Ireland adopted the law on employee involvement in the European Company (SE) in January 2007.
Employees are represented on the boards of some publicly-owned companies in Ireland – but have no right to board-level representation in the private sector. Both unions and employers were consulted on how the directive was to be implemented in Ireland – but there was no wider public debate.
There is no statutory requirement for board level representation in the private sector. However, some parts of the public sector are covered by legislation which gives employee representatives a right to seats on the board, although privatisation means that the number of companies with employees at board level has fallen. Where employees are represented, they normally have one third of the seats.
Unions, employers’ associations and the enterprise agencies in Ireland (which give support to companies and business) were all consulted on the draft text implementing the directive and submitted a number of detailed comments. However, there was no wider public debate on the issue.
Directive was implemented through legislation in December 2006, more than two years after the October 2004 deadline.
The directive on employee involvement in European companies was implemented in Ireland by a statutory instrument (legislation laid before the Irish parliament) dated 14 December 2006 and published in the official journal on 19 December 2006. The title of the legislation is European Communities (European Public Limited-Liability Company) (Employee Involvement) Regulations 2006, SI No. 623 of 2006. Ireland was the last of the EU members to transpose the directive, other than Romania, which only joined the EU on 1 January 2007.
Changes adapting Irish company law to take account of the Regulation on European companies were made through two separate statutory instruments laid before the Irish parliament in January 2007.
Special negotiating body (SNB)
Irish members of the SNB are elected by the employees.
Irish SNB members are elected or appointed by the employees of the participating companies (Regulation 5). Where there is an election, the Irish legislation states that it is the responsibility of the management of the participating companies (“competent organs” in the wording of the legislation) to “arrange for the conducting of those elections”. There are also more detailed provisions which cover issues such as who is able to nominate, who can stand, who can vote and the appointment of a “returning officer” (the individual organising the election, who is obliged to conduct it fairly) (Regulations 6 and 7).
However, it is also possible for SNB members to be “appointed” by the employees. The legislation is less precise as to how this should be done, stating only that appointed means that there is no election and that the “basis on which that appointment is made may … be such as is agreed by them [the employees] with the participating companies” (Regulation 2).
Where there is an election, candidate must be nominated either by a union or an “excepted body” which the employer already “recognises” – negotiates with – or at least two employees. (An “excepted body” is defined in Irish law as an organisation, whose members are all employed by the same employer, which negotiates on their behalf but does not have union status.) To stand as a candidate, an employee must have been employed for at least a year; trade union officials and officials of “excepted bodies” may also stand (see section on external trade union representatives) (Regulation 6).
External union representatives in Ireland can be appointed to the SNB.
The Irish legislation states clearly that trade union officials or officials of “an excepted body” can be members of the SNB “whether or not he or she is an employee” (An “excepted body” is defined in Irish law as an organisation, whose members are all employed by the same employer, which negotiates on their behalf but does not have union status.) (Regulation 6)
Funding not limited to a single expert.
The Irish legislation on funding does not limit funding to a single expert. It simply states that the SNB may “engage experts of its choice to assist with its work” (Regulation 10) and the “reasonable expenses relating to the functioning of the special negotiating body … shall be borne by the participating companies” (Regulation 12)
Standard rules under the fallback procedure
There is nothing in the legislation dealing specifically with SE representative body members from Ireland. Overall they are to be chosen by employee representatives or, if there are none, by the employees themselves, and the mechanism for doing so is decided on by the SNB.
The legislation does not include any rules setting out how Irish members of the SE representative body, known simply as the representative body in the text, should be chosen under the fallback procedure. The regulations deal only with the overall composition of the representative body, stating that it should be made up of employees of the SE – in contrast to the SNB, external trade union or other officials cannot be members – and that it should be “elected or appointed by the employees’ representatives or, in the absence thereof, by the entire body of employees. The way that the members of the representative body are to be elected or appointed is to be “agreed by the special negotiating body” (Schedule 1, Part 1).
The company should bear the reasonable costs of the representative body, and there are no limits on the number of experts.
