Multinational Groups Consultation
The Transnational Information and Consultation of Employees Act 1996 is designed to ensure that employees of businesses which have a significant presence in more than one EU state are informed about the decisions affecting the overall business, which may be relevant to their local branch or entity. The legislation implements the 1994 EU directive.
Mechanisms are required to be put in place to give effect to the consultation and information sharing. Workers and their representatives must, at the appropriate level, be guaranteed information and consultation in good time in the cases and under the conditions provided by EU law and national legal procedures.
The 1994 EU Directive on European Work Councils and procedures in Community (EU) size scale businesses were updated in 2009. The Directive was updated in Ireland under the European Communities (Transnational Information and Consultation of Employees) Act (Amendment) Regulations.
The Directive requires that employees are to be properly informed and consulted about decisions taken in EU states, in order to ensure that they have the benefit of proper information and consultation. European Works Councils or other suitable procedures are required for transnational consultation and information for the benefit of such employees.
The EU Directive on Works Councils has been controversial. A 2009 Directive established European Works Councils or alternative procedures in certain large EU scale businesses or groups for the purpose of employee consultation, information and participation.
A European Works Council or an alternative procedure for informing and consulting employees must be established in each EU scale undeundertaking/ groupundertakings, where requested. EU scale undertakings are those with at least 1000 employees within a state and at least 150 employees in each of two states.
The legislation applies to groups of undertakings, which fulfil the above criteria on employment numbers. A group means a controlling business or undertaking and its controlled undertaking. A controlled undertaking is one in respect of which a dominant influence may be exercised through ownership, financial participation or by other means. The undertaking or group may be wholly or partly based within the EU.
The average number of employees within the previous two years is counted. Upon the request of an employee’s representative, the central management of the business must give information about the numbers and status of employees for the purpose of determining whether the legislation applies. It is an offence to fail to give the requested information.
The legislation requires that there be either a European Works Council, European Employees Forum or an alternative arrangement with employees in order to effect information sharing or consultation. The central management of the businesses or group of businesses is responsible for establishing the mechanisms for the Council or consultation procedures.
Representatives on the body, the European Employees Forum or Work Council, must be elected or appointed by the employees, or on an agreed basis. Members of the body must not be penalised or victimised in relation to the exercise of their functions.
The purpose of the body is to reach an agreement where possible on certain matters. Members are obliged to work in a spirit of cooperation, with due regard to their reciprocal rights and duties. Disputes regarding the operation of the agreement may be referred to the Labour Court.
Where the central management is outside the EU, an agent must be designated in a member state in order to undertake the obligations. The establishment of the Council or the representative procedures may be put in place on the initiative of central management or on the written request of at least 100 employees or their representatives, in at least two undertakings or establishments in at least two EU States.
Some of the obligations in the 1996 Act have been superseded by the later more general legislation which applies where there are more than 50 employees.
Special Negotiation Body
A special negotiating body (SNB) must be facilitated. Its function is to negotiate with central management for the purpose of the agreement for the provision of information and consultation of employees and to agree on matters relating to such agreements. The SNB may be established by the central management.
The SNB must be established if 100 employees or their representatives in at least two undertakings / businesses in two EU member states so request. The function is to negotiate for the establishment of a European Employees Forum (EEF) or an information and consultation procedure.
The cost of the SNB is to be borne by management. States may put limits on the costs which must be borne. Negotiations must be initiated. States shall determine the method of election or appointment of members in that state. Where there are no employee representatives already in place, employees may nominate and elect members.
The special negotiation body is to have at least three members. The members of the negotiation body are to be appointed or elected in proportion to the number of employees in each State. Each State is to have one member per proportion of employees amounting to 10% (or part thereof) of the number employed in all EU states.
The negotiating body and the central management are to enter a written agreement on the composition and functions of the body, terms of office and the information and consultation procedures. Management is to convene a meeting with a special negotiation body for the purpose of agreeing on the above structures and arrangements. The body may, by two-thirds of its votes, decide not to negotiate or end existing negotiations.
The parties are to endeavour to agree in a spirit of cooperation, an agreement on detailed information and consultation arrangements. This is to include a provision in relation to the composition, terms of office, allocation of seats, procedures for consultation and information, arrangements for meetings, financial and resources, duration of the arrangement. The body may, by two-thirds of votes, decide not to negotiate or end existing negotiations.
There is a code of practice on information sharing and consultation, made under the Industrial Relations Act. It seeks to assist employers and employees in developing arrangements for establishing effective consultation and communication. It is based on the legislation, together with practical experience in implementing it.
Consultation is the exchange of views between employee’s representatives and central management, or with the appropriate levels of management. Consultation contemplates the establishment of dialogue and the exchange of views between employee’s representatives and central management.
Consultation should be such as to enable employee’s representatives to express a view on the basis of the information provided about proposed measures, the subject of the consultation. It must be undertaken within a reasonable time.
Central management and Works Councils / other body are to work in a spirit of cooperation with respect to their mutual obligations and rights.
The consultations are without prejudice to the responsibilities of management. They do not require that any particular action be taken or not taken. They do not detract from the general duties and responsibilities of management and directors, which are owed primarily to the enterprise’s shareholders.
