Works council 'maelstrom' ahead

Large British companies will be warned today that they are facing a "maelstrom" of bureacracy and litigation over the introduction of European works councils.

The stark warning will come from the Engineering Employers' Federation, which will point out that there are only 100 working days left before a potentially punitive Brussels directive is activated.

If multinationals have not set up a voluntary framework for consulting and informing employees by then, strict and detailed European laws will come into force which will dictate exactly how they should establish a works council.

Peter Reid, an employment law specialist at the EEF, yesterday estimated that a third of the 50 to 60 British companies who had adopted a "wait- and-see" attitude had done so through ignorance and prevarication. If organisations had not already set in train a process for the creation of a council, they were now too late, he said. Unions in the UK and on the Continent had been granted pounds 40m to prepare for the process - which worked out at around pounds 60,000 per multinational - and were "well organised".

Many multinationals had good reasons to await imposition of the works councils under European law, Mr Reid conceded.

Some had delayed because they were undergoing restructuring and felt it was the wrong time to establish such a structure.

Others found there was no "synergy" between businesses they owned in separate countries. One of Mr Reid's corporate clients has 29 business divisions producing 29 different products and services in EU countries.

But a significant number of British-based multinationals were unaware of the implications of the works council directive. "There's little doubt that some companies have little idea of how it will work and are heading for a maelstrom.

"The negotiations will be very constrained. There was a strong political flavour to the debate over Maastricht, so businesses did not look at the works council provisions because of the opt-out. The whole idea seemed alien to them."

Despite the UK's social opt-out from the treaty, all British companies with 1,000 employees in the 15 EU states, with at least 150 in each of two countries, must set up the consultative machinery if requested by workers.

The opt-out allows organisations to exclude British workers from the councils, but all those who have set them up, or intend to do so, are ignoring that provision.

The TUC estimates that eventually 3 million Britons will be covered by councils, whether employed by UK firms or by foreign multinationals with British subsidiaries.

Nick Clark, a senior official at the TUC, said some firms had betrayed "astonishing ignorance" on the issue, while others were secretly preparing a works council structure in an attempt to exclude unions.

Only two EEF members, GKN and Electrolux, have so far voluntarily created a council, but Mr Reid expects another dozen agreements by 22 September.

Outside the engineering sector, Coats Viyella, ICI, Pilkington, NatWest, United Biscuits and BT already have systems in place.

After September, the directive can be invoked at a qualifying company by any employee who can legitimately claim to represent 100 of his colleagues. All such companies will have to set up a council three years after that, or face even stricter laws which will dictate the exact form of the consultative structure.