What is corporate governance?
Corporate governance concerns the system of rules, processes, and practices through which an organisation is directed, led, and managed towards attaining its objectives. It involves balancing the interests of workers, shareholders, management, customers, suppliers, government, and the community. Corporate governance spans internal control of the development of strategies, action plans and work policies and programmes, as well as the obligation to publicly disclose information about the company and its performance.
What does company law do
Company law addresses corporate governance, which concerns the relationships between a company’s management, board, shareholders, and other stakeholders (including workers), and therefore, on the ways the company is managed and controlled. Company law also addresses issues such as the formation, capital and disclosure requirements, and operations (such as mergers, divisions) of companies. Related legal areas include insolvency law and corporate reporting standards.
Why is company law important for workers?
Company law regulates the rights of workers in corporate governance, most clearly in the rules for representing workers in the board (Board-level Employee Representation). Company law also defines ad hoc rights for workers, for example information and consultation rights in the case of takeover bids and cross-border conversions, mergers, and divisions. Finally, workers are affected by the rights that company law grants to other parties, such as voting rights for shareholders.
What does ETUI do on company law, corporate governance, and worker participation?
The ETUI work in this area relies on its GoodCorp network, a pan-European network of trade union and academic experts in the field of corporate governance. In addition to providing policy advice to the trade unions and other stakeholders, GoodCorp has coordinated a number of publications and the development of the European Participation Index, a national-level measure of the strength of worker participation in corporate affairs. Within GoodCorp, a new network of national correspondents called Monaco was established in 2022, which focuses on monitoring the transposition of company law and related directives which involve worker participation. You can find an overview of EU company law relevant for worker participation on the Legislation and Regulation page.
GoodCorp Network
GoodCorp, a pan-European network of trade union and academic experts, was initiated in 2005 following the European Commission’s publication of an action plan for company law and corporate governance. In the GoodCorp network, leading experts from different disciplines and countries, all with an interest in workers' rights as stakeholders, engage in activities including:
- the exchange of information and opinions on current issues on the European corporate governance and company law agenda, as well as on key developments in EU Member States
- advice and support for the European trade union movement on these issues
- research and publications on policy options
ETUI Monitoring and Assessing Company Law Transposition (Monaco) Network
Within the framework of the GoodCorp Project, the Monaco network was established in 2022 to monitor and analyse the transposition of key EU Company Law and related Directives with relevance for worker participation. The network is composed of correspondents from the different Member States with a background in the analysis of legislation. The Monaco Network is coordinated by Progressive Policies on behalf of the ETUI.
These correspondents report regularly on the state of transposition of key company law Directives in their respective countries. Where relevant, they also provide a qualitative assessment of national implementation, in particular on provisions that are important for workers’ rights. Based on the monitoring reports, an overview report on the transposition is compiled for several directives.
The network currently monitors the transposition of four Directives:
- Digital Tools and Processes Directive 2019/1151
- Cross-Border Conversions, Mergers and Divisions Directive 2019/2121
- Insolvency and Restructuring Directive 2019/1023
- Corporate Sustainability Reporting Directive 2022/2464
For summaries of the Directives that the Monaco network monitors, as well as other relevant EU legislation, please click on the link above or go directly to Legislation and Regulation.
European Participation Index
Video introduction to the European Participation Index (EPI)
The European Participation Index (EPI) is a multidimensional measure of the strength of ‘workers’ voice’ in companies in different European countries. The inclusion of three components respects the variety of industrial relations systems in different countries, which provide information, consultation and participation rights at different levels of the company:
- The first component measures the strength of worker representation on company boards. Board level employee representation (BLER) is generally either widespread in both the public and private sectors, limited mainly to public and privatized companies, or only weakly supported or based on voluntary arrangements;
- The second component measures the percentage of the workforce with formal collective representation at the establishment (i.e. workplace) level; and
- The third component measures collective bargaining influence, which is an average of the percentage of the workforce covered by a collective agreement and the percentage of the workforce that are trade union members.
Countries receive a score between 0 (no worker voice) and 1 (strong worker voice) on the EPI. The EPI has been shown to have a high correlation with various economic and social indicators, including economic equality, the labour share in income, the employment rate, research and development spending (R&D), in-work poverty, and political participation.
Research using the EPI (including earlier versions) can be found in various editions of the annual ETUI Benchmarking Working Europe publication (2009: 55; 2011: 97-98; 2016: 69; 2016: 69; 2017: 58; 2018: 76; 2019: 73-75; 2020: 140-142, 155).
A recent article - De Spiegelare, S. and Vitols, S. (2024). The European Participation Index (EPI) and inequality: a multi-dimensional cross-national comparative measure of worker participation. Transfer: The European Review of Labour and Research - describes the methodology and data sources underlying the EPI and demonstrates its usefulness in explaining cross-national variation in inequality.