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ils Human Resource Management Human Resource Management Conference, Estonia - 3/4 April, 2003Conference, Estonia - 3/4 April, 2003

“Valuable Organisation” “Valuable Organisation”

European Works CouncilsEuropean Works Councils- the advantages of - the advantages of employer/employee employer/employee

dialoguedialogueJohn RaywoodJohn Raywood

Secretary, GlaxoSmithKline Secretary, GlaxoSmithKline European Employee Consultation European Employee Consultation

ForumForum

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ilsEuropean Works CouncilsEuropean Works Councils

‘‘A talk in five parts’A talk in five parts’Part 1Part 1

– What are they? What are they? – Who has to have one?Who has to have one?– How are they set up? How are they set up? – When do they meet - and what for?When do they meet - and what for?– How is ‘consultation’ defined?How is ‘consultation’ defined?– What about ‘National Information & What about ‘National Information &

Consultation’?Consultation’?

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ilsEuropean Works CouncilsEuropean Works CouncilsPart TwoPart Two

– Intended to promote dialogueIntended to promote dialogue– Serve as a rein on ManagementServe as a rein on Management– Should be an aid to ManagementShould be an aid to Management– Assist communication with employeesAssist communication with employees

Part ThreePart Three– Expansion of the European UnionExpansion of the European Union

• the implications for ‘EWCs’ the implications for ‘EWCs’

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ilsEuropean Works CouncilsEuropean Works CouncilsPart FourPart Four

– Are they effective?Are they effective?– What next?What next?

Part FivePart Five– Effects of mergers on ‘EWCs’Effects of mergers on ‘EWCs’

• a case study [GlaxoSmithKline]a case study [GlaxoSmithKline]

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ilsWhat are ‘EWCs’?What are ‘EWCs’?Joint bodies comprising Management Joint bodies comprising Management

and Employee representativesand Employee representatives- set up under EU Council Directive - set up under EU Council Directive

94/45, 22 September 1994 94/45, 22 September 1994 PurposePurpose– “…“…to improve the right to information to improve the right to information

and to consultation of employees in and to consultation of employees in Community-scale undertakings and Community-scale undertakings and Community-scale groups of Community-scale groups of undertakings.”undertakings.”

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ilsWho needs to have one?Who needs to have one? Any “undertaking” withAny “undertaking” with

– at least 1000* employees within the at least 1000* employees within the Member StatesMember States

andand– at least 150* employees in each of at at least 150* employees in each of at

least two of the 17 Member States least two of the 17 Member States [*Based on the average number of employees, including [*Based on the average number of employees, including

part time employees, during the previous two years]part time employees, during the previous two years]

Does not apply to merchant navy Does not apply to merchant navy crewscrews

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ils What were Companies’ What were Companies’ initial options in initial options in implementing the EU implementing the EU Directive?Directive?Agree a procedure with aAgree a procedure with a

““Special Negotiating Body”, Special Negotiating Body”, comprising Employee Representatives comprising Employee Representatives from each Country included (Article 6)from each Country included (Article 6)

OROR

Negotiate a voluntary agreementNegotiate a voluntary agreement(Article 13)(Article 13)

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ils What approach was What approach was adopted?adopted?Many companies initially chose the Many companies initially chose the

voluntary route, largely to maintain voluntary route, largely to maintain their current arrangements and their current arrangements and reduce the degree of bureaucracyreduce the degree of bureaucracy

Others chose the ‘SNB’ route Others chose the ‘SNB’ route – greater legal claritygreater legal clarity– less risk of Court challengeless risk of Court challenge– often supported the businesses’ often supported the businesses’

strategiesstrategies– usually favoured by employeesusually favoured by employees

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ils What about the UK ‘opt What about the UK ‘opt out’?out’?

At the time, UK employees were not At the time, UK employees were not legally bound to be includedlegally bound to be included(this changed in December 1999)(this changed in December 1999)

But an ‘EWC’ or equivalent body was But an ‘EWC’ or equivalent body was still required to cater for employees in still required to cater for employees in the other Member Statesthe other Member States

So, it was sensible to include any UK So, it was sensible to include any UK employees - and most companies did!employees - and most companies did!

