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Global labour law update: January, 2015

  • United Kingdom


    Trade unions push for tougher EWC sanctions, including blocking deals

    There are differences in the level of sanctions which apply across the EU if an employer breaches rights and duties relating to European works councils (EWC). In a critical research paper from ETUI (the European Trade Union Institute), the example is given of potential fines ranging from 4 Euros to nearly 200,000 Euros across the EU.

    For some time trade unions have lobbied for a change to EWC sanctions, arguing that without consistent, tougher sanctions, the EWC Directive will be ineffective. Given that the EU Commission is expected to review and report on the implementation of the Directive by member states next year, we expect unions to push for sanctions to feature heavily in that report. Their hope will be that sanctions judged ineffective by the Commission may ultimately result in infringement proceedings, unless member states take remedial action.

    In particular, it should be noted that the ETUI research would like EWC sanctions to include the blocking of management decision making. This could involve injunctions halting any merger, sale or other associated commercial activity until management have addressed failures in the EWC information and consultation process. Such a change is unlikely given anticipated opposition from member states, however, other recommendations, including the funding of EWC litigation by the employer, may meet with more success.

    Corporate transparency: increased human rights reporting requirements

    The EU Non-financial Reporting Directive has been adopted and must be implemented in member states by 6 December 2016. It is of significance to those working in labour law given the recent trend for trade unions to frame some disputes as human rights issues and to use global human rights concerns as a reputational pressure point against employers, for example, as part of their campaigns to grow union membership and access across the global operations of MNEs.

    The Directive requires some larger companies with more than 500 employees to report annually on social and employee-related matters (expected to include the undertaking’s respect for trade union rights), human rights, anti-corruption and bribery matters. The report must include a description of the policies, outcomes and risks related to those matters and information on the due diligence processes implemented by the undertaking (and, where relevant and proportionate, its supply and subcontracting chains) in order to identify, prevent and mitigate existing and potential adverse impacts. Where the company does not have a relevant policy, the statement must provide a clear and reasoned explanation for not having one.

    The Commission will be issuing guidance on these reporting requirements. It seems inevitable that increasing transparency in this way has the potential to increase leverage to trade unions and other campaigners. More than ever before, employee, labour and human rights are also becoming corporate governance issues, requiring HR, Legal and CSR to work together to ensure a cohesive, consistent and effective approach.