The Rule

Managerial Law
Emerald Article: The Rule of Law versus The European Works Council
Jo Carby-Hall
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Volume 40 Number 4 1998
The Rule of Law

versus
The European Works Council

Jo Carby-Hall
1
Contents Page
Introduction. 5
The Rule of Law in context. 5
I. The European Works Council concept. 6
(a) Its historical context. 6
(b) The Directive - Influences, description and explanation. 7
Background. 7
The descriptive element highlighted. 8
- Coverage. 8
- Establishing a European Works Council. 8
- Subsidiary requirements. 8
- Article 13. 9
- The three phase operation. 10
- Some comments. 10
- Conundra regarding implementation. 11
II. The implications of the Directive on the United Kingdom. 12
(a) Different UK attitudes to the Directive. 13
- The government and the Confederation of
British Industries. 13
- ..... and the T.U.C. 13
(b) The consequences in the U.K. 14
- Direct consequences. 14
- Indirect consequences. 14
(c) Consequences relating to British employees. 15
(d) Problematic situations for the U.K. 16
- Recognition and employee representation. 17
- Possible consequences of a late implementation. 17
- Harmonisation of different employee representative
arrangements. 18
III. “Some are more equal than others” - Returning to the Rule of Law. 18
(a) Inequalities between British employees and employees in the
Member States. 18
(b) Inequality between British employees. 19
(c) Employers and inequality. 19
To sum up. 20
IV. Conclusion. 20
(a) Any effect of the Directive on British industrial relations? 20
(b) Consequences of the British opt-out. 21
(c) Possible influences on the United Kingdom. 21
(d) A Europe à la carte. 22
(e) ..... and one final remark. 22
References. 24
3
Introduction
The rule of law in context.
The concept of the rule of law is rooted in the history of European constitu-
tionalism.(1) In England it was first given a clear definition by Dicey. (2) The
rule of law refers basically to three different notions:- Firstly, the absolute
supremacy of ordinary law as opposed to arbitrary power on the part of the
government. Secondly, it refers to equality before the law. Thirdly, it means
that the rights of the individual are not secured by guarantees set down in a
formal document but by the ordinary remedies of private law.(3) The exami-
nation which follows will concentrate on two aspects of the rule of law
namely (a) that of legal equality and (b) the universal subjection of all per-
sons to the same system of law. In other words, the absolute supremacy of
law. If one were to link these requirements in the context of the European
Works Council Directive,(4) it will be observed that the prevention of an une-
qual treatment of employees working in the same transnational company is
one of the objectives of the Directive. The Directive specifically states that
“procedures for informing and consulting employees as embodied in legis-
lation or practice in the Member States are often not geared to the transna-
tional structure of the entity... this may lead to the unequal treatment of
employees affected by decisions within one and the same undertaking...”(5)
This whole (i.e. the rule of law definition and the Preamble to the EWC Di-
rective) it is submitted, is an updated definition of the rule of law with regard
to European Works Councils which will lead us into the twenty-first cen-
tury.
Because of the opt-out from the Social Policy Agreement by the

Thatcher /Major administration, the United Kingdom is not subject to the
EWC Directive. The Directive is however, applicable to all other Member
States and as will be seen presently, it is having an indirect effect in the
United Kingdom. This situation could lead to inequality and thus to a breach
of the rule of law as defined above with respect to three different aspects:
The first one concerns inequality between the rights of British employees
and their colleagues in the Member States subject to the Directive. The sec-
ond aspect relates to inequality among British employees inter se: There are
British employees working in British undertakings which apply the Direc-
tive and which also include their British employees. There are however, also
British employees working for undertakings which do not extend to their
English employees the scope of any agreement concluded under the Direc-
tive.
The third aspect to be considered in this context relates to the situation

of British employers contrasted with those in the Member States. Only the
latter group is affected by the Directive and might thus be in a less advanta-
geous competitive position as a result. Although the New Labour admin-
istartion has accepted to be bound by the European Social Policy Agreement
and by the E.W.C. Directive, the staus quo remains during the long period of
implementation.
Before an examination of these three aspects takes place, it is proposed

to discuss briefly the philosophy behind the European Works Council con-
5
Managerial Law
cept. In doing so, the topic will first need to be put in its historical context.
There will then follow a discussion on the European Works Council Direc-
tive itself. This will receive brief treatment and will concentrate on the rea-
sons for its adoption; the highlighting of its main provisions, and the making
of some general comments. The complications concerning the implementa-
tion of the Directive will need to be addressed before its implications on the
U.K. are discussed. This later discussion will examine a number of factors
which will include, inter alia, U.K. attitudes towards the Directive; its direct
and indirect consequences within the U.K.; problems of applicability; con-
sequences of possible late implementation; and the harmonising of a variety
of employee representative structures. Something will then be said on prob-
lematic situations which could come about when the U.K. eventually adopts
the E.W.C. Directive.
An understanding of these features is essential before the concept of

the rule of law, as applicable to the European Works Council may be fully
appreciated. It will then be appropriate to discuss the three aspects of the rule
of law as outlined above before some conclusions on this issue are reached.
I. The European Works Council Concept.(6)
(a) Its historical context.
The history of European legislation on employee participation dates back to

1970.(7) It is a sad indictment on industrial democracy that comparatively
few proposals have since been adopted: They include Directive 75/127 EEC
on Collective Redundancies;(8) Directive 77/187 EEC on the Transfers of
Undertakings,(9) Directive 89/391 EEC on the Safety and Health of workers
at work(10) and the European Works Council Directive.(11)
In spite of lengthy debates on employee participation, several other pro-

posals, have not been approved by the Council.(127)
One example was the draft “Fifth Directive”, which dates back to 1970
and which related to employee participation at the board level in large com-
pa nies. It bor rowed much from the West Ger man sys tem of co-
determination, providing for a two tier system on the supervisory board.(13)
It was however resisted by a number of Member States, employers’ organi-
sations and other bodies.(14) In 1980 the Commission proposed a Directive
on informing and consulting the employees of undertakings with complex
structures, in particular, transnational undertakings. This draft Directive
was known as the “Vredeling proposal”.(15) The draft proposal contained
two major obligations: a duty to provide employees with periodic informa-
tion and an obligation to give information in advance of decisions which
would seriously affect the employees’ interests.(16)
This draft Directive, although modified in 1983, faced serious opposi-

tion by Member States and international businesses.(17) The UK especially,
was strongly opposed to it, due to the draft being irreconcilable with the lim-
ited information and consultation provisions which exist in that coun-
try.(18) The proposal finally failed in 1986, unable to find positive consent
in the Council. Nevertheless the Vredeling Directive can be regarded to
6
some extent as the progenitor of the European Works Council Direc-

tive;(19) as the son of Vredeling.
In 1989 the Community adopted the Charter of Fundamental Social

Rights of Workers, which, although not a binding document on the Member
States, promoted, inter alia, the information, consultation and participation
of workers concept. The Charter was adopted without the participation of
the UK. The Charter was contrary to the then Conservative government’s at-
tempt to lift restrictions on employers in the labour market in order to boost
the economy.(20) Art. 17 of the Social Charter states that worker participa-
tion should especially apply to companies having establishments in two or
more Member States. In this way, issues dealt with under the Vredeling Di-
rective were taken up again.
The draft Directive on “The establishment of a European Works Coun-

cil in Community undertakings or groups of undertakings for the purpose of
informing and consulting employees” was proposed by the Commission in
December 1990 and was based on Art. 100 of the European Community
Treaty. It was therefore subject to unanimous Council voting.(21) Although
amended in 1991 and 1993,(22) the proposal did not reach unanimity, the
main reason for this being the consistent opposition by the United Kingdom.
Somewhat of a turning point occurred with the signing of the Maas-

