The European Parliament has published a draft directive that proposes substantial reforms to the 2009 European Works Council Directive. Following successful interinstitutional negotiations between the European Parliament and the Council of Ministers, the text has now reached a stage where it is highly likely to become law.
As we previously outlined, the draft directive's most impactful change is the proposed abolition of "Article 13" and "Article 3" status. These provisions have, for the past three decades, allowed hundreds of multinational businesses to operate outside national European Works Council laws. In this second article, we explore the new legal framework that will apply to all businesses once the directive is enacted.
Context and evolution of European Works Councils
A European Works Council is a body that facilitates information and consultation with European employees of large multinational businesses on transnational issues. EWCs are composed of employees' representatives from each country that is a member of either or both of the European Union and the European Economic Area (Member State), in which a business has employees. They operate separately from national information and consultation bodies.
The concept of an EWC dates from 1994, when Directive 94/45/EC was enacted. That legislation was extended to apply to the UK in 1997 by Directive 97/74/EC and further amended in light of Bulgaria and Romania becoming Member States by Directive 2006/109/EC.
In 2009, and following pressure from the European trade union movement, Directive 94/45/EC was further amended and recast as Directive 2009/38/EC to strengthen the rights of EWCs and their members. To the European trade union movement's disappointment, that legislation has remained unchanged for over 15 years, other than for it to be extended to seafarers by Directive 2015/1794/EC.
The story behind the new EWC Directive
Recent years have seen renewed efforts by the European trade union movement to secure further reforms to Directive 2009/38/EC. These led to the following key developments:
- On 2 February 2023, the European Parliament adopted a resolution approving a report drawn up by the German MEP and former trade union official, Denis Radtke. The Radtke Report called for fundamental and profound amendments to Directive 2009/38/EC.
- On 11 April 2023, the European Commission launched a first-stage consultation of European social partners on a revision of Directive 2009/38/EC. It did so in line with President von der Leyen's commitment that the European Commission would follow up on any resolution by the European Parliament calling for legislative reform.
- On 26 July 2023, the European Commission launched a second-stage consultation of European social partners on a revision of Directive 2009/38/EC. This reflected that it concluded after its first-stage consultation that there was scope for further EU action to improve Directive 2009/38/EC, meaning that it was appropriate for it to consult European social partners on the possible content of this action, based on the potential areas for reform already identified.
- On 24 January 2024, the European Commission published its proposed revisions to Directive 2009/38/EC. Although its proposals did not go as far as the Radtke Report's suggestions, they would still have represented a very significant revision to the current legal framework governing EWCs.
- On 6 February 2025, the European Parliament and the Council of Ministers began interinstitutional negotiations to resolve their different negotiating mandates on how Directive 2009/38/EC should be revised.
The new draft EWC Directive
On 28 May 2025, the European Parliament published the draft directive that it had agreed with the Council of Ministers during institutional negotiations on 21 May 2025. Whilst the draft directive still requires formal approvals, it is now very likely to become law this autumn.
The remainder of this article analyses the draft directive in detail.
Timeline for implementation of the new EWC Directive
The draft directive is likely to become EU law this autumn. Following that, Member States will have a two-year period to transpose its provisions into their national law.
Following the transposition period, there will be a further period of one year before Member States' national provisions become effective and binding on businesses.
The exceptions to this further period are:
- The abolition of "Article 13" and "Article 3" status, which will take place in autumn 2027; and
- The right for either an EWC or a business operating under an EWC agreement that does not comply with the new directive to trigger a renegotiation of their EWC agreement, again from autumn 2027. This renegotiation would be to, as a minimum, amend the EWC agreement to meet the draft directive's standards, such as incorporating provisions on gender balance.
The new draft EWC Directive's provisions
Definition of 'transnational'
The draft directive broadens the concept of a 'transnational' matter. A matter will be considered to be 'transnational' when measures considered by a business:
- can reasonably be expected to affect workers in more than one Member State; or
- can reasonably be expected to affect workers in one Member State and workers in another Member State can reasonably be expected to be affected by the consequences of those measures.
