EU agrees new European Works Council Directive

The current EWC Directive outlines the processes for creating EWCs and for informing and consulting them on transnational matters, such as some cross-border M&As, outsourcing, restructuring and redundancies. Changes in the new Directive include:

• increasing workers’ and EWCs’ rights
• raising employer costs, such as funding EWC experts, legal fees, training, expenses
• expanding the scope and breadth of management’s EWC information and consultation obligations
• requiring management to justify the confidentiality, or withholding, of information 
• removing the exempt status of ‘legacy’ EWCs
• strengthening sanctions for non-compliance

Member States (MS) must, by 1 January 2028, implement the new Directive. Some changes take effect from 2 January 2028 and others will apply from 2 January 2029.

What should I do?

Employers, both with an existing EWC and those in-scope but without, should risk assess the impact on their businesses and take advice on how to respond. In-scope businesses are those with at least 1,000 employees within the EU or European Economic Area and at least 150 employees in each of two countries. When risk assessing, the following changes should be considered:

When transnational EWC consultation is triggered

EWCs' rights are limited to “transnational”, as opposed to local, developments, leading to some disputes over scope. A new expanded definition is expected to result in more EWC consultation. For example, it requires both a current and future reasonable assessment of the effects of a development and, significantly, includes indirect cause and effects (where it affects workers in one MS and the consequences can reasonably be expected to affect workers in another).

Information and consultation (I&C) changes

Transnational I&C with an EWC may need to start at an earlier stage, demand more management time and attention and become longer in duration, reflecting the following changes:

• the need for timely information-sharing by management, taking into account any provisions in the EWC agreement for representatives to consult with national bodies (e.g. works councils)
• a new entitlement for EWC representatives to express their opinion, and receive a reasoned written response from management, prior to the adoption of a decision (provided the opinion is given within a reasonable time)
• clarifying the role of EWC members to represent and update workers as a “right”, supported by the means to fulfil that right (which might include facilities and finance)

Confidentiality

Where information is subject to confidentiality restrictions, such restrictions must be in the legitimate interests of the business, according to new objective criteria (to be laid down by MSs), and a justification given. Where information is withheld, the conditions (to be laid down by MSs) are being tightened and a justification should be given.

Management will need to ensure that confidentiality or non-disclosure can be justified and meets the conditions set down by MSs and the Directive. Employers should assess the impact of these changes as, for some, it may require a change in practice.

EWC costs

These are set to increase, for example: expenses relating to negotiating an EWC, including reasonable costs for experts, must be borne by the business; the EWC agreement must clarify funding for the EWC’s use of experts, of trade union advisors and for training; reasonable training costs and expenses must be funded as well as the funding of reasonable legal and associated costs if the EWC enforces its rights. Increased costs under the subsidiary requirement changes (below) are also expected to prompt similar demands, and accompanying costs, for other EWC agreements.

Determining sanctions

The revised Directive requires MSs to ensure that EWCs can enforce their rights, by providing timely and effective procedures and remedies. Penalties should take into consideration the gravity, duration, consequences and the intentional or negligent nature of the offence. MSs should also provide for financial penalties (alongside any other sanctions they make available) for a breach of information and consultation duties - these financial penalties should additionally take into account annual turnover. A controversial proposal to introduce a mandatory financial penalty, based on a fixed percentage of global turnover, has not been included. However, employers should anticipate EWC enforcement risks, including financial penalties, increasing in some MSs.

Legacy EWCs

Some EWCs, mainly those agreed before the original 1994 Directive was applied, are exempt from EWC laws. The revised Directive deletes their exemption from 2 January 2028 and affected employees may initiate negotiations for a new EWC over a reduced two (not three) year period, after which the default (known as “subsidiary”) requirements apply if no agreement is reached. However, there is no requirement to negotiate a new EWC and it will depend on whether a request is received or the employer initiates the process.

Employers with legacy EWCs should review their arrangements now, including assessing any gaps between legacy terms and those provided for under the revised Directive, alongside a health check of the EWC and the likelihood of a request. Where such requests are made, employers should be cautious in concluding negotiations until such time as they are clear how the Directive is being transposed under the applicable MS’s governing law relevant to their EWC agreement. 

Also, from 2 January 2028, for those EWCs subject to EU law, transitional arrangements encourage parties to renegotiate their agreements within a two year period (if requested, or initiated by management and the two years running from the request/initiation), to reflect the revised standards under the new Directive.

Other changes

Other changes include: improving EWC gender balance (parties must aim for at least 40% representation of men and women); strengthening protection for EWC members and other representatives (e.g. from retaliation); increasing EWC rights under the subsidiary requirements (e.g. increasing the number of plenary meetings to two, held in person; expanding the topics for EWC I&C; giving experts, which may come from trade unions, the right to attend meetings with management in an advisory capacity; and removing the single expert funding limitation); and increasing the likelihood of the subsidiary requirements applying if management do not respond sufficiently quickly to a new EWC request.

Review the amending EWC Directive: Directive - EU - 2025/2450 - EN - EUR-Lex