tricht Treaty, where the Protocol on Social Policy was signed by all twelve
Member States. The UK thereby formally accepted that the eleven other
States could make further progress on social issues.(23) A second docu-
ment, the Agreement on Social Policy, set out how, and in which areas,
progress could be made. This included the information and consultation of
workers. After the ratification of the Maastricht Treaty by the Member
States, the Commission decided to relaunch the proposal under Art. 2(2) of
the Agreement. On this basis the Directive was subject to majority voting of
the Member States. The UK’s consent was thus no longer required. In accor-
dance with Art. 3(2) of the Agreement the Commission consulted manage-
ment and labour at Community level in 1993 and 1994, giving them the
chance to consider opening negotiations culminating in an agreement on
this issue. The social partners were however unable to reach an agree-
ment.(24) The Council finally adopted the European Works Council Direc-
tive on 22 September 1994.
The Directive was thus not only the first to be adopted under the Social
Policy Protocol, it was also the first to be adopted without the acceptance of
all Member States. It nevertheless represents the first successful attempt by
the Community to legislate on transnational employee participation proce-
dures, thus making it the first positive outcome of a debate which has lasted
for over two decades.
The Directive - influences, description and explanation.
Background.
It is proposed to consider briefly the reasons and influences which have been
attributed to the Directive’s adoption and which have shaped its final out-
7
Managerial Law
come. One of the key factors behind the Commission’s approach is closely
linked with the completion of the Single Market. In order to boost business
within the Community, strong emphasis was placed on multinational enter-
prises. A significant growth of such undertakings took place in the mid
1980s; they included the world’s most important employers.(25) The tran-
snationalisation of companies signified for employees, that the policy deci-
sions of the undertaking were likely to be made outside their country. The
consequences of these decisions could however affect their workplace.
Even if the Member State were to provide legislation for group-level infor-
mation and consultation, such legislation would not be applicable beyond
national borders. There existed thus a “participation gap” on information
and consultation rights between the increasingly transnational decision
making and the national one.(26) In closing this gap, the Commission also
hoped to bring about social acceptance of the restructuring linked with the
completion of the internal market.(27) In addition, there was the economic
factor: European Works Councils were regarded as useful for the purpose of
developing the economic activities within an undertaking in a “harmoni-
ousfashion” through informing and consulting the representatives of the
employees.(28)
Early agreements on information and consultation in European multi-

nationals were another factor which influenced the outcome of the Direc-
tive. (29) In spired by French leg is la tion, the first ex peri ments on
transnational-level information exchange were conducted during the mid
1980’s by French companies.(30) Although the number of those agreements
was limited,(31) they laid the foundation for the Commission’s proposal.(32)
The descriptive element highlighted.
Coverage.
The Directive applies to all Member States of the European Union which
have signed the Agreement on Social Policy. This includes, all the original
EU States with the exception of the United Kingdom, as well as the three
new members Austria, Finland and Sweden. In addition, the three remaining
States of the Economic European Area, Norway, Liechtenstein and Iceland
have also agreed to implement the Directive.
The Community scale undertakings affected by the Directive are de-

fined as those with at least 1000 employees in each of a minimum of two
Member States.(33) In the case of a Community scale group of undertakings,
the minimum required is 1000 employees within the Member States. Fur-
thermore it must have a minimum of two group undertakings in different
Member States, each of them having at least 150 employees.(34) In assessing
whether an undertaking is covered by the Directive, operations and employ-
ees in the UK are, as yet, not counted.(35)
Establishing a European works council.
The Directive sets out a procedure on how the negotiations to set up a EWC
should be conducted once the Directive came into force on 22 September
1996.(36) The responsibility for the establishment lies within the central
8
management or within the representative agent of the central management if

this is not located within a Member State.(37) The procedure starts either with
an initiative of the central management or at a written request of at least 100
employees in two undertakings in different Member States.(38) To establish a
European Works Council a special negotiating body has to be set up. This
body must consist of between three and seventeen members. Although the
method for the election of members of the special negotiating body is left for
the Member States to decide, the Directive sets out some further require-
ments which must be adhered to.(39) According to Art. 5 (3) of the Directive,
the central management and the special negotiating body can determine, by
a written agreement, either to set up a European Works Council.(40) or to esta
blish a procedure for the information and consultation of employees.
Subsidiary requirements.
The agreement on the setting up of a EWC or a procedure for information

and consultation are not however the only alternatives of the negotiation
outlined above. Should the parties fail to reach an agreement after a period
of three years from the date of the request for negotiations, Art. 7 prescribes
for “subsidiary requirements” to become applicable. Subsidiary require-
ments are generally those already existing in the national legislation of the
Member State where the central management is located, and additionally
certain minimum conditions set out in an Annex to the Directive must be
met.(41) These “fall-back provisions” ensure that the obligations of the Di-
rective are observed and not bypassed simply by spinning out negotiations.
The subsidiary requirements of the Directive also apply if management has
refused to start negotiations within six months of being asked to negotiate or
where the parties agree to use them.(42)
Another possible alternative would be a majority decision by the special

negotiating body not to open negotiations with the central management. In
this case, the subsidiary requirements of the Annex will not apply and a new
request by the employees to convene a special negotiating body cannot be
made before a two years’ period.(43)
Article 13.
Art. 13 provides that the obligations of the Directive shall not apply to un-
dertakings which have already concluded a pre-directive agreement on a
voluntary basis before 22 September 1996. This means that until such agree-
ments expire, the Directive will not apply to the undertakings concerned. In
order to qualify under Art. 13, the agreement must fulfil the following con-
ditions: it must cover the entire workforce and it must provide for the tran-
snational information and consultation of employees. Since Art. 13 uses the
word “agreement”, it implies that it cannot simply be arbitrarily imposed by
one side.(44) Apart from that, employers and employees are free to agree on
whatever they think meets the specific needs and best interests of their busi-
ness. Concluding voluntary agreements before the EWC Directive entered
into force avoided certain formal requirements, such as the establishment of
a special negotiating body. This has led many companies to enter such
agreements or to start negotiations with representatives of employers and
9
Managerial Law
employees with a view to finalising an agreement before 22 September

1996.
Art. 13 reflects the Directives general approach of giving precedence

to company-specific settlements negotiated between management and em-
ployee representatives. It is also a recognition of “pioneer EWC agree-
ments”, voluntarily concluded before the legislation on European Works
Councils is adopted.(45)
The provision offers advantages both for the employers’ and the em-
ployees’ side.(46) Several voluntary agreements have already been con-
cluded and negotiations are taking place in many companies.(47) The
European Commission and the European Foundation for the Improvement
of Living and Working Conditions in Dublin have published some fifty vol-
untary agreements relating to information and consultation of employees,
concluded by undertakings in the Member States in advance of the imple-
mentation of the EWC. This collection gave an overview of what was in-
cluded in such agreements and at the same time acted as a guide to
employers and employees who were involved in negotiations prior to the
coming into effect of the Directive.
Research shows that most agreements have been signed by both na-
tional and international trade union organisations or by a national works
council from a single country. The size of the representative body varies be-
tween seven and seventy members, although the great majority have be-
tween ten and forty members. The competences of these bodies include
normally economic, financial, employment and other social matters limited,
generally to group or transnational issues.
Most agreements provide for annual meetings. Extraordinary meetings

are possible in the case of exceptional circumstances. The majority of agree-
ments provide explicitly for simultaneous interpretation to be provided at
the meetings. The costs for the meetings are met by companies. The issue of
confidentiality is also addressed in several agreements.(48)
Since the Directive entered into force on the 22 September 1996, vol-
untarily concluded agreements can be subject to Court proceedings, simply
if one side claims that the concluded agreement is not a valid Art. 13 agree-
ment. An examination of some of these agreements shows that both sides
are operating carefully, in this context, obeying the minimum requirements
set out in the Annex to the Directive.
The European Commissioner for Social Affairs, Mr. Padraig Flynn

epitomised the effect which Art. 13 has had as follows: “I am greatly heart-
ened by the fact that so many companies have voluntarily put in place agree-
ments to inform and consult with their employees. Companies and
employees are seeking and finding solutions which are adapted to their own
particular situation. The Directive was designed to be a flexible instrument
and to encourage a voluntary approach. At this moment, over 140 voluntary
agreements have been reached and dozens of negotiations are taking place
to benefit from the opportunity to conclude a voluntary agreement before
September 22 this year. I am happy to see it working with such success”.
10
The three phase operation.
The Directive is thus operating in three phases, measured both in terms of

the “time” and in terms of the “requirements” it imposes. The first was the
stage before the Directive provisions had to be implemented by the Member
States when voluntary agreements could be concluded. The second stage
occurred after the implementation in the Member States, upon the initiative
either of the central management or the employees. A concluded agreement
would not have to meet the minimum requirements. Rather it simply would
have to cover some basic issues set out in Art. 6 (2). The third stage will
come into operation three years after negotiations between the employers
and employees side have broken down. The subsidiary requirement provi-
sions would then come into force.
Some comments.
One of the Directive’s key characteristics is “flexibility”. The Commission,

taking into account earlier criticism of its proposals as too inflexible and
rigid, drafted the Directive to be as flexible as possible in its application and
moreover restricted it only to information and consultation.(49) An example
of “flexibility” can be found in Art. 13. The spirit of the Directive is thus to
provide a framework for negotiations and not to prescribe detailed require-
ments which have to be included in the agreement.
Another significant principle which underlies the Directive is “subsidi-

arity”.(50) This generally implies that the Community shall only take action
where the objectives of the action can be attained better at Community level
rather than at the level of the Member States.(51) The principle is generally
expressed in Art. 3b of the Maastricht Treaty and put into concrete form in
the Agreement on Social Policy: the Community will only “support” and
“complement” the activities of the Member States,(52) the Community only
takes action if the “social partners” on the European level do not want to ne-
gotiate on the matter;(53) and if the Community takes action, it only adopts
“minimum standards”.(54) The Directive reflects these requirements in sev-
eral of its provisions.(55) The Directive is thus the provider of the basic con-
ception in this field. It only sets out the minimum minimorum standards and
a considerable amount of discretion is left to the Member States.
What should be highlighted with regard to the Directive’s scope is that

