v

Legal provisions for information and

consultation, exceptional circumstances,

mergers and acquisitions

Elewijt, 6th October 2015Maria Jauhiainen

Legal CounselThe Union of Professional Engineers in

Finland, IL ry

The Finnish EWCs

• More of the good agreement and bad cohesion EWCs than nothing else (or bad agreement and bad cohesion)

• Usually only some information – which is given really late – and no consultation

• Sanctions are really bad, if they exist at all

The Finnish EWCs

• Sanctions:• The Cooperation Ombusman supervises the

compliance with the EWC law, BUT he cannot set a penalty payment

• The actual sanction goes according to a criminal proceedings: the central management who intentionally or negligently fails to observe or violates the provisions shall be subject to a monitary fine for violation of the cooperation obligation of a group of undertaking

• And it looks like that the EWC following e.g. subsidiary rules has been forgotten from this (covers experts, I&C, extraordinary meetings)

Situation now, ALU-Nokia

The incoming merger:• Nothing has been agreed yet finally• Maybe after 1Q 2016, around the 1st of April 2016• Planned 900 million EURO in synergy savings• Not too many overlapping functions in the two

companies (apart from distribution, mobile networks, support functions)

• About 120.000 employees all in all in Europe• Nokia no longer Finnish, per se, but the

(terminated) EWC agreement still goes by Finnish legislation

• The future HQ still in Finland?

Situation for Euroforum

• Nokia Euroforum agreement was terminated in May 2015, the six months´ period of notice will expire the 1st January 2016 (agreement basically from May 1996, revision 13th June 2002, so a 2009/38/EC Directive agreement)

• NSN EWC was going by the subsidiary rules 2010-2014, in June 2014 NSN was made part of Nokia EWC again => NSN HR-management took charge of the EWC and things changed from then on

• HR management is now from Belgium and Germany (the head of HR), no Finns left ”on the other side”

• Negotiations for new Euroforum agreement could go on for three (3) years (until the end of 2018)

• Biggest changes in the company and in the employment situation could happen after the merger in about two years´ time: what is the state of play for the EWC(s) at that time?

Future for EWC work in ALU-Nokia?

• A totally new agreement for Euroforum? Possibly by the end of March 2016? An “inadequate” draft agreement has been received and declined

• Separate EWC(s): is that beneficial and good for the cause (e.g. the hard employment questions after the merger?)

• A EWC merger too? Into a whole new agreement, into Euroforum (the new agreement/negotiations/subsidiary rules?) or into the present Alcatel-Lucent agreement?

• Into the Alcatel-Lucent –agreement with minor changes?

• How to terminate the Alcatel-Lucent agreement? Would it take 6,5 years to get to e.g. subsidiary rules?

• According to what legislation? The HQ will most likely remain in Finland => Finnish EWC -law

ALU-agreement, the so called art. 13agreement, what does it mean?

• Agreements signed before 22 September 1996 are commonly known as ‘Article 13 agreements’

• This period corresponds to the general derogation clause provided for under Article 13 of Directive 94/45/EC

• Furthermore the definitions and principles contained in the body of the Directives are the prerogative of the legislator As such, they already eluded the competence of the negotiating parties at the time of the conclusion of the agreement and should be applied

ALU-agreement, the so called art. 13agreement, what does it mean?

• Although the obligations arising from the 2009 Directive do not, in principle, apply to agreements signed before 22 September 1996, a number of requirements still have to be fulfilled

• The 2009 Directive states the three conditions that are necessary for the validity of such agreements:(1)The term ‘agreement’ implies that a convention has been concluded between the parties, resulting from negotiations between management and an employees’ representative body, which provides sufficient guarantee of representativity in accordance with the applicable national law(2)The agreement must cover the entire workforce (and means that the `body´ is for the employees only)(3)The agreement must provide for the ‘transnational information and consultation of employees’,

• The correct the definitions and understandings contained in the 2009 Directive of information, consultation and transnationality must be found in the ‘old Article 13 agreements´ also

