What is corporate governance?
Corporate governance is the system of rules, processes, and practices by which a company is directed and controlled. It defines the role that managers, shareholders, workers, the government, and the community can play in influencing company strategies, action plans and work policies and programmes. Corporate governance is regulated by a variety of measures, including ‘hard law’, ‘soft law’ (such as codes and recommendations), and established practice.
What is company law?
Company law is ‘hard’ law, which firstly plays a role in regulating corporate governance and the relationships between a company’s management, board, shareholders, and other stakeholders (including workers). Secondly, it also addresses structural issues, such as corporate formation, capital requirements, and the reorganization and restructuring of companies, such as takeovers, mergers, divisions and conversions. It also concerns transparency through financial and sustainability reporting, and related areas such as insolvency.
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 network of national correspondents called Monaco focuses on monitoring the transposition of company law and related directives. You can find an overview of EU company law relevant for worker participation on the Legislation and Regulation page.
GoodCorp Network
GoodCorp 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; and
- research and publications on company law and 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 Directives in the company law field with relevance for worker participation. The network is composed of correspondents from 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 monitor 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 these assessments, overview reports on transposition are being compiled for several directives.
The network has monitored 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 these Directives, as well as of other relevant EU legislation, please click on the link above or go directly to Legislation and Regulation. On the last directive, please also see a recent brochure - Vitols, S. and ETUC. (2024). Recommendations for transposition of the Corporate Sustainability Reporting Directive (CSRD). Brussels: ETUI and ETUC.
European Participation Index
Video on the ETUI European Participation Index
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.
The EPI data can be downloaded here (forthcoming).