it provides only for information and consultation. It does not introduce real
participation in the meaning of co-determination. The prerogatives of man-
agement are unaffected. The scope is therefore somewhat narrow.(56) On
the other hand, the Directive provides a basis for continuous dialogue be-
tween management and labour and is the first Directive which provides for
the giving of regular information on a broad range of matters. It is thus an
improvement on previous Directives which are concerned with information
and consultation in restricted circumstances.(57)
Conundra regarding implementation.
The European Union’s social policy has become somewhat complicated

since the adoption of the Maastricht Treaty. Although social measures may
11
Managerial Law
still be introduced under the EC Treaty (58) they might now, in specific ar-
eas, also be introduced under the Agreement on Social Policy.(59) If a social
policy measure is successfully introduced under the EC Treaty, it will apply
to all Members of the European Union. If however the measure fails to be
adopted under the EC Treaty, it may be re- introduced under the Agreement
on Social Policy.
With regard to the EWC Directive itself, Member States may either im-
plement the Directive by legislation or by agreements between management
and labour. At the time of writing, Member States have taken up both ap-
proaches and are at various stages of implementation.(60)
The Directive aims at creating a European-wide legal framework for

transnational information and consultation, a task of considerable legal
complexity. In this respect if differs from other Directives, which usually af-
fect persons only within their own Member States. The Works Council Di-
rective by contrast affects, by definition, people living in at least three
different Member States. The transnational nature of the Directive implies
that national measures for its implementation will have transnational conse-
quences.
Furthermore, different national provisions of the Member States will

be of significance for an undertaking covered by the E.W.C. Directive. The
location of the central management has to decide which national law is ap-
plicable with regard to the transnational provisions of the Directive. For ex-
ample the Directive’s subsidiary requirements.(61) On the other hand, each
country’s national law will be decisive for the national aspects of the Direc-
tive, such as the definition of an employee representative or the method of
the election of national members on the special negotiating body.(62)
Problems are also likely to arise as a result of the Directive leaving

many issues to be decided at national level.(63) A working party, set up by
the Commission and composed of representatives from all countries subject
to the Directive,(64) aims at harmonising the national measures for imple-
menting the Directive. The working party has made several recommenda-
tions. One of these is that national implementation provisions had to enter
into force in all the Member States subject to the Directive by 22 September
1996.(65) This proposal endeavours to avoid complications which could
occur as a result of the transnational structure of this Directive. Despite the
fact that the recommendations of the working party are non-binding, they
are of importance to the national legislator concerned with implementation.
It is thought that the result will spell a greater degree of harmonisation be-
tween national approaches than might otherwise have been the case.(66)
Although the working party is attempting to harmonise the different

national approaches to some extent, it is unlikely that a complete harmonisa-
tion of national measures will take place. Transposition measures are more
likely to reflect national industrial relations cultures, which are engrained
and enshrined as a part of each country’s history and traditions. Details of
national provisions therefore can be expected to vary from country to coun-
try. In this context an interesting question to ask is how far different models
of European level information and consultation might emerge. However,
12
the minimum standards, must be observed in every country. This will guar-
antee some basic harmonisation concerning the Directive’s implementa-
tion. It will also be in accordance with the Directive’s philosophy and the
whole social policy approach; namely that national measures should only be
harmonised where it is necessary and that the different national traditions
should be maintained where they do not lead to an unequal treatment on a
European Union level.
II The implications of the Directive on the United Kingdom.
The UK is very much a special case in terms of information and consultation

arrangements. Except for the provisions on safety representatives,(67) dis-
closure of information to trade unions for collective bargaining purposes
(68) and the implementation of European Directives on these and some
other issues,(69) there are no legal provisions regulating employee partici-
pation.(70) Moreover, there does not exist a tradition of statutory imposed
employee participation. This situation can be explained by the voluntary
character of the British industrial relations system: it is generally left to the
employers and trade unions to define the pattern of industrial relations. Col-
lective bargaining, although declining in importance in the late 1990s, has
functioned as a way of defining the employment relationship. Employee
participation is a reflection of the voluntarist system. This means that the
agreements which are concluded at plant or company level are more impor-
tant than the collective agreements entered into at national level. Thus, if
and to what extent participation takes place, depends to a significant degree
on the situation in the individual company.(71) Apart from Ireland, the UK is
the only country in the EU without a general system which provides work-
place employee representatives with information and consultation rights.(72)
That does not, however, mean that British workers are deprived of any
participation rights. They are able to take part in decisions through the “shop
steward” and “joint consultation committee” systems.(73)
(a) Different UK attitudes to the Directive.
The Government and the Confederation of British Industries.
The Thatcher/Major Government was, and the employers’ organisation, the

CBI is opposed to the EWC Directive. According to the then Government,
the “Directive embodies a concept which is alien to the UK tradition and
would be incompatible with British information and consultation prac-
tice”.(74) Furthermore, it “would impose a rigid bureaucratic mechanism”
and “compulsion is the worst way of getting managers and employees to
work together”.(75) Employers share these arguments and moreover see the
Directive as an “extremely expensive and damaging measure, ...which will
reduce competitiveness by seriously delaying companies’ freedom to take
vital decisions in good time”.(76) The then Government was,and employers’
representatives are, however not opposed to voluntary employee involve-
ment, and to companies setting up works councils if they see advantages in
this.(77)
13
Managerial Law
Apart from the opposition to imposed legislation, there is another rea-

son for the general objection: the Directive provides for “indirect participa-
tion”, which means collective representation and not direct, individualised
forms of employee involvement.(78)
In addition, the then government was, and employers’ organisations are,

sensitive to the implications the Directive might have in the long term.
Would it encourage collectivism and thus become a vehicle for the develop-
ment of European-level collective bargaining?(79) Both the previous Con-
servative government’s and the employers’ organisation attitudes were such
as to show a deep ideological opposition to the Directive. As Hall puts it:
“Management in UK based multinationals are likely to find the prospect of
being accountable to a group-wide forum of employee representatives,
armed with statutory information and consultation rights, a considerable
culture shock”.(80) Although the New Labour government returned in May
1997 has adopted the Directive, no positive results have ensued at the time
of writing.
.... and the TUC.
The British Trade Union Confederation (TUC) has historically been op-
posed to statutory imposed employee participation. Although this attitude
appears surprising at first sight, it can be explained as a result of the adver-
sial character of the British industrial relations system. The unions want to
retain their complete independence in order to be able to exercise their full
collective bargaining power.(81) The TUC has however taken greater interest
in the works council system in recent years. This, for two reasons: The first
related to the European-level developments on employee participation, es-
pecially as a result of the EWC Directive. Furthermore, through member-
ship of the European Trades Union Confederation (ETUC), the TUC has
involved itself in consultations regarding this issue and has seen better op-
portunities existing at European rather than at the national, level. Secondly,
a falling union membership, which went hand in hand with a general loss of
power, in British trade unionism(82) especially regarding union recognition
and collective bargaining power.(83) It may generally be said that with an in-
creasing loss of trade union power at national level, the British trade union
movement has focussed on Europe,(84) (a) as a possible deus ex machina, in
remedying its problems or (b) at least in consoling itself.
The TUC thus welcomed the EWC Directive, but at the same time it
has pointed to a number of operational problems that could arise in the Brit-
ish context.(85) One of these is that the Directive does not attribute a particu-
lar role to trade unions. The European Works Council consists of “workers’
representatives”. This does not necessarily mean trade unionists. The TUC
therefore foresees a danger, should alternative channels of employee repre-
sentation emerge. Trade unionism might suffer as a result, (86) or be trans-
formed.
With regard to the operation of the Directive, the TUC is particularly in

favour of concluding voluntary agreements in accordance with Art. 13.
Apart from the fact that these agreements could have been concluded before
the Directive was implemented, they offer unions an important advantage:
14
Because of the thenUK’s opt out of the social provisions, trade unionists and
non-unionists alike had no formal rights or role to play under the Directive.
For example they did not have to be included in the special negotiating body
or in the European works council. The only way to ensure UK employee rep-
resentation was through voluntary agreement. It is therefore in its own inter-
est, as the TUC states, “to try to get as much agreed as possible before the
Directive is implemented and more formal rules apply”(87)
The attitudes in Britain towards the Directive must therefore be regarded

as ambivalent. Although the trade unions are generally in favour of it, the
previous government was, and the employers’ organisation is strongly op-
posed to it. The New labour government is, of course, in favour and has
adopted the Directive subject to a transition period which means that the
status quo still remains.
(b) The consequences in the U.K.
Both direct and indirect consequences are attributable to the Directive with
regard to the United Kingdom.
Direct consequences.
The direct consequences are obvious. Because of the UK’s original opt out
from the social policy Agreement, the then British government was not
compelled to implement the EWC Directive. Employers operating in the
UK, whether they be based in the United Kingdom or elsewhere, were under
no legal obligation to set up a European Works Council for their British em-
ployees. However, multinationals based in the UK still had to comply with
the Directive for their operations in the Member States. UK employees and
operations were furthermore not included in the workforce size thresholds,
which the Directive sets out. It may therefore be said that both employees
and undertakings in Britain had no legal obligations under the Directive, but
neither were they able to derive any legal rights from it.
Indirect consequences.
Indirect consequences which result from the Directive follow with regard to
both British employees and employers. The key question, to be asked in
both these cases is what kind of indirect consequences follow from the Di-
rective, bearing in mind that the UK had no obligation to implement it?
Although the New Labour administration has adopted the Directive,

these direct and indirect consequences remain because of the transition pe-
riod which maintains the status quo.
(a) Consequences relating to employers.
British multinationals are required to set up works councils in the Member

