CAPACITY BUILDING WORKSHOP
Online – January – 1 day
Topic: How to apply the EU law on employee involvement in the face of transnational re-organisation: cross-border conversions, mergers, divisions,..
On 25/01/2021 was held the second meeting of the project: Let Us Participate! Cross-border reorganization and the future of employee involvement in corporate governance” After the welcome of the beneficiary organization CONFSAL, the workshop started with an introductory presentation made by Dominik Owczarek (Institute of Public Affairs, Poland) resembling the key objectives of the project and outlying the key EU regulations referring to social dialogue mechanisms in the cross-border restructuring in multinational companies. According to the Institute of Mergers, Acquisitions and Alliances the number and volume of company restructuring has been growing globally since the beginning of the 80ties , and stabilised at relatively high level in the recent decade. Two significant peaks could be observed in this respect during the digital bubble in the end of the 90ties and during the real estate bubble just before the financial crisis 2008+. (See detailed figures in the presentation).
There are two main EU directives that pertain the regulations on social dialogue in the restructuring process:
- EU Cross-border Mergers Directive 2005/56/EC (art. 16)
- And EU Directive 2017/1132 – relating to certain aspects of company law (art. 133) that was substituted by EU Directive 2019/2121 (art. 86l)
The directives confirmed entitlements of workers existing in earlier regulations, but also include specific (new) provisions:
- Employee participation rules in line with the law in the country of registration
- If one of the merging companies employs over 500 workers and has an employee participation system like in the SE (Societas Europaea)
- Regulations on board-level participation (BLER) are weaker that in the country of the company to be merged
- the same entitlement to exercise participation rights as is enjoyed by those employees employed in the Member State where the company resulting from the cross-border merger has its registered office.
- company shall be obliged to take a legal form allowing for the exercise of participation rights (especially SE)
- A company shall communicate to its employees or their representatives the outcome of the negotiations concerning employee participation without undue delay. (new provision added in EU Directive 2019/2121 (art. 86l)
One might mention also Council Directive 2001/86/EC supplementing the Statute for a European company (SE) with regard to the involvement of employees and Council Directive 2001/23/EC – on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses that are often relevant in the restructuring processes and relate directly to the essence of working conditions (not to the workers’ participation rights).
Also reference to the ETUI report was made: “Exercising voice across borders: workers’ rights under the EU Cross-border Mergers Directive” as a valuable source of information for preparing the national inputs. https://www.etui.org/publications/books/exercising-voice-across-borders-workers-rights-under-the-eu-cross-border-mergers-directive
Following the introductory presentation each of the partners were asked to present the results of the national studies (national inputs).
Giuseppe Catanzaro (CONFSAL)
- In Italy, for a long time there was no law on International Conversion, and in particular on workers’ rights. Implementation of the EU Cross-border Mergers Directive 2005/56 / EC was made only in 2008 and only then did the relevant legislation appeared.
- Over 70% of employees claim that they know the tools to protect the mechanisms of social dialogue and workers’ rights, but in their opinion these mechanisms are not sufficient.
- Almost 90% of respondents rate the Italian legislation good because it is detailed and covers many relevant situations, but unfortunately these provisions do not translate into reality (problem with implementation). European legislation has been well transposed. It is important to execute this right, not just to have it written down.
- tax breaks for companies that pursue social dialogue and protect employee rights to a greater extent than required by law
- or any other incentive for companies
- full and comprehensive implementation of European law
Emilia Martin (FETICO)
- In this research phase, we focused on analyzing how this European regulation has been transposed into the Spanish legal system and how the interests of employees affected by cross-border business reorganization processes are protected. In summary, it was analyzed how the rights to information, consultation and participation of the employees involved in these processes are implemented in Spain.The four sectors that have concentrated the activity of cross-border mergers and acquisitions in 2020 will continue to be protagonists in 2021: financial services, infrastructure, renewable energies and telecommunicationsDirective 2005/56/EC was transposed in 2009, but subsequent directives have not yet been transposed. Most of the experts interviewed and asked about the effects and whether the transposition of this directive into Spanish law has been positive have considered that the transposition of the directive has been adequate since it ensures the protection of the rights to information and consultation of workers recognized in our legal system.The transposition of Directive 2019/2121 into Spanish Law will imply strong legal changes in order to guarantee greater protection for employees affected by cross-border business mobility processes.
In general, all the experts consulted in Spain for this project agreed that European Corporate Law is the most appropriate way to regulate common standards in terms of protecting the interests of workers involved in cross-border corporate reorganization operations in all countries. However, some of those consulted considered that, since the national systems of labor relations and social dialogue are different in each country, the individuality and tradition of each system should be respected.
The main difficulties that the experts consulted for the protection of workers in cross-border business mobility processes have been the following:
- Economic aspects and tax implications due to different laws or possible loopholes with respect to social security taxes, certain social benefits such as early retirement or other complementary retirement benefits.
- Lack or limitation of capacities for the participation of the workers’ representatives in the merger negotiation processes, due to the fact that Spanish legislation only provides for non-binding information and consultation of these representatives. Furthermore, not all employee representatives in the countries involved in the mergers have the same powers granted by their national legal systems.
• Other difficulties or barriers mentioned: legal, administrative, language, socio-cultural differences during integration, accessibility to information.
