European Works Councils: abolition of the UK’s legal framework?

Last week the government launched a consultation into reform of two areas of employment law: TUPE and European Works Councils. We have written about the TUPE proposals here and in this article examine the impact of the proposed changes to EWCs.

The consultation will remain open until 11 July 2024,but since it was launched, a general election has been announced for 4 July, casting the progress of these reforms in doubt.

Abolition of the UK legal framework

The third proposal in the government’s consultation paper is the abolition of the UK’s legal framework on European Works Councils. We’ve written previously about the Brexit amendments to the Transnational Information and Consultation of Employees Regulations 1999, and litigation arising from this (see here). As we explain below, this simplification is much needed.

European Works Councils are bodies of employees’ representatives that enable transnational information and consultation on business proposals that affect employees in more than one member state of the European Union. Their existence reflects an attempt by the European Union to avoid a situation in which businesses can operate on a cross-border basis thanks to the single market, but employees’ representatives remain siloed and only able to operate on a national basis. However, critical to their effective operation is the fact that a common legal framework applies across the EU, ultimately enforced by the European Court of Justice.

It was therefore very surprising that, in 2019, the government brought forward legislation that provided for the post-Brexit creation of a new domestic UK law concept of UK-law EWCs. As confirmed by the Court of Appeal in easyJet, the legislation requires a small number of UK businesses to operate two EWCs: one under the laws of an EU member state, to comply with its obligations under EU law, and a secondone under UK law. Critically, it is legally impossible to merge these two bodies.

Benefits of removing the dual structure

In a very welcome move, the government is now proposing to abolish the UK’s legal framework. The benefits of this would include the following:

• It would remove a conceptual nonsense from the UK’s statute book. As the government itself said to Parliament in 2019:

“There is also no way to replicate the European works council system only in the UK, as their purpose is to enable cross-border engagement. That requires the same rules in all countries”.

Unfortunately, the government then legislated to try to achieve the very outcome that it had said was not possible. The consequence of this was summed up by the Court of Appeal in easyJet, when three judges unanimously agreed with submissions that the 2019 legislative changes were “possibly not the best thought through piece of legislation”.

• It would end what the Court of Appeal accepted as the ‘practical difficulties’ arising from a business having to operate two EWCs under different legal frameworks.

On the one hand, it would mean that certain UK businesses no longer have to run two EWCs with different memberships, with different remits and under different rules. It would also end the uncertainty about how to constitute their UK-law EWC when, for example, there are no provisions in Irish law on how Irish members of a UK-law EWC are to come to hold office.

On the other hand, it would also mean that employee representatives who serve on both of their business’s EWCs no longer face the possibility of conflicting obligations. For example, it is currently possible that an employee representative could be required to report back certain information to employees on the basis that a UK court has determined that it is not of a nature justifying confidentiality yet, at the same time, be required not to report back that same information on the basis that a court in a member state of the EU has determined that it is. This predicament is exacerbated if a breach of confidentiality under that member state’s laws constitutes a criminal offence leading to potential imprisonment.

Given the final form of Brexit, the proposed removal of legacy legislation on cross-border employee representation structures would certainly achieve the government’s objective of ‘smarter regulation’. It would also be consistent with a number of similar Regulations that have already been repealed, but would not entirely finish the job as two further sets of Regulations concerning cross-border employee representation structures would remain on the statute book.

Will it get across the finish line?

The removal of the UK EWC laws can be achieved relatively quickly by statutory instrument using the government’s new powers to change assimilated EU law. However, with a general election now scheduled for 4 July, a week before the consultation period will have ended, these changes currently seem unlikely to be implemented.