Joint Committee on Enterprise, Trade and Employment debate -
Wednesday, 8 Feb 2023

European Work Councils and Legislative Provisions for Dispute Procedures: Discussion (Resumed)

Chairman

I remind all those present in the committee room that they are asked to exercise personal responsibility to protect themselves and others from the risk of contracting Covid-19.

Members who are participating in the meeting remotely are required, as they are well aware, to participate from within the Leinster House complex only. Apologies have been received from Deputy Shanahan.

Today, we will discuss European work councils, EWCs. European work councils are bodies that facilitate information and consultation with European employees on transnational issues. EWCs are subject to the law of the member states in which they are located. They allow workers to be informed and consulted by management on the progress of the business and any significant decisions at European level that can affect their employment or working conditions. Today we will discuss the impact of Brexit on EWCs based in the UK, Irish legislation relating to European work councils and related issues. I am pleased that we have the opportunity to consider these matters further with the following representatives. I welcome Dr. Jonathan Lavelle, senior lecturer in employment relations at the department of work and employment studies, Kemmy Business School, University of Limerick; Dr. Werner Altmeyer, managing director of the EWC Academy in Hamburg, Germany, who is joining us online; and Mr. Philip Sack, director, EWC Legal Advisers.

Before we start, I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected, pursuant to both the Constitution and statute, by absolute privilege. Witnesses are again reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that may be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such directions I may give.

The opening statements will be circulated to members. To commence our consideration, I invite Dr. Lavelle to make his opening statement.

Dr. Jonathan Lavelle

I thank the committee for the invitation to discuss European work councils, EWCs, and legislative provisions for dispute procedures. I am a senior lecturer in employment relations at the department of work and employment studies, Kemmy Business School, University of Limerick. My research interests are focused on employment relations, with a particular interest in multinational companies, MNCs. Along with colleagues at the department of work and employment studies, I have undertaken a number of research projects on MNCs in Ireland, for example, Employment Relations in Multinational Companies: Cross-National Comparative Analysis, Multinational Corporations, Sub-national Governance and Human Resources, and American Multinationals and the Management of HRM in their European Subsidiaries. EWCs have featured as a sub-theme in many of these projects, but for many reasons they tend to be under-researched in the Irish context.

European work councils are institutions that bring workers across Europe together to be informed and consulted by central management about transnational issues within the company. EWCs were introduced via the EU directive on the establishment of a European works council, 94/45/EC, in 1994, with a recast of the directive in 2009, 2009/38/EC. The directive was transposed in Ireland in the Transnational, Information and Consultation of Employees Act 1996 and subsequent amendment in 2011, SI 380/2011. The purpose of an EWC is to provide workers with information and consultation rights in companies on issues of a transnational nature. This includes issues such as the economic and financial situation of the company, closures, mergers, new technologies, relocation and changes in employment.

Drawing on the European Trade Union Institute, ETUI, European works councils database, more than 1,200 EWCs are in operation, representing approximately 50% of eligible MNCs. EWCs are primarily found in the metal, services and chemical sectors. The countries where EWCs are headquartered are Germany, USA, France, UK and Ireland, with 11. The number of EWCs located in Ireland has been relatively low, with the result that they have received little attention in comparison with other employee representative structures. However, Brexit has acted as a

catalyst for a significant increase in the number of EWCs located in Ireland. The UK was a common location for EWCs for non-EU headquartered MNCs, for example, MNCs from the USA or Japan. Non-EU headquartered MNCs have the option to choose a location for their EWC. With Brexit, EWCs can no longer be headquartered in the UK and, therefore, MNCs needed to transfer their EWC to another EU member state by 31 December 2020. Ireland has been identified as a location of choice by many MNCs looking to relocate their EWC. This was not surprising, with many industrial relations practitioners such as trade unions and employer groups predicting an influx of EWCs into Ireland post Brexit. Industrial Relations News estimates that as many as 100 EWCs may have relocated from the UK to Ireland. This represents a significant increase in the number of EWCs located in Ireland and has arguably, for the first time, put a spotlight on EWCs in Ireland.

