Global Employee Information and Consultation: Replicating the European Model - Coursework Example

Global Employee Information and Consultation: Replicating the European Model INTRODUCTION The only way for the employees and their representatives to reach the level of multinational corporations is to create an effective transnational mechanism that facilitates consultation and information disclosure. The European model (EWC) is an example of an institution that intends to provide employees voice in the transnational arena. The information dissemination and consultation arrangement enable employee representatives to participate in discussing issues that pertains to their employment. However, there is a need to analyze whether EU style of legislating a mechanism shall be effective if replicated globally. The answer in part depends on the success of the current global trend of transnational information and consultation, especially in its implementation and regulation aspects. THE EUROPEAN MODEL A significant step to enhancing the employees’ right to information and consultation is the establishment of European Works Council (EWC). The EWC Directive (94/45/EC) aims to improve cooperation in transnational companies and to allow trade unions to influence, at least indirectly, the decision-making of corporations (Lockwood and Williams). It requires community-scale undertakings and community-scale groups of undertaking to create this mechanism for regular consultation of the workforce. A ‘community-scale undertaking’ is one with at least 1,000 employees within the Member States and at least 150 employees in each of at least two Member States (Lewis and Sargeant). An EWC is a forum which would allow employees in European states to be informed or consulted of transnational issues affecting the corporation. It shall be made up of representatives from the respective European member states where the corporation has operations. The EWC shall be set up with the initiative of the central management. If it fails to act, it may be initiated by at least 100 employees or their representatives through a request, in two undertakings in two member states. Through a special negotiating body (composed of employee representatives) created to meet with the central management, a written agreement will be drafted that would cover the “scope, composition, functions and terms of office” of the EWC or the arrangements for implementing an information and consultation procedure (Lewis and Sargeant). The implementing TICE Regulations mandates that the central management has to meet at least once a year with the EWC in order to undertake consultation and information on the basis of a management-drawn report (Lockwood and Williams). Aside from annual meeting, EWC may also call for ‘exceptional meetings’ to discuss specific issues. Through EWC, important information is relayed to all employees from management that affects employees in one member state of a transnational corporation which may likewise affect employees in another member state. The European Directive establishes a minimum standard for the employees’ right to consultation and information. The right covers the company’s financial situation, changes in the organization, employment prospects, and decisions which involves redundancies, pension scheme, business transfers, etc. The European Union regulates this by mandating the transposition of the directive in the member state’s national laws. Furthermore, they have provided a built-in mechanism called ‘subsidiary requirements’ that would guarantee implementation. It is a strong incentive to reach an agreement specified in the Annex to ensure the constitution of an EWC if ever the management refuses to participate, or when SNB negotiations fail to come up with an agreement within three years (Hepple). CURRENT GLOBAL MECHANISMS The global initiatives of employee information and consultation started with the concept of ‘global social dialogue’ that involves framework agreements between individual multinational corporations and global union federations (International Labour Office). These frameworks have procedures in dealing with disputes that are not locally resolved. However, the implementation of these framework agreements is merely regulated by the management side and the global union federations, which would largely depend on their close collaboration (International Labour Office). In addition to that, Seifert claims that: The legal character of these international Framework Agreements is not easy to discern. Clearly, there is no international legal framework for these collective agreements. In this sense, they exist in a legal vacuum. The parties to an International Framework Agreement are free to choose one national law as the applicable law. In practice, however none of these agreements choose the applicable national jurisdiction. (Seifert 345) Another global initiative of employee involvement and consultation is the creation of transnational structures at enterprise level. These include World Group Councils, World Works Councils, and Information Committees. World Group Councils or Company Councils are forms of trade union employee representatives and management which are financed and organized by International Trade Secretariats (Rǘb). The meetings usually include information report by central management on the company’s global strategy. On the other hand, World Works Councils are those created through written or oral agreement between the central management and employee representatives. Its operation involves commitments by the central management which includes