EU companies must consult workers on business decisions

New legislation will come into effect in 2005 in most European countries

Companies in the European Union (EU) with more than 50 employees will be forced to consult workers on major business decisions, with new legislation that has been recently finalized by EU governments and the European parliament.

The new Information and Consultation Directive (Icon) forces companies to consult employees on all significant decisions, such as restructuring, changes in work organization and the company’s overall economic situation.

Critics say that firms will be made to reveal sensitive information because of the new rules. However, companies have the right to hold back information as long as they provide objective proof that its release would damage the company.

The directive took three years to negotiate and comes into effect in 2005 for most countries.

It is designed to send the message that workers are respected as much as shareholders, the EU social affairs commissioner, Anna Diamantopoulou says. She says companies are already managing change through enlightened self-interest.

Many European companies such as those in France and Germany, already have work councils. However, firms in the UK and Ireland will be more significantly affected by the rules.

The directive was spurred on by the recent closing of Marks & Spencers stores across Europe (except in the UK). Workers were given the news just minutes before it was made public.

The directive must be ratified by the European parliament, likely in mid-January, to become law.

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