The company is obliged to cover the “reasonable costs” of the representative body to enable its members “to perform their duties in an appropriate manner”. There is no specific mention of the costs of experts in the legislation but the text states that “the representative body or the select committee may be assisted by experts of its choice”, which clearly indicates that their reasonable costs would be covered (Schedule 1, Part 2).
Irish employee representatives at board level are chosen by the Irish representative body members from amongst themselves.
The legislation leaves the choice of Irish board-level employee representatives in the hands of the Irish members of the representative body. However, they can only choose from among themselves (Schedule 1, Part 3).
Misuse of procedures and structural change
Employees or their representatives can take a suspected misuse of procedures to the Irish Labour Court, although they must try to resolve the problem in some other way beforehand.
The Irish legislation deals with the possibility that “the SE is being or will be misused for the purpose of depriving employees of their rights to employee involvement or of withholding those rights” by allowing employees or their representatives – or both – to make a complaint if they consider that this has happened. The complaint goes to the Labour Court in Ireland, which has powers to investigate the case and make first a recommendation to the parties, and if that is not accepted, a decision – a “determination” in the words of the legislation – on the action to be taken. It is possible to appeal against this determination in the High Court.
However, before a dispute can be taken to the Labour Court, those making the complaint must first use the company’s internal dispute resolution procedure, if there is one, and then attempt to resolve the problem through the Labour Relations Commission, an official conciliation body. Only when the Labour Relations Commission states that it is unable to do any more to resolve the dispute can it go to the Labour Court (Regulation 20).
There is no requirement in the Irish legislation to renegotiate the agreement if there has been structural change, although if it can be shown that the change represents a misuse of the procedures a complaint can be made to the court.
There is nothing in the legislation that specifically requires the agreement to be renegotiated if there are structural changes after the SE has been set up. However, if the employees or their representatives can show that such changes represent a misuse of procedures, they can take their case to the Labour Court (see section on misuse of procedures).
Both unions and employers were consulted on the legislation implementing the directive and made detailed technical comments. The unions expressed their satisfaction with the fact that the legislation had been introduced in Ireland, the employers appear to be more cautious.
The government consulted with both unions and the employers on the legislation implementing the directive with both sides submitting detailed comments. The final outcome appears to have satisfied the unions. The Irish union confederation ICTU stated that it had “secured improvements to the legislation” which it described as “giving rise to new rights” and providing “opportunities for Irish trade unions”. The Irish employers’ association IBEC is generally very wary of extended powers for employee representatives, preferring direct communication with the workforce.
L. Fulton (2008) Anchoring the European Company in National Law - Country Overviews (online publication, prepared for worker-participation.eu)
Kevin P O’Kelly (University of Limerick)
Resulting from the historical links, Ireland operates within, what is called, a ‘voluntarist’ system of industrial relations, i.e., the right to choose to join a trade union or an employer organisation, to bargain collectively or individually and to agree or not to agree on the issues in dispute and that the disputes between the parties should be resolved without the intervention of outside forces. A fundamental principle of this voluntarism is the absence of legally imposed structures and that the State takes a supportive role, through legislation and the provision of dispute settlement arrangements, rather than an interventionist role, in the employment relationship.
Since joining the European Community in 1973, in Ireland there has been a growing interest in shifting industrial relations from the traditional adversarial approach to a more consensus way of addressing workplace problems. This was not out of character with the Irish system of industrial relations as, since 1946, there had been a series of national wage rounds and, during the 1960s, on a number of occasions agreement on a Wage Round was negotiated centrally by the ICTU and the employers’ organisations. However, these experiments never lasted longer than a single Wage Round, until 1970 when, under the threat of legislation to control incomes and prices, the employers’ organisations and trade unions negotiated the first National Wage Agreement. These agreements eventually lead to the negotiation of two tripartite National Understandings between 1979 and 1981. They covered, not just pay levels in the Public and Private Sectors, but also a wide range of national economic and social policies, such as taxation, social welfare and health, education and training, labour law, housing and a commitment from the three parties to work together to achieve significant increases in employment. These agreements were the forerunner of the present series of National Programmes, agreed between the social partners and successive Governments, which have become the basis of Irish industrial relations since 1987.