providing information during the forum (Rǘb). In contrast to abovementioned mechanism, Information Committees are control forums that discuss ‘selected range of issues’ and limited only to a number of employee representatives—thus offering a limited form of employee representation (Rǘb). Of the three, the World Works Council is the most viable option for building information and consultation structure as it is actually patterned after EWC. However, the institution of WWC is still gaining ground; it is uncertain whether it has the capability to become a worldwide phenomenon. The Volkswagen World Group Council is the pioneering example of World Works Council. It is an information and consultation forum that facilitate an exchange of information between world group council and group management through an annual joint meeting (Rǘb). However, it is important to note that their establishment is not through legislative enactments or international instruments. In fact, Seifert believes that the “only legal document of the ILO dealing with employee representation in transnational enterprises is the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy” (336). The Tripartite Declaration mentions for instance the requirement of giving notice to the employee representatives or government authorities of any operational changes in the enterprise that would affect employment (qtd. inSeifert). However, these documents are not even binding but merely voluntary on the part of transnational companies; hence there are actually no mandatory rules that would regulate its implementation. As a matter of fact, the framework neither has a procedure applicable at a transnational level nor an implementing procedure that would establish a strong representation body on a global scope (Seifert). This is also the case of the OECD Guidelines on Multinational Enterprises and Social Policy. The fact that it is a mere ‘guideline’ indicates that it has no binding directive on multinational corporations to implement global involvement of employees. It however requires (or encourages) transnational corporations to regularly inform employee representatives on a lot of issues involving the company (Seifert). ANALYSIS The current global regime on employee and consultation is fraught with problems of uniformity, stability and global support. As a result, employee representation in a global scale cannot fully develop. The problem lies in the lack of coordination between the employee representatives and the central managements of transnational undertakings. The management groups are usually unwilling to extend aid in terms of preparation and monetary considerations. Companies are not ready to cooperate in disclosing information or in opening its door for consultation in a wider scope. They somewhat resist the idea of a global information and consultation procedure as this may strengthen the bargaining power of employees—diminishing employer’s control. As a result, these worldwide structures fail to meet the expected performance and output needed from them. This unsatisfactory result of the current arrangements only indicates the further need for innovation in labor representation. Without a doubt, information and consultation of employees should not only be regulated in the local or regional level. It must transcend national borders in order to foster close involvement of employees in global issues affecting transnational companies. There is in fact a need to solidify the participation rights of employees in a global level because that would enable them to achieve an international voice during collective bargaining or consultations. This movement is needed since there is little employee involvement in issues affecting transnational corporations. For instance, they are not consulted on matters such as the effects of introduction of new technologies, global developments, product diversification, and worldwide expansion of business. It must be noted that because of the transnational character of these corporations, their freedom of action is unhampered by the jurisdictional authority of the nation-states (Seifert). Consequently, cross-border information and consultation would become instrumental in creating a system of ‘checks and balances’ within multinational companies especially in their labour policies. Thus, Seifert believes that: Cross-border employee information and consultation procedures can strengthen the internal control of the trans-national enterprises corporate conduct and supplement mechanisms of external control... In the event that the enterprise violates the human rights of its employees, the employee representatives can organize solidarity on a worldwide scale, for example by using transnational union networks or by campaigning with NGOs, and can put pressure on the enterprise to comply with these fundamental labor standards. (Seifert 332) Establishing a Global Works Council (or a much more structured World Works Council) will be a significant leap towards a global regulation of information and consultation. A GWC will be a forum that would tackle strategic issues of a global scale affecting transnational corporations. Just like EWC, an effective information exchange will be attained through a mechanism involving the central management and the GWC concerning important subjects of discussion including working conditions of employees, benefits, economic situation of the company, and all other decisions that affects the welfare of the employees. Perhaps, the central management may even inform or consult the GWC on a broader range of issues that would help prevent or