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ils ‘‘EWCs’ - when do they meet EWCs’ - when do they meet - and what for?- and what for?EWC EWC meets at least once a year or ‘in meets at least once a year or ‘in

special circumstances’special circumstances’Sub-CommitteeSub-Committee usually meets more usually meets more

frequently or ‘in special circumstances’frequently or ‘in special circumstances’To share information and to consult To share information and to consult

with elected representatives on the with elected representatives on the Company’s transnational operations Company’s transnational operations as they affect the interests of as they affect the interests of employees in at least two Countriesemployees in at least two Countries

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ilsWhat do ‘EWCs’ discuss?What do ‘EWCs’ discuss?StrategyStrategy - the structure and - the structure and

strategy of the Company, strategy of the Company, including substantial changes in including substantial changes in the organisation; the organisation; mergersmergers; cut-; cut-backs or closuresbacks or closures

FinanceFinance - the financial and - the financial and economic situation; Company economic situation; Company investmentsinvestments

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ils What do ‘EWCs’ discuss? What do ‘EWCs’ discuss? . . . . . . ContinuedContinued

DevelopmentDevelopment - - the expected the expected development of production, R&D and development of production, R&D and Sales; the introduction of new working Sales; the introduction of new working methods or production processes; methods or production processes; transfers of productiontransfers of production

Human ResourcesHuman Resources - - the situation and the situation and trend of employment; collective trend of employment; collective redundanciesredundancies

Issues for Information & ConsultationIssues for Information & ConsultationNOT NEGOTIATIONNOT NEGOTIATION

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ilsConsultationConsultation

What does this mean?What does this mean? European definitionEuropean definitionan “ exchange of views and dialogue”an “ exchange of views and dialogue” Understanding ‘local’ expectations Understanding ‘local’ expectations

and what are and what are local local issuesissues Takes place at a time when it is still Takes place at a time when it is still

meaningful, i.e. when the opinion of meaningful, i.e. when the opinion of Employee Representatives can be Employee Representatives can be taken into consideration before final taken into consideration before final decisiondecision

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ils Typical format/programme Typical format/programme of (Annual) ‘EWC’ meetings*of (Annual) ‘EWC’ meetings*

Employee Representatives’ separate Employee Representatives’ separate preparatory meetingpreparatory meeting

Keynote Address - from a senior Company Keynote Address - from a senior Company executive in Europeexecutive in Europe

Presentations - on behalf of the major Presentations - on behalf of the major businesses or in relation to an businesses or in relation to an important/current topic important/current topic

Educational/Training sessions for Educational/Training sessions for employee representatives - to help them employee representatives - to help them to understand and appreciate the business to understand and appreciate the business environment environment *(with Interpreters)*(with Interpreters)

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ils EU Directive on National EU Directive on National Information & Information & Consultation*Consultation*

Purpose Purpose [similar to ‘EWCs’][similar to ‘EWCs’]to establish a general framework to establish a general framework setting out minimum requirements for setting out minimum requirements for the right to information and the right to information and consultation of employeesconsultation of employees

To be achievedTo be achievedby arrangements which ‘management by arrangements which ‘management and labour’ consider to be best suited and labour’ consider to be best suited to their needs and wishesto their needs and wishes

* * (2002/14/EC) (2002/14/EC)

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ilsNational Information & National Information &

ConsultationConsultationScopeScope the recent and probable development of the recent and probable development of

the undertaking’s or the establishment’s the undertaking’s or the establishment’s activities and economic situationactivities and economic situation

situation, structure and probable situation, structure and probable development of employment…and…any development of employment…and…any anticipatory measures envisaged, in anticipatory measures envisaged, in particular where there is a threat to particular where there is a threat to employmentemployment

decisions likely to lead to substantial decisions likely to lead to substantial changes in work organisation or in changes in work organisation or in contractual relationscontractual relations

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ilsNational Information & National Information &

ConsultationConsultation

ArrangementsArrangements appropriate timing, method and appropriate timing, method and

content ... at the relevant level of content ... at the relevant level of managementmanagement

on the basis of information supplied on the basis of information supplied by the employer...and the opinion by the employer...and the opinion which the employees’ which the employees’ representatives are entitled to representatives are entitled to formulateformulate

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ilsNational Information & National Information &

ConsultationConsultation

Arrangements (continued)Arrangements (continued) in such a way as to enable in such a way as to enable

employees’ representatives to meet employees’ representatives to meet the employer and obtain a response, the employer and obtain a response, and the reasons for that response, and the reasons for that response, to any opinion they might formulateto any opinion they might formulate

with a view to reaching agreement with a view to reaching agreement on decisions within the scope of the on decisions within the scope of the employer’s powersemployer’s powers

