Board-Level Employee Representation [BLER]

IN EUROPE AND DENMARK

Aline ConchonResearcherEuropean Trade Union Instituteaconchon@etui.org

Konference for medarbejdervalgte bestyrelsesmedlemmer

November 6, 2012

Board-level employee representation in Europe and Denmark2

Structure of the presentation

A. European perspectives on BLER1. Current situation in Europe: overview of national rights

2. Trends in Europe : evolution of national rights

3. Current situation at EU level: BLER in EU company law

4. Trends at EU level: BLER rights under pressure

B. BLER in Denmark: Preliminary findings of a survey1. Who are the respondents?

2. What influence on boardrooms decisions?

3. What interests do BLEReps defend?

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Board-level employee representation

EUROPEAN PERSPECTIVES

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1. Current situation in Europe: overview of national rights

Widespread participation rightscomprising private (and privatised) as well as state-owned companies (14 countries)

Limited participation rightsOnly found in state-owned companies (4 countries)

No (or very limited) participations rights(12 countries)

FR

ESPT

UK

IE

IS

NOSE FI

EE

LT

PL

CZ SK

HU

IT

GR

AT

DEBE

LV

LUFR

ESPT

UK

IE

NO SE

FI

EE

LT

PL

CZSK

HU

IT

MT

GR

AT

DENL

SI

BE

LV

LU

CY

BG

RO

DK

IS

LI

● BLER rights in the European Economic Area

=At least 17,442 BLEReps

and another 5,733 companies with BLEReps (FI, NL, CZ, SK,

DE Drittel)

2. Trends in Europe: evolution of national rights

● The impact of privatisation in countries where BLER is to be found only in state-owned companies BLER disappeared in MT BLER might soon disappeared in GR and ES savings banks Dramatic decrease of the number of SOEs in IE and PL (+ bill in PL to

eliminate BLER, but stalled since March 2011)

● Weakening of BLER rights on the occasion of the introduction of the one-tier system (HU, SI), and even elimination (CZ), though not in DK nor NL

● Initiatives from political actors In FR, by the end of 2012, a bill for employee reps on remuneration

committee and a national debate to extend BLER in the entire private sector In IT: a government decree by spring 2013 for facultative BLER in companies

with a two-tier board and >300 employees● Some trade unions’ demands for extending the coverage of BLER rights

(in NO, DE, LU, FR, NL, IE), and creating some kind of BLER (UK)

CHALLENGES

OPPORTUNITIES

Board-level employee representation in Europe and Denmark6

3. Current situation at EU level: BLER in EU company law

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● BLER is a European fundamental right!

● BLER is anchored in 3 pieces of European Company law:

The 2001 European Company statute (SE – Societas Europaea) The 2003 European Cooperative Society statute (SCE – Societas

Cooperativa Europaea) The 2005 Cross-border Merger [CBM] Directive

Information, consultation and participation of workers must be developed along appropriate lines

‘The Union shall support and complement the activities of the Member States in the following fields: […] - Representation and collective defence of the interests of workers and employers, including codetermination’1989 Community Charter for

fundamental social rights for workers Art. 153 (f) Treaty on the functioning of the EU

No harmonisation but flexibility based on two key principles: Negotiation on BLER arrangements ‘before and after’ principle for safeguarding pre-existing BLER rights

Board-level employee representation in Europe and Denmark7

4. Trends at EU level: BLER rights under pressure

● Companies can restrict or even circumvent national BLER rights because of:

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Loopholes in the current EU legislation

The Cross-Border Merger Directive is less protective than the SE Directive (e.g. merged companies with a one-tier structure could restrict BLER to 1/3 of the board)

In theory (but rare in practice), the SE statute could be used to avoid or “freeze” BLER, as negotiations on employee involvement take place before the setting up of the SE, and there is a legal uncertainty as to the possibility of reopening negotiation (even in the case of a significant increase of the workforce)

The emergence of a European “Delaware effect”

It is legal for companies to shop amongst the different national regulatory regimes and opt for the one with the least stringent rules (esp. on BLER)

Rulings of the European Court of Justice indeed allow companies to register in one Member States (and be subject to its company law) while having all its business activities in another Member States (without applying its legal provision on BLER). => 43 large German companies do not have BLER as they registered abroad (e.g. as British Plc.)

Board-level employee representation in Europe and Denmark8

4. Trends at EU level: BLER rights under pressure

● Counter-actions and proposals from The European Parliament: multiple calls for a 14th Directive on cross-

border transfer of seat The ETUC: demand for European minimum standards for employee

involvement in Europe

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All the legal forms of company entity at the EU level SE, SCE and pending SPE) must be subject to binding regulations on worker participation in company boards and on information and consultation with worker representatives regarding cross-border issues.

Companies that have operations in several countries should be covered by the regulations that entail the best available model for worker participation.

● Paradox of a worker right not attached to workers but to companies as the applicable legal framework: Is not that of the country where workers habitually carry out their work But that of the country where the company is registered

BLER in Denmark

PRELIMINARY FINDINGS OF A SURVEY

10

Who are the respondents?

alineconchon © etui (2012) Board-level employee representation in Europe and Denmark

Gender

13% 87%

Characteristics of individuals

Characteristics of the companies in which they sit

Age

Min. 30Max. 66Average: 51 ½

Education Position

1 VOCATIONAL TRAINING (50%)

2 Elementary education (31%)

1 BLUE COLLAR (47%)

2 Technician (24%)

3 Professional (23%)

4 White collar (5,5%)

5 Manager (0,5%)

1%

10%

47%

38%

4%

Medium50-249

Large250-4 999

Small 10-49

Micro 1-9

Extra large >5 000

Size23.7%

73%

3.3%

Non-listed

Don’t know Listed

Listed on the stock exchange

Board-level employee representation in Europe and Denmark11

What influence on boardrooms decisions?

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Explanation: the running of the board!

The majority (53,6%) considers that the main decisions are made outside the board meetings, without employee representatives.

The Influence/Power Continuum (inspired by Heller 1971)

Information Consultation

Influence

30%22%

52%

Joint-decision Control/Co-Management

Power

29%19%

48%

Board-level employee representation in Europe and Denmark12

What interests do BLEReps defend?

INTERESTS %

Employees 81,8

The company 61,4

Shareholders 24,2

Trade unions 14,1

Local labour market 5,6

Wider society 4,2

Environment 2,8

Other 1,4

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Note: total >100% as figures present the sum of the items placed in ranking position #1 and #2

INTERESTS %

Employees 78,5

LT economic return 77,5

Environment 71

Shareholders 56,5

Local community 45,5

Trade unions 37,5

ETUI survey (2009) Rose/Kvist (2003)

Ranking

1

2

3

4

5

6

With the exception of “Environment”findings are similar

BLEReps defend a stakeholder approach, but not to the detriment of the company (ranked #2) nor of the shareholders (ranked #3 &4)!

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Thank you for your attention!

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