One implication of the influx of EWCs to Ireland is that it has drawn attention to a concern around how disputes relating to EWCs are processed and resolved. SIPTU flagged concerns going back to when the legislation was originally introduced in the mid-1990s but the issue has come to the fore again in the past three years. As previously reported by many experts, a key limitation of the legislation transposing the EU directive on EWCs in Ireland into law is that the normal industrial relations dispute resolution machinery in Ireland, the Workplace Relations Commission, WRC, and the Labour Court, do not apply. This is unusual within the Irish industrial relations environment as both agencies are responsible for resolving industrial relations and employment rights disputes in Ireland. The omission is also unusual in the context of the transposition of similar EU directives such as the Employees (Provision of Information and Consultation) Act 2006, which transposed the EU directive on information and consultation, 2002/14/EC, and provides access to the WRC and Labour Court in disputes. The WRC and Labour Court have a positive reputation among all stakeholders in the resolution of industrial relations disputes in Ireland. For many commentators, the provisions for dispute resolution in the EWC legislation are not fit for purpose. Trade unions, employers, employer groups and industrial relations practitioners have all campaigned for this issue to be addressed. SIPTU lodged an official complaint with the European Commission in March 2021 and the Commission subsequently issued an infringement notice to Ireland regarding the implementation of the directive, 2009/38/EC. Specifically, the Commission noted concerns around the enforcement of rights. More broadly, a review by the ETUI on the transposition of the EWC directive across member states also notes concerns around enforcement and sanctions associated with EWCs across countries. It appears that there is a consensus among trade unions, employers and industrial relations experts that there is a straightforward solution to the problem of EWCs and dispute resolution in Ireland, which is to amend existing legislation to include access to the WRC and the Labour Court to help resolve disputes relating to EWCs.

While the history of EWCs as a concept dates back to the 1960s, the subsequent introduction of such an institution in the mid-1990s means that this structure of employee representation is largely in its infancy. Attempts are ongoing to try to develop this institution as a forum for employee voice at a transnational level. This is quite a difficult task, so it was no surprise that a recasting of the directive took place in 2009. A summary of changes introduced by the recast directive in 2009 includes clearer definitions of "information", "consultation" and "transnationality", employers' obligation to provide training and the presence of experts and changes to the subsidiary requirements, among others. EWCs continue to be the subject of examination and debate. For example, the ETUC points to problems relating to employers frustrating the establishment of EWCs, a lack of proper information and consultation and the misuse of confidentiality clauses. BusinessEurope, on the other hand, sees no reason for a revision of the directive, citing concerns around the impact changes may have on decision-making, social dialogue within the company and enforcement penalties.

On 2 February, the European Parliament voted to adopt a report led by Dennis Radtke MEP to further strengthen EWCs. Proposals set out in this report include the need for timely and effective information and consultation for worker representatives, strengthening subsidiary requirements, clarifying the scope of confidentiality, improving dispute resolution, ensuring penalties are effective, dissuasive and proportionate, ending the exemption of pre-directive agreements and ensuring better access to justice. The European Parliament has called on the European Commission to take action. We are likely to see more debate and changes to EWCs in the future.

Dr. Werner Altmeyer

I thank the committee for the invitation. I watched the discussions in the committee last year in June with great interest. I will speak slowly because I am not a native speaker. I will briefly introduce myself. I have been working with EWCs full time for 25 years and wrote my doctoral thesis on the subject. For ten years, I have been the managing director of the EWC Academy in Hamburg, Germany, which is a private limited company providing training, conferences and consultancy services for employee representatives, as well as a quarterly bulletin on EWC issues in three languages. We have no official connection with trade unions but all our consultants have professional experience in trade union-related institutions or as members of works councils. We have worked with larger EWCs such as Airbus, Unilever and Zurich Insurance but mostly work with smaller councils representing up to 20,000 workers in Europe in the electrical, automotive, pharmaceutical, packaging, finance, transport and IT sectors in a variety of jurisdictions.

This includes USA companies that were already operating under Irish law before Brexit, or Bombardier, a Canadian business jet manufacturer with a European works council, EWC, based near Belfast Airport under the law of Northern Ireland at the time. We are currently owrking with the Verizon EWC under Irish law.

I will give some EWC figures as examples. According to the database of the European Trade Union Institute in Brussels there are currently some 1,200 EWCs, more than 500 of them with Irish delegates. Unfortunately, one cannot find reliable statistics on post-Brexit changes. I estimate that Ireland now ranks third in the EU in terms of the number of companies under the respective law. Germany hosts nearly 25% of all European works councils, France 15% to 20%, and Ireland 12% to 15%. I do not know the exact figure - it may be 140 to 180 companies - but only 11 of those are proper Irish companies like Smurfit Kappa, Kerry Group or Aer Lingus. One can identify the names when looking at the online database. No. 4 is Sweden with less than 6%. Many EU member states have only a handful of EWCs or none at all.

On whether multinational companies can choose the country in which the EWC is based, any company with global headquarters in an EU member state must locate the EWC there. Companies from third countries such as the USA, Canada, Japan, Switzerland, and the UK after Brexit, are free to choose the national law, the location and a legal entity, which is called the representative agent.

On whether a company must have many employees in a particular country to locate the EWC there, the answer is "No". It is possible to choose Irish law without having a single employee in Ireland, without having an office space in Ireland and without paying one euro of tax in Ireland. There are examples like this from Luxembourg. I personally know a company that has thousands of employees in Europe but only 29 in Ireland and the EWC has been based in Ireland. Consequently, there is no automatic link and maybe no impact at all with the labour market at the seat of the EWC. Do EWCs in Ireland have to hold their meetings in Ireland? The answer is "No". Meetings can take place anywhere; in Paris, in Brussels, in Berlin or in Bucharest. Last year I even attended meetings in Switzerland and England. Meetings might never take place on Irish soil, and that is legally fine.

