What makes a good company? Employee interest representation in European company law: reflections and legal provisions

Report by Janja Bedraè.

Currently, there is a battle over the character of the evolving European system of corporate
governance. At issue is the fundamental choice between two different conceptions of the
firm: the shareholder model, where the purpose of the firm is to maximise value in the interests of shareholders, and the stakeholder model, where the firm has responsibility to a broader range of stakeholders. Potentially, Europe could use its existing legal framework to develop a regime of corporate governance which anchors companies within the society. An important EU contribution to realising corporate social responsibility is the establishment and maintenance of a well-balanced corporate governance framework by legislation which respects different systems of worker involvement and, at the very least, safeguards existing provisions at national level.

National and cultural differences notwithstanding, worker participation has been an everpresent
thread running through the process of creating the European Constitution. Article II-87 of the European Constitution will, if approved, legally establish information and consultation in the workplace as a fundamental workers’ right. It could be argued that these fundamental rights make workers into workplace citizens, underlining the common political will throughout Europe to involve workers as key players in the shaping of Europe’s economic and social future.

The legislation on worker participation in the European Company (SE) (2001/86/EC; 2157/2001), in force since October 2004, as well as the Directive on cross-border mergers (the so-called 10th Directive on European company law, which has to be transposed into national law by December 2007, 2005/56/EC) provide the protagonists on both sides of industry with the opportunity to set up a qualified transnational representation of workers and to realise a range of benefits by involving them in monitoring and influencing management decisions. In interaction with, at least, the relevant provisions of the other main EU Directives on information and consultation, the EWC Directive (94/45/EC) and the so-called information and consultation Directive (2002/14/EC), workers and their trade unions should take the opportunity to develop a joint European policy of interest representation which is at the same time reconciled with companies’ economic objectives.

The so-called Bolkestein plan of May 2003 – ‘Modernisation of European Corporate Governance’ – which is currently under revision, and ETUI-REHS’s so-called GOODCOM project (‘What makes a GOOD COMpany?’) examined the legal role of workers’ participation within corporate governance. From a trade union point of view involvement of workers’ representatives is crucial for sound corporate governance, promising both improved economic performance and fulfilment of the Lisbon strategy. Currently, the project provides monitoring and topical support with a view to influencing the debates of the European Corporate Governance Forum organised by the EU Commission. This may lead to the development of a workers’ voice in corporate governance which stresses the potential for shaping (global) financial markets in the workers’ interests.

ETUI Report (2006): What makes a good company? Employee interest representation in European company law: reflections and legal provisions http://www.etui.org/Publications2/Reports/What-makes-a-good-company

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