The Impact of European Union Law on Employee Involvement in Estonia

Author:Merle Muda
Position:Docent of Labour and Social Welfare Law, University of Tartu

1. Introduction - 2. Definition and subjects of involvement - 2.1. Definition of involvement - 2.2. Subjects of involvement - 3. General framework of employee involvement - 4. Employee involvement in individual matters - 5. Employee involvement with Community-scale legal persons - 6. Conclusions


Merle Muda

Docent of Labour and Social Welfare Law, University of Tartu

The Impact of European Union Law on Employee Involvement in Estonia

1. Introduction

Estonia started to co-ordinate its labour legislation with European Union (EU) law after entering into the Association Agreement1 with the European Communities and their Member States in 1995, insofar as with that agreement Estonia undertook to converge and harmonise Estonian legislation with European Union law, especially in the fields of commerce, economy, and related areas, including with respect to matters pertaining to employee protection (addressed in Articles 68 and 69 of the Association Agreement). According to the European Commission White Paper of 1994, the associated Member States had to implement the necessary accession measures in order to transpose into national law and practice the basic rules of Community social policy, including the seven labour rights directives established by that time2. Of this legislation, employee involvement was discussed in Directive 94/45/EEC3 , on the establishment of a European Works Council, and the obligation to inform and consult employees was also included in Directive 75/129/EEC4 , on collective redundancies, and in Directive 77/187/EEC5 , on transfers of undertakings.

The labour legislation that existed in Estonia before accession to the EU included no fundamental disagreement with EU law; in some areas that the EU had considered necessary to regulate, however, rules had not been established or were insufficient in their detail6. Three areas can be pointed out in which the harmonisation of Estonian legislation with European law turned out to be most problematic. These are the equal treatment of employees, the limitation of weekly maximum working time, and employee involvement7. While with respect to harmonising the regulation of the amount of working time the most immediate necessity was to change practical organisation of work in order to decrease working time from 60 hours to 48 hours a week8 , with respect to equal treatment of employees and employee involvement the differences existed more in principle. Estonian national law included individual provisions addressing both areas, but in practice their meaning was marginal. While, with regard to equal treatment of employees, the reason behind the minimal regulation could have been the society's meagre knowledge of equal treatment and equal opportunities9 , the absence of employee involvement regulation was mostly due to the low importance of employee trustees in shaping employment relationships10.

Neither had attention been paid to improving national employee involvement rules in the EU integration action plans drafted in Estonia in the second half of the 1990s for the implementation of the rules established in the above-mentioned white paper11. On the one hand, this could be explained by the fact that the subject matter of employee involvement was unfamiliar to Estonian practice; on the other hand, also the EU started to pay more attention to developing this area only at the beginning of the current decade12 , when several significant employee-involvement-related directives were adopted - 2001/86/EC, on employee involvement in the affairs of the European Company (Societas Europaea, or SE)13 ; 2002/14/EC, establishing a general framework for informing and consulting employees14 ; 2003/72/EC, on the involvement of employees in a European co-operative society (or Societas Cooperativa Europaea, SCE)15 ; etc.

Although collective employment relationships have developed little in Estonia and consequently the associated employee involvement issues have been relatively unfamiliar, Estonia has now brought its labour legislation into concordance with the respective EU provisions. Hence, this article aims to examine the impact the transposition of EU employee involvement rules has had on the functioning of employment relationships in Estonia. In order to reach this goal, the author firstly studies the definition and subjects of employee involvement, insofar as the position of the latter has a great influence on the efficiency of employee involvement, continuing with the general framework of employee involvement, employee involvement in individual matters, and employee involvement in Community-scale undertakings, focusing not so much on analysing the transposition of directives verbatim as on trying to provide broader evaluation of the effects thereof16.

