UK: Initiatives in European Employment Law

Paul Goulding QC and Jane Mulcahy of Blackstone Chambers round up various initiatives emanating from Europe, beginning with the concept of "social mediation".

The Commission is to consult on the possibility of establishing European-level voluntary mechanisms for conflict resolution.

The Commission has been working on the topic for a number of months. At the same time, the idea of "social mediation" was promoted independently by the Belgian presidency.

EU Commissioner for employment and social affairs, Anna Diamantopoulou, told a Brussels conference that the Commission will shortly bring forward a discussion paper on social mediation. She saw European-level conflict resolution as being particularly useful in a number of areas including disputes between European Works Councils ("EWCs") and central company management, and issues arising from company restructuring.

However, European-level mechanisms would be concerned only with matters of a collective nature. Disputes concerning individual employment relations would continue to be dealt with nationally.

Any initiatives are more likely to be in the nature of conciliation and mediation than arbitration and would be on a purely voluntary basis. Even a limited degree of compulsion, as is the case in some Member States, would probably render any solution unattractive.

In relation to disputes between EWCs and management, Ms Diamantopoulou said that there were now about 650 agreements in place which provided for "transnational interaction" between employer and employee. She expected more transnational agreements as new European companies were developed: these agreements were likely to be more complex and difficult to negotiate. EU-level dispute resolution could therefore have a role to play in assisting management and employees to interpret existing agreements or in helping them reach an agreement in the first place.

EU-level mediation might also be of help in relation to those agreements between the social partners which have become Community law, for example parental leave, part-time work and fixed term contracts (see further below). Until now the social partners have requested that any matter relating to the interpretation of these agreements at European level should first be referred to the Commission for an opinion. Ms Diamantopoulou considered that EU-level mediation might be a more useful forum when differences on questions of interpretation arise – or even in helping to conclude such agreements in the first place.

Issues stemming from the consolidation and restructuring of companies may also be suitable for mediation. Restructuring often involves companies with bases in a number of Member States and may be extremely contentious if companies fail to comply with their social and/or legal obligations. Ms Diamantopoulou acknowledged that "the potential willingness of the parties to submit the issues that arise in such situations to EU level mediation is unclear". However, anything that might help diffuse such situations deserved consideration.

The most likely approach to EU-level mediation would be the possible nomination of a panel of mediators from which parties themselves could select someone to mediate in their dispute. However, the practicalities would become clearer in the course of the formal consultation with workers and management.

The European Parliament adopted a range of amendments to the proposed Directive for Informing and Consulting Employees in the European Community ("the Consultation Directive") (see ELA Briefing, vol. 8, no. 9, August 2001) at its plenary session in October 2001. However, on 17 December 2001 a conciliation committee of representatives of the Parliament and Council of Ministers ultimately agreed to only minor changes.

Final adoption of the Consultation Directive will require the formal ratification of the joint text by the Parliament and Council, probably in February 2002. Once the final text is published Member States will have until early 2005 to implement its requirements.

Parliament’s amendments had aimed to introduce more specific requirements for employers to inform and consult, reversing concessions won by the UK and Irish governments when the common position was agreed by the Council of Ministers in June 2001. Nevertheless, a proposal to strengthen the sanctions to be imposed for failure to comply with the Consultation Directive did not receive sufficient backing from MEPs.

The European Trade Union Conference considered that the amendments would remedy the weaknesses of the Consultation Directive. But the UK employers’ organisation, the CBI, said the proposed amendments were "highly damaging". It said it would lobby MEPs vigorously in order to get the proposed amendments dropped.

Amendments adopted by the MEPs included:

• An extended definition of "information" to include all relevant data.
• Consultation should take place during the planning stage of a decision in order to ensure the procedure is effective and to allow the decision-making process to be influenced.
• Employee representatives should be informed about the organisation’s economic and financial situation, particularly as regards investment, production, sales and structure as well as strategic plans.
• If the implementation of a decision will have significant adverse consequences for employees, the final decision must be postponed for an appropriate period at the request of the employees’ representatives so that consultations may continue.

Not all of these were acceptable to the Council. The compromise reached in the conciliation committee on 17 December 2001 involves just four amendments to the Council’s original position:

• Reduction by one year of the transitional period within which countries without existing systems of information and consultation may phase in the Consultation Directive’s requirements.
• A new "recital" that penalties for the infringement of the Consultation Directive’s obligations should be "proportionate in relation to the seriousness of the offence".
• An additional recital noting that the restriction of the Consultation Directive to organisations of a certain size "is without prejudice to other national measures…aimed at fostering social dialogue within companies not covered by this Directive…".
• A drafting change clarifying the term "information".

The Government has produced a second draft of regulations to implement the Fixed Term Work Directive (No.99/70/EC). A twelve week consultation period on the new Fixed Term Employees (Prevention of less favourable treatment) Regulations 2002 ("the Regulations") began on 21 January 2002. Comments should be received by the Department of Trade and Industry ("DTI") by 15 April 2002. (The regulations are available on the DTI website, www.dti.gov.uk/er/fixed/index.htm, or on 0870 1502 500.)

The aim of the Fixed Term Work Directive is to (1) improve the quality of fixed term work by ensuring the application of the principle of non-discrimination and (2) to establish a framework to prevent abuse arising from the use of successive fixed term employment contracts.

The Fixed Term Work Directive is due to be implemented in the UK by 10 July 2002. The Regulations are therefore intended to come into force on that date.

The Government intends the Regulations to apply to "employees" rather than "workers". However, excluded from the category of "employees" are apprentices, some employed on training programmes, agency workers and the armed forces.

The central tenet of the Regulations is that fixed term employees should not be treated less favourably than permanent employees in relation to terms and conditions of employment unless there is an objective reason to justify the less favourable treatment. An employee should look to an actual comparator to measure less favourable treatment. However, less favourable treatment of a particular contractual term can be justified if the fixed term employee’s contractual rights are, as a whole, not less favourable.

Following the first period of consultation the Government has decided that the non-discrimination principle in the Regulations will cover pay and pensions, even though it is of the view that the Fixed Term Work Directive does not.