Strengthening social dialogue in the EU through the European Works Council

This article is brought to you in association with the European Commission.

The Commission welcomes another important political step that strengthens social dialogue in the EU. This morning, the European Parliament and EU Member States reached a political agreement on the revised European Works Council Directive, which aims to strengthen social dialogue in the EU.

European Works Councils (EWCs) are bodies that ensure employees are informed and consulted on transnational decisions by companies with more than 1,000 employees and operating in more than one EU or EEA country. Meaningfully involving employees in company decisions can help manage change, such as during company restructuring or when introducing new technologies.

In 2024, the Commission proposed an update to the Directive to make it easier to establish EWCs, improve their gender balance, and promote effective enforcement. The revised Directive also improves access to justice in case of disputes and reinforces penalties for breaches. It guarantees companies’ ability to make decisions and simplifies implementation by removing complex exemptions and enhancing legal clarity.

More effective and efficient European Works Councils

Key improvements in the revised Directive include:

• Timely and meaningful consultation of employees: EWC members must receive a reasoned response before the company makes decisions on transnational matters. Companies must also explain why confidentiality restrictions apply to the sharing of information regarding transnational matters.
• Equal rights for workers to request EWCs: Removing exemptions will extend these rights to 5.4 million workers in 320 multinationals with agreements set up before 1996.
• Clear definition of transnational matters:The revised Directive clarifies when a topic qualifies as ‘transnational,’ including indirect effects on workers in other Member States.
• Increased capacity to do their work: EWC agreements must specify financial and material resources, including budget, expert support, and training.
• Better gender balance: When forming EWCs or special negotiating bodies (SNBs), parties must aim for at least 40% representation of each gender. If this is not possible, workers must be informed of the reasons.
• Improved access to justice: Member States must ensure EWCs and SNBs can access justice for breaches of their rights, either through employer-funded costs or other means such as legal aid. Member States must also notify the Commission of how EWCs can initiate judicial or administrative proceedings.
• Stronger enforcement: Member States must put in place effective, dissuasive and proportionate penalties. These should take into account the company’s annual turnover or have a similarly dissuasive nature.

Next Steps

The European Parliament and the Council must now formally adopt the political agreement. Member States will then have two years from publication of the revised Directive in the Official Journal to implement the legislation. New rules will apply one year after this. During this transition, existing EWC agreements can be adapted to meet the revised requirements.

Background

European Works Councils (EWCs) are information and consultation bodies that represent European workers in multinational companies. They are created either upon employees’ or central management’s initiative. EWCs are consulted on transnational matters and complement national employee representative bodies.

EWCs and other forms of transnational information and consultation exist in around 1 000 multinational companies, representing approximately 16.6 million EU employees. They contribute to protecting employment and industries in Europe and ensuring the EU’s competitiveness. There are currently around 1,000 transnational information and consultation bodies, two thirds of which are EWCs. About 20 new EWCs are created each year.

A 2018 Commission evaluation identified shortcomings in the consultation process of EWCs and the means for employees’ representatives to enforce their rights. In February 2023, the European Parliament called on the Commission to revise the 2009 Directive and strengthen the role of EWCs. The Commission then carried out a two-stage social partner consultation to gather insights from interested parties, including national administrations, businesses, employees representatives, and legal and academic experts. In January 2024, the Commission proposed to revise the Directive.