Barbora Majdisova (Forum for International Cooperation, FIC)
- In Denmark, a two-tier representation system (combined German and British system), about 200 cross-border restructurings in the period 2007-2014, high coverage by collective agreements, presence of employee representation in 80% of companies – especially large enterprises (99% in large ones) – strong employee representation
- The transposition of EU law into Danish law involves the appointment of a specialist committee within which negotiations are conducted leading to a loss of consensus on the content of the transposed law. Previously, an expert opinion is carried out by an independent expert.
- SEVIC verdict – Workers ‘rights to social dialogue and workers’ rights are the same for company mergers and mergers.
- A Danish company may only move to another country if that country’s BLER law is no worse than that of Denmark
- The rest of the presentation is available under the following link: https://www.canva.com/design/DAETqqKj_fo/jqFsEY02pbu0tIjc_NnaJQ/view?utm_content=DAETqqKj_fo&utm_campaign=designshare&utm_medium=link&utm_source=viewer
Maciej Pańków (Institute of Public Affairs, Poland)
- Cross-border transformations constituted approx. 60% of all mergers and acquisitions in Central and Eastern Europe in 2019; mergers constituted approx. 16% of cross-border transformations in years 2005-2014, The cumulative value of FDI equal to 49% of GDP in 2013, Dependent market economy model (Nölke and Vliegenthart)/ subcontractor economy, The increasing role of Asian capital in recent years
- The Directives were transposed to the national law: Article 2313 of the Labour Code – employees’ right to information about the planned takeover, Article 261 of the Act of the 23rd May 23 1991 on trade unions – TUs’ right to information on a planned takeover and negotiating changes in employment conditions, Act of the 13th March 2003 on special principles of termination of employment contracts with employees for reasons not related to employees
- Weakness of social dialogue in Poland, Trade union density among adult Poles decreased from 20% in early 1990s to 5-6% in recent years, Trade union density in 2019 amounted to 12,9% among employees, Trade unions present in only 35% of enterprises, Only 22% of respondents declared that the unions effectively defended the interests of the staff, 38% of respondents had a good opinion about trade unions, while as many as 41% had no opinion about them, Collective bargaining coverage amounts to 10-15% of all employees,
- Works councils not successfully adopted in Polish companies – present in only 2% of those meeting statutory criteria for establishing the council, Limited scope of board-level participation – less than 300 entities, no signs of extension mechanism based on the Directive 2005/56/EC,
- Participation in cross-border reorganisations unsatisfactory from the perspective of the interviewed trade union members, Very weak position and problems with representativeness in service sectors, No information in advance despite the presence of EWC and works council, No influence on the general strategy of the company, The main conclusion: existing legal mechanisms do not guarantee the right to participation – it depends on the good will of the employer and the strength of the trade unions.
- Recommendations: Ensuring sufficient membership and hence representativeness of the trade unions. Need for TU leaders to act professionally, conduct their duties full-time, improve their competences and qualifications. Need to create multi-employer structures with sufficient resources, make more use of external advisory services and expert support. Need for TUs within the same company to cooperate, exchange information, overcome differences and tensions between organisations and formulate a common position on key issues. Additional legal solutions strengthening the trade unions should be considered in Polish legislation, along with more detailed provisions and adequate sanctions for employers not following their obligations.
- Macedonia is a candidate country, therefore the rights to social dialogue are not as broad as in the EU countries. There is no BLER at all. Macedonia is also not included in the European social dialogue
- The right to participate in EWC exists – the implementation of directives in this area, but is not practiced
- The main difficulties are the inability to establish cooperation with a domestic and foreign employer,
- Foreign investors often take advantage of the situation – they set up companies in Macedonia, but more willingly apply national social and economic standards, and not those that would result from corporate policies,
- Due to the fact that Macedonia is not yet a member of the EU, international corporations apply national law and do not want to implement EU law yet.
- A significant proportion of employees are not aware of their rights, which would result from European legislation
Technical difficulties did not allow to present the Romanian context.
Panel discussion – global challenges for workers’ democracy in the context of transnational corporate reorganisation
Partners discussed the above national presentation and exchanged their opinions on both legislative and practical aspects of the workers’ participation in transnational restructuring.
Spain: Social dialogue in the case of transnational restructuring unfortunately often concerns marginal issues from the perspective of working conditions and therefore the impact of the mechanism on improvement of employees situation is small (ie. redundancies, wages, working time, etc.) Workers have the right to bring their issues to a court if employee rights are violated in the restructuring process. Labour rights are therefore in the hands of the Spanish judges.
Poland: Jacek Murawski (Bombardier) the Polish plant has been bought by an international company. The workers and the union received support from IndustriALL, which tried to protect workers against layoffs. The Polish plant was also supported by the EWC operating in this corporation and the Syndex company. The I&C procedures in the corporation are on a good level (good practice).
Also Jan Paciorkowski and Mirosław Grzybek declared their good cooperation within EWCs (in Bosch (Stuttgart / Mirków plant near Wrocław). Mirosław Grzybek notices that EWCs work well mostly in German companies, but in Italian, Spanish and French companies the situation vary. Information flow is not the best there, a wide range of information is kept secret.
Marianna Caiazzo, fro Confsal highlighted that there should be more dialogue within European trade federations or between unions from different countries within a single corporation. European programs might serve to build such a platform of cooperation.