2. Definition and subjects of involvement
2.1. Definition of involvement

In the broadest sense, employee involvement means employee participation in making microeconomic decisions at the workplace (plant) or enterprise level17. Employee involvement thus refers to workers' opportunity to influence organisational decisions, regardless of their position in the company hierarchy18. Employee involvement can assume different forms. According to theoretical sources, employee involvement usually comprises the right to acquire information, the right to conduct consultations, and the right to co-decide (i.e., participate)19. Also, EU employee involvement Directives 2001/86/EC (Article 2 (h)) and 2003/72/EC (Article 2 (h)) define employee involvement as any kind of procedure, including informing, consulting, and participation, that employee trustees can use to influence the decisions made in an undertaking.

Unlike several older Member States20 , where the traditions of employee involvement go way back and where national regulations have served as a model in drafting the respective EU legislation, the concept of employee involvement was unfamiliar in the labour legislation existing in Estonia prior to accession to the EU. Influenced by EU law, the Trade Unions Act21 (TUA) of 2000 obliged the employer to inform and consult the representatives elected by the trade union, but it did not elaborate on the concept of these terms, only listing the areas in which informing and consulting was obligatory22. The employee involvement-related terminology based on EU law is thus a new phenomenon in Estonia's legal order.

The concepts of informing and consulting employees have been established in the Employee Trustee Act23 (ETA), which harmonises national law with EU Directive 2002/14/EC, and the Community-scale Involvement of Employees Act (CSIEA), which transposes into Estonian law Directives 94/45/EEC, 2001/86/EC, and 2003/72/EC, as well as the cross-border mergers directive (2005/56/EC)24. Insofar as employees in Estonia do not have the right of co-decision - i.e., employees do not participate in the activity of the bodies of legal persons - the respective regulation is only laid down in the CSIEA, applying to European companies (SEs) and European co-operative societies (SCEs).

The concept of informing is laid down in the ETA's § 19 (1) and the CSIEA's § 3 (1) in almost identical wording25 - informing refers to the informing of the employee trustees on an appropriate level that allows the employees to receive a clear and sufficiently detailed overview of the structure and economic and employment situation of the employer, on time, and possible development of the structure, situation, and other circumstances affecting the interests of employees, and to understand the effects of the situation and other circumstances on the employees. If one compares the definition of informing laid down in Estonian legislation to the corresponding definitions in the EU Directives (2001/86/EC (Article 2 (i)), 2002/14/EC (Article 2 (f)), and 2003/72/EC (Article 2 (i))), it may be concluded that, as the national regulation mostly provides a more thorough definition of the term than is required in EU law, it comprises that laid down in the directives26.

The ETA's § 19 (2) and CSIEA's § 3 (2) provide a similar definition of consulting - consulting means exchange of views and the establishment of dialogue between the employee trustee and the employer on an appropriate level allowing the employee trustee to express opinions and receive reasoned responses to the opinions expressed from the employer. As Estonian legislation, similarly to Directives (94/45/EEC (Article 2 (f)), 2001/86/EC (Article 2 (j)), 2002/14/EC (Article 2 (g)), and 2003/72/EC (Article 2 (j)) open the definition of consulting by means of exchange of views, establishment of dialogue, and expressing of opinions, the definition of consulting provided in the national law is in compliance with EU law.

As the last form of employee involvement, employees' right of co-deciding (participating) was mentioned above. Under Estonian legislation, this is only possible with regard to SEs and SCEs27. Proceeding from Directives 2001/86/EC (Article 2 (k)) and 2003/72/EC (Article 2 (k)), the respective term is laid down in CSIEA § 46, where the participation of employees means the right to elect or appoint some of the members of the bodies of an SE or SCE, or the right to recommend or oppose the appointment of the members of the bodies of an SE or SCE. This, too, complies with the provisions of EU legislation.

In analysis of the definition of employee involvement, it may be concluded from the above that this concept was unfamiliar in Estonian law prior to EU accession and that it was adopted only as a consequence of the harmonisation of national law with EU regulations. Pursuant to Estonian law, employee involvement means informing, consulting, and participation of employees, and the respective terminology is in compliance with EU legislation. Insofar as the concept of employee involvement established in the legislation is clearly defined and sufficient, it creates a good legal...

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