States subject to the Directive. For various reasons, some of which are men-
tioned below, these multinationals may include their British employees
within the European works council which they have set up. One reason may
be that British employees may form the majority of all employees within the
15
Managerial Law
undertaking. Indeed, the management of United Biscuits stated as to the in-

volvement of the British employees in the voluntary EWC agreement:
“Across Europe the majority of employees are in the UK and it is therefore
important that they are involved in any forum which is discussing the group.
Indeed it would be counter productive for our business not to include the
UK.(88) Secondly, these firms may have an interest in avoiding social dis-
cord within their undertakings by treating their employees unequally. Fur-
thermore, British employees will now have to be included anyway when,
due to the change of Government, Britain became a party to the Agreement
on Social Policy. In this way employers may find it more practical to include
British employees at an early stage durung the transition period.
At the time of writing, the number of British companies affected by the

Directive is not entirely certain. It is estimated at 100 companies.(89) Al-
though it was clear, from the beginning that the Directive would have some
impact on British firms covered by it, it was not until the middle of 1994 that
the first British European works councils were established.(90) Research
shows that so far no UK based undertaking has excluded its British employ-
ees when setting up a voluntary works council or an information or consulta-
tion procedure. It seems furthermore that a considerable number of UK
multinationals affected by the Directive as a result of their operations in the
Member States of the European Union are willing to enter into discussions
on the establishment of an EWC(91)
It is submitted that the statement made by the then Employment Secre-

tary Mr. D. Hunt on 22 June 1994; was irrelevant and did not accord itself
with reality. He said:- “Thanks to the British Government’s efforts there
will be no obligation on any British company to extend European Works
Councils to the UK. If they do so it will be of their own free choice - a choice
that employers in the rest of Europe will not have”.(92) This statement did not
take into account any indirect consequences which British undertakings
face and which would influence considerably their decision whether or not
to set up an EWC. It may even be argued that these indirect consequences
had the effect of minimising the employer’s “free choice”. It is clear, that the
then U.K. government’s policy to opt out of the EWC Directive did not lead
to the ineffectiveness of the Directive’s consequences and influences. These
transcend the British frontiers.
Since the Directive had not been implemented by the U.K. it was, and
still is, unclear which national jurisdiction UK based undertakings would be
subject to. Art. 4 (2) sub-paragraph 2 of the Directive seems to give these un-
dertakings some discretion on which national jurisdiction to choose ena-
bling them to designate a representative agent in any one of the Member
States. Companies may simply choose the country in which they can most
easily undertake the organisation of a EWC.(93) There is, however a danger,
that this discretion may lead to some kind of “forum shopping”. By this is
meant that British undertakings could actively seek to avoid a particular
Member State because of more stringent measures relating to information
and consultation of employee representatives.(94)
16
(c) Consequences relating to British employees.
A few remarks should also be made with regard to the indirect consequences
on British employees. In the case of the conclusion of voluntary agreements,
it seems that most multinationals, whether UK based or otherwise, include
their British employees.(95) It should nevertheless be noted, that the inclu-
sion of British employees is not necessary so as to conclude a valid Art. 13
agreement. Rather, the inclusion will take place for different reasons such as
union pressure(96) and advantages derived by the employer in including Brit-
ish employees.(97) Because employees in the UK could not, and still cannot
during the transition period, claim any rights under the Directive, they are in
a weaker situation than their colleagues in the other European Union Mem-
ber States.
The situation becomes even less favourable for British employees, when
a EWC is set up in accordance with the provisions of the Directive. The Di-
rective does not mention that British workers have to be included in the spe-
cial negotiating body, nor that they may have a seat in the EWC itself. The
working party however has recommended that Member States should allow
employee representatives from outside the countries covered by the Direc-
tive (e.g. from the UK which is still at the transition stage) to play some role
in the European works council. Although this presents an opportunity for
British representatives to get involved, this chance will in the last resort de-
pend on the Member States taking up this recommendation. So far, research
shows that Member States’ implementation proposals provide either for a
“non-voting participation” of British employee representatives on the
works council, or they leave this issue to be decided by the central manage-
ment and the employee representatives in the individual undertakings.(98)
At the end of the day, British employees are unable as yet to claim any direct
rights arising out of the Directive.
(d) Problematic situations for the U.K.
The much quoted phrase “The lady is not for turning”.(99) deriving from a
speech made by Mrs. Margaret Thatcher when prime minister and referring
to no “U turns” being made in government social policy, has held steadfast
under the Conservative government. Had that government been returned to
power in the May 1997 general election there was every likelihood that that
policy would not have changed with regard to the U.K. not adopting the So-
cial Chapter of the Maastricht Treaty and other European social documents.
There was, however, a change of government and New Labour came to
power, resulting in the UK adopting the European social policy.(100)
Now that New labour came to power,the UK’s current problems as out-
lined above, are compounded in at least three spheres; namely, recognition
and employee representation in the U.K; possible consequences of a late im-
plementation; and the conundra of harmonisation of different employee rep-
resentative structures. Each of these will be discussed briefly.
17
Managerial Law
Recognition and employee representation.
The Directive provides that Member States must have a system which deter-
mines the method of election/designation of employee representatives in
connection with information and consultation procedures.(101) Art. 5(2) (a)
subparagraph 2 states that “Member States shall provide that employees in
undertakings and or establishments in which there are no employees’ repre-
sentatives through no fault of their own, have the right to elect or appoint
members of the special negotiating body”.
Employee representation in the UK is mainly achieved through trade

unions.(102) Trade Union recognition by the employer operates, on a volun-
tary basis,(103) which means that there are no legally enforceable rights for
trade unions to achieve recognition upon refusal by the employer. Recogni-
tion is a matter which is at the sole discretion of the employer and he is en-
tirely free to withdraw or limit recognition at any time.(104) Although UK
legislation provides for an information and consultation procedure for pur-
poses of collective bargaining(105) this applies only in cases where the em-
ployer recognises a union. UK legislation does not provide a mechanism for
the designation of employee representatives in undertakings in which the
employer refuses trade union recognition. This situation has led to an in-
fringement of European law concerning the implementation of the Transfer
of Undertakings Directive and the Collective Redundancies Directive.(106)
The ECJ found the UK to be in breach of its obligations under both Direc-
tives because of its failure to provide for the appointment of employees rep-
resentatives where an employer does not recognise a union.(107) The UK has
subsequently introduced legislation(108) which provides for the consultation
of “appropriate representatives”, who are either members of independent
unions or employees affected by the decision. The Regulations do not pro-
vide for the setting up of a standing representative committee, it is sufficient
if the employer allows for ad-hoc representation.
The legality of this “minimalist approach” has already been questioned

in terms of its consistency with the above mentioned Directives.109) Compar-
ing what is said above to the requirements of the EWC Directive, a problem-
atic situation becomes apparent. The EWC Directive provides for a
permanent body of employee representatives; it is therefore likely that the
current UK legislative provisions providing only for an ad-hoc appointment
of employee representatives will fall short of the requirements of the Direc-
tive!
Possible consequences of a late implementation
Another potential problem of the UK having implemented the Directive is

that it has become operative - (especially bearing in mind the transition pe-
riod) - at a later stage. The consequences would be that British employee
representatives would have to be included in existing employee representa-
tive structures, unless, of course, they are initially covered by an agreement
(see above).
The Directive entered into force in all Member States on 22 September

