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Workers’ participation at board level - Reports on the national systems and practices

Workers’ participation at board level - Reports on the national systems and practices eu_15_reports_blr.pdf 1.29 MB

TRANSFER 2/2005 • Employee board-level participation in Europe

The European Company Statute came into force in EU Member States in October 2004. The associated Directive on employee involvement in European Companies (SEs) is the first time European legislation has recognised employee board-level participation. This issue of Transfer examines such participation, the importance of the SE Directive and its implications for industrial relations and corporate governance in Europe.

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Financial Participation

The incidence of employee financial participation in Germany is at an average level internationally. Only one tenth of all companies practice profit-sharing and only 2% have employee share ownership schemes. The concept of employee financial participation has been in and out of public debate in the last decades, with varying intensity. The end of 2005 saw the debate gaining ground, mainly due to political focus. This ended up with the adoption of a new law promoting employee share ownership (the "Mitarbeiterkapitalbeteiligungsgesetz”) in early 2009. The political goal defined in the law is greater employee participation in the success and capital of companies.

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Workplace Representation

Employee representation at the workplace is essentially through works councils elected by all employees. They should be set up in all workplaces with at least 50 employees and more than three-quarters of workplaces of this size have them. (There are other arrangements for smaller workplaces.) Works councils are not directly union bodies, although union members often play a key role.

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Prospects for trade unions in the evolving European system of corporate governance (ETUI-REHS Report 92)

Co-determination and economic performance in Europe

Even though the US neo-liberal economic model is currently regarded by many as dominant, this may be proved false by the future of Europe's stakeholder economies. An examination of individual countries in the European Union reveals facts that speak against the supposed superiority of the US model in terms of economic performance. The strongest economies can be found, by and large, where employees enjoy strong rights of representation in company boardrooms, a finding that contrasts strongly with the prevailing opinion that co-determination impairs economic performance.

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Board-level Representation

Employee representatives have a right to seats on the supervisory board of larger companies – one-third in companies with 500 to 2,000 employees, half in companies with more than 2,000.

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Transfers of undertakings (Directive 2001/23/EC)

In 1977 the Transfer of undertakings directive, 77/187/EEC, was adopted by the Council. According to the preamble, the differences in employee protection among the Member States can have a direct effect on the functioning of the Single Market. The purpose of the Directive is (Article 1) to protect employees’ rights in case of a ‘ transfer of an undertaking, business or part of a business to another employer as a result of a legal transfer or merger’. It aims to achieve partial harmonisation of the Member States’ legislation by extending the protection of workers to cover the case of transfer of undertakings. The aim of the Directive is to ensure, as far as possible, that the employment relation continues unchanged with the transferee and that the workers are not placed in a less favourable position solely as a result of the transfer.

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Key Facts

Population16,730,348
Collective Bargaining Coverage 81%
Proportion of Employees in Unions 20%
Principal Level of Collective Bargaining

industry (also some company)

Workplace Representation

works council

Board-level Representation

yes: state-owned and private companies

Company Board Structure

dualistic or monistic (choice)

Sources: see individual country sections; where a range of figures has been quoted, the lower number has been taken

European Works Council Directive

  • European Works Council Directive (2009 recast)
    Directive 2009/38/EC of the European Parliament and of the Council of 6 May 2009 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees (Recast)
  • European Works Council Directive
    Council Directive 94/45/EC of 22 September 1994 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees.
  • European Works Council Directive (UK)
    Council Directive 97/74/EC of 15 December 1997 extending, to the United Kingdom of Great Britain and Northern Ireland, Directive 94/45/EC on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees
  • European Works Council Directive (BG, RO)
    Council Directive 2006/109/EC of 20 November 2006 adapting Directive 94/45/EC on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees, by reason of the accession of Bulgaria and Romania
  • Related EU documents / reports can be downloaded from the EU Commission website.