A revised EWC Directive

What does it mean for multinational companies with well-functioning social dialogue at the European level?

Author: Sofia Pedersen, Partner and Head of Employment, MAQS

Many multinational companies operating European Works Councils (“EWCs”) report that their EWCs function effectively today. EWCs, as the only legally established transnational employee representative bodies, play a critical role in fostering dialogue between employees and management at a European level. However, the ongoing legislative process regarding the revision of Directive 2009/38/EC, which governs the establishment and functioning of EWCs, is causing uncertainty. This revision, aimed at strengthening transnational information and consultation rights, could have significant implications for both newly established and existing EWCs. In particular, it may affect the cooperation and social dialogue between companies and employee representatives not only in a positive way.

Key areas of concern in the revised EWC Directive

Among the most concerning aspects of the proposed revision are changes to the scope of transnational matters, treatment of confidential information, the introduction of sanctions, and the use of experts and related expenses. Notably, the European Parliament has proposed to broaden the definition of “transnational” issues. Under the new proposal, even matters that directly involve only one member state but have indirect consequences for employees in other member states would fall under EWC’s competence. This expansion would likely increase the administrative burden, delay decision-making processes, and raise costs associated with managing EWCs.

Timeline and potential impact

A trialogue negotiation between the European Commission, European Parliament, and the Council will start as soon as the European Parliament has voted on their proposal, most likely beginning of 2025. The final outcome of these negotiations is expected later in 2025, followed by a two-year implementation period. Unfortunately, the anticipated changes may lead to stricter regulations and increased obligations for companies, potentially harming the competitiveness of European-based multinationals. Given that many companies already report well-functioning dialogues with their EWCs, some question whether such a revision is necessary at all.

In Sweden, for example, social dialogue with employee representatives is a cornerstone of labor relations. The Swedish model emphasizes cooperation, and many argue that the operation of an EWC should be governed by the specific agreement between the parties, tailored to the needs of individual companies and sectors, rather than by rigid EU-wide legislation.

The importance of constructive EWC dialogue

A transparent and constructive dialogue with EWCs offers numerous advantages for companies. It allows for large-scale transformations and the implementation of new global systems with minimal disruption. Trust, preparation, and professionalism are key drivers of successful and productive relationships with EWCs.

Questions raised by the revision

The key question is whether the revised directive will lead to better outcomes for European employees. Could more extensive regulations potentially harm the social dialogue they seek to enhance if compliance becomes overly burdensome for multinational companies? Furthermore, will companies be less inclined to use EWCs as a forum for worker feedback on emerging issues, such as AI or product development, if the scope of consultation is widened and sanctions are introduced?

Stay informed

As this legislative process unfolds, it is essential for multinational companies to stay informed of the forthcoming changes to the EWC Directive. The outcomes of these discussions will likely reshape how EWCs function, with a final decision expected by 2025. 

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