National law only has meaning when it comes to legal disputes. I shall outline what legal disputes might arise. In practice, conflicts repeatedly arise over the functioning or the operation of the EWC; the competence of the EWC in transnational issues; the scope of information and consultation during a restructuring process; the extent of the reporting obligation on business data; and confidentiality. However, the overall number of court cases is not very high. I will outline some practical examples of what might come up in court disputes. The first example is that EWC members may have training needs and central management does not want to pay for it.

A complaint then has to be made to the Workplace Relations Commission in Ireland. The Workplace Relations Commission requires each side to bear its own costs. What does this mean for a workers’ representative from Bulgaria or Portugal, for example, with no legal training or proper understanding of the procedure? Who pays for the interpreter and, if no remote hearing is arranged, for flight, hotel and meals? The company, however, has access to leading firms of solicitors and eminent barristers, the cost of engaging whom can be written off against tax.

Another example is a US company that wants to close sites in Spain and refuses to involve the EWC. Such a court dispute has actually taken place, once in Germany and another case in the Netherlands. In such cases the EWC has to act quickly and needs a short-term and enforceable decision from a court. Does Irish law provide for this? I have some doubts.

A third example is when one side wins a case in the Workplace Relations Commission or Labour Court and the other side can appeal, possibly all the way to the Supreme Court. Who pays solicitors and barristers for the EWC? If the EWC loses, costs of over €100,000 may be incurred. Will the EWC chair, lets us say from Slovenia, then have to sell his or her private home to pay the company’s solicitor and barrister in Ireland? Even if central management ends up being ordered to pay all the EWC’s legal fees, that can take years. What lawyer in Ireland is willing to take such a risk and wait years for payment?

These three examples show that it is not just about a small detail of EWC law, but about the principle of the rule of law as such. If a law is valid, framework conditions must be implemented so that all parties involved can enforce the law in court. The party in EWC disputes is not an individual workers’ representative, but the council as a collective body without having its own budget.

Chairman

I thank Dr. Altmeyer whose time has run out. The rest of his statement will be noted via the submission he made to the committee. He will be free to come back in when members raise questions. We will move on now to the next witness.

Dr. Werner Altmeyer

Okay. I thank the Chairman.

Chairman

I invite Mr. Sack to make his opening statement.

Mr. Philip Sack

I thank the Chairman for this opportunity to address the committee. I have sent the committee a briefing paper setting out what I am about to say in more detail. I am director of EWC Legal Advisers. I specialise in providing advice, support and training to European works councils, EWCs. I have been working in this area for a little over 20 years. From 2001 to 2005 I was assistant director in the Department of Trade and Industry - as it was then called - in London with responsibility for EU and UK legislation on employee involvement, including European works councils. I devised the enforcement scheme in the UK information and consultation regulations, which was subsequently adopted by the EWC legislation – the transnational information and consultation of employees regulations. I believe the title was stolen from the Irish law. This enforcement regime involves bringing almost all disputes relating to EWCs to a body known as the Central Arbitration Committee, through a civil procedure. Since 2005 I have been in the private sector advising in the area of EWCs, initially on the employer side, but now exclusively on the employee side, including bringing several legal complaints on behalf of EWCs to the Central Arbitration Committee. I have a fairly good knowledge of EWCs and of the enforcement regime in the UK.

In the run up to the EU referendum in the UK in 2016, I started looking much more closely at the Irish legislation on EWCs, the Transnational Information and Consultation of Employees Act 1996, because I could see that if the UK voted to leave the EU it was very likely that a lot of companies with EWCs based in the UK would seek to move them to Irish jurisdiction, and that is exactly what has happened, as we have heard. I do not know the precise number but I believe there are dozens of companies that have appointed a representative agent in Ireland in order to make their EWC subject to the Transnational Information and Consultation of Employees Act 1996.

I confess that what I read in the Act about enforcement surprised me, and I became more surprised when I contacted the Workplace Relations Commission, the Department of Business, Enterprise and Innovation, and its successor the Department of Enterprise, Trade and Employment, to ask how the enforcement regime would work in practice. I cannot see how the enforcement regime in the Transnational Information and Consultation of Employees Act 1996 complies with the EWC directive. Specifically, Article 11 of the directive requires member states to ensure that the management of establishments or undertakings situated within their territory “abide by the obligations laid down by [the] Directive”. It also requires member states to provide for “appropriate measures in the event of failure to comply” with the directive, ensuring that “adequate administrative or judicial procedures are available to enable the obligations deriving from [the] Directive to be enforced”. As a general principle of EU law, reflected in Recital 36 to the directive, “administrative or judicial procedures, as well as sanctions that are effective, dissuasive and proportionate in relation to the seriousness of the offence, should be applicable in cases of infringement of the obligations arising from [the] Directive”.