An alternative to the European Employees Forum or alternative procedures and arrangements body is a European Works Council. It is, in effect, the default arrangements, so that the alternative bodies arrangements are negotiated with reference to it and will reflect its objects and functions.
The European Works Council must be established
- where the central management and special negotiating body agree;
- where the central management refuses to commence negotiations within six months to establish an SNB;
- where three years after the request, the parties are unable to conclude an agreement and the SNB has not taken a decision to refuse to negotiate with central management.
Makeup of Works Council
The procedural requirements of the Works Council are set out in the legislation. It must be comprised of representatives of employees, appointed or elected in accordance with legislation. The Council should have no less than three and not more than thirty members. There must be supplementary members from states which reflect the strength of the business in those states.
There are to be between three and thirty members. Employees in each state in which the business is established must appoint at least one member. At least one further member must be provided by each state in which between 25% and 50% of employees are employed. Two additional members are required from a state with between 50% and 75% and three additional members from a state where more than 75% of the EU workforce are employed.
Works Council Functions
The function of the Works Council is confined to information and consultation relating to the business as a whole, or as concerns two branches or groups in different states. The Council is entitled to meet management at least yearly, and be informed and consulted on the basis of a report about the progress of the business, the group and its prospects.
The Council or its subcommittee is entitled to be informed and meet central management and levels of management as appropriate,
- where there are exceptional circumstances affecting the employees’ interest to a considerable extent;
- in the event of relocation or closure of an establishment;
- where there are collective redundancies.
Works Council Procedure
The Works Council may determine its own procedure: Minutes of meetings are to be approved jointly by management and employees’ representatives; The Council may be assisted by experts of its choice. The Council must inform employees’ representatives or the workforce directly, of the outcome of the relevant information and consultation, unless confidential information is involved;
Minutes of meetings are to be approved jointly by the employer and employee representatives. Arrangements for meetings are to be agreed between management and employees.
Members of Special negotiation bodies, employees’ forums and Works Councils must not disclose confidential information. Experts authorised to assist them members of special negotiation bodies or European Works Councils and other bodies may not reveal confidential information or information which is revealed in confidence.
Central management is not obliged to furnish information which of its nature, objectively viewed, would cause serious harm and prejudice to the functioning of the business. It may refuse to disclose commercially sensitive information where it can show that the disclosure may significantly and adversely prejudice the economic and financial position of the company.
References and Sources
Employment Law Meenan 2014 Ch. 15
Employment Law Supplement Meenan 2016
Employment Law Regan & Murphy 2009 Ch.16 ( 2nd Ed 2017)
Employment Law in Ireland Cox & Ryan 2009 Ch.14
Other Irish Books
Employment Law Forde & Byrne 2009
Principles of Irish Employment Law Daly & Doherty 2010
Industrial Relations Act 1946 (No. 26)
Industrial Relations Act 1969 (No. 14)
Industrial Relations Act 1976 (No. 15)
Industrial Relations Act 1990 (No. 19)
Industrial Relations (Amendment) Act 2001 (No. 11)
Industrial Relations (Miscellaneous Provisions) Act 2004 (No. 4)
Industrial Relations (Amendment) Act 2012 (No. 32)
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Employment Law Yearbook (annual) Arthur Cox
Employment Law Reports
Irish Employment Law Journal
Employment Law Review
Dismissal & Redundancy Consolidated Legislation Barrett, G 2007
Irish Employment legislation (Looseleaf) Kerr 1999-
Employment Rights Legislation (IEL offprint) Kerr 2006
Employment Law Nutshell Donovan, D 2016
Employees: Know Your Rights Eardly 2008
Essentials of Irish Labour Law Faulkner 2013
Workplace Relations Commission http://www.lrc.ie/en/
Irish Human Rights and Equality Commission https://www.ihrec.ie/
Health and Safety Authority http://www.hsa.ie/eng/
Textbook on Employment Law, Honeyball, et al. 13th Ed. 2014
Labour Law, Deakin and Morris 5th Ed. 2012
Employment Law, Smith and Wood 13th Ed 2017
Selwyn’s law of Employment Emir A 19 Ed. 2016
Employment law : the essentials. Lewis D Sargeant M and Schwab M 11 Ed.2011
Labour Law Collins H, Ewing K D and McColgan 2012
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Pitt’s Employment Law 10th Ed. Gwyneth Pitt 2016
CLP Legal Practice Guides: Employment Law 2016 Gillian Phillips, Karen Scott
Cases and Materials on Employment Law 10th Ed. Richard Painter, Ann E. M. Holmes 2015
Blackstone’s Statutes on Employment Law 2015 – 2016 Richard Kidner
UK Practitioner Services
Tolley’s Employment Handbook 2017 Mrs Justice Slade 2017
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Blackstone’s Employment Law Practice 2017 Edited by Gavin Mansfield, John Bowers, John Macmillan 2017
UK Periodicals and Reports
The Employment Law Review 8th Ed. Erika C. Collins 2017
Industrial Relations Law Reports
Employment Law in Context: Text and Materials 2nd Ed. David Cabrelli 2016