1996. Until then, Member State representatives had the opportunity of intro-
18
ducing, through the working party, their preferences, opinions and sugges-
tions into the operation of the Directive. Each Member State thus had the
opportunity to influence the final outcome - an opportunity which the UK
did not have. - This implies that the UK would have to adopt the structures
that Member States had already drawn up.
Harmonisation of different employee representative arrangements.
A further problem should be addressed. This is to do with the possible re-

lationship of employee representative arrangements between the European
Works Council and existing trade union organisations. Traditionally, col-
lective bargaining has been the prerogative of trade unions and employers.
The EWC’s function is to be informed and consulted, etc... At first sight
these functions appear separate and distinct. There is however a potential,
particularly with regard to the UK, for a degree of conflict between these
two separate channels of employee representation.(110) It may also be that
employers will use the new emerging representative channel for bypassing
existing union structures. If this happens, the British industrial relations sys-
tem, traditionally based on trade unions as employee representatives,(111) is
likely to change.
III “Some are more equal than others” - Returning to the Rule of Law.
Having discussed the philosophy behind the European Works Council con-
cept and some variations on that theme with respect to the UK, it is now pro-
posed to resume the discussion on the rule of law. It will be based on equality
before the law and everyone being subject to the law. Three aspects of ine-
quality will be treated each of which is it suggested constitutes a breach of
the rule of law as defined above. These are the inequality between British
employees and those in Member States; inequalities between British em-
ployees inter se; and inequalities with regard to employers.
(a) Inequalities between British employees and employees in the Member

States.
A condition for the application of the rule of law is that all Member States
have to apply the Directive equally. At the time of writing, the national im-
plementation steps have not been concluded in every country, the diversity
of the national approaches is therefore hard to foresee. However, two mat-
ters should be noted. First that although it is likely that national implenenta-
tions may vary to some extent, the working party has attempted to draw up a
common response to the “grey zones” of the Directive. In that way it may be
argued that all Member States (other than at the time, the UK) are trying to
ensure an equal application of the Directive. Second, different national ap-
proaches do not constitute a breach of the Directive so long as they do not in-
fringe the framework which it sets out. The Directive is especially drawn in
such a way as to allow for flexibility and the maintenance of national diver-
sities. Thus, varying national approaches cannot be regarded as a breach of
the rule of law, as long as they are in line with the minimum standards of the
Directive. One could therefore argue, that all Member States are applying or
will apply the minimum standards of the Directive equally. Thus, employ-
ees in the Member States will be subject to the Directive, whereas this was
19
Managerial Law
not, and because of the transition period, this is still not, the case in the U.K.
In this way there exists an unequal treatment between employees living in
Britain and those living in the Member States.
The basis of the equality principle is more general in nature and lies
within the European idea itself. It is therefore applicable to issues beyond
the EWC. In this latter context it is not only expressed in the Treaty itself(112)
but it has also been developed in a wider sense by the European Court of Jus-
tice.(113) Distinctions between different groups in the Community do not
automatically lead to a breach of the equality principle.(114) In order to be un-
lawful the unequal treatment must be arbitrary and unjustified.(115) The ques-
tion is whether the unequal treatment between British employees and those
from the Member States is justified. The unequal treatment can in the last re-
sort be attributed to the Social Protocol, which allowed the other Member
States of the EU to proceed on social issues without the UK. Thus the Proto-
col on Social Policy, which is a piece of Community legislation itself pro-
vides the reason for the unequal treatment between British employees and
those from other Member States. It is open to question whether the Social
Protocol provides the necessary justification for the unequal treatment, and
whether it is itself a valid document since it leads to such obvious unequal
treatment between various employees. The fact that it is itself a piece of
European Community legislation is not justification in itself. The constitu-
tionality and justiciability of the Social Protocol and the Agreement are not
beyond doubt.(116) It is argued that they are more of a diplomatic compromise
rather than a valid piece of Community legislation.(117) Problems therefore
are intrinsic within the context of the rule of law itself!
(b) Inequality between British employees.
It has already been said that it was, and still is possible for one undertaking to
include its British workforce in an agreement, whereas another may chose to
exclude its British operation. This would lead to an inequality between Brit-
ish employees: the British employees who are “included” would acquire the
rights granted by the Directive whereas their “excluded” colleagues would
not. British employees are thus subject to two different sets of rules.
This situation however, would not be in breach of the rule of law, if

there exists justification for the unequal treatment. It may be argued that the
only justification is that the Directive itself allows for this kind of unequal
treatment, simply by leaving it to the employers to decide whether or not to
include the British employees.
This situation appears arbitrary and it is submitted that it is not in accor-

dance with the rule of law. The fact that the Directive does not provide for
any measures to prevent such a practice does not justify the unequal treat-
ment of employees in the same group.
(c) Employers and inequality.
It will be recalled that only multinational employers in States subject to the

Directive have to set up European Works Councils. British employers had,
at least in their own country, no obligation to do so. Employers in the U.K.
20
may therefore operate under different conditions. They did, and still do not
have to spend money and time to set up works councils. Their decision-
making is likely to be faster, because if they want to take a decision they do
not have to wait until the European Works Council is informed and con-
sulted.(118) One could therefore say that British employers are in a better
competitive situation than their colleagues in the Member States. The
former British Government capitalised on this situation. The then Employ-
ment Secretary M. Portillo championed the social Chapter opt-out as “pro-
tecting a competitive advantage for most British business”.(119)
Furthermore, foreign undertakings from outside the Community find it

more desirable to set up European operations in the UK in order to avoid the
consequences of the Directive. In this manner a competitive advantage is
apparent for British employers at the expense of employers in the other
Member States.
The Commission’s policy in introducing the EWC Directive was, inter

alia, to harmonise the employee involvement systems of the Member States
in order to abolish unfair competition at the European level.(120) The non-
application of the Directive to the UK therefore ran counter to the intention
of the Directive. The competitive structure in all other EU Member States
will at least be the same with regard to the minimum requirements of the Di-
rective. The UK was, and still is thus the only Member State of the EU which
has a competitive advantage over the others. Possible infringements in the
context of the rule of law are therefore also manifest with regard to the em-
ployers inter se.
To sum up.
Resulting from the above discussion it may be observed that possible

breaches of the rule of law principle occur both on the employers’ and the
employees’ side. British employees are unequal inter se and at a disadvan-
tage when compared with their colleagues in the other Member States. Brit-
ish employers on the other hand are in a more favourable position when
compared with the employers in the Member States. It seems that the two
situations reflect different sides of the same coin. In the British context, the
advantage on the employers’ side emanates from the disadvantage on the
employees’ side. In the other European Union countries, the advantage on
the employees’ side emanates from the disadvantage on the employers’
side. This will hoever change when the full effects of the British opt-in take
place.
IV Conclusion.
A five part conclusion may be drawn from the discussion which has taken
place above.
(a) Any effect of the Directive on British industrial relations?
The first of these relates to the effect of the EWC Directive on the British in-
dustrial relations system. The British government’s original opt-out has had
the effect of hindering the development of the Directive’s direct conse-
21
Managerial Law
quences in the UK it has however not stopped its indirect consequences

since, as we have seen, the Directive provisions have already infiltrated the
UK. The New Labour government has adopted the EWC Directive which
signifies that the Directive will eventually have direct consequences.
Following from these, the question has to be asked as to how the Direc-
tive - with particularly its indirect but also with its direct consequences - can
be integrated in the British industrial relations system. It will be recalled that
the Directive is to a great extent based on the principle of flexibility. Addi-
tionally, it leaves a great deal of freedom for negotiation between the social
partners. This is very much in line with the UK tradition. The Directive how-
ever takes the form of legislation. When considering the possibility of con-
cluding “voluntary agreements” rather than wait for the Directive to enter
into force, it has to be borne in mind that these voluntary agreements are le-
gally enforceable. “Voluntary” in this context means that the minimum re-
quirements of the Directive have to be included, and that the agreement
becomes enforceable as soon as the Directive became operative on 22 Sep-
tember 1996. In this manner the Directive provides for legal enforceability
which reflects the employee representation model found in all of the EU
States. In the U.K., collective agreements are presumed not to be legally en-
forceable (see discussion below.)
Given that the Directive runs to some extent contrary to the British in-
dustrial relations tradition, is not necessarily incompatible with it. The Di-
rective does not intend to change the existing national legislation or
traditions on employee involvement, nor will it impose on the U.K., a uni-
form European wide industrial relations mechanism. It is concerned with
harmonisation on matters of information and consultation only at the Euro-
pean level. One may therefore argue that it helps develop the British indus-
trial relations system.
(b) Consequences of the British opt-out.
The former British government’s opt-out from the Social Policy Agreement
was the decisive step which rendered the adoption of the Agreement by the
other eleven (now fourteen) Member States possible. Similarly, the former
British opt-out rendered the adoption of the EWC Directive possible. The
former British government’s opt-out made it therefore possible for the indi-
rect influences of the EWC Directive to operate in the UK.
Another consequence is that the UK will have to deal with legislation

