STRATEGIC WORKSHOP I
The strategic workshop I was held on 22-23.04.2021 online. Main topic of the meeting was the board-level workers’ representatives role in ensuring socially responsible restructuring, mergers and relocation of companies. During the first day of the meeting, after registration of the participants (18 in total) the agenda of the workshop was introduced together with key project objectives discussed during the session (How to apply the EU law on employee involvement in the face of transnational re-organisation: cross-border conversions, mergers, divisions?). The following issues were presented:
- definition of board-level employee representation (BLER)
- classification of the EU countries in terms of BLER entitlements extend
- Benefits of BLER
- role of BLER in counteracting critical situations in companies, literature.
After introductory presentation there was the country presentation outlining the key research findings followed the.
- Legal landscape
There are no direct regulations on BLER in the country. However, the right to participation in company management is ensured in the Italian Constitution (art. 46). This general provision has not been yet transposed to country legislation.
There were attempts to introduce regulations establishing BLER mechanism in the country:
– 2012 r. Labour law reform (Fornero) – introduced entitlement to establish BLER mechanism in the legislation, but operational regulations had to be put in place within 12 months, which did not take place. (unsuccessful attempt to introduce BLER).
– 2016 r. Renzi reform – the reform introduced soft measures (tax reliefs) incentivising companies to apply social dialogue and welfare solutions at company level, including BLER, as a voluntary measure. The workers’ rights to BLER were not a part of this legislation.
– 2010 r. region Veneto – adopted a law allowing for establishing BLER mechanism in companies registered in the region
– tax reliefs to the companies that introduce BLER, or tax breaks for companies
– in contrary – penalties for those companies which do not execute workers’ rights
The main objective of this research was to know how the interests of workers are protected in cross-border business reorganization processes: mergers, conversions and divisions.
In recent years, Spanish companies have become increasingly involved in cross-border mergers and acquisitions, mainly targeting Europe and Latin America. The purchase of one company by another (acquisition) or the union of two companies, giving rise to a larger one (merger), are one of the most common forms of internationalization of Spanish companies, to increase their size and competitiveness.
There are general provisions in the Constitution and the Labor Code that ensure the possibility of worker participation in management, but there are no detailed executive laws.
– Directive 2005/56 / CE, of October 26, 2005, on cross-border mergers of limited liability companies
The main objective of this Directive is to facilitate the merger of companies across European borders.
The transposition of the Directive on cross-border mergers into Spanish law
– Law 3/2009, of April 3, on structural modifications of commercial companies (Law on structural modifications of commercial companies -LME) entails a profound reform of the Spanish corporate legal system in terms of structural modifications of companies that are updated and expanded.
– Law 31/2006, of October 18, on the participation of employees in European Companies
The transposition to the Spanish system of the Cross-Border Mergers Directive also modified Law 31/2006, of October 18, on the participation of employees in European Companies by introducing a new Title IV (arts. 39 to 45). In fact, Law 3/2009 on structural modifications of commercial companies establishes in article 67, under the heading “Participation rights of workers in the company resulting from the merger”.
-Directive (EU) 2017/1132 of June 14, 2017 on certain aspects of company law.
This Directive carries out a codification of the Company Law of the European Union. The new Directive brings together six founding texts related to corporate life and various corporate transactions, among which are: Cross-border mergers of limited liability companies.
– Directive (EU) 2019/2121 of November 27, 2019 that modifies Directive (EU) 2017/1132 with regard to cross-border conversions, mergers and divisions.
Known as the “Directive on cross-border mobility of companies”. This new Directive establishes rules to facilitate mergers, divisions or transfers of registered office that have an impact in at least two Member States.
It has already entered into force (it did so 20 days after its publication) but it has not been transposed into Spanish law. Member States have until January 31, 2023 to formalize its transposition.
The transposition of this Directive 2019/2121 into Spanish Law will imply strong legal changes to guarantee greater protection for employees affected by cross-border business mobility processes. Most of the experts interviewed in the presented report consider that the transposition of the directive has been adequate, since it ensures the protection of the information and consultation rights of workers recognized in our legal system.
