Seminar, 'European company law and corporate governance – importance for workers' board-level representatives in company boardrooms'

Venue: ACV-CSC Brussels – Rue de Trèves/Trierstraat 33 (Room 9) – 1040 Brussels

The European Worker Participation Competence Centre (EWPCC) of the ETUI has begun a series of seminars designed to examine, in particular, the qualification requirements of board members representing the workforce of European (SE) and other Transnational Companies. On 2 and 3.6.2010 twenty board members serving as "non-executive directors" in 13 companies came to Brussels to receive information about recent developments in European Company Law and European Corporate Governance by the EU Commission and the European Parliament, as well as by European academic experts. Earlier seminars concerned important practical topics like information policy of worker representatives or subjects suitable for taking own initiatives, such as the "Sustainable company" against the background of climate change.

It was mainly by chance that, on 2 and 3 June 2010, around 30 practitioners from European and multinational enterprises and trade unions came together at the seminar ‘European company law and corporate governance – their importance for employee representatives in supervisory boards’, at which the European Commission once more put the legal provisions on the European Company (SE) up for discussion. Employee representatives in SE supervisory boards took this opportunity to draw attention, based on their experience at the European level, to how worker participation in boardrooms and corporate governance interlock in practice in cross-border companies. The European Worker Participation Competence Centre of the European Trade Union Institute (ETUI) had invited representatives from the European Commission, the European Parliament and the European trade unions and employers’ organisations to Brussels for a discussion with practitioners.

At the end of March 2010, the European Commission had published a study it had commissioned on the situation and attractiveness of the SE for enterprises. It now served as a basis for the discussion on the future shape of SE legislation. The study was carried out by lawyers from Ernst & Young and presented a number of positive and negative aspects which supposedly determine the attractiveness of the SE from the standpoint of companies. This European Commission study tabled a number of far-reaching proposals for legal amendments aimed at making the legal provisions ‘simpler’ and less costly. It was somewhat surprising that these also concerned worker participation procedures in the SE, which the authors of the study considered to be a negative factor. Worker participation in the SE is regulated in a directive related to the SE Statute which was not explicitly the focus of the Ernst & Young study.

The introduction into the discussion of the first results from a second study, therefore, was very timely. It was commissioned by the European Foundation for the Improvement of Living and Working Conditions in Dublin and carried out by a consortium of Wilke, Maack and Partner in Hamburg and the IRES Institute in Paris in cooperation with researchers in Belgium, Italy, the UK and Hungary. The subject in this instance was specifically workers’ involvement (by information, consultation and, where applicable, participation) in the SE. Ten case studies were conducted for the purpose. The sample includes SEs of different sizes and sectors, with their head offices in various EU member states: Austria, France, Germany, Luxembourg and the Netherlands. The SEs under the spotlight also varied in terms of the extent of workers’ involvement via information and consultation, as well as participation in company boards. The study was rounded off with a survey of the European social partners with regard to their experiences with worker participation in the SE.

It is notable that the study commissioned by the European Foundation in Dublin did not confirm the negative findings of the corresponding study by Ernst & Young on worker participation in the SE. On the contrary, those companies that wished to bolster their cross-border credentials by transforming into an SE and submitting to the procedure concerning employee involvement on the basis of a participation agreement generally expressed great – mutual – satisfaction with how things had turned out. This was confirmed by the employee representatives in SE supervisory boards who were present, who themselves had been involved in negotiations of this kind. These companies can rely on the strong support of their transnational employee representatives, also in their supervisory boards, in the event that changes need to made in the enterprise or even if further changes are carried out in the company’s structure, as happened recently in the case of Fresenius SE. The more frequently management and employee representatives consult one another, the more marked the benefits. That was reported from, for example, BASF SE, where considerably more meetings of the ‘Europe works council’ are held than are laid down in the agreement. The reason is that ever more topics that were previously dealt with at national level, such as the centralisation of service units or IT services at transnational level, but also the development of Europe-wide pay salary structures, are increasingly being dealt with at the European level of interest representation. What is more, major developments, such as the integration of Ciba, after its acquisition, also had to be dealt with on the employee side. The affected employee representatives were included in the consultation process in good time. It is clear that in this way the negotiating partners on both sides emerge on an equal footing at transnational level.