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ils National Information & National Information & ConsultationConsultation

The Company’s OptionsThe Company’s OptionsSubject to the provisions of National Subject to the provisions of National

legislation (to be in place by 23 March, 2005)legislation (to be in place by 23 March, 2005) reach agreement with employee reach agreement with employee

representatives on the basis of the representatives on the basis of the framework laid down in the Directiveframework laid down in the Directive

oror negotiate arrangements with employee negotiate arrangements with employee

representatives which are different from representatives which are different from those laid down, provided that they respect those laid down, provided that they respect the principles set out in the Directivethe principles set out in the Directive

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ilsEWCs promote dialogueEWCs promote dialogue

EWCs are a EWCs are a legal requirementlegal requirementTheir purpose is to improve the Their purpose is to improve the

rightsrights of employees to information of employees to information and consultationand consultation

To be achieved through dialogue To be achieved through dialogue between senior company executives between senior company executives and employee representativesand employee representatives

Employers should welcome this Employers should welcome this additional opportunity for discussion additional opportunity for discussion and make it a virtue and make it a virtue

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ils EWCs - a rein on EWCs - a rein on Management Management EWCs are a EWCs are a legal requirementlegal requirementEmployers must respect the obligation Employers must respect the obligation

to inform & consult as appropriateto inform & consult as appropriatebefore implementation of proposalsbefore implementation of proposals

Time should be built-in to the project Time should be built-in to the project schedule to allow for necessary schedule to allow for necessary consultationsconsultations

Develop trust between management Develop trust between management and employee representativesand employee representatives

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ils EWCs - an aid to EWCs - an aid to Management Management The The requirementrequirement to inform and to inform and

consult provides an opportunity to consult provides an opportunity to seek an second opinion from those seek an second opinion from those likely to be directly affectedlikely to be directly affected

Ensures that employees can be Ensures that employees can be involved in the eventual decision and involved in the eventual decision and will be more likely to support the will be more likely to support the changechange

Avoids ‘unpleasant’ surprises and Avoids ‘unpleasant’ surprises and gives time for ‘acceptance’gives time for ‘acceptance’

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ils EWCs assist EWCs assist communicationcommunicationEmployees become better informedEmployees become better informedStimulate new/novel methods of Stimulate new/novel methods of

communication to employees (e.g. communication to employees (e.g. use of IT and dedicated web sites)use of IT and dedicated web sites)

Creates an obligation to brief Line Creates an obligation to brief Line Managers - so that they are not left Managers - so that they are not left out of the loop!out of the loop!

Keeps elected ‘Employee Keeps elected ‘Employee Representatives” truly Representatives” truly ‘representative’‘representative’

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ilsExpansion of the EUExpansion of the EU

What is proposed?What is proposed?With effect from May, 2004, the With effect from May, 2004, the following ten Countries are due to following ten Countries are due to become members of the European become members of the European UnionUnion::

Estonia, Latvia, Lithuania, Estonia, Latvia, Lithuania, Poland, Poland,

Czech Republic, Slovakia, Hungary, Czech Republic, Slovakia, Hungary, Slovenia, Malta and CyprusSlovenia, Malta and Cyprus

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ilsExpansion of the EUExpansion of the EU

Provided that the Country has adopted Provided that the Country has adopted the relevant EU Directives* (a condition the relevant EU Directives* (a condition of entry to the EU), Company of entry to the EU), Company employees will then become eligible to employees will then become eligible to be represented on the ‘EWC’be represented on the ‘EWC’

The way in which this will be achieved The way in which this will be achieved will depend on the circumstances will depend on the circumstances within each Companywithin each Company

*some agreements do not make this a requirement*some agreements do not make this a requirement

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ilsExpansion of the EUExpansion of the EU

Issues to be determinedIssues to be determined- new Agreement required?- new Agreement required?- timing/commencement of - timing/commencement of involvement - interim arrangementsinvolvement - interim arrangements- consultation with new Countries- consultation with new Countries- degree of representation- degree of representation- election of employee - election of employee representativesrepresentatives- training of new representatives- training of new representatives

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ilsExpansion of the EUExpansion of the EUEWCs - a new experience!EWCs - a new experience!