BLER in Denmark is quite well developed instrument as compared to the other partner countries and is well interconnected with the two-tier system of workers’ representation at company level. BLER might be established in companies with at least 35 workers (sustaining this level of employment for at least 2 years). Only 25% of the entitled companies have BLER. Why?
- registration and election procedure is multistage and complicated: inquiry to the board, establish election committees, Y/N vote affirming general support for BLER, if yes – set election date and call candidates, Election and entry
- the right to take half of the seats on the board of directors
- workers do not express the need to establish BLER to often because there are other mechanisms that work well.
- BLER is often a formal role, informing shareholders that the company is inclusive.
- there is a rapid globalization of enterprises and, at the same time, the level of unionization decreases,
- employees in multinational companies do not know that they have the right to appoint BLER,
Perception of employees about BLER
- employee representatives have no added value in the work of the management board
- difficulties in implementing the interests of employees or the interests of the company (figure impossible).
- sometimes BLERs are not adequately prepared to fulfil their management responsibilities
- BLERs are mostly unionists, so this is duplication of existing structures.
Poland is one of the countries with limited BLER entitlements. As in Spain, BLER is present (almost) exclusively in the public sector in two types of enterprises: state-owned enterprises (works council) and commercialized state-owned enterprises. The total number of these companies covered by these regulations does not exceed 200 nationwide. This mechanism is therefore limited to a small group of companies.
State owned enterprises:
- Employees’ board consisting of 15 employee representatives
- Entitlement to elect the director of the company
- Currently less than 20 companies
State Treasury companies
- Two employee representatives on a five-member advisory board after commercialisation
- One employee representative on the management board in companies employing more than 500 people
- Board members are appointed and dismissed by the company’s general shareholders meeting
- Dismissal of a crew representative voted at the written request of at least 15% of employees
- The rules for appointing and dismissing employee representatives on the supervisory board may be changed from the moment the state treasury ceases to be the company’s sole shareholder
- However, employees keep their right to elect their representatives on the advisory board
- Neither particular qualifications nor competencies are required for the employee representatives on the advisory board (earlier: passing examination was required).
Realations between tha actors of board-level participation are rather complicated, dependent on personality and attitudes of particular actors, situation of the company, strength of TUs, political climate in the country
- Various attitudes of board members reported towards employee representatives
- ‚Professional’ attitude despite differences of opinion
- Disrespectful attitude
- ‚Window dressing’, decission making with no participation of employee representatives
- Difficult relations with other employees
- Misunderstanding of the role of the advisory board
- Not recognising the limitations of the statutory bodies members
- Unrealistic expectations towards the role of statutory board members and output of their activities
There is no BLER in Romania, but employees have the right to be present during the companies board’s deliberations.
Neither the trade unions nor the workers wanted BLER. Unions were afraid that employers would not consult with trade unions, and employers did not want anyone to interfere with their business.
There is no BLER in Macedonia. Under Yugoslavia, it functioned until the 1990s, but in a completely different context. This solution did not work, it was ineffective. It is necessary to develop the entire educational system, and to prepare employees for the role of BLER and for acting as union leaders. The economic account is not the most important element in management, social and environmental factors must be taken into account. Unfortunately, there is a threat of politicizing the BLER – this was the case in Yugoslavia, an absolutist solution. The government chooses relationships to talk to and ignores others. Social dialogue have to be develop step by step. Legal bases are needed to be a point of reference and transparency.
Panel discussion – direct workers participation as a moderator to corporate management – focus on transnational corporate reorganization
- In Poland, companies with BLER do not undergoes transnational restructuring (companies operating only in the country).
- In Italy, a merger in the automotive sector is an interesting case to be observed.
- In Spain, one has to take into account the differences between the stock exchange value of the company and the economic situation (the real value of the company). The latter should be prime concern of the management and the workers.