The Transnational Information and Consultation of Employees Act 1996 provides for enforcement of the subsidiary requirements, namely the rules that apply in the absence of an EWC agreement, and certain other obligations, through criminal enforcement by the Workplace Relations Commission, WRC. Criminal prosecution requires a high standard of proof, which must be beyond reasonable doubt. This is not suitable for the type of breach that would typically be in dispute under the subsidiary requirements. I refer, For example, to: whether adequate information had been provided by management to enable the EWC to undertake an in-depth assessment of the possible impact; whether that information had been provided early to allow that assessment ahead of a meeting with management; whether management should have consulted the EWC at an earlier stage in the decision-making process; whether an issue involved a substantial change concerning organisation, or whether employees interests were affected to a considerable extent. Many of these are questions involving fine judgments and are not at all clear-cut. To have to prove them beyond reasonable doubt in a criminal prosecution seems like using a sledgehammer to crack a nut. The same could be said of the other offences subject to prosecution under section 18 of the Act.

I was told by the WRC that it had absolute discretion regarding whether to bring a prosecution under the Act, and that it would weigh various factors when deciding whether to do so, one of which was the efficient use of resources. I can understand that the WRC would not want to use its resources inefficiently, but I do not see how that ensures that obligations deriving from the directive can be enforced. I was also told that the District Court in which a prosecution may be brought could not order any remedy where a company had breached the subsidiary requirements. All it can do is issue a penalty. That penalty is rather low, a few thousand euro at most. I do not see how that can be said to be effective, proportionate or dissuasive.

On the enforcement of EWC agreements, this is exclusively through private or court-appointed arbitration under section 21 of the Act. However, I understand that regulations have still not been made under section 7 of the Act regarding the powers and procedures of arbitrators, the conduct of arbitration proceedings or the expenses to be borne by central management. Also, as has been mentioned, the Act states that the parties must bear their own costs in arbitration. Therefore, as matters stand, it is unclear whether it is even possible to seek arbitration under the Act, it is unclear what procedure should be followed, and it is unclear what powers an arbitrator would have, for example, to order remedies or impose a penalty for breach of an EWC agreement.

The threat of having to cover their costs will also act as a severe deterrent to any EWCs wishing to bring disputes. Similar comments could be made about disputes regarding the confidentiality rules in section 15 of the Act, but the situation here is even worse because a dispute can only be brought where it involves Irish employees or their representatives. This seems to discriminate against other EU employees. I note that the obligations on central management regarding special negotiating body, SNB, negotiations in section 11 of the Act are not enforceable at all. This is the subject of related infringement proceedings by the European Commission, as is the issue of confidential information disputes.

In terms of recommendations, it seems that the best enforcement regime would involve civil proceedings, brought by the complainants themselves, for example, the SNB or the EWC, to a specialised body with expertise in industrial relations. The Labour Court or the WRC are the obvious candidates. There should be the possibility of an effective remedy, such as an order by the court or the WRC against central management, requiring it to make good its breach of the legislation or of the EWC agreement. There should also be a financial penalty that is proportionate to the nature of the offence but also dissuasive. It seems to me that the enforcement regime in the Employees (Provision of Information and Consultation) Act 2006, involving the Labour Court and the WRC, provides a good and ready-made model. Alternatively, the initial enforcement role for all obligations could be given to the WRC, with a combination of mediation and adjudication of disputes, and possible appeal to the Labour Court on points of law.

Chairman

I remind members who are participating remotely to use the raise hand feature and, importantly, to cancel it when they are finished speaking. Deputy O'Reilly is sharing time with her colleague, Senator Gavan. They have seven minutes each.

Deputy Louise O'Reilly

My colleague might take his time all together and I will take mine. I ask our guests to what extent they believe the lack of collective bargaining rights for workers in this State has had a role in attracting companies to establish the legal basis of their EWC in Ireland, most especially those that have moved from Britain to Ireland post Brexit?

Mr. Philip Sack

It has not been an important factor for companies. By far the most important factor in companies transferring from the UK to Ireland would be the similarity of the general legal regime, the English language and, as a bonus, the rather helpful legal regime for employers.

Deputy Louise O'Reilly

That is a nice way of putting it. I might choose other words but I will not do so today.

Dr. Jonathan Lavelle

I share that view. That seems to be the case and that seems to be the attraction. Many of these are US multinational companies, and we are a liberal market economy that is similar to the US so there would be a lot of cultural and institutional similarities.