Worker Participation Policy in Ireland
With the emergence of consensus at national level in the early 1970s there was recognition of the need to supplement this with limited forms of workers' participation. In 1973 a draft agreement was drawn up, for inclusion in the third National Wage Agreement, which would provide for the establishment of works councils in Irish enterprises. While the ensuing discussion on this draft agreement accepted that the proposed approach was in keeping with the practice and traditions of Irish industrial relations it was never ratified as events, such as the first OPEC oil crisis and resulting global recession, changed the priorities of both employers and the trade unions.
The Government, therefore, took the view that if anything was to happen regarding workers' participation that it would have to provide the stimulus. Consequently, in 1977 legislation was enacted giving employees in seven State?sponsored commercial companies the right to elect a third of the directors to the boards of these organisations, for a period of three years. (Worker Participation (State Enterprises) Act, 1977)
Based, in part, on the report of the Workers’ Participation Advisory Committee the original 1977 legislation was amended in 1988. This new law extended the worker director system further and increases the term for elected directors from three to four years.
Recognising that the 1977 Act failed to provide any guidance on how worker directors should link with the workers who had elected them through some sort of reporting back process, the legislation also provides for the establishment of sub?board consultative arrangements, not just in companies and agencies with worker directors, but also in other organisations. In total thirty?six State companies and agencies were covered by this aspect of the legislation. The approach adopted in the new Act was very flexible on the type of consultative forum which should be set up within each organisation, as the structure needed to reflect the objectives of the organisation, the size and location of its workforce, the employee/management relations, its culture, its national role or the business environment in which it functioned.
As regards the Private Sector, in keeping with the 'voluntarist' nature of Irish employment relations, the Government showed a reluctance to impose any form of employee participation if it was not acceptable to employers and managers. Its preference was for the social partners to reach a voluntary agreement. However, such agreement was never reached and the introduction of EU legislation for the establishment of European Works Councils brought a new concept to the Irish labour market by introducing, for the first time, statutory information and consultation rights into Private Sector employment. An estimated 300 transnational enterprises with subsidiaries based in Ireland are covered by the Directive. Many of these have already established EWCs with members representing Irish workers at European-level meetings.
The Framework Directive to introduce information and consultation arrangements for any enterprise operating within the EU (2002/14/EC) will extent this process further and employee involvement will have been achieved through the EU route rather than domestically, something the unions have advocated for decades, but without success.
The Government launched a consultation process, with the publication of a Consultation Paper, on how this Directive should be transposed into Irish legislation and both the trade unions and employers have made submissions in response to this paper.
European Company Statute Directive
While dealing specifically with the Framework Information and Consultation Directive, the Irish Government’s Consultation Paper notes that the ECS Directive must be transposed into Irish law by 8 October, 2004. However, in its response to the paper the Irish Congress of Trade Unions (ICTU) has sought the transposition of both Directives at the same time and through a single consultation process.
Turning to the specific provisions of the Directive the ICTU made two general comments in a letter the Dept of Enterprise, Trade and Employment (which is the responsible ministry for the implementation of the two Directives):
"First, Congress noted that Article 3 of the Directive specifies arrangements for the establishment of a special negotiating body (SNB) and the arrangements for the selection of employee representatives on SNBs. The relevant subsection provides that Member States may make provisions that would permit representatives of trade unions to participate in SNBs whether or not they were employees of a participating company, concerned subsidiary or establishment. It is the view of the ICTU that the legislation transposing the Directive should provide that, if employees choose to be represented by a trade union on a SNB, the employer concerned must facilitate that union's participation.
Second, the submission argued that the standard rules set out in the annex to the ECS Directive and which will apply in certain circumstances, most notably in the event of the parties failing to agree on procedures for employee involvement by way of an SNB, should be consistent with the basic rules which may emerge from the transposition of Directive 2002/14/EC and should be reflected in the standard rules which will be specified in legislation transposing this Directive. In other words, there should be consistency and continuity across the two Directives.
Transposition of the Directive into Irish Law
It is the view of the Dept of Enterprise, Trade and Employment that this directive can be transposed through a regulation laid before the Oireachtas (Irish Parliament). However, to date this has not happened, so the deadline for transposition of the directive has not been met. The regulation is been finalised by the Department and it is hoped to have the transposition completed before the end of 2004.