IR Notes

On 9 October, MEPs definitively adopted the proposal for a revision of the European Works Council directive, based on the compromise reached on 21 May between negotiators from the Parliament, the Council and the European Commission (see IR Notes 253). In spite of BusinessEurope sending out a final letter to MEPs to denounce pointless and costly new rules, the charge levelled by some Conservative MEPs that it would hamper business competitiveness and the far-right’s dismissal of “EU soviets”, MEPs adopted this text by a large majority (414 votes in favour, 139 against and 61 abstentions). So this vote marks the end of “a saga that has been going on for 16 years”, in the words of Dennis Radtke (EPP), who oversaw this text through to the end, and managed to convince his own camp of the revision’s merits. Fearing a vote “against” in the name of maintaining EU competitiveness, the trade union movement issued a number of very “pro-business” messages in the run-up to the vote, proclaiming that the revision would not create any new rights, and that it would offer companies legal security without increasing their costs. This isn’t strictly true, if only because there will be a cost involved in having two in-person annual meetings instead of just one, and in the new obligation requiring the employer to cover “reasonable costs of legal representation and participation” in any judicial proceedings initiated by EWCs to defend their rights. However, this will have been a genuine victory for the European Trade Union Confederation: anyone looking at the forthcoming changes to the CSRD and CS3D directives (see below) will appreciate that this was a close call. Before it can enter into force, the new directive still has to be formally adopted by the Council (this is a formality, as the compromise text is supported by 26 countries), and then published in the OJEU. Governments will then have two years to transpose it into their domestic law, i.e. until the end of 2027. Nevertheless, going forward, any agreement negotiations or renegotiations will be conducted with this new text in mind.  The main impact of the directive is that it will lead to changes in virtually all existing agreements, by directly imposing some of its provisions, and above all by opening up the way to a renegotiation of these agreements, including the pre-directive agreements concluded before 23 September 1996, i.e. before the application date of Directive 94/45. The 350 or so bodies concerned here will no longer regarded be as EWCs and employees of their companies will be granted the right to negotiate a proper EWC agreement within their group. In addition to holding out the prospect of wholesale negotiations, the text contains measures strengthening EWCs’ powers: 1/ consultation of the EWC is to be conducted in a way that enables workers to express “their opinion prior to the adoption of the decision”. This means consultation taking place before the decision is taken, to ensure that the directive has a useful effect. 2/ If they express an opinion within a reasonable time, the employees’ representatives “shall be entitled to a reasoned written response from central management (…) prior to the adoption of the decision”. 3/ Undertakings will have to justify their refusal to hand over information or the reasons why this must remain confidential, and determine the duration of the confidentiality obligation. They retain the right not to transmit information in specific cases, but they will then have to provide “reasons justifying the non-transmission of information”. 4/ Access to justice must be guaranteed. 5/ If the right to receive information is infringed, the penalties imposed shall “take into consideration the gravity, duration and consequences of the failure to comply, and whether the failure to comply is intentional or negligent”. If provided for, “financial penalties” shall take into account the undertaking’s annual turnover. 6/ The text includes a gender-balanced representation target for special negotiating bodies and EWCs (at least 40% of seats to be assigned to members of each sex). 7/ The directive’s subsidiary requirements – which will apply in the absence of an agreement – are being strengthened, including the holding of two annual meetings in person.