Deputy Louise O'Reilly

I ask Mr. Sack to elaborate further on the enforcement of subsidiarity requirements and other obligations through criminal enforcement by the WRC, including the difficulties that this causes in regards to proving a breach. I have already said I am a former trade union official, as is my colleague, Senator Gavan, and that is quite a high bar that has been set. I ask Mr. Sack how this compares with European best practice.

Mr. Philip Sack

In my briefing note, I set out a number of problems with the procedure, and this is compliant to breaches of the subsidiary requirements and a limited number of other breaches, which are prosecutable as offences. I mentioned the fact that this is a criminal prosecution with a high standard of proof, which will be difficult for the WRC to prove, given the nature of the offences, and I have described some examples which could almost amount to a difference of view.

Let us say there is a difference of view over whether information should have been provided to the EWC one week in advance of the meeting. Would that have given it adequate time or was two days in advance enough time? One can see very fine judgments involved. That is a typical sort of dispute that could come up under the subsidiary requirements. I have been involved in a number of cases in the UK where we brought disputes about exactly these sorts of points and it seems to me that a civil standard of proof, which is on the balance of probabilities, is a much more appropriate procedure for this type of offence. This applies in the UK but I cannot speak for the rest of Europe.

There was also the fact that an EWC would have to rely on the WRC to bring the dispute on its behalf. It cannot bring the complaint on its own behalf and make its own case in court. It has to rely on the Workplace Relations Commission to do it and the WRC may not even be willing to do it, in the first place, because of all the factors that it weighs up, including efficient use of its resources. Those, plus the absence of an effective remedy and the rather low financial penalty that would apply for a breach, are reasons I do not see it as appropriate.

Deputy Louise O'Reilly

I do not see how that scenario could arise with the WRC given its resources. Anyone waiting to have a case heard will know that resources are very stretched. It would be hard, notwithstanding the merit of the claim, to see that the WRC would plough a large amount of resources into taking such a case for that reason.

I have some questions for Dr. Lavelle. How unusual is it for the normal industrial relations dispute resolution procedures not to apply when it comes to EWCs? How has this happened? How have we got to the position where it has been allowed to persist? We have heard from people, trade unions, employers and other groups. Everybody is campaigning for the issue to be addressed, yet there is a reluctance to do so. How did we get here? We know it has been allowed to persist. Even though I do not see anybody necessarily coming out to cheerlead and support it, we still find ourselves in the same position.

Dr. Jonathan Lavelle

I am not entirely sure how we got to this position. European works councils, particularly in an Irish context, are very new. Information and consultation rights are very new in an Irish context. While they are in their infancy at a European level, they are especially so in the Irish context. We are trying to figure out how this works with regard to enforcement and the like. This is not just an Irish story. If one looks across Europe, there is a lot of variability in the area of enforcement. Concerns around enforcement and variability across European countries are among the key issues around campaigns for updating the directive again. This is a very new institutional structure that we are still trying to figure out. It is contested as we know and because it is contested, we are still trying to figure it out. It is going to be subject to further debate on the back of, for example, the European Parliament's recent report.

Deputy Louise O'Reilly

It is still being bedded in and we are a little bit further behind than others. Is that correct?

Dr. Jonathan Lavelle

Yes. There are some interesting reports that have looked at enforcement in the comparative context. It is very difficult to follow up because some countries are doing this and other countries are doing that. That seems to be characteristic of this particular issue.

Senator Paul Gavan

I thank all the speakers for their presentations. I want to put this in context and get to the nub of the issue. After those infringement proceedings began last May, I tabled a Commencement matter in the Seanad. The Minister of State in the Department of Enterprise, Trade and Employment who responded blankly told me there was no problem and nothing to see here.

That was after the infringement proceedings began. Do the witnesses have any views as to why that would be the case? It strikes me that there is a real reluctance on the part of the Department to deal with a relatively simple issue. What is the fix? There seems to be a large degree of commonality among the three witnesses on having a simple fix along the lines suggested by Dr. Kevin Duffy, the former chairperson of the Labour Court. That fix is to simply extend the remit of the Workplace Relations Commission and the Labour Court in relation to these issues. This is clearly not a priority for the Department. Not only that but the Department is going out of its way not to deal with it, in my opinion. We had a spokesperson from the Department in a few months ago and all she would say was that officials were talking to the Commission. I want to get to the heart of this reluctance and the fix for it.