which is influenced and shaped by other Member States. Since it becomes
increasingly clear that the British opt-out did not hinder European social
legislation from having an influence on the UK, the former British govern-
ment’s policy could only be characterised as short-sighted. Moreover, one
may say that that government had marginalised itself. Furthermore, neither
of the social parties affected by the Directive in the British context, - foreign
and British employers and the TUC, - seemed to follow in the footsteps of
the opt-out of the last British government. A discrepancy between the politi-
cal attitude of the then Government and the attitude of the social partners
thus became apparent.
22
A further consequence follows from the tapestry embroidered in this

paper. The non-applicability of the Directive to the UK leads to a possible
breach of the rule of law. The unequal treatment between British workers
and those of the Member States., the unequal treatment between English
workers inter se, and the unequal treatment between employers in the UK
and those in the Member States is manifest. As a consequence, British em-
ployers have a competitive advantage over those of the Member States, and
British employees have a social disadvantage compared to their colleagues
in the Member States.
(c) Possible influences on the United Kingdom.
A possible long term influence of the EWC Directive on the domestic law of
the UK is to do with the enforceability of the collective agreement. Agree-
ments concluded under the Directive are legally enforceable and can there-
fore be challenged in a court of law. In the UK the collective agreement is
presumed to be legally unenforceable. What is the possible influence of this
situation on UK law? Will it influence the UK to make collective agree-
ments legally binding? If so will the judgments in the Member States’ courts
have in the long term an influence on the British courts?(121)
Now that a Labour government has been returned in the 1997 general
election and the EWC Directive (inter alia) has been adopted by the U.K.
what impact would it have on British collective bargaining? A possible im-
pact is that the relationship between European works councils and the tradi-
tional role of trade unions is likely to have long term effects on the British
collective bargaining system. A works council vested with statutory rights
could, for example, narrow the range of matters currently determined by
workplace and company-level collective bargaining, since these matters
could already have been determined by the EWC at European level.
It is too early to predict the developments which could take place in

these spheres. What is certain however is that European social legislation
will influence industrial relations and collective bargaining in the UK.
These influences could in the last analysis lead to a dramatic transformation
of the British system.
(d) A Europe à la carte.
There now exists a common standard on information and consultation rights

in multinational undertakings at the European level. Until recently Britain
was the only Member State of the European Union not to adopt the common
European standard. As a consequence, British employees were, and still are
at the time of writing, the only group of employees within the European Un-
ion who do not enjoy the rights granted by the Directive. Thus, the British
opt-out has led to the creation of a two tier system of employees in Europe.
This situation is not only contrary to the EWC Directive but also to the
EC Treaty itself: Art. 2 of the EC Treaty states that the Community shall
have as its task the “economic and social cohesion and solidarity among
Member States”.(122) Furthermore, “fair competition” within the European
Community shall be ensured.(123) It can be said that because of the British
23
Managerial Law
opt-out, these ideals are endangered. They were not only endangered by the
British opt-out of the EWC Directive but also with regard to future Euro-
pean social legislation: It was probable, that Britain given its former policy,
would have opposed further European legislation on social matters. If a so-
cial measure could not have been adopted under the EC Treaty, the Com-
mission would again have introduced it under the Agreement on Social
Policy. There would thus have been, in Jacques Santer’s words “A Europe à
la carte” where Member States chose which legislation to adopt and which
to opt-out from. If the UK wishes to remain a member of the European Un-
ion, it should adopt the laws accepted by the majority. It is, after all, what de-
mocracy is all about! The New labour government has seen the sanity of the
situation!
(e) ....... and one final remark.
A final matter should be raised regarding the Directive itself: This latter
does not achieve a coherent participation system within Europe, nor does it
achieve real participation. It must nevertheless be regarded as significant,
since it provides a basis - a rudimentary basis perhaps, but nevertheless a ba-
sis - for a European level of industrial relations. European works councils
will be the location where the different national industrial relations systems
converge and where problems arising on a European scale will be ad-
dressed.
The EWC Directive can therefore in the final analysis be regarded as a

first step: a first step towards real employee participation and a first step to-
wards a transnational industrial relations system.
24
References.
(1) C. Turpin, “British Government and the Constitution”, 1990, p.54; see
also the European convention of Human Rights which recognises that Euro-
pean countries have a common heritage of the rule of law.
(2) A.V.Dicey, “Introduction to the study of the law of the constitution”,

1960, p.188.
(3) See for details: A. Dicey, ibid; E. Wade, A. Bradley, “Constitutional and
Administrative law”, 1985, pp.94 et seq; G. Marshall, “Constitutional
Law”, 1971, pp. 137 et seq.
(4) 94/95 EC of 22nd September 1994.
(5) Preamble to the Directive.
(6) See Carby-Hall “Employee Participation in Europe” Croom-Helm

(1978). It is ironical that this author suggested a works council system for
the U.K. as early as 1978! This work was prophetic for a number of sugges-
tions made therein will be found in the E.W.C. Directive.
(7) For a historical comment see J.J. Danis, R. Hoffmann: “From the Vre-
deling Directive to the European Works Council Directive - some historical
remarks”, in Transfer, Vol. 2 No. 1, 1995, pp.180 et seq.; M. Gold and M.
Hall: “Statuary European Works Councils: the final countdown”, IRL 1994,
p. 177-178; J. Carby-Hall: “The European Dilemma of Employee involve-
ment”, CLR 1995, pp. 103 et seq; P. Cressey, “Employee Participation”, in
M. Gold, “The social dimension - employment policy in the European
Community”, 1993, p.86 et seq.; R. Blanpain, E. Klein, “Europaeisches Ar-
beitsrecht”, 1992, p.183.
(8) Collective Redundancies Directive, O.J.L. 48/1975, revised by Direc-

tive 92/56 EEC of 24 June 1992, O.J. L 245/1992.
(9) Transfer of Undertakings Directive, O.J. L 61/1977.
(10) Health and Safety Directive, O.J. L 183/1989.
(11) 94/95 EC 22 September 1994.
(12) For example the draft “European Company Statute” (1970) which pro-
vided both for employee representation on the European companies super-
visory boards and the creation of European Works Councils. For further
details, see for example, M. Hall, “Legislating for employee participation: a
case study of the European Works Council Directive”, Warwick Papers in
Industrial Relations, No. 39, 1992, p.5 and 6.
(13) See C. Barnard, “EC Employment Law”, 1996, pp.408-414.
(14) For further details see P. Cressey, op,. cit. at p.88; J. Welch, “The Fifth
Directive - A false dawn?” ELR, Vol. 8, 1983, pp.83 et seq.
25
Managerial Law
(15) O.J. C 297 of 15th November, 1980.
(16) J. Carby-Hall, op.cit., p.107; C. Barnard, op. cit., p.408.
(17) See for example J. Carby-Hall, op. cit., p.107; C. Docksey, “Informa-
tion and consultation- the United Kingdom and the Vredeling Directive”,
MLR, Vol. 49, 1986, pp.281 et seq.
(18) M. Hall, “Behind the European Works Council Directive: The Euro-
pean Commission’s legislative strategy”, BJIR 1992, p.555.
(19) The Directive borrowed also from the 1970 and 1975 drafts for the
European Company Statute. See for further information: M. Hall, op. cit.,
p.555; P. Cressey, op. cit., p.99.
(20) M. Marckington et. al., “New developments in employee involve-

ment”, 1992, p.2.
(21) For a com ment on this pro posal see: B. Nagel, “Der EG-
Richtlinienentwurfzum Europaeischen Betriebsrat”, AuR, 6/1991, pp. 161
et. seq.; R. Nielsen & E. Szyszczak, “The social dimension of the European
Community”, 1991, pp. 171 et. seq.
(22) The 1993 amendment is also known as the “Belgian compromise”, be-
cause it was drawn up under the Belgian Presidency. It was formally ac-
cepted by all other 11 Member States. See for further details: EIRR, No.
242, March 1994, p.13 f.
(23) More details can be found in: B. Fitzpatrick, “Community Social Law
after Maastricht”, ILJ Vol. 21, 1992, p.199 et seq.: B. Bercusson and J. J. van
Dijk, “The implementation of the Protocol and Agreement on Social Pol-
icy of the Treaty on European Union”, IJoCLLaIR, 1995, pp.3 et seq.
(24) See EIRR Nr. 245, June 1994, p.18; A. Wirmer, “Die Richtlinie Euro-
paeischer Betriebsraete - ein zentraler Baustein europaeischer Sozialpoli-
tik”, DB, Heft 42 1994, p.2135.
(25) See M. Hall, Warwick Papers in Industrial Relations No. 39, op. cit.,
p.2. See also the statistic in D. Krimphove, “Europaeisches Arbeitsrecht”,
1996, p. 270, that in 1988/1989, 53% of the mergers and take-overs which
took place within the European Community consisted of at least two under-
takings in different European Member States.
(26) See for this, also the Preamble of the Directive: “... procedures for in-
forming and consulting employees as embodied in legislation or practice in
the Member States are often not geared to the transnational structure of the
entity which takes the decision affecting those employees”. See also M.
Hall, BJIR, op. cit., p.549.
(27) M. Hall, ibid. at p.550.
(28) See Preamble of the Directive.
26
(29) A good historical overview will be found in EIRR, No. 228, 1993,
pp.13 et seq. and EIRR No. 229, 1993, pp.14 et seq.
(30) For example in the companies Saint-Gobin, Thomson Grand Public