ALU-agreement, the so called art. 13agreement

• And the general ‘no renegotiation’ principle does not mean that the old agreements are immune from the new rules

• If, after the entry into force in national law of the 2009 Directive, the company experiences a significant change of structure within the meaning of Article 13 (2009 agreement) and the existing agreement does not contain specific provisions in this regard, a negotiation under the terms of the 2009 Directive is compulsory – regardless of the date of signature of the existing agreement

ALU-agreement, the so called art. 13agreement (extra)

2009 Directive Article 13:Adaptation in case of significant change of structure • This obligation did not exist under the old Directive,

so usually the old EWC agreements do not have specific mechanisms for adaptation of the EWC in case of significant change of structure

• In such cases, a negotiation under the terms of the 2009 Directive is mandatory, in accordance with Article 13

• So, where the agreement does not contain adequate provisions in these cases, negotiations under the terms of the 2009 Directive should be triggered following a valid request from employees’ representatives in accordance with Article 13 => so this could be done in this case

ALU-agreement, the so called art. 13agreement (extra)

• If the agreement expires without the significant change of structure and the parties decide jointly to renew or adjust it, the provisions of the 2009 Directive – other than the definitions of information, consultation and transnationality – still do not apply

• If, however, the parties fail to jointly agree to prolong the agreement, new negotiations should be started, in compliance with the new Directive (Art 14.2)

ALU-agreement, the so called art. 13agreement (extra)

• Directive 94/45/EC did not contain a definition of information, and consultation was defined merely as ‘the exchange of views and establishment of dialogue between employees’ representatives and central management or any more appropriate level of management’

• The new Directive’s detailed definitions will govern the functioning of existing EWCs. If the agreement contained different definitions, they will have to be discarded

ALU-agreement, the so called art. 13agreement (extra)

• The adaptation clause of the new Directive applies to agreements that were signed before 22 September 1996

• The application of the adaptation clause involves the negotiation of an entirely new agreement, which will come under the terms of the 2009 Directive

• As the business environment is constantly changing – involving important operations such as mergers and acquisitions – one can logically expect that old ‘Article 13 agreements’ will over time have to be renegotiated, thereby unifying the applicable regimes with regard to EWCs throughout Europe

• Just like is happening in this case

The future, what to consider

• The things to consider here especially:

• The EWC is only a body for the employees and their representatives

• The definitions of information and consultation

• The definition of transnationality• Right to training

Some specifics about the Finnish EWC-law

• In a community-wide group the employees must be informed of any transnational matter and be consulted regarding any transnational matter, at the relevant level of management and representation (HR is NOT enough)

• According to the Finnish EWC-law, only one meeting per year + the possible extraordinary meetings

Act on Co-operation within Finnish and Community-wide Groups of Undertakings

• A transnational matter refers to a matter concerning an entire community-wide group of undertakings or an undertaking, or at least two undertakings of a group of undertakings or an operational unit of a community-wide undertaking located in different Member States of the European Economic Area, and a matter that, regardless of the number of Member States, has a significant effect on the position of the employees or which involves transfers of activities between Member States.

Finnish EWC-law on Information

Information• The information must be provided:

– at such time– in such fashion and – with such content

• as to provide employees’ representatives with the information necessary in terms of considering the matter, allowing employees’ representatives to carry out a sufficient examination thereof and to prepare for the consultation with the competent organ of the group

Finnish EWC-law on Consultation

Consultation• The consultation must be carried out in the form of a

dialogue between employees’ representatives and the central management, or another appropriate level of management– the time– fashion and – content of consultation

• must be such as to enable employees’ representatives to express an opinion on the basis of the information provided on the proposed measures to which the consultation is related

• without prejudice to the responsibilities of the management, but which may be taken into account within the undertaking/undertakings when resolving the matter

Also the Directive 94/45/EC: The EWC is an employee body only

Subsidiary requirements, as referred to in art. 7 of the Directive:• The EWC shall be composed of the

employees of the Community-scale undertaking/undertakings

• The Finnish EWC-law: E.g. the establishment of employees’ negotiating body

• So NO management representatives in the EWC, they can only be the interlocutor (NB: unanimous or majority votes) for EWC

