On 10 November, Parliament definitively adopted the Corporate Sustainability Reporting Directive (CSRD) (see Due diligence), which will be formally approved by the Council, and then published in the OJEU. The initial text put forward by the Committee in April 2021 (see IR Notes 163) has been significantly strengthened by MEPs (see European Parliament press release). Undertakings with more than 500 employees are already subject to a number of obligations concerning the reporting of non-financial information, but the scope of these obligations will be broadened by this directive, which grants new rights to employee representatives, and at the same time strengthens social dialogue. Undertakings will have to publish data on their societal and environmental impact at regular intervals, in the form of a sustainability report. The directive will apply to all large undertakings, whether or not they are listed on the stock exchange, and to non-European undertakings whose turnover exceeds 150 million euros in the EU. Publicly listed SME will also be subject to these obligations. It is estimated that going forward, 50,000 undertakings will have to publish a sustainability report, compared to the current figure of 11,700. Undertakings with more than 500 employees, which are already subject to the current Non-Financial Reporting Directive, will have to publish their initial sustainability report in 2025. Large undertakings that are not subject to the current directive will publish their report in 2026. SME and other undertakings will publish their report in 2027. The sustainability report must enable workforce representatives to understand their company’s impact on the environment and on society, and its sustainability strategy. It will also contain a lot of information on social issues, such as data on employment, training, working hours, decent wages and the existence of works councils. The undertaking’s management will be required to inform “workers’ representatives at the appropriate level” and discuss “with them the relevant information and the means of obtaining and verifying sustainability information. The workers’ representatives’ opinion shall be communicated, where applicable, to the relevant administrative, management or supervisory bodies” (Article 19). Recital 9 states that the ultimate beneficiaries of sustainability reports include “trade unions and workers’ representatives who would be adequately informed and therefore able to better engage in social dialogue”. The text therefore assigns an important role to employee representatives and also to European Works Council members, who will express their opinion on the sustainability report. This information will also help to nurture social dialogue at EWC level, and employee representatives at companies that do not yet have their own EWC will be able to draw on it to support their request for one to be created.

> Note: The German trade union confederation DGB has openly expressed its delight at the adoption of this law, pointing out that, “for the first time, the European institutions will force the companies concerned to include the representation of their employees’ interests in the preparation of sustainability reports”. General Secretary Yasmin Fahimi describes it “as a huge step forward” (see press release).

Due diligence : On 7 November, the Dutch MEP Lara Wolters (S&D) presented her report on the proposal for a directive on Corporate Sustainability Due Diligence, which was adopted by the European Commission on 23 February (see IR Notes 181). The aim is to hold companies liable for breaches of human rights and damage caused to the environment throughout their chain of suppliers and subcontractors. The text, which will be analysed by Parliament’s Committee on Legal Affairs, proposes to cut the thresholds of application in the Commission’s proposal. The text applies to companies with more than 250 employees (rather than 500, as previously) and a net worldwide turnover exceeding 40 million (rather than 150 million). It also applies to companies operating in ‘high-impact’ sectors posing significant risks of adverse human rights and environmental impacts, which employ more than 50 employees (rather than 250) and realise a net worldwide turnover of 8 million euros or more (rather than 40 million). The list of at-risk sectors is also being extended, and in addition to the three sectors identified by the Commission (textiles, agriculture, ore extraction), now includes several others: construction, financial services, production of information and communication technologies, and software solutions including artificial intelligence. The text also applies to companies from third countries that are active in the EU. The report adds adverse impacts on “good governance” to the existing categories of environmental and human rights impacts. Consultation with affected stakeholders at all stages of the process has been added to the list of actions that companies are required to undertake in order to eliminate – or attempt to eliminate – negative impacts within their value chains. These stakeholders now explicitly include “the company’s workers, the workers of its subsidiaries” (and no longer just “employees” of the company or of its subsidiaries) and “trade unions, workers and their representatives”.

New compromise on AI regulation : On 19 October, the Czech Presidency of the EU presented a new compromise text on the proposal for a Regulation laying down rules on AI. The text keeps systems in the category of high-risk AI, where they are: 1) intended to be used for recruitment or selection of natural persons, notably to place targeted job advertisements, to analyse and filter job applications, and to evaluate candidates; 2) intended to be used to make decisions on promotion and termination of work-related contractual relationships, to allocate tasks based on individual behavior or personal traits or characteristics and to monitor and evaluate performance and behavior of persons in such relationships. Such systems “may appreciably impact future career prospects and livelihoods of these persons” and “may perpetuate historical patterns of discrimination” (see Artificial intelligence).