Mr. Philip Sack

Having in a previous career role worked for the UK Government, I know there is very often a reluctance to change the law unless one is forced to do so. We had similar issues over collective redundancies when we fought tooth and nail to change the law in the UK. I cannot say why the Government seems to be denying there is a problem. There is manifestly a problem. I had a dispute on behalf of a client which wanted to refer a dispute about confidential information where the EWC had been provided with information that was subject to a confidentiality restriction. It related to redundancies in a country where the national law in that country provided that any information received by a representative on the EWC must be shared with other local national representatives and failure to do so would be seen as anti-trade union activity which could be prosecuted against that member of the EWC. Here was a potential conflict of law between a national law, on the one hand, and EWC law, on the other hand. I looked at what could be done about this. The Act states a dispute must be brought to an arbitrator and the Government must make regulations to appoint an arbitrator. However, such a regulation had not been made, so I wrote to the Department asking what we should do. The Department wrote back asking for lots of information, which we provided. The matter did not seem to go very far. The Department then pointed out that there had to be a dispute with Irish employees. It was not with Irish employees because there was no Irish representative on the EWC. At this point, I realised we were not going to get anywhere so I decided to complain to the European Commission. That is the reason part of the infringement proceedings is to do with confidential information. I came up against a brick wall in the Department when trying to resolve this dispute.

My conclusion is that the only way anything will be done is through infringement procedures initiated by the European Commission, which, at the moment, are only on two specific issues. One is the absence of any enforcement of the obligations to do with special negotiating bodies. There is no enforcement whatsoever. One cannot enforce ones rights as an SNB. The other is to do confidential information, which I have just mentioned. These are only two issues and they are not the most important issues actually. Further infringement procedures may well be needed to force the Irish Government's hand.

Dr. Jonathan Lavelle

Mr. Sack has more hands-on experience of this than I have. I cannot speak for the Irish Government in terms of why-----

Senator Paul Gavan

I am not asking Dr. Lavelle to speak for the Government. I am asking if he has an opinion on what is being discussed here.

Dr. Jonathan Lavelle

There are many issues here, with a lot of ambiguity around European works councils. As Mr. Sack said, this is bigger than some of the specifics that have been talked about already. The biggest issue is around the statutory and financial means for European works councils to carry out their duties.

There is a lot of ambiguity around that. There is a need to delve into those issues and address them in legislation. Perhaps it might be the case that this is bigger than just a quick fix and that there are bigger issues that need to be addressed. This has been pointed out at European level. There is very much a focus on the means and whether EWCs have the means to carry out their duties. Mr. Sack mentioned that if they do not have access to enforcement, it is very difficult for them to have a means to carry out their duties.

Senator Paul Gavan

I would like to bring in Mr. Altmeyer. Will he speak in terms of the reputational damage to Ireland that is occurring as a result of us not having effective EWC enforcement legislation?

Dr. Werner Altmeyer

The issue is not an Irish issue. Many delegates from continental Europe are sitting on or part of an EWC based on Irish law. It is a European issue. There are large workforces in companies based in Germany under Irish law - US companies and others - and the German workforce is touched by the situation under Irish law when it comes to transnational restructuring issues and when it comes to how the EWC is operating. Therefore, this is not just an issue for Germany and it is also an issue for France and the Nordic countries. Many Irish-based EWCs have a huge delegation from continental Europe and that is the reason the focus is now on Ireland and the legal situation in Ireland, which is in third place after Germany and France. It cannot avoid dealing with the issue from a pan-European point of view.

Chairman

We move to the Fine Gael slot. I call Deputy Bruton.

Deputy Richard Bruton

I will share my time with Deputy Stanton. I thank the witnesses for the presentation. Is this issue related to Ireland's tradition of a voluntary system of industrial relations whereby enforcement of agreements has not traditionally been part of our approach? Is it that we are seeking to reconcile two different traditional approaches to industrial relations? I know there was a recent report on the introduction of collective bargaining so when legislation at the EU level goes through, Irish law will change in this respect. Are these issues tied up together to some degree as Ireland moves towards a more European collective bargaining model under a transitional arrangement, in that issues such as this will become part of a new approach in Ireland?

Mr. Philip Sack

The reason the only enforcement of EWC agreements is through arbitration may well be because of that culture and history of voluntarism in Irish industrial relations. This arbitration is the most important means of enforcement because, by far, most European works councils are set up under agreements, not under the subsidiarity requirement, so, in fact, this is probably the most important aspect of enforcement in the legislation.

The big difference here is that, unlike general industrial relations, there is a European directive sitting behind this, requiring certain standards in terms of enforcement. That was why I put emphasis on what the directive requires around procedures and enforcement of rights. There is another European directive implemented in Irish law that does have a perfectly acceptable enforcement regime and, as mentioned earlier, that deals with information and consultation.

There is a ready model that could be adopted here.

Deputy David Stanton

I welcome our guests and thank them for their presentations. As they have said, many bodies of various shapes and sizes have moved their headquarters here post Brexit. That increases the imperative and the importance of all this.