The draft directive's recitals indicate that the second limb by which a matter will be considered transnational is necessary to capture circumstances when a change in one Member State might affect, for example, the operation of the business's supply chain in another Member State. Importantly, it indicates that that effect must be 'substantial', meaning neither 'trivial' nor involving 'ordinary operational decisions'. Nonetheless, whilst the draft directive suggests that its purpose is to 'ensure legal certainty and reduce the risk of...disputes', the meaning of these terms will almost certainly be the subject of future disputes.
Definition of a 'controlling undertaking'
The draft directive expands the definition of a 'controlling undertaking' for the purposes of determining a corporate group by reference to the ability to take decisions in respect of other undertakings.
The draft directive's recitals indicate that the purpose of this expansion is to take into account businesses that operate by, for example, entering into franchise or licence agreements to exert dominant influence over otherwise arms-length undertakings.
Definitions of 'information' and 'consultation'
The draft directive sensibly simplifies the definitions of 'information' and 'consultation'. It does this by removing provisions about how they should take place and inserting them into more onerous standalone obligations. For example, a business will need to respond to any opinion from its EWC on its proposals before deciding on them. For these purposes, an EWC must provide any opinion within a reasonable time of the consultation meeting, having regard to the urgency of the matter. Nonetheless, the meaning of a 'reasonable time' and 'urgency' will almost certainly be the subject of future disputes.
Requests to establish an EWC
The draft directive removes the requirement for employees and their representatives to submit a coordinated request to establish an EWC. Under the new provisions, businesses will be obliged to set up an EWC once the threshold of 100 employees or their representatives - spread across at least two Member States - has been reached, even if the requests are made separately rather than jointly.
Gender balance on Special Negotiating Bodies
The draft directive introduces an objective for the membership of a Special Negotiating Body that will negotiate the terms of an EWC agreement to be gender-balanced, meaning that it should consist of at least 40% men and 40% women. It also provides for the SNB to update employees in writing if this outcome isn't achieved. However, the draft directive gives no guidance on how this objective is to be achieved when national processes run independently of each other in each Member State and employees in most Member States will only elect or appoint one member of the SNB. It is therefore unsurprising that the draft directive confirms that a failure to meet the objective does not prejudice the valid creation of the SNB.
Operation of SNBs
The draft directive requires a business to convene the first meeting of a SNB within six months of receiving a request to set up an EWC. If it fails to convene such a meeting, then subsidiary requirements governing its operation of its EWC will apply to it, irrespective of whether it has expressly refused to commence negotiations. However, nothing in the draft directive provides that such a meeting may not be convened virtually. It appears that a first meeting could therefore take the form of nothing more than a Teams meeting for the business to introduce itself to the SNB.
The draft directive requires a business to convene a 'sufficient number' of negotiation meetings with its
SNB to reach an EWC agreement. However, it is silent on when a business may decide that it will not be possible to reach an agreement and therefore refuse to convene further meetings.
The draft directive also requires SNBs to be entitled to be assisted at a business's expense by legal experts insofar as necessary, provided that their expenses have been notified to the business in advance. Whilst businesses will not be required to fund 'manifestly disproportionate costs' and costs related to 'manifestly unfounded, frivolous or vexatious claims', the draft directive gives no guidance on how a business is to determine whether what it considers to be an unfounded claim against it is 'manifestly' unfounded. However, such guidance might be forthcoming in due course as the draft directive permits Member States to lay down budgetary rules regarding the operation of SNBs.
Content of EWC agreements
The draft directive requires EWC agreements to address numerous additional issues including:
- the format of meetings - this is designed to remove any ambiguity that meetings may take place virtually;
- the possible use and participation in meetings of experts, including legal experts and representatives of trade unions. This is designed to address the frustration of many EWCs that, unlike SNBs, they may not currently be accompanied during meetings; and
- the objective of gender balance even although, as for SNBs above, a failure to achieve this objective will not prejudice the creation of the EWC.