and BSN. See for further details EIRR No. 288, 1993, pp. 13 et seq.
(31) In 1994 there existed about 30 voluntary agreements.
(32) M. Hall, Warwick Papers in Industrial Relations No. 39, op. cit., p.4.
See for further details on voluntary agreements: M. Gold, “The draft Euro-
pean Councils Directive - an outline”, EPM, 1992, p.7; M. Gold and M.
Hall, “Experience with voluntary initiatives”, EPM 1992, p. 9; M. Gold and
M. Hall, “Report on European level information and consultation in multi-
national companies - an evaluation of practice”, 1992; P. Bonneton et. al.,
“Review of current information and consultation in European multina-
tionls”, 1996.
(33) Art 2 (1) a of the Directive.
(34) Ibid. Art 2 (1) c.
(35) Earlier proposals of the Directive included UK operations and employ-

ees, but due to opposition from the British government this was abandoned.
See EIRR No. 245 June 1994, p.20.
(36) See Art 14 of the EWC Directive
(37) Art 4 (1) and (2). See for a detailed description: F. Carlin, “The Euro-
pean Works Council Directive”, ELR Vol. 20 No. 1 1995, p.98.
(38) Art 5 (1).
(39) see Art 5 (2) c.
(40) In this case Art 6 (2) provides certain matters which the parties have to
address in the agreement.
(41) Art 7 (1) and (2). For the subsidiary requirements in the Annex see O.J.
L 254/71.
(42) Art 7 (1).
(43) Art 5 (5).
(44) See ETUC: European Works Councils, 1995, p.35; EWC Bulletin:
“Article 13- the indefinite Article”, preview issue Winter 1995, p.11.
(45) EWC Bulletin, ibid. p.10, with a similar statement of the European
Commissioner responsible for social affairs, P. Flynn. See also S. Laulom,
“European Works Councils”, ILJ Vol. 24 No. 4 1995, p.382.
27
Managerial Law
(46) See: H. J. Willemsen and K. S. Hohenstatt, “Chancen und Risiken von

Vereinbarungen gemaess Art.13 der Euro- Betriebsrat Richtlinie”, NZA
1995, p.399; D. Wienke “Jetzt unternehmerisch entscheiden”, Arbeitgeber
1996, p.89; ETUC, “European Works Councils”, p.36; K. S. Hohenstatt,
“Der Europaeische Betriebsrat und seine Alternativen”, EuZW, Heft
6/1995, p.171.
(47) About 100 voluntary agreements had been concluded by May 1996.
For more statistical information see EIRR No. 268 May 1996, p.15; and
EIRR No. 265, February 1996, p.23. By 1997, [according to the TUC], - 113
U.K. based companies were covered by the EWC Directive. Around 40 UK
Companies missed the cut-off date which means that they are now covered
by a seperate legislative framework for EWC negotiations.
(48) “Information and consultation of Employees - Review of ”pre-

Directive" agree ments cur rently in place" Euro pean Com mis sion
1P/96/592 4 July 1996.
(49) S. Vitolis, “European Works Councils - an outline”, EPM, issue No. 6

1993, p.52.
(50) See generally for the significance of the subsidiarity principle in the
context of European Social Policy: O. Schulz, “Maastricht und die Grundla-
gen einer europaeischen Sozialpolitik”, 1996, p.144 et. seq.
(51) A. Charlesworth and H. Cullen, “European Community Law”, 1994,

p.48.
(52) Art 2 (1) of the Agreement on Social Policy.
(55) For example: Art 12 (2); Art 14 (2); Art 11; Art 10(1); Art 7; Art 5 (2a)
and Art 13 of the EWC Directive.
(56) The Commission already issued a Communication Paper which is con-

cerned with further legislation on information and consultation: “Commu-
nication from the Commission on worker information and consultation”,
COM (95) 547 final.
(57) For example, the Directives on Health and Safety; Transfer of Under-
takings and collective redundancies.
(58) Articles 118a, 100 and 235 of the EC Treaty.
(59) Art 2 (2) and Art 2 (3) of the Agreement on Social Policy; see also J. Ad-
dison & W. Siebert, “Recent developments in Social Policy in the new Euro-
pean Union”, IRLR, 1994, p.20.
28
(60) So far, agreements were signed in Norway and Belgium. Iceland, Italy
and Portugal are also exploring the possibility of an implementation through
collective agreement. The other Member States intend to implement the Di-
rective by legislation, see for further details: EIRR 1996, No. 265, p.23;
ETUC, “Transposition of the EWC Directive”, working paper No. 23, 14
June 1996; EWC Bulletin, issue 3, 1996, p. 8 et seq.
(61) Another example of a transnational provision is Art 13.
(62) For a list concerning the identification of the national and transnational
provisions of the Directive see EWC Bulletin, issue 3, 1996, p.8.
(63) For a general comment see: C. Savioni: “The prospects of the enact-
ment of Directive 94/45 EC in the Member States of the European Union”,
Transfer Vol. 1 No. 2, 1995, pp. 245 et seq.
(64) The UK was allowed at the time to send an observer, see W. Buschak,
“Umsetzung der EBR Richtlinie in nationales Recht”, working paper by
ETUC.
(65) See Art 14 (1) EWC Directive. For information concerning the activi-
ties of the working party see: European Commission, “Working Party Infor-
mation and Consultation”, Working Papers, V/6943/95/EN.
(66) ETUC provides a detailed overview concerning the transposition of the

Directive into national law in its working paper No. 23 of 14 June 1996, op.
cit.
(67) Under the Health and Safety at Work Act 1974 and the Safety Repre-
sentatives and Safety Committees Regulations, 1977 para 4A.
(68) Under the Trade Union and Labour Relations (Consolodation) Act
1992 ss. 181 to 185. see Carby-Hall in Encyclopaedia of Northern Ireland
Labour Law, entry on “Disclosure of Information”.
(69) For example on mass redundancies and transfer of undertakings.
(70) Hans Boeckler Stiftung, op. cit., p.118 et. seq.
(71) H. Knudsen, “Employee Participation in Europe”, 1995, p.52.
(72) IRS Employment Trends, June 1994, p.6.
(73) See for the British experience of employee participation: H. Knudsen,

op. cit., p.55; M. Marckington et. al., op. cit., p.5 and 6; M. Hall, Warwick
Paper in Industrial Relations No. 46, op. cit., p.7 and 8.
(74) M. Hall, BJIR, op. cit., p.560.
(75) Statement from D. Hunt, the then Employment Secretary, issued by the
Department for Education and Employment (DEE), NEWS 101/94, 25 May
1994.
29
Managerial Law
(76) DEE, NEWS, 226/94, 8 December 1994; see also for the employers
side: IRS Employment Trends No. 561, 1994, p.11.
(77) See the statement by A. Widdecombe, the then Minister of State for
Employment, issued by DEE, NEWS, 226/94, 8 December 1994.
(78) See IRS Employment Trends No. 561, 1994, p.11. For more informa-
tion about direct participation see: F. Geary, K. Sisson, “Conceptualising di-
rect participation in organisational change - the EPOC Project”, 1994; M.
Gold, “Direct communications in European Multinationals: a case study ap-
proach”, 1994.
(79) M. Hall, Warwick Papers in Industrial Relations, No. 39, op. cit., p.11.
(80) M. Hall, BJIR, op. cit., p.562.
(81) H. Knudsen, op. cit., p.53, who gives a good historical overview on this
aspect.
(82) See the UK Rapport given by this author at an international conference