Dr. Lavelle said that the European Parliament last week voted to adopt a report to further strengthen EWCs. A resolution has passed to recommend to the Commission the revision of the EWC directive. Our guests' proposal is that we make changes to our situation with respect to enforcement and so on. At the same time, this is occurring in Europe. There is obviously a European review. I also note that BusinessEurope sees no reason for a change to the directive. Perhaps we should also listen to its view. If the directive is going to be revised and changed, I do not know how long that will take. The Commission has approximately three months to come back. Does that mean we might see further dramatic changes to the directive in the time ahead? If we make changes now, we might be making further changes within a short period. Are they on parallel tracks? Are they interacting in some way? Perhaps our guests could explain how the European Parliament resolution of last week could impact the changes they are proposing. Should we act anyway?

Mr. Philip Sack

To answer the Deputy's last question first, the Irish Parliament needs to act straight away, without reference to the European Parliament's report. The European Parliament has produced an own-initiative report seeking changes to the directive. That does not of itself make any changes to it. To make changes to the directive would require the European Commission to come forward with a proposal and for that proposal to then be agreed by the EU Council and the European Parliament. That process can take years. I know because I was involved in several such processes when I worked for the UK Government. It may result in nothing at all because if there is no agreement between the Council and the Parliament, there will be no revision of the directive. The process could take a very long time. There is no guarantee that the Commission will make a proposal although I note that Commission President Ursula von der Leyen, when she was seeking its approval to become President of the Commission, promised the European Parliament that if it were to make a report requesting legislative change, she would act. She made a personal commitment to do so. We will have to wait and see how she will do it. There are also some better regulation rules in place which state that an increase in regulation requires burdens to be eased in the same areas. It will be interesting to see how that might work out in all of this. However, the timeframe involved could be very long. The process may not result in anything at all.

Deputy David Stanton

That is useful. There are some interesting points in the resolution. One that stands out relates to gender balance. I thought it unusual.

Earlier, Dr. Lavelle stated, "It appears that there is a consensus among trade unions, employers and industrial relations experts that there is a straightforward solution to the problem". He proposes the amendment of the current legislation to include access to the WRC and Labour Court. Would that require major primary legislation or is there another way of doing it, perhaps by means of secondary legislation?

Dr. Jonathan Lavelle

What is required was discussed at the most recent meeting.

However, that is very specific. The concern, really, among EWCs is the broader issue of means. Do EWCs have the means to do what they should and have to do? Fixing the route is a very specific issue, but there are wider issues around the statutory and financial means. Mr. Sack outlined a very good example of access to enforcement. If one cannot afford the costs of legal representation, works councils will not be given the means to do what they need to do. The broader issue is the need to look at our legislation. Does it provide the means for EWCs to do what they need to do? It is broader than what was being discussed at the last meeting. That is my understanding.

Deputy David Stanton

How is this dealt with in the other countries, such as Germany? How do we compare with respect to means and such?

Dr. Werner Altmeyer

There is a difference between a local or national works council and an EWC. There are several countries in Europe where the local works council has its own budget. The most important example is France, where the works councils have their own budget by law. When they have to engage a lawyer, they can use this budget. We have similar provisions in Austria. However, in many other countries, there is no budget. In Germany and the Netherlands in particular, the works councils can act. They can go to court, engage lawyers and experts and the company must pay. A basic principle of the works council system is that all means necessary for the activities of a works council must be paid by the company, because the works council is not a trade union. It is like a department within the company and a parliament for workers' voices, but the company must pay for it. In Germany, when the works council is going to court, the lawyer will send a quotation and there is a basic standard. If the fee is higher, there are negotiations. The Netherlands is quite similar, but it is absolutely clear that the company must pay for all legal fees.

Deputy Paul Murphy

This is a considerable issue that affects major multinational corporations, which have quite an interest in what we do here and the interests of workers. I was struck by what Dr. Altmeyer said about our being the third country with regard to the number of EWCs here. Will Dr. Altmeyer give an estimate of how many workers would be included and affected by our rules and legislation?

Dr. Werner Altmeyer

That is a considerable issue. There are no reliable figures on the number of companies. One cannot say how many people are involved. There are EWCs representing approximately 2,000 to 4,000 workers and others representing 20,000 workers. Councils in large corporations such as Airbus or big automotive companies represent 100,000. It is somewhere in between all those figures.

Deputy Paul Murphy

It would probably be in the millions.

Dr. Werner Altmeyer

Maybe. I do not have clear figures, but it would be a considerable number of workers.

Deputy Paul Murphy

Yes. If one is thinking of between 140 and 180 companies, with tens or hundreds of thousands of workers, a very large group of workers is affected. Mr. Sack did not mince his words about our compliance with the directive. In his opinion, there is just no way we are in compliance with this directive.

Mr. Philip Sack

Correct.

Deputy Paul Murphy

Do Dr. Lavelle and Dr. Altmeyer agree with that?

Dr. Jonathan Lavelle

I agree, from my reading of it.

Dr. Werner Altmeyer

Sorry, I did not catch the question.

Deputy Paul Murphy

Does Dr. Altmeyer agree that Ireland is in breach of the directive?