An An additional additional forum - to forum - to promote dialogue between promote dialogue between employees and managementemployees and management

Not intended to undermine or Not intended to undermine or supersede local processes or local supersede local processes or local employee rightsemployee rights

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ilsTest of EWC effectivenessTest of EWC effectivenessDiscussions remain business focusedDiscussions remain business focusedDevelops appropriate links at the Develops appropriate links at the

business level to local communication business level to local communication and consultation processesand consultation processes

Recognises that communication is a joint Recognises that communication is a joint responsibility for management and responsibility for management and employee representativesemployee representatives

Encourages participation and Encourages participation and involvement through enhanced dialogueinvolvement through enhanced dialogue

Promotes a spirit of collaboration Promotes a spirit of collaboration

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ilsWhat next?What next?Promote greater understanding of Promote greater understanding of

the role of the ‘EWC’ amongst staff the role of the ‘EWC’ amongst staff and managersand managers

Actively involve ‘EWC’ in the Actively involve ‘EWC’ in the formulation of business plansformulation of business plans

GENERALLY RECOGNISE THATGENERALLY RECOGNISE THAT‘‘EWCs’ ARE HERE TO STAY!EWCs’ ARE HERE TO STAY!

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ils Effects of mergers on Effects of mergers on EWCs - GlaxoSmithKline EWCs - GlaxoSmithKline approach (1)approach (1) How to merge two existing ‘EWCs’?How to merge two existing ‘EWCs’? Few precedents - none of which Few precedents - none of which

were considered directly comparablewere considered directly comparable Advised to agree everything with Advised to agree everything with

employee representativesemployee representatives The optionsThe options

-- begin again (‘Special begin again (‘Special Negotiating Group’ etc.), orNegotiating Group’ etc.), or-- build on existing arrangementsbuild on existing arrangements

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ils Effects of mergers on Effects of mergers on EWCs - GlaxoSmithKline EWCs - GlaxoSmithKline approach (2)approach (2)Members of both ‘EWCs’ met togetherMembers of both ‘EWCs’ met together

Joint ‘Working Group’ created from Joint ‘Working Group’ created from members of the GlaxoWellcome and members of the GlaxoWellcome and SmithKline Beecham ‘EWCs’SmithKline Beecham ‘EWCs’

‘‘Working Group’ recommendations put Working Group’ recommendations put to a further joint gathering to a further joint gathering andand to to separate meetings of both ‘EWCs’separate meetings of both ‘EWCs’

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ils Effects of mergers on Effects of mergers on EWCs - GlaxoSmithKline EWCs - GlaxoSmithKline approach (3)approach (3)The recommendations:The recommendations: regard the members of both regard the members of both

existing ‘EWCs’ as an analogous existing ‘EWCs’ as an analogous ‘Special Negotiating Body’‘Special Negotiating Body’

elect a formal ‘Working Group’ elect a formal ‘Working Group’ from these ‘EWCs’ - from these ‘EWCs’ - to negotiate to negotiate a new agreement, subject to a new agreement, subject to final endorsement by each of final endorsement by each of the former ‘EWCs’the former ‘EWCs’

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ils Effects of mergers on Effects of mergers on EWCs - GlaxoSmithKline EWCs - GlaxoSmithKline approach (4)approach (4)The outcomeThe outcomeNew Agreement (under English law)New Agreement (under English law)Basically, followed the ‘subsidiary Basically, followed the ‘subsidiary

requirements’ of the (by then) UK requirements’ of the (by then) UK RegulationsRegulations

‘‘EWC’ - 31 employee representatives EWC’ - 31 employee representatives (from all Countries previously included) (from all Countries previously included) and a ‘standing sub-committee’ (jointly and a ‘standing sub-committee’ (jointly chaired), comprising 5 employee and chaired), comprising 5 employee and up to 5 management representativesup to 5 management representatives

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ils Effects of mergers on Effects of mergers on EWCs - GlaxoSmithKline EWCs - GlaxoSmithKline approach (5)approach (5) ‘‘Working Group’ also authorised to Working Group’ also authorised to

act as ‘interim’ Sub-Committee for all act as ‘interim’ Sub-Committee for all purposes until new Country purposes until new Country employee representatives elected - employee representatives elected - met on two occasions (once in met on two occasions (once in ‘exceptional circumstances’)‘exceptional circumstances’)

Inaugural meeting held in January, Inaugural meeting held in January, 2002, with training for 2002, with training for representativesrepresentatives

First Annual Meeting in April, 2002First Annual Meeting in April, 2002