EWC take part in the crisis unit set up by the Global HRD; and recruiting Ukrainian refugees on fixed-term contracts in countries bordering Ukraine, and providing them with training.

At Orange, EWC members will be briefed on the situation, at an ordinary EWC meeting being held on 9 March. “This will primarily deal with the actions decided on by Orange entities in the four countries bordering Ukraine”, explains Anne Lelong-Nakhlé, who is the company’s industrial relations manager: “turning a training centre in Poland into a reception centre for refugees; making telecommunications networks available to humanitarian aid organisations and emergency services; the Orange Foundation issuing a call for projects to company employees; and distributing SIM cards to migrants crossing the border”.
As a European Works Council, we’ve asked our management to make a donation to the ICRC, which they have done, and we’ve asked all our employees to make a donation to local aid organisations, in order to help Ukrainian refugees”, explains Stephan Seiffert, Secretary of the EWC of the Irish group Ardagh, which manufactures glass and metal containers, and has a number of sites in Poland.

In the future, once Ukraine has submitted its application to join the European Union, a more immediate action might be to amend European Works Council agreements, so that Ukraine can come within their scope of application. Legally, there is no reason why this cannot be done. “The question of an immediate symbolic integration has not yet arisen”, explains Michaela Sofer-Ayadi (Veolia). “Our priority is to provide help on the ground, but the question of allowing Ukrainian employees to join the European Works Council will be put to management”, Gabriel Di Letizia (BNP Paribas) assures us.

Right to withdraw labour: : On 2 March, an innovative agreement was signed by the motorway company Autostrade per l’Italia (5,300 employees) and the trade unions FILT-CGIL, FIT-CISL, UIL-Trasporti, SLA-CISAL, UGL Viabilita, Fillea – CGIL, Filca – CISL and Fenealuil, at the Ministry of Employment, in the presence of minister Andrea Orlando (see press release). This agreement provides for the creation, for the first time in Italy, of a right to withdraw labour, i.e. the right for every employee, regardless of the position they hold, their length of service or the role they play, to stop work where they believe that this work is not being performed in complete safety and might result in accidents, injuries or occupational illnesses, either to themselves or others. The agreement also provides for the organisation of a periodic “safety walk”, i.e. periodic inspections of the workplace conducted by management, both for observation purposes and to listen to workers’ concerns, with a view to promoting good behaviour. The memorandum of understanding provides for the creation of a strategic joint safety committee, with a view to guiding and monitoring initiatives taken in the area of vocational health and safety, and to setting short, medium and long-term objectives, in accordance with the group’s strategy.