UK: UK FIRMS HANG BACK OVER EUROPEAN WORKS COUNCILS. - It's now nearly eight months since the European Social Affairs Council in Brussels adopted the Commission's Directive 94/45/EC on the establishment of European works councils. This means that compani

Last Updated: 31 Aug 2010

It's now nearly eight months since the European Social Affairs Council in Brussels adopted the Commission's Directive 94/45/EC on the establishment of European works councils. This means that companies caught within its scope have barely 16 more months in which to seek to evade the directive by reaching a voluntary agreement with their Continental workers. (If they choose this route, they must also, in practice, decide whether to include British employees as well.) Alternatively, they may have to consider whether they're prepared to hold out against bureaucratic meddling by ignoring the directive, possibly until they are forced into line - which might not be until near the end of the century.

Not that many managers, anywhere in Europe, have been throwing their hats in the air. The directive was opposed by employers right across the EU, if for no other reason than that it promised to make European businesses less competitive vis-a-vis the Americans and Asians. The British at least had the limited protection of the Maastricht 'opt out', unless, of course, they happened to be substantial 'Community-scale' businesses with at least 150 employees in each of two member states not including the UK. The definition trapped maybe as many as 300 UK businesses.

Most British companies, like their competitors elsewhere, have been trying quite seriously to improve the quality of their internal communications. But the British, more than most others, are haunted by the four decades of intermittent class warfare that bedevilled the country's industrial performance after 1945: not just the strikes, official and wildcat, nor the leap-frogging wage hikes and the endless negotiating over trivialities, but the time that these things absorbed and the deadening influence they had on initiative and morale. Some company bosses think that the requirement to form a European works council, which could well possess legal rights to consultation on such matters as investment and redundancy, means handing too much power back to trades unions.

Hence the statement of one (unnamable) big company chairman that he will fight the directive as far as the European Court if necessary. He is not alone in being coy about his identity. When the Institute of Directors polled 44 major companies on the subject earlier this year, all wished to remain anonymous. But industrialists are increasingly prepared to speak their minds. John Gardiner, chairman of The Laird Group, is accustomed to high-level worker representation in his German and French operations but regards a Europe-wide works council as irrelevant because the group's 25 subsidiaries have quite distinct activities. At the same time, it's a distraction. 'It's another of those European bureaucratic things ... It's not about business, it's about administrative bureaucracy.' If obliged to, says Gardiner, Laird will react, 'but I imagine we would be quite late'.

TI Group is another hanger-back. 'We are looking to see how it develops,' says executive director Anthony Sumner. 'With good arrangements for representation of employees in each country, we see no need to rush at it.' Besides, some aspects of the directive are far from clear. TI has an important 50-50 joint venture with Snecma of France. Assuming that both parents have European works councils, to which one should Messier-Dowty's French and British employees send their representatives? The more complex the organisation, the more imponderables there are to weigh. BTR, for example, owns Continental businesses which bring it within the scope of the directive. The group also has major undertakings in America and Australasia, which are no concern of any European workers' representatives. So what position should it take? 'It has not yet been decided,' replies personnel director Barry Williams.

In the services sector the decision may be less fraught, since the question of switching production from A to B - which is what principally alarms workforces in manufacturing - is unikely to arise. Rentokil Group has subsidiaries in all the EU countries. Each one operates separately, and has its own form of representation, often dictated by local law. 'I don't see any need to have a European works council,' says chief executive Clive Thompson. If Brussels demands one, then so be it. But Thompson thinks it 'highly unlikely that we would set up a UK works council in order that it should be part of a European works council'.

Elsewhere, reluctance to disenfranchise UK workers - by leaving them unrepresented within a European works council structure - has led some businesses, in effect, to swallow the Maastricht Social Policy whole. 'GKN is working to achieve a European works council, including our UK employees, within the voluntary period,' confirms Trevor Bonner, managing director of the group's automotive driveline components division. 'It would be inconceivable not to involve our UK employees,' says Bill Shardlow, human resources director at Coats Viyella. Coats is also looking to pre-empt the directive by reaching agreement with its employees - and not merely their trades unions - before September 1996.

Tim Melville-Ross, director general of the IoD, argues, on the contrary, that 'British companies should take full advantage of the opt-out provisions, and simply exclude their UK operations from any [European] works councils' which they are required to set up. 'The best way forward would be to renegotiate the directive.' This is not impossible, Melville-Ross believes, since the Commission recognises that the directive is irrelevant to the primary aim of getting people back to work.

Unhappily, all governments are capable of facing two ways at once. And Brussels has few precedents for legislative backtracking.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

A simple cure for impostor syndrome

Opinion: It's time to stop hero-worshipping and start figuring out what greatness looks like to...

I was hired to fix Uber’s toxic culture - and I did. Here’s ...

Harvard’s Frances Frei reveals how you know when your values have gone rotten, and what...

Social responsibility may no longer be a choice

Editorial: Having securitised businesses’ loans and paid their wage bills, it’s not inconceivable the government...

What went wrong at Wirecard

And how to stop it happening to you.

Leadership lessons from Jürgen Klopp

The Liverpool manager exemplifies ‘the long win’, based not on results but on clarity of...

How to get a grip on stress

Once a zebra escapes the lion's jaws, it goes back to grazing peacefully. There's a...