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INDUSTRIAL DEMOCRACY IN EUROPE
The attitude towards workers’ voice in corporate governance is very different in mainland Europe: though is often seen as solely a German phenomenon, employee representation of some kind is widespread in the management of companies right across Europe. (12) Workers are represented on company boards in nineteen European countries, including the Netherlands, Sweden, France and Austria. Worker involvement comes in a number of different forms. The most common form, found in eighteen EU member states plus Norway, is worker representation in boardrooms with decision-making power. In fourteen of these countries rights are widespread, and are operative both in state-owned companies and in private or public limited companies (Austria, Croatia, Czech Republic, Germany, Denmark, France, Hungary, Luxembourg, the Netherlands, Norway, Sweden, Slovenia, Slovakia). There are also various forms of workers’ boardroom representation with a consultative voice, including in France, Romania and Sweden, and of worker representation at annual general meetings, such as in France, Bulgaria, Hungary, the Netherlands and Sweden. Involvement in the top-level management team is also practised in some specific types of firms in a number of countries, for example in Germany iron and steel companies, in Slovenia large companies and in Poland privatised companies.
(12) Workers’ Voice, op cit.
There are variations in how worker representation operates across Europe. For example, there are variations as to which companies are covered by requirements on worker board representation, and the number and/or proportion of worker representatives per board. As well as this, worker representation on boards is sometimes exclusively linked to two-tiered board structures (i.e. where worker representation could be restricted to the second tier), but is also found in unitary board structures; and it is not always linked to statutory systems of industrial relations that rely on mandatory rules (as exemplified by its existence in Nordic countries, where an initiative from the worker side or trade union is needed to trigger implementation of worker representation on the board).
Worker representation on boards with the right to vote is recognised in European Union primary and secondary law. Three EU legal texts include requirements covering the representation of workers on company boards: the European Company Statute (2001); the European Co-operative Society Directive (2003); and the Cross-Border Merger Directive (2005). Though there are differences in the provisions of these statutes and directives, they all follow two general principles: that worker involvement mechanisms are subject to negotiations between workers and the employer; and that the ‘before and after’ principle should be adhered to - i.e., in the event of a merger or takeover, pre-existing rights to worker representation at board level must be safeguarded (although where no pre-existing rights exist, the new employer is not required to put such rights in place)
National and supranational rights for worker representation at board level with decision-making power are not static but constantly evolving, both at EU level and within member states. Sometimes new legislation may bring greater rights (such as within the French law of June 2013), but sometimes it may weaken them (as in the Czech Companies Act of 2012, which repealed provisions requiring compulsory representation of workers on boards). National rights are increasingly under pressure, however, because of the trend towards regulatory competition between member states: competition on costs almost always favours the ‘low road’ approach. There is also within the EU a growing trend towards ‘State Aid’ restrictions, on the grounds that state aid of any kind is ‘anti-competitive’. Such an approach has the effect of enabling companies to circumvent their obligations to have workers on boards.
If all the different rights for workers to raise their voice in some kind of corporate governance body are combined, whether at the AGM, top management tier, or board level, twenty-one European countries have adopted some kind of industrial democracy perspective. (13) The UK, however, has no similar legislative provision, further underlining its ‘out-rider’ position in respect of worker voice.
(13) Workers’ Voice, op cit.