Dr. Werner Altmeyer

I think it is.

Deputy Paul Murphy

I obviously agree that the issue of extending the remit of the WRC is a route for this, but it seems that is not the only issue. This is about access to justice, which relates to the question of means, about which Dr. Altmeyer was making the point. It seems a central part of the legislation the Government will need to write is that means will have to be provided for. One has a David-and-Goliath situation here. On the one hand, we have some of the biggest corporations in the world, with effectively unlimited access to resources and, on the other hand, EWCs that do not have a mechanism to raise resources for themselves. They can only have what is provided by the companies. Does Mr. Sack agree that it is essential to have an obligation in the legislation for companies to provide for experts, legal advice and so on?

Mr. Philip Sack

I agree there should be a legal obligation with regard to this specific question, because it is absolutely impossible for EWC members to do so, as Dr. Altmeyer in particular and others have made clear. EWC members cannot be expected to bring complex legal disputes in Irish jurisdictions on their own, in their non-native English language, in an unfamiliar legal environment and potentially up against very well-paid lawyers and barristers. There is already a requirement in the legislation. It comes from the directive and appears in all legislation implementing the directive, including section 17(1)(a) of the Transnational Information and Consultation of Employees Act. It requires the central management to provide members of an EWC with the means required to apply the rights arising from the directive to represent the collective interests of employees. That is already in there. The question really is whether than includes the cost of advice, support and help, whether that is legal advice or just expert advice, to bring a dispute on behalf of an EWC. We await a test case. This is one of the issues that goes to adjudication at the WRC. We await a test case as to whether that is what it means in the Irish context. It was ruled that it covers legal costs in the UK.

Deputy Paul Murphy

While we are on that subject, will Mr. Sack talk a little to us about the Central Arbitration Committee, CAC? Will he tell us what kinds of cases it dealt with, how it dealt with them and whether there are things we can learn there?

Mr. Philip Sack

I probably brought ten or 12 cases to the CAC on behalf of EWCs. We found the procedure very useful in that it is easy to understand and quick. One can get decisions within a matter of weeks. The CAC also offers voluntary mediation on an informal basis. General practice is, before going to a formal hearing to resolve the dispute, to have up to several informal meetings to see if it is possible to resolve the dispute informally. I believe that is also possible through the Labour Court and the WRC. It is a very helpful procedure and we have been able to withdraw some of the complaints through voluntary agreement. However, it is a civil proceeding with that standard of test and the complainant can make their own case for the CAC and be given a fair hearing. It has worked well in the UK.

Deputy Paul Murphy

One of the suggestions Mr. Sack makes for a remedy is to use the Employees (Provision of Information and Consultation) Act 2006. How do we know that will work? How many cases have been taken to the WRC about these sorts of issues under this Act? How have they gone? What has been the outcome?

Mr. Philip Sack

I am sorry. I do not know the answer to that question. I believe there have been rather few.

Deputy Paul Murphy

I think there have been six cases taken.

Deputy Paul Murphy

Has that worked well for those who have taken cases? It has not.

Dr. Jonathan Lavelle

I am not sure.

Deputy Paul Murphy

There is a certain view that the Act is weak and was watered down through a process of corporate lobbying when it came into effect.

Mr. Philip Sack

I think those are other issues in the legislation rather than enforcement, per se. I was negotiating that directive on behalf of the UK Government and we worked closely with the Irish Government, which is why the legislation looks rather similar. We were trying to limit its impact in the two countries. It is not to do with enforcement, as such.

Deputy Paul Murphy

How can we ensure that any dispute mechanism allows an entire EWC to take a dispute and not just an individual member?

Mr. Philip Sack

This would normally simply be through the wording of the legislation. Sometimes, legislation will say a "member" can, in other places it will say "the European works council" can, in which case it is down to the internal rules of the EWC as to how it takes a decision to do so. Regarding arbitration, currently it is the European works council as a whole that brings the dispute. It just says, "the parties", I think. It is just how you word the legislation.

Dr. Jonathan Lavelle

We talked about the means and we focused a little more on the financial means but there are obviously statutory means as well. That gets to Deputy Murphy's question as well. There is much debate around now and a lot of variability across member states regarding how it is worded and whether European works councils can take those cases. That goes back to the bigger issue of means, both statutory and financial.

Chairman

Nobody else has indicated to speak so that concludes our consideration of the matter today. I thank all of the witnesses for assisting the committee in its consideration of this important matter. The committee will further consider this matter as soon as possible. That concludes the committee's meeting in public session for today. I propose that the committee now go into private session. I welcome the transition year students here who are guests of the Minister of State, Deputy Richmond.

The joint committee went into private session at 10.37 a.m. and adjourned at 10.46 a.m. until 9.30 a.m. on Wednesday, 15 February 2023.