Finnish EWC law on the means

Rights of the employees’ representatives• The members of the European Works

Council shall have the means required to apply the rights arising from this Act, to be able to represent collectively the interests of the employees of the group

• Insofar as necessary for the exercise of their representative duties in an international environment, the members of the employees’ SNB and of the EWC shall be provided with training

Finnish Law,Training and leave of absence

• The employees’ representatives referred to in this Act are entitled to sufficient leave of absence from their work in order to carry out their duties and to participate in training

• The employer shall compensate any consequent loss of earnings

• Any other leave of absence from work and related compensation for loss of earnings shall be agreed upon case by case between the employees’ representative concerned and the employer

Training: what to agree on?

• This clause has to be agreed on very carefully and with a very good planning ahead:– Where? (abroad also?)– When? (how many times per year, also in the

beginning of a new period?)– For how long? (one day, in connection to plenary

meetings? Always or only once a year?)– Organised by whom? (ETUI or someone the

employer prefers?)– What kind of? (Language, economics or something

else too?)– Agreed on by whom? Only by the Select committee

(employees) or in co-operation with the management? Half and half?

1994 and 2009 Directive,Confidential Information

• Directive, art. 8:• The Member states shall provide

that members of the SNB and the EWC and any experts who assist them are not authorized to reveal any information which has expressly been provided to them in confidence

The Finnish EWC-law on Confidential Information

• An employee, who is a SNB or EWC representative or the expert - who assists the employees’ representatives -, has to keep confidential information:– 1)relating to business and trade secrets of the

group– 2)relating to the financial position of the group

(and the said information not being public information and dissemination of such information would probably be harmful to the employer or any of his business partners or contracting parties;

– 3) relating to the security of the group

The Finnish EWC-law on Confidential Information• This do not prevent the persons bound by the

obligation of confidentiality from disclosing the information to other employees or their representatives or experts assisting them, if this is necessary in order to carry out the duties and after having informed of the confidential nature of the information.

• A precondition for confidentiality is that:– the management has indicated to the persons bound

by the obligation of confidentiality what information is considered as business and trade secrets;

– the management has indicated to the persons bound by the obligation of confidentiality that the information is confidential; and (all of these prerequisites have to completed)

– the person bound by the obligation of confidentiality has informed of the obligation of confidentiality to the employees or their representatives or the experts assisting them

The Finnish EWC-law on Confidential Information

• Directive (both) say that the company does not have to divulge information that would – according to objective criteria – seriously harm to company or to its functions (usually refers to insider secrets)

• BUT there should be a administrative or judicial appeal procedure to still get this ”hidden” information according to the Directive

• In Finland this is the Cooperation Ombudsman, the only such in place

Liability for costs incurred by co-operation, the Finnish EWC-law

• Central management is liable for costs incurred by operation of the European Works Council and its working committee which include at least organisation of the meetings and interpreting costs of the meetings as well as travel and accommodation expenses of the members of the European Works Council and working committee unless otherwise agreed

• But no own budget for Select Committee

Finnish law on Composition

Composition of the European Works Council• The members of the European Works Council

shall be elected in proportion to the number of employees employed in each Member State by the undertaking/ undertakings, by allocating in respect of each Member State one seat per portion of employees employed in that Member State amounting to 10%, or a fraction thereof, of the number of employees employed in all the Member States taken together

• Always entitled to one seat, even when employing under 150

• Also like this in the 2009 Directive

1994 Directive on Composition

• In election or appointment is must be ensured that each Member State in which the undertaking has one or more establishments or in which it has the controlling undertaking or one or more controlled undertakings is represented by one member

• There is a deviation in the ALU –agreement from this subsidiary provision

Finnish EWC-law, Standard/subsidiary rules

• The provisions of sections 28―38 on a European Works Council shall apply, but only these

• Hence e.g. the confidentiality clauses are such that you cannot agree on them deviating from the law (section 43)

Thank you for your attention!

Kiitos!

maria.jauhiainen@ilry.fi