The subsidiary requirements
The draft directive amends the subsidiary requirements that apply to a business if it has failed to conclude a negotiated EWC agreement, including as follows:
- the EWC's remit will be expanded to cover skills and training processes, and the anticipation of change and management of restructuring processes, including those linked to green and digital transitions;
- the EWC will be entitled to meet with the business twice a year in person, with these regular meetings only able to be held virtually in exceptional cases and with the EWC's consent;
- the EWC will be entitled to be accompanied by its experts at meetings between the EWC and the business, so long as the EWC has informed the business of their attendance in advance; and
- the reasonable costs of legal experts must now be met by the business as part of an EWC's operating expenses, provided that these are notified in advance.
Confidentiality
The draft directive attempts to stop businesses applying confidentiality restrictions in an unduly broad manner. In particular, it requires any imposition of confidentiality to be justified according to objective criteria to be specified by Member States as necessary to protect the legitimate interests of the business. It also requires businesses to justify their imposition of confidentiality and to indicate when the obligation to maintain confidentiality will end.
Withholding of information
The draft directive requires a business to justify any withholding of information on the grounds that it is so sensitive that it cannot even be shared confidentially, on the basis that to do so would cause it serious harm. However, it is unclear how a business can communicate such a justification to its EWC. The challenge lies in enabling the EWC to scrutinise the decision, without revealing the existence or nature of the underlying matter, which could itself trigger the very harm the withholding is intended to prevent.
Protection of representatives and trainin
The draft directive clarifies that SNB members must have the 'means required to apply the rights arising' from the directive and to represent collectively the interests of employees. As such, it extends the scope of an existing right currently only enjoyed by members of an EWC. However, the draft directive gives no guidance on the subject matter of ongoing litigation before the Irish High Court as to what is meant by the term 'means required', and whether it concerns members having capacity to enforce their rights against businesses or businesses having to provide them with resources of some kind.
The draft directive also provides that members of an EWC will be entitled to communicate with employees' other representatives or, in their absence, directly with employees both before and after meetings with the business. Businesses will therefore need to consider classifying their proposals as confidential if their employees might otherwise first hear about their proposals from members of an EWC, instead of in accordance with the business's communications plan.
Enforcement
The draft directive provides for a tougher framework of enforcement against and penalties for businesses that breach their obligations. In particular, Member States will be required to implement a framework under which penalties are set having regard to the gravity, duration, consequences and intentional or negligent nature of breaches. Financial penalties will need to take into account the annual turnover of the business.
However, the draft directive falls far short of earlier proposals put forward by the European Parliament for GDPR-scale fines of up to 4% of a business's turnover for intentional breaches and for injunctive relief to be available to prevent a business from implementing its proposals if its EWC believes that it has not been properly informed and consulted.
Costs of legal action against businesses
The draft directive provides that Member States must ensure that, if an SNB or EWC takes legal action against a business, then the business must provide it with its reasonable costs of legal representation, or the Member State must implement another measure to ensure that the SNB or EWC is not unable to pursue its actions by reason of a lack of financial resources.
Preparing for what's ahead
Whilst the draft directive heralds a more onerous legal framework for businesses with an EWC, it does not represent the whole new world sought by the European trade union movement. Ultimately, EWCs will remain mere information and consultation bodies. Their powers have not been strengthened so as to entitle them to conduct consultation with a view to reaching or seeking agreement, as is the standard of consultation set out in the Collective Redundancies Directive and the Acquired Rights Directive. The European trade union movement's hope for EWCs to enjoy a right of co-determination by the back door, by way of being able to force businesses to negotiate with them or else risk being injuncted and GDPR-scale fines, have been dashed.
Although not yet enacted, the draft directive proposes sweeping changes to nearly every aspect of how EWCs are established and operate, with wide-reaching implications for all businesses. Nevertheless, until the directive formally becomes EU law, we consider it generally premature for businesses to take proactive steps - unless there is a compelling reason to do so. Such reasons may include:
- The business is currently engaged in a SNB process;
- It wishes to merge two EWCs following a corporate transaction; or
- It is already in the process of renegotiating its existing EWC agreement or it is requested by its EWC to do so.
In these cases, negotiations should be approached with the draft directive in mind, ensuring that any new EWC agreement aligns with the formal requirements set out in the proposed legislation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
