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6 Eur. Company L. 55 (2009)
Employee Board-Level Representation in the EU: A Contested Subject

handle is hein.kluwer/eurcompl0006 and id is 55 raw text is: ARTICLE Employee Board-Level Representation in the EU: A Contested Subject ROBBERT H. VAN HET KAAR, SENIOR RESEARCHER HUGO SINZHEIMER INSTITUUT, UNIVERSITEIT VAN AMSTERDAM, (EMPLOYEE') BOARD MEMBER WITH TWO DUTCH COMPANIES* 1. INTRODUCTION Employee involvement in the company can take many different shapes. These can be grouped according to different categoriza- tions. Examples of categorizations are direct, indirect and financial employee involvement, the degree of involvement (right to information, consultation, co-decision). For this article (and more generally, this issue of ECL), the crucial distinction is that between employee involvement in the undertaking (works councils, shop stewards, etc.) on the one hand and employee involvement in the organs of the company on the other. For the latter type the EU has, especially since the Societa Europaea (SE)Directive, reserved the expression participation. I prefer instead the expression employee board-level representation (further: EBLR). For many (arguably most) company lawyers, the existence of something like EBLR is a strange phenomenon. The accepted view is that the board is a place for shareholder representatives and that employees should be kept out. If desirable at all, there are other ways to organize employee involvement. Nevertheless, in the real world, EBLR exists in more countries and companies than is often thought. Moreover, EBLR has conquered its right of existence in recent EU legislation: the SE and SCE Directives, the Cross-Border Merger Directive and the Draft Statute for the SPE. Undeniably, EBLR, at least in some countries, is at the heart of the stakeholder model. In this article, I will present an overview of EBLR in the EU and address the main issues and debates. In section 2, I argue that EBLR should not be analyzed in isolation, but in the context of a larger system of industrial relations. In section 3, 1 present an overview of EBLR in the EU, focusing on similarities and differences. I pay special attention to those countries that in my view for some reason 'stand out' from the rest: Germany, Sweden and the Netherlands. After this more descriptive part I take a more analytical view. In sec- tion 4, I look at the relevance of the company structure (one-tier or two-tier) for EBLR. Section 5 focuses on the issue of independ- ency, in more than one sense: independency of employee board members from workers' interests and unions on the one hand, and independency from the company and its directors on the other. Section 6 gives an overview of debates on EBLR in some selected countries, with some background information on the (perceived) effects of EBLR on companies and company performance. In sec- tions 7 (analysis) and 8 (conclusion), I look at the future of EBLR. 2. EBLR: PART OF A LARGER SYSTEM EBLR is part of a larger whole: the system of industrial rela- tions in a country and, to a lesser extent, the system of corporate governance. In countries with strong participation rights, EBLR and other forms of codetermination rights (not linked to the company structure, but to the labour organization) to a certain extent operate as complements. As an illustration one can look at the German and the Dutch systems. In the Dutch system, from an employee point of view, the works council (and in groups of com- panies: the central works council) is by far the most important body, certainly with regard to strategic decisions like mergers, takeovers, restructuring and investments. In contrast, there are no 'real' workers' representatives on the supervisory board. By law, no member of the SB is allowed to represent partial interests, be it banks, shareholders or employees. In practice, there is very little difference between 'ordinary' members of the SB and members who have been nominated by the works council. So, from an employee point of view, the Dutch system of EBLR is weak, while the works council rights are very strong. On the other hand in Germany, works councils do not have the same extensive rights with regard to strategic (corporate) decisions as their Dutch col- leagues. At the same time, the position of EBLRs in large German companies is very strong. They occupy up to 50% of the seats on the board. Sometimes the fact that the shareholder representa- tives hold the chair and in case of a tie have the casting vote is even neutralized by disagreements between different groups of shareholders. One should look even further than codetermination rights to fully understand the importance of EBLR in the system of industrial relations. In many countries employees do not have strong participation, or information and consultation rights, but can exert influence in other ways, such as strikes. Within the system of industrial relations one should finally take into account the national differences with regard to the role and stance of the unions, both within and outside EBLR arrangements. Of course union density is a major factor, but also union attitudes. * E-mail: R.H.vanhetKaar@uva.nl. Van Het Kaar, Robbert H.'Employee Board-Level Representation in the EU: A Contested Subject' European Company Law 6, no. 2 (2009): 55-61. @ 2009 Kluwer Law International BV, The Netherlands

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