THIRTIETH REPORT
The European Scrutiny Committee has made further
progress in the matter referred to it and has agreed to the following
Report:—
INFORMING AND CONSULTING EMPLOYEES
(21790)
—
| Draft Directive establishing a general framework for informing and consulting employees in the European Community.
|
| Legal base:
| Article 137 (2) EC; co-operation; qualified majority voting
|
| Department:
| Trade and Industry |
| Basis of consideration:
| EM of 21 November 2000
|
| Previous Committee Report:
| None; but see (19679) 13099/98; HC 34-viii (1998-99), paragraph 2 (3 February 1999) and HC 34-xxvii (1998-99), paragraph 7 (21 July 1999)
|
| To be discussed in Council:
| 27-28 November 2000 |
| Committee's assessment:
| Legally and politically important
|
| Committee's decision:
| For debate in European Standing Committee C
|
Background
1.1 This draft Directive would require Community
undertakings[1]
with 50 or more employees to put in place arrangements for informing
and consulting their employees on a range of matters. It specifies
sanctions for certain aspects of non-compliance. The detailed
procedures for information and consultation are to be determined
by the Member States, subject to certain minimum standards in
the directive.
1.2 We cleared an earlier version of this
proposal in July 1999, after the then Minister of State at the
Department of Trade and Industry had answered our questions and
emphasised his antipathy to the draft Directive both in a written
response[2]
and in a later evidence session.[3]
1.3 Negotiations on the proposal then stalled,
until the French Presidency announced its determination to revive
it, and included it in the Social Policy Agenda.[4]
1.4 The document was discussed at the Employment
and Social Policy Council on 17 October. The Press Release reports
that the Presidency invited delegations to submit their observations
in writing in preparation for further discussion at the next Council
meeting on 27 and 28 November. The UK stated its continued opposition
to the proposal.
1.5 The Minister for Competitiveness (Mr
Alan Johnson) has now submitted an unofficial text with an Explanatory
Memorandum in order to keep the Committee informed of progress.
The unofficial text
1.6 The Minister explains that, in October,
the Presidency circulated its own proposal which amended the Commission's
draft in various ways. The Commission has accepted the text as
a basis for further work, and the Presidency intends to present
it to the Employment and Social Affairs Council on 27 and 28 November.
1.7 According to the Minister, the main
changes in the Presidency text compared with the Commission's
are as follows:
"— Article 1.1 says the objective
is to establish a general framework establishing minimum standards
of information and consultation which must as a general principle
be 'effective';
"— Article 2 contains new definitions
of 'establishment' and 'employee'. Most of the substance to the
definitions of 'information and consultation' has been transferred
to Article 3;
"— There is a new Article 2a on scope
of application. This allows Member States to apply the obligations
either to undertakings with 50 or more employees, or to establishments
(which are sub-divisions of undertakings) with 20 or more employees;
"— Article 3 now sets out the modalities
for information and consultation which were in Article 2 (d) and
(e) of the Commission's proposal, and also the subjects on which
employees are to be informed and consulted (from article 4 of
the Commission's proposal). Together these are intended to be
the minimum standards referred to in Article 1. Article 3 also
requires Member States to determine the procedures for the exercise
of the employees' right to information and consultation;
"— Article 4 (Article 3 in the Commission's
proposal) has been re-drafted to clarify that, subject to conditions
and limits fixed by the Member States, the social partners may
negotiate agreements which establish provisions different from
those in article 3, while respecting the principles set out in
article 1;
"— The proposal deletes the provision
in Article 7.3 of the Commission's proposal which would have rendered
management decisions without legal effect in certain circumstances."
The Government's view
1.8 The Minister comments:
"The Government's view of the Presidency proposal
is the same as its view of the Commission's. The Government is
not persuaded of the need for a directive on information and consultation
in companies operating only at national level, which is difficult
to reconcile with subsidiarity and would cut across existing practices
in member states to no benefit. Community instruments already
exist, as identified above, which adequately regulate information
and consultation at the Community level. The proposed directive
on employee involvement in the European Company would also complement
the existing Community measures in this area.
"The Government also considers the minimum standards
go beyond those necessary to achieve the objectives. They go further,
for example, than those in the European Works Council directive,
despite the fact that this applies to much larger undertakings.
"The Government also considers that the proposed
legal base of the proposal may be inadequate, insofar as aspects
of it may be considered to be more appropriate to Article 137(3)
of the Treaty in that they touch on the representation and collective
defence of workers and employers, including co-determination,
rather than information and consultation per se."
1.9 The Minister sets out the current UK
legislation which provides for the informing and/or consultation
of employees, and concludes that some integration of the present
legislation on transfers of undertakings and collective redundancies
with that implementing the proposed Directive could be required.
Additionally, UK provisions on information for the purpose of
collective bargaining might in practice be superseded. Implementing
legislation via Regulations would be required to implement the
Directive.
1.10 A copy of the previous Regulatory Impact
Assessment (RIA) is attached for information, since the Government
does not consider that the revisions to the text have changed
the position. A range of total recurring costs of between £209
and £261 million and a range of set-up costs to the economy
of between £84 and £88 million are posited, but their
speculative nature is emphasised. The Minister explains:
"Costs were calculated on the basis that British
business would have to move from a position where there was no
statutory legal requirement for information and consultation to
one where there was."
Conclusion
1.11 The most significant changes in
the new text appear to us to be the change in the scope of application,
which would allow Member States to apply the obligations to establishments
with 20 or more employees (as suggested by the European Parliament),
and the deletion of the provision which would have made rendered
management decisions without legal effect in certain circumstances.
Otherwise, little seems to have changed since we last saw this
proposal, in terms either of its content or of the UK's stance.
1.12 As a result, two of the points we
made earlier still stand:
(1) We understand why the Government does
not consider that the subsidiarity case has been met. However,
as Article 2 makes clear, the Treaty has social obligations as
well as economic ones, and it is arguable that some legislation
of this kind is needed at Community level to balance the competitive
pressures (resulting from the single market and economic and monetary
union) which may otherwise induce companies to neglect employees'
interests. We would be interested in the Minister's views on this
wider point.
(2) We have yet to be convinced that aspects
of the proposal may be more appropriate to Article 137(3) as they
touch on the representation and collective defence of workers.
We do not consider that the Minister has substantiated his case.
1.13 More generally, however, we consider
that this proposal is significant enough for debate. If adopted,
it would have an impact on employers and employees. It is important
that the House should have the opportunity of hearing the latest
state of play from the Minister, especially given the Presidency's
wish to have the measure agreed despite the controversy about
it at EU level. Although we understand that a vote at next week's
Council is unlikely, it is important that the matter be aired
sooner rather than later. We therefore recommend the document
for debate in European Standing Committee C as soon as possible.
The Committee may wish to question the Minister on the points
above, and also to ask:
- which aspects of the minimum standards the
Minister considers go beyond what is necessary
- how far other Member States share the UK's
conviction that the proposal breaches the principle of subsidiarity
- whether there are any aspects of the proposal
that the UK does not oppose.
1 Public or private undertakings carrying out an economic
activity, whether or not operating for gain. Back
2 Reported
in HC 34-xxvii (1998-99), paragraph 7 (21 July 1999). See headnote
to this paragraph. Back
3 See Minutes of Evidence of 7 July 1999, HC 689 (1998-99). Back
4 (21420)
9964/00; see HC 23-xxvi (1999-2000), paragraph 1 (26 July 2000). Back
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