This practice-driven development is writing European history: in contrast to what so many well-intentioned projects and measures had been able to achieve previously, SEs, despite national differences, are emerging as effective and practicable instruments for European labour relations. The SE legislation created the necessary basis for this, at least in some enterprises. In this respect, the SE must also be deemed a success from the standpoint of policy on Europe.

To be sure, learning processes of this kind are evaluated differently by the employers’ and employees’ sides. This was illustrated by the discussion between Maxime Cerrutti, the representative of the European employers’ organisation Business Europe (BE) and Isabelle Barthes, the representative of the European Metalworkers Federation. Cerrutti did not draw, from the reported experiences of how it had proved possible to successfully bridge national and cultural differences in the SE for the benefit of companies, the obvious conclusion that such pioneers should for that very reason receive even more support than hitherto. The obviously good experiences reported from some SEs even by the employers’ side do not appear to have encouraged the latter to take up the proposal raised previously by Catelene Passchier (ETUC) to help interested companies to further develop as a model the European approach to corporate governance including worker participation. Since social relations vary too much from country to country, in the opinion of the European employers the simplest way would be to leave it to enterprises themselves to decide how they wish to tackle worker participation, within the framework of national legislation. Therefore, the SE should be relieved of the requirement to reach agreement on worker involvement. This way, which is far more attractive for enterprises, has been pursued in European company law by means of the proposal for a European Private Company Statute (SPE), although inconclusively so far. Since, as the discussion on the SPE also showed, any debate on the details of worker participation seems to ends up ploughing the same old furrows and it is unrealistic to expect that what employers really want with regard to the SE will be granted them, Cerrutti called for the status quo to be maintained as regards SE law. The enterprises affected could live with that.

In contrast to BE, the European trade unions have embraced the learning process in the SE. Isabelle Barthes, the representative of the European Metalworkers’ Federation (EMF), spoke of the extended possibilities opened up by the SE, because it guarantees access to top management in multinational companies. Even though, generally speaking, participation in the top management level is still controversial among trade unions in Europe it helps, in terms of the practice of interest representation in multinational companies, to be able to exercise influence over companies’ strategic decision-making by this means. As an example of the trade unions’ learning process Barthes cited the involvement at GM Europe. On behalf of the EMF she exercised the option, especially in the current crisis, of exerting constructive influence at the transnational level to preserve industrial jobs and to provide some sort of sustainable future for them. This is one way of taking a stand for the future of European industry. Reinhard Reibsch, EMCEF, had already spoken positively about the new possibilities, particularly for problem-solving between the social partners at transnational level.

With the SE as a platform, enterprises, according to the experiences of the participants, appear better able to prepare themselves to meet the new demands arising from the European Single Market and competitiveness on global markets. The view was, therefore, that the current European policy of seeking to measure everything in terms of the ‘simplification’ of regulations for enterprises and financiers was unproductive and inadequate. For example, proposals for such innovations as the possibility of re-establishing an SE by business activation or having the registered office and the administrative headquarters in different locations come under the heading of ‘simplification’, although it may be foreseen that they could lead to pressure being put on national company law to change accordingly, encourage companies to engage in ‘regime shopping’ and also to undermine existing participation rights.

In order to be able to counter such developments and to continue the comparatively positive course of the SE in European company law constant vigilance is needed, also with regard to detailed aspects of the European legislative process, even if, at first glance, they have only indirect significance for workers. This includes, for example, current efforts to establish a European company register. From the workers’ point of view, it would also be important to record when a shelf SE becomes active and takes on employees. Such changes in the structure of an SE retroactively trigger negotiations on workers’ participation in the SE. In order to recognise such loopholes and possibilities cooperation with representatives in the European Parliament is extremely important for employee representatives and trade unions. This was made particularly clear at the seminar by the exchange with Evelyn Regner, a MEP from Austria. The views of the ETUC can be gathered from the ETUC website.