Due diligence and sustainability reports face being phased out : On 13 October, the European Parliament’s Legal Affairs Committee (JURI) adopted its report on the proposal for an “Omnibus” directive designed to simplify the due diligence (CS3D) and corporate sustainability reporting (CSRD) directives. The EPP, the Socialists and Democrats and the liberal Renew groupings joined forces to support the report presented by the Swedish Conservative Jörgen Warborn (EPP), which was adopted by 17 votes in favour, 6 against and 2 abstentions. This “compromise didn’t emerge from consensus, but from the EPP’s threat to partner with the far right”, emphasises Andreas Rasche, Professor and Associate Dean at Copenhagen Business School. In terms of the substance, Parliament’s plan goes further than the “simplification” measures proposed by the Commission, thereby clearly transforming this first Omnibus directive into a deregulation instrument. If these proposals go ahead, the CSRD directive will apply only to companies with more than 1,000 employees and a turnover of 450 million euros (compared to 1,000 employees and 50 million euros under the Commission’s proposal), and to subsidiaries of foreign companies that exceed these thresholds within the EU. If exemptions for holding companies and finance companies are added to these less strict criteria, the number of companies concerned could fall to 4,200 within the EU, according to the estimates produced by Andreas Rasche. This figure is a long way from the 46,450 companies currently covered by the directive and even from the 11,700 companies previously targeted by the Non-Financial Reporting Directive (NFRD). The cutbacks are even more severe in the case of the CS3D. Whereas the Commission wanted to limit its scope of application to companies with 1,000 employees and a turnover of more than 450 million euros (to bring it into line with the proposed CSRD thresholds), Parliament is going even further, by raising the thresholds to 5,000 employees and a turnover of 1.5 billion euros (which is also the Council’s position). Moreover, while the compromise still includes the preparation of a climate transition plan, it empties this plan of substance: implementing measures will no longer have to be included, and companies will simply have to make “reasonable efforts” (rather than their “best efforts”, as in the current text) to achieve targets “compatible” with those of the Paris Agreement (and are no longer required to make a “contribution” to it) (see Andreas Rasche’s Post). Consequently, under pressure from employers’ organisations and the far-right, these two pieces of legislation, which were nearly six years in the making, are at risk of being “broken up like a jigsaw puzzle” by the year end.

Telework and the right to disconnect : Following the second-stage consultation of European social partners, completed on 6 October, the European Commission can now prepare legislation covering telework and the right to disconnect. In its contribution, despite previously emphasising that such regulations would serve no purpose, the employers’ organisation BusinessEurope has declared that it is open to entering into negotiations covering certain subjects within the framework of the social partners’ work programme. This offer – from an organisation that failed to conduct, in a professional manner, the negotiations on these two subjects that began in 2022 – is a curious one (see IR Notes 219). The offer to reopen negotiations is also supported by SGI Europe (see Position paper). It is therefore unsurprising that in its response, the European Trade Union Confederation points out that as the employers have “refused to put forward the negotiated agreement for adoption”, the Commission should “proceed with a legislative proposal without delay”. Or more precisely four proposals: one on telework, another on the right to disconnect, which applies to “all workers”, and two others aimed at revising the directive on health and safety in the workplace and the directive on display screens.

Travelling time to be regarded as working time : In a judgment delivered on 9 October, the Court of Justice ruled that time spent travelling between an employer’s site and a work site, at fixed times, in a company vehicle, must be regarded as working time. The case concerns biodiversity conservation personnel employed by a public undertaking responsible for overseeing the protection of a Natura 2000 zone. These workers travel from home, by their own means, to their “base”, where they must be present at 8am. From there, they drive a company vehicle to a work site. At 3pm, they leave this site in the company vehicle, drive back to base and then return home. The employees asked for both of these journeys between the work site and their base to be regarded as working time. The company, on the other hand, counted these as only one journey. According to the Court, the three elements constituting the notion of “working time” are met: 1/ The employees are “carrying out their activity or duties”, as the journeys are “inextricably linked to their status as biodiversity workers”. 2/ They are “at the employer’s disposal” because “during the necessary travelling time, which generally cannot be shortened, the workers concerned are not able to use their time freely and pursue their own interests, so that, consequently, they are at their employer’s disposal”. 3/ Lastly, the employees must be regarded as “working during that journey”, because “given that travelling is an integral part of being a worker without a fixed or habitual place of work, the place of work of such workers cannot be reduced to the physical areas of their work on the premises of their employer’s customers”.

