Significant structural changes - European Works Councils: Impact of Brexit and actions required

Following the UK’s withdrawal from the European Union (commonly known as “Brexit”) and the expiry of the transition period on December 31, 2020, the UK is no longer a member state of the EU. It is considered a third country with regards to the implementation and application of EU law. The European Works Council Directive 2009/38/EC (“EWC Directive”), which is transposed to local/national law by the countries of the European Economic Area (EEA), no longer applies to the UK. This has consequences for the establishment of new EWCs, but also for existing EWCs as well as any central management or representative agents previously located in the UK. A company or group of companies may even no longer qualify as a “community-scale undertaking” or “community-scale group of undertakings”, respectively, for purposes of the EWC Directive.

Companies have to consider (i) whether the EWC Directive continues to apply to them at all and, if not, whether existing EWCs may have ceased to exist, (ii) whether employees of a UK undertaking may continue to participate in an EWC, (iii) what the location requirements are for central managements or representative agents, (iv) whether the law governing existing EWC agreements changes or should be changed and (v) in which way ongoing or future negotiations are impacted by a changed headcount ratio between businesses in the remaining EEA countries.

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