During the second day were discussed the preliminary results of the study on BLER in comparative perspective
Project expert– presented a summary of the country inputs presented during the first day in the comparative perspective.
Action planning session I
The key part of the workshop assumed discussion on recommendations on how improve BLER mechanism in the partner countries and on how to shape actions plans in order to reach the desired condition. The following recommendation were expressed by the partners:
- There is no research showing that BLER has any added value as compared to other social dialogue institutions. In such situation, unions, companies and the legislator have no incentive to create such a mechanism. Especially that BLER imposes numerous obligations on the workers’ representative.
- Introducing an EU directive on standard solutions in BLER is ok, but it should be implemented gradually. We should consider how to better harmonize standard solutions, e.g. a fixed threshold of employees’ number allowing for establishment of BLER.
- Observe the countries where BLER operates and learn
- The introduction of BLER in Spain is utopian. Unions have been trying to introduce a similar system for many years, but it has failed.
- In the meantime, once the BLER is set up, the main thing to do is to implement the current directives, and there are problems with that. For example, the law on mergers – extend the BLER right to companies in corporate divisions after the process of international restructuring. This will be an attempt at BLER operation. If this works, it will be possible to think about extending this mechanism to non-international companies. I don’t know if BLER will work well in SME.
- If I&C could be properly implemented, then maybe BLER would not be necessary
- Adopt a strategy step by step
- BLER does not automatically guarantee success. There are no studies that show the added value of BLER.
- BLER may also produce unsatisfactory results. For example, when the representative is not well prepared when they are in the minority – this can cause frustration and tension.
- In Denmark, the traditions and regulations regarding social dialogue are quite complex, so the BLER regulations do not necessarily have to be very simple (they reflect certain traditions and cultural patterns)
- In CEE relationships are demonized, associated with the past, but this is not true.
- In southern European countries, collective agreements are more important – also at the regional and sectoral level.
- Generally you have to organize yourself and not be afraid
- Employees must be sure that they are safe when organizing. First of all, it is necessary to strengthen the lowest level of organization and this is the most important task.
- BLER is the icing on the cake, a nice addition. ‘
- Development of the BLER mechanism would be appreciated in the country
- There are tangible effects of BLER mechanism ie. blocking collective redundancies
- It is increasingly difficult to establish BLER (and practice I&C) and enforce workers’ rights in this respect from eligible companies.
- Dialogue at central level is also unsatisfactory, which is an effect of the current government’s policy
- The unionization level is low, so union strength at the workplace level is insufficient
- BLER can operate much earlier than trade unions, because information on restructuring or other company actions are available much earlier than in I&C processes.
- We need BLER in the context of the deficit of other mechanisms of social dialogue
Action planning session II
In the second session of the workshop, the partners focused on defining an action plan leading to reach desired shape of BLER. The following proposals were submitted:
- To Carry out an EU campaign in support of the EU Directive and / or national legislation
- Focus groups to discuss different aspects of BLER – international groups, exchange of experiences in different countries
- Training materials for employee representatives, including BLER, eg labor law, BLER mechanism – there are also many threads common to all employees in the EU.
- Information portal for BLER or other body representing employees. Such a portal would be informative, but also advisory – you can turn to them and ask for help
- Promotion of the results of our project
- Dissemination of good practices – in an orderly manner and presented so that they can be put into practice at the workplace.
- Disseminating information on EU and national legislation – information meetings and sharing experiences.
- Ranking of companies that introduced BLER and achieved success in concrete terms
- Conducting BLER evaluation studies
- Including in-depth case studies of companies that are undergoing international restructuring. How does BLER work in them, are they just dead records, or is BLER actually playing a role. How the International Restructuring Directive is implemented
In the last part of the meeting the partners took part in a video recording, which will be edited and presented to a wider audience as a dissemination result of the project.
Meeting closed with a summary of the meeting and further steps in the project and methodology of the study on the next issue concerned, namely evaluation of European works councils, was briefly refreshed and the online evaluation survey on the workshop was filled in by the participants.