Uniform flat-rate tips : The National Council has adopted uniform regulations for calculating social security contributions (see press release). Previously, the rules in this area varied from one branch to another and one federal state [Land] to another. Tips will remain tax-free. The law introduces various ceilings, depending on the type and length of activity, and the sector concerned (see article). It means that employees will enjoy enhanced cover for their pension, sick pay, and unemployment protection.

Independent contractors : The National Council has adopted measures to provide better protection for independent contractors [Freie Dienstnehmer] from January 2026 onwards. They will be entitled to conclude collective labour agreements, and to four or six weeks’ notice if they are dismissed (see press release). Employers will also be required to inform independent contractors of the rules applicable to them, such as the minimum wage (see press release).

Collective bargaining : The Ministry of Labour and Social Policy has prepared a draft law amending the Employment Code, which seeks to encourage collective bargaining between trade unions and employers at sectoral level (see press release). Promoting a more active dialogue between the State and the trade unions, and ensuring better working conditions are two of Minister Borislav Goutsanov’s priorities, and this plan is intended to bring about progress in these areas. The plan, which has been drawn up in conjunction with social partners, is now being published for public consultation. It stipulates that the government will adopt a joint national plan to support collective bargaining by the year end, thereby meeting the obligation imposed by the European directive concerning adequate minimum wages.

Youth employment : The government has amended the law on employment contracts (§7) to allow young people aged between 15 and 17 to work up to two or three hours per day during the school year (see article in ERR news). The maximum length of time they can work during school holidays is being raised to eight hours per day (§ 43) (see Chamber of Commerce and Industry press release).

Parenthood : The 2026 draft social security financing law, adopted by the Council of Ministers on 14 October, introduces “supplemental birth leave” (Art. 42) for the parents of children born or adopted from 1 July 2027 onwards, to allow parents to look after their new-born children, and to encourage the sharing of parental duties. This leave, lasting for up to two months, will be partially funded by the sickness insurance scheme (at the rate of 70% of the employee’s previous net wage for month one, then 60% for month two) and can be taken individually by each parent, either simultaneously or alternating with their partner. It can be taken during the 9 months following maternity, paternity or adoption leave.

A 13-hour day : On 16 October, Parliament adopted a labour law reform that includes extending the length of the working day to 13 hours. The new law allows employees to work long days – beyond the standard eight-hour working day – for a maximum of 37 days per year, provided they reach a voluntary agreement with their employer and are paid a 40% bonus for the additional hours worked beyond the standard working day. Before the vote in Parliament, the draft law had aroused a great deal of criticism and led to two national strikes, on 1 and 14 October. The Workers’ General Confederation of Greece and the Adedy trade union are firmly opposed to this measure (see ADEDY press release). Trade unions have condemned the tiny margin for negotiation available to workers. Advocates of this measure are happy with the flexibility offered in its implementation, which is voluntary and decided on within the company.

Shorter working hours : Following the announcement of the pilot programme establishing various measures to introduce shorter working hours, 1,994 companies and institutions have registered to take part (see IR Notes 252). 90 have been selected, representing around 5,000 employees (see press release). The employers are now going to sign agreements (see list of companies/institutions). The minister has stressed the need to cut working hours for older people and those with family responsibilities. The project’s main phase will commence in 2026.

European Pillar of Social Rights : At a time when the Commission is working on a new action plan to apply the European Pillar of Social Rights, the European Economic and Social Committee has published a study, commissioned by our partner Panteia, examining the Pillar’s implementation and its initial action plan in 2024. The study focuses on four directives featuring in the context of the European pillar: those covering transparent and predictable working conditions, work-life balance, adequate minimum wages and gender balance on company boards. The analysis, which relates to the implementation of these directives and any remaining gaps, covers 14 of the 27 Member States (see country reports). Its conclusions are fairly critical, emphasising insufficient application of these texts. The rights bestowed by these directives often do not benefit people who hold atypical or precarious jobs. Furthermore, labour inspectorates and equality bodies do not have the resources and sanctions they need to ensure compliance with the legislation.