The Gazette 1982

GAZETTE

JULY/AUGUST 1982

ployment and a statement to the effect that the new owner

(the "transferee") would, in the near future, be making an

offer to renew his contract of employment or to re-engage

him under a new contract of employment. The employee

was left in the dark as to the reasons for the transfer and the

possible long-term implications resulting therefrom. The

"Acquired Rights" Directive took cognisance of this and

prescribed, as duly implemented by Regulation 7(1) and

7(3) of the 1980 Regulations, that employees on a transfer,

whether they be the employees of the transferor or the

transferee and whether they be represented by employees'

representatives in thefirmor not, receive minimum items of

information. There is in addition an obligation to consult

with the employees' representatives, if any, in the event of

there being any measures envisaged in relation to the em-

ployees consequent on the transfer. While the obligations

to inform and consult in a collective redundancy situation

are only intended to operate where employees' representa-

tives exist in the business, the 1980 Regulations make

special provision for the communication of information

where no such representatives exist.

Inadequacy of existing arrangements

Present information and consultation procedures have

been criticised

on the grounds that when information is

given it is often out of date, incomplete or insufficient, that

the procedures only apply to particular situations (health

and safety and welfare in factories and other specified

premises, redundancy and transfer of a business) and fin-

ally that where information is supplied to employees it only

relates to the affairs of the local business entity so that

employees do not get a clear picture of the corporate

activities as a whole.

The Proposal aims to give employees as complete a

picture of the company's activities and performance as

possible, and where a company has transnational opera-

tions, this will include information on all its activities in the

various countries in which it is established. It has been sug-

gested that increased information will help to clarify issues

for collective bargaining purposes

and may indeed pro-

vide amore appropriatemethod for employee participation

in the enterprise rather than having recourse to methods of

employee participation on boards of companies.

Disclosure of Information under the Proposal

The Proposal requires, in the transnational context, the

management of a dominant undertaking whose decision

making centre is situate in a Member State of the EEC and

which has one or more subsidiaries in at least one other

Member State, to disclose, via the management of those

subsidiaries, information to employees' representatives in

all subsidiaries employing at least 100 employees in the

EEC, and to consult with them on specified issues (Article

4). The management of an undertaking whose decision-

making centre is located in aMember State ofthe EEC and

which has one or more establishments in at least one other

Member State shall have similar obligations in relation to

information and consultation procedures towards the em-

ployees' representatives in all of its establishments in the

EEC employing at least 100 employees (Article 9).

Similar obligations apply

mutatis mutandis

(leaving aside

Article 8 for example) to the management of a dominant

undertakingwhich has one ormore subsidiaries in the same

Member State (and to the management of the undertaking

which has one or more establishments in the same Member

State). The Commission proposed that an undertaking be

regarded as dominant in relation to all the undertakings it

controls (i.e. subsidiaries) where the former (a) holds the

majority of votes relating to the shares issued by the latter,

or (b) it has the power to appoint at least half of the mem-

bers of the administrative, management or supervisory

bodies of the latter where these members hold the majority

of the voting rights. The explanatory memorandum to the

Proposed Directive however makes it clear that the exist-

ence of (a) or (b) only give rise taa presumption of domin-

ance, so that important share holdings (even if they do not

constitute majority holdings) may be taken into account for

the purposes ofestablishing whether

defacto

control exists

or not. This might give rise to difficulty in practice unless

some agreement is reached on what constitutes

de facto

control. What criteria should be adopted to determine

whether a shareholding of less than 50% should amount to

defacto

control? Itiswidely acceptedthat ablock holdingof

say 30% of the shares in the company may constitute

facto

control over that company where the other holdings

are widely dispersed. For the purposes of the Mergers,

Takeovers andMonopolies (Control) Act 1978 enterpris-

es are deemed to be under common control where one ofthe

enterprises has more than 30% of the voting rights in the

shares of the other, or where it has the right to appoint or

remove a majority of the Board or Committee of Manage-

ment ofthe other. It could also be argued that a shareholder

has

defacto

control over a company when he has more than

a 26% shareholding in that company, having in effect, the

power to block the carrying of a special resolution. There

has been much discussion but as yet little agreement on the

Commission's proposed definition of what should consti-

tute "dominant undertaking". It will be interesting to see

what definition will be eventually agreed upon.

Control outside the EEC

The Proposed Directive furthermore provides that the

management ofa dominant undertakingwhich controls one

or more subsidiaries in the EEC (or where control is exer-

cised over one ormore establishments in the EEC, the man-

agement ofthe undertaking concerned) and which does not

have its decision-making centre within the EEC, must

ensure that there is at least one person within the Com-

munity who is capable of fulfilling the requisite disclosure

and consultation obligations. In the absence ofthe manage-

ment so providing, the Proposed Directive states that the

management of the subsidiary that employs the largest

number of employees within the E.E.C. (or in the case of

establishments, the establishment employing the largest

number ofemployees within the E. E .C.) will be responsible

for fulfilling the said obligations.

The information that central management must relay to

the national management of its subsidiaries or establish-

ments, in the context of transnational undertakings or that

management must relay to each of its subsidiaries or estab-

lishments, in the case ofcomplex structures whose decision

making centre is located in the country in which the em-

ployees work, must comprise ofrelevant information giving

a clear picture of the activities of the undertaking and its

subsidiaries or establishments taken as a whole. The man-

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