resolve conflicts usually associated with management decisions. The EWC could serve as a world-wide model in creating a Global Works Council. In fact, the idea is basically congruent to this European model. The positive aspect of this model includes its design to provide not only to keep employees well aware of the management decisions but also to enhance employee involvement over transnational or global issues that affects their employment. Thus, legislating a general framework of consultation and information would provide a uniform, comprehensive and effective guideline for the most basic right of the employees—the right to be informed and consulted. A Global Works Council will be a mechanism of comprehensive information disclosure and consultation. It will facilitate agreements between the central management and employee representatives. This will therefore call for the creation of a body composed of employee representatives just like the EWC’s special negotiating body. This will be an important development in providing a comprehensive framework of consultation and information. These special representatives will be effective linkage of the employees especially since they normally have the independence, resources and expertise to negotiate and effectively use the information that would level the playing field between employees and multinational corporations. In this way, the consultation process and disclosure of information is much more structured that would be able to cater to wider range of issues. With this mechanism, employees will be able to ask for information from transnational corporations in a fair and unimpeded manner, avoiding the usual scenario where the employer discloses information when he wants and how he wants it to be revealed. A legislative approach will be much more beneficial since it will have mandatory effect on nation-states. If the arrangement is transposed at a national level, transnational companies will be compelled to submit to the system—avoiding resistance or noncooperation on the part of the management. In this regard, it is important to consider the fact that there is “no real concept of employee involvement in transnational context” because the current international documents have no binding effect on nation-states (Seifert 336). Thus, enterprises will be compelled to consult their employees only when the process of information and consultation comes from a legally binding instrument. The biggest problem that needs to be addressed however is the incompatibility that may arise between the national laws and the international directive. This was also the problem that occurred when EWC was transposed by EU members. For instance, the concept of ‘consultation’ seems to differ in the respective national laws of the states, resulting in its ambiguity. The definition of ‘consultation’ itself is vaguely phrased as ‘the exchange of views and establishment of dialogue’ (Davies). This may differ in application in some countries as some may construe the ‘exchange of views’ or ‘dialogue’ as something which need not lead to a concrete agreement, while others may think otherwise. Moreover, the cultural differences among states may pose an obstacle during meetings and consultations, especially since intercultural communication may be very difficult in this kind of setting wherein employee representatives and management groups try to settle or dispute issues. In the long run though, these potential problems will be resolved. What is needed in the present state is to initiate the creation of formal rules and regulations that would trigger the development of improved transnational information and consultation mechanism. CONCLUSION Since global structures and other transnational frameworks are still undeveloped, there is a growing search for the right model for the world in employee information and consultation. The European Directive which created a wider framework for consultation and information has transcended the local level of collective employment relations. The employees’ rights to participation have for the first time become truly transnational. Although there are little literature regarding its actual performance and effectiveness, the overall framework is an ideal model that can be adopted globally. What is further required is the creation of a much structured form that would consider important factors such as cultural diversity and varying labor laws of states. Works Cited Davies, A. C. L. Perspectives on Labour Law. United Kingdom: Cambridge University Press, 2004. Print. Hepple, Bob. Labour Laws and Global Trade. Oregon: Hart Publishing, 2005. Print. International Labour Office (ILO). Organizing for Social Justice: Global Report Under the Follow Up to the ILO Declaration on Fundamental Principles and Rights at Work. Switzerland: ILO Publications, 2004. Print. Lewis, David, and Malcolm Sargeant. Essentials of Employment law (8th ed.). Great Britain: Cromwell Press, 2004. Print. Lockwood, Graeme, and Kevin Williams. “Collective Rights: Recognition, Representation and Industrial Action.” The Handbook of Employment Relations: Law and Practice. Ed. Brian Towers. United Kingdom: Kogan Page Limited, 2004. 128-146. Print. Rǘb, Stefan. “World Works Council and Other Forms of Global Employee Representation in Transnational Undertakings.” Trans. Pete Burgess. Arbeitspapier 55 (2002): 1-61. Web. 22 Feb. 2010. . Seifert, Achim. “Global Employee Information and Consultation Procedures in Worldwide Enterprises.” The International Journal of Comparative Labour Law and Industrial Relations 24.3 (2008): 327-348. Print. Read More