Until 2004 there was no European standard of worker participation on the supervisory board or the board of directors of companies. The European Company (SE) legislation for the first time introduced a European reference for this form of worker interest representation familiar to many national corporate governance systems.
For decades it proved impossible to reach a consensus among European policy-makers on the question of workers’ board-level representation. Whereas some member states opposed a European approach, fearing that this could weaken their national systems (such as Germany), other countries were afraid of having to import an unknown feature into their industrial relations system.
The adoption of the European Company statute in 2001 constituted a breakthrough in this regard. The European Company directive defines the different elements of the ‘triad of worker involvement rights’: information, consultation and (board-level) participation.
The result reached by the EC Council in 2001 represents a historic compromise in this regard as the debate on the introduction of a European Company Statute was deadlocked for more than 30 years. The board-level representation of employees in the SE (participation) was one of the most disputed issues. If it was finally possible to overcome the deadlock this was mainly due to the following factors:
The adoption of the European Works Council (EWC) Directive in 1994 which included a new approach based on company-based negotiations (instead of a ‘one size fits all’ approach) and minimum fallback provisions (standard rules).
The introduction of the ‘Before and After Principle’ which seeks to ensure that, on the one hand, no existing employee rights would get lost and, on the other hand, that no company (and country) in which participation is unknown has to ‘import’ this feature involuntarily.
Find more information in the section: European Company