held in Lagewniki, Poland, on the state of trade unionism in Western Europe
in “Le Syndicalisme Contemporain et son Avenir”. H. Lewandowski (Ed).
University of Lodz Press (1995) at pp. 74-112.
(83) IRS Employment Trends No. 561, 1994, p.6; M. Hall, “Works Council
For the UK? Lessons from the German system”, Warwick Papers in Indus-
trial Relations, No. 46, 1993, p.2.
(84) H. Knudsen, op. cit., p.55.
(85) See M. Hall, BJIR, op. cit., p.562.
(86) Ibid., p.561.
(87) TUC, “European Works Councils”, p.12.
(88) TUC, “European Works Councils”, p.14.
(89) IRS Employment Trends, No. 574, 1994, p.4.
(90) The first agreement was signed on 2 June 1994 by BP Oil Europe, fol-
lowed by an agreement signed by United Biscuits on 9 November 1994. See
for more information IRS Employment Trends No. 574, 1994, p.4 et. seq.;
EIRR No. 251, 1994, p.20 et. seq. For a detailed enumeration concerning the
establishments of the first British EWCs see B. Bercusson, “European La-
bour Law”, 1996, p.255 et. seq.
(91) See The Times, 2 March 1995, with a survey by the Institute of Direc-
tors among 44 British undertakings likely to be affected by the Directive: 11
are talking to their unions about setting up an EWC and a further 24 are pre-
paring the ground for talks; 80% in all.
30
(92) Statement issued in NEWS, DEE, 127/94, 22June 1994.
(93) This could for example be Ireland, because of the English language and
the close relationship between England and Ireland; see A.C. Neal, “UK
point of view”, in R. Blanpain and T. Hanami, “European Works Councils”,
1995, p.322/323; EWC Bulletin, issue 3 1996, p.10.
(94) A.C. Neal, ibid., p.324. Sweden and Germany constitute good exam-
ples of this situation.
(95) The Dutch owned ING Group has become the first company to exclude
British operations of significant size from the representation on a voluntary
EWC; see EWC Bulletin, issue 3 1996, p.1.
(96) All the European Industry Federations of the ETUC, which have been
involved in negotiating EWC agreements have committed themselves to in-
clude the UK; employees. See TUC, “European Works Councils”, p.14.
(97) Different statements by employers who included British employees in

a voluntary agreement are given in TUC, booklet “European Works Coun-
cils”, p.13.
(98) See EWC Bulletin, issue 3, 1996, p.10 with examples from the German,
Spanish and French proposals for the implementation of the Directive.
(99) A “jeu de mot” on the phrase “The lady is not for burning” a medieval
play relating to a witch hunt.
(100) See the statements of the Labour Party in: “The social chapter - myth
and reality”, 1994, p.8. With regard to the general implementation of EC
Law in the UK see: T. Daintith, “Implementing EC Law in the United King-
dom: structure for indirect rule”, 1995.
(101) Art 5 (2) (a) of the Directives states: “Member States shall determine
the method to be used for the election or appointment of the members of the
special negotiating body...”
(102) B. Bercusson, European Labour Law, op,. cit., p.273.
(103) There used to be a statutory recognition procedure in the UK but that

has been repealed. See discussion in Carby-Hall “Modern Employment
Protection Laws - Managerial Implications”. MCB Publications (1979) pp.
89 et seq.
(104) A.C. Neal, op. cit., p.310.
(105) See discussion in Carby-Hall “Modern Employment Protection Laws

- Managerial Implications”. MCB Publications (1979) pp. 104 et seq.
(106) Both cases were brought by the Commission before the ECJ, see
EIRR, No. 248, 1994, p.25/26.
31
Managerial Law
(107) Cases C-382/92 and C-383/92, Commission v United Kingdom

(1994) ECR 2435; EIRR, op. cit. For a comprehensive analysis see B. Ber-
cusson, “European Labour Law”, op. cit., p.268 et. seq.
(108) Collective Redundancies and Transfer of Undertakings (Amend-

ments) Regulations 1995 (SI 1995 No. 2587). They came into force on 25
October 1995, but will only apply to redundancies or transfers before 1
March 1996.
(109) For a critique see M. Hall, “Beyond recognition? Employee represen-

tation and law”, ILJ 1996, p.15 et. seq.
(110) M. Hall, Warwick Papers in Industrial Relations, No. 46, op. cit., p.9;
M. Hall, et. al., “The European Works Council: setting the research
agenda”, Warwick Papers in Industrial Relations, No. 41, 1992, p.14.
(111) See a critical analysis on trade union representation in J. Carby-Hall,

“The trade union as representative of its members in concluding collective
agreements”, Research Papers in Law, University of Nottingham, 1994, No.
17.
(112) See Art 7, Art 119, Art 40 (3) EC Treaty.
(113) The first case relating to the development of the equality principle
was: case 8/57, Hauts Fourneaux et Acieries Belges v High Authority, 1958,
ECR p.245. See also case 117/76, Firma Albert Ruckdeschel & Co. v Haupt-
zollamt Hamburg-St. Annen, 1977, ECR p.1753; case 124/76 and 20/77
Moulins et Huileries de Pont-a- Moussons SA v Office National Interpro-
fessional des Cereales, 1977, ECR 1795.
(114) Case 283/83, Firma A. Racke v Hauptzollamt Mainz, 1984, ECR

p.3791, at 3800.
(115) Case 11/74, Union des Minotiers de la Champagne v France, 1974,

ECR p.877, at 886; case 117/76, Firma Albert Ruckdeschel & Co. Haupt-
zollamt Hamburg-St. Annen, ECR 1977, p.1753 at 1769.
(116) B. Bercusson, “The dynamic of European labour law after Maas-

tricht”, ILJ 1994, p.1 et. seq.; E. Szyszczak, “Future directions in European
Union social policy”, ILJ 1995, p.19 et. seq.; D. Curtin, “The constitutional
structure of the Union: A Europe of bits and pieces”, CMLR 1993, p.17 et.
seq.; B. Fitzpatrick, op. cit., pp.199 et. seq.
(117) cf. B. Bercusson, op. cit., p.29, who concludes that the “agreement is
probably part of Community law”.
(118) see Carby-Hall, op. cit., at p.101; D. Krimphove, op. cit., p.278.
(119) Statement in NEWSD, DEE, 22 May 1995, 108/95.
(120) There has been pressure from international business, especially the
US and Japan, against the adoption of the Directive, see Carby-Hall, op. cit.,
32
p.109. The Directive was first proposed under Art 100 EC Treaty as a meas-
ure of economic necessity, to remove unfair competitive advantages. See C.
McGlynn, “Towards industrial democracy”, ILJ, Vol. 24, No. 1 1995, p.79.
(121) See Carby-Hall and Sewerynski (Eds) “Anglo-Polish Labour Law Es-
says”, the essay by Carby-Hall “The legal enforceability of the collective
agreement”, (to be published in 1999).
(122) See also Art 3 j EC Treaty.
(123) See the Preamble of the EC Treaty.
33

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The Rule of Law

The European Works Council

The rule of law in context.

Because of the opt-out from the Social Policy Agreement by the

The third aspect to be considered in this context relates to the situation

Before an examination of these three aspects takes place, it is proposed

An understanding of these features is essential before the concept of

I. The European Works Council Concept.(6)

(a) Its historical context.

The history of European legislation on employee participation dates back to

In spite of lengthy debates on employee participation, several other pro-

This draft Directive, although modified in 1983, faced serious opposi-

some extent as the progenitor of the European Works Council Direc-

In 1989 the Community adopted the Charter of Fundamental Social

The draft Directive on “The establishment of a European Works Coun-

Somewhat of a turning point occurred with the signing of the Maas-

The Directive - influences, description and explanation.

Early agreements on information and consultation in European multi-

The descriptive element highlighted.

The Community scale undertakings affected by the Directive are de-

Establishing a European works council.

management or within the representative agent of the central management if

The agreement on the setting up of a EWC or a procedure for information

Another possible alternative would be a majority decision by the special

employees with a view to finalising an agreement before 22 September

Art. 13 reflects the Directives general approach of giving precedence

Most agreements provide for annual meetings. Extraordinary meetings

The European Commissioner for Social Affairs, Mr. Padraig Flynn

The three phase operation.

The Directive is thus operating in three phases, measured both in terms of

One of the Directive’s key characteristics is “flexibility”. The Commission,

Another significant principle which underlies the Directive is “subsidi-

What should be highlighted with regard to the Directive’s scope is that

Conundra regarding implementation.

The European Union’s social policy has become somewhat complicated

The Directive aims at creating a European-wide legal framework for

Furthermore, different national provisions of the Member States will

Problems are also likely to arise as a result of the Directive leaving

Although the working party is attempting to harmonise the different

II The implications of the Directive on the United Kingdom.

The UK is very much a special case in terms of information and consultation

(a) Different UK attitudes to the Directive.

The Government and the Confederation of British Industries.

The Thatcher/Major Government was, and the employers’ organisation, the

Apart from the opposition to imposed legislation, there is another rea-

In addition, the then government was, and employers’ organisations are,

.... and the TUC.

With regard to the operation of the Directive, the TUC is particularly in

The attitudes in Britain towards the Directive must therefore be regarded

(b) The consequences in the U.K.

Although the New Labour administration has adopted the Directive,

(a) Consequences relating to employers.

British multinationals are required to set up works councils in the Member

undertaking. Indeed, the management of United Biscuits stated as to the in-

At the time of writing, the number of British companies affected by the

It is submitted that the statement made by the then Employment Secre-

(c) Consequences relating to British employees.

(d) Problematic situations for the U.K.

Recognition and employee representation.

Employee representation in the UK is mainly achieved through trade

The legality of this “minimalist approach” has already been questioned

Possible consequences of a late implementation