In March 2002, the European Commission established a general framework for informing and consulting employees in its European Directive on Information and Consultation of Employees.
Although EU member states needed to implement the directive by 23 March 2005, the Belgian government sees no reason to legislate. Belgium has a long tradition in employee information and consultation, and as a result there is ample legislation on the subject. The government asserts that the current legislation is fully compliant. Not surprisingly, the unions dispute this and insist that further legislation is required. In the context of heightened tension following the recent clash on end-of-career and retirement age issues, this spells more trouble for Belgium’s industrial relations.
Member states need to provide a legal framework for information and the consultation of employees. The directive allows for choice between either ‘undertakings’ employing at least 50 employees, or ‘establishments’ employing at least 20 employees in any one member state. Different thresholds apply to the UK and Ireland during a transitory period.
National laws must ensure that the employees’ representatives are entitled to information and consultation with regard to a number of issues that are of an economic nature, such as employment perspectives, economic situation of the company and restructuring of the business.
The current state of employee representation
The works council is elected via ‘social elections’, which are held every four years (the next elections will be in May 2008). Only employees who are members of one of the three national trade unions (and one smaller union representing executives) have the exclusive right to stand in elections; nevertheless, all employees have a right to vote. All candidates to the elections (effectively elected and not elected) enjoy far-reaching protection.
The works council is organised at the level of a ‘technical operating unit’ (TOU), which is a factual notion, not a legal notion such as a company or employer. A TOU is characterised by a degree of economic and social homogeneity as well as autonomy, in such a way that, from a factual point of view, it is considered as a single ‘undertaking’ by its employees, third parties etc. For instance, different legal entities can in fact operate as one single TOU. In that case, the social body will be implemented on the level of the TOU and it will be competent for the different legal entities that are part of that TOU.
At present, there is an obligation to organise social elections for a works council for every employer who employs an average of at least 100 employees at the level of a TOU. There are no uniform employee thresholds for the instalation of a union delegation. Thresholds are defined by collective agreement at the level of an industry branch and may range between 20 and 50. Furthermore, the union delegates are not elected under a secret ballot under the company’s workers, but are appointed by the union members.
The trade unions, however, claim the government cannot opt for the threshold of 50 employees and must instead provide for a mandatory representation at the level of establishments (ie 20 employees). To that end, they argue that the notion of a TOU as defined under Belgian law necessarily corresponds to the notion of establishment in the sense of the directive. They are considering legal actions against the government before the European Court of Justice, claiming the Belgian legislation is not in line with the European directive.
Clearly, the workers’ representation in companies employing between 20 and 50 employees is at stake. If the trade unions are successful in their claim, all companies employing at least 20 employees will be immediately affected.
The employers’ organisations fear the generalisation of the obligation to have a works council or a similar social body. They believe that the implementation of the directive should not affect entities employing 20 employees, but only those employing 50. Furthermore, they say that the institutionalisation of the (informal) relationships between management and employees will harm rather than facilitate the daily life within smaller enterprises.
They fear that lowering the bar for the instalment of such a social body will entail a disproportionate increase in administrative obligations for small and medium-sized companies and is likely to generate more protected employees’ representatives. Companies may react to this situation by further outsourcing parts of their activities or relying on the services of independent contractors.
This issue is particularly sensitive, since over 95 per cent of companies in Belgium employ fewer than 50 employees, many of which are subsidiaries or legal branches of a foreign company.
It is not likely that the trade unions’ arguments would be upheld by the European Court of Justice, as the directive clearly gives each member state the right to choose. Whether the information and consultation is organised at the level of an ‘undertaking’ or an ‘establishment’ is purely a political choice.
The Belgian government’s choice for the level of the undertaking is legitimate, insofar as the notion of a TOU corresponds to the notion of undertaking in the sense of the directive. Now, based on an analysis of the case law with regard to the notion of a TOU, it appears that it is even broader than the European notion of undertaking. Consequently, Belgian employees have quicker access to information and consultation under the Belgian legislation than under the European directive.
For companies employing between 50 and 100 employees, the role of the union delegation should be slightly enlarged, so that it gains competence for all economic matters set out by the directive.
The unions’ claim is likely to generate a fierce political debate. However, this is likely only ever to be a theoretical debate, as the legislation is already in place. Further issues such as retirement and competitiveness will soon test the government further, as well as the unions and employers’ organisations.
Eddy Lievens is head of employment and Jurgen Goyvaerts an associate at DLA Piper Rudnick Gray Cary. They were assisted by trainee Caroline Deiteren