Law on the Deal for Employment : The Law of 3 October 2022 enacting miscellaneous provisions relating to labour has been published. It adopts the measures taken within the framework of the Deal for Employment. The law enables an employee who is working full-time to apply to work a four-day week or to adapt their working hours into a cycle covering two consecutive weeks. During this cycle, the employee can work up to 9 hours per day and up to 45 hours per week, provided that they work 31 hours the following week, in order to comply, on average, with the number of hours comprising the normal working week. The law encourages e-commerce, by allowing employers to introduce night-time working, between 8pm and midnight, and from 5am onwards, based on a collective labour agreement (with the agreement of a single trade union) or, within the framework of an 18-month pilot project, to ask their employees to volunteer to work nights during these same hours, without establishing a collective labour agreement or amending the labour regulations. The law also obliges companies with more than 20 employees to conclude agreements on the right to disconnect, by 2023 (see press release).

• Minimum wage : On 19 October, the government fixed the minimum wage for 2023 at 700 euros (5,274.15 HRK) per month gross, i.e. 560 euros net (4,219.32 HRK). Following this decree, the new minimum wage now stands at 62.14% of the gross median wage. Since 2016, the gross minimum wage has risen by more than 69%. This increase will benefit the 30,000 employees who are paid the minimum wage and the 70,000 whose wage is currently below the new amount.

Towards a reform of the law on dismissal : At a meeting organised by the Association of Economic News Journalists, the Minister of Employment, Yolanda Diaz, announced that she wanted to embark on a reform of the existing dismissal rules that would involve reformulating the grounds for dismissing employees, and moving towards what she called “reparative or restorative dismissal”. This involves providing for differing levels of compensation, in line with the impact of their dismissal on the persons concerned. The formula used to calculate the amount of compensation payable, which will be a matter for social dialogue, might include factors such as a person’s age, their education and training, gender, income or the nature of their household (family, single person) (see APIE press release).

Trade-union representativeness : In its decision no. 2175/2022 dated 10 November, the Council of State called into question a reform relating to the representativeness of trade unions. Under Law 4808/2021 governing the protection of employment and the Minister of Employment’s decision no. 62599/26.8.2021, a general register of trade unions and employers’ organisations (GEMISOE) was created, allowing trade unions that are recognised by law to take part in collective bargaining in Greece. The Council of State declared that the cumulative suspension of a series of trade union rights, in cases involving non-registration or a failure to update the data needed to create an entry in this register, as provided for by law, constitutes clearly disproportionate and particularly serious interference in the right to freedom of association, and is therefore a breach of the Constitution. The Council of State also noted that the register breaches the General Data Protection Regulation (GDPR) by revealing details of trade union membership. This law also included provisions covering employees’ digital voting rights. The trade unions have been very critical of these provisions, claiming that they are anti-constitutional in nature (see press release issued by the trade union confederation GSEE).

• Teleworking for medical reasons: The government has published a decree allowing private-sector employees to switch to teleworking for medical reasons, from 1 January 2023 onwards. The decree establishes a list of pathologies, illnesses or disabilities in connection with which employees can apply to switch to teleworking, provided they produce a medical certificate (see press release).

Law on tipping : The government has announced a change in the law (the “Payment of Wages (Amendment) (Tips and Gratuities) Act 2022”), which will come into force on 1 December, granting employees the legal right to receive tips and gratuities paid by electronic means (see IR Notes 180). It requires tips to be paid to employees fairly, and imposes an obligation on employers to provide information on how tips are calculated and paid (see press release). The Irish Congress of Trade Unions (ICTU) has welcomed the introduction of this arrangement (see press release).

Labour market : The National Institute of Public Policy Analysis (INAPP) has unveiled a report demonstrating the structural weaknesses of the labour market, which “seems to be constantly trapped in a state of precariousness”, according to the INAPP. Seven out of ten new contracts of employment signed in 2021 were fixed-term contracts; 11.3% of employees (compared to an average of 3.2% for the OECD countries) are currently engaged in involuntary part-time working, and poor workers now represent 10.8% of the total labour force (compared to 8.8% at EU level) (see press release).

Securing the future of a production site : On 10 November, the German works council prize was awarded to the automotive subcontractor Gestamp Griwe at Haynrode (Germany). The award recognised the works council’s efforts to secure the ongoing operation and future of the site, which had been threatened by a restructuring involving 145 job losses. The council initiated a process that resulted in new orders, an increase in turnover of 25 million euros per year and further investments (see presentation of case). IG Metall’s Vice-President Christiane Benner believes that this case justifies the call to strengthen the works council’s joint management rights linked to the strategic orientation of businesses, as part of a reformed and updated law on business organisation. “In that case, we would at last be able to offer more effective opposition to the plans put forward by employers, which are always the same and completely devoid of any ideas”, she argues (see IG Metall press release).

• Digitalisation : The management of the Swedish ready-to-wear store chain H&M and the German trade union ver.di have signed a collective bargaining agreement that aims to involve the company’s 14,300 employees in Germany in the digital transformation process. The agreement expands the Central Works Council’s participation rights and establishes a ‘Digitalisation Advisory Board’, made up of ver.di and H&M representatives, which can put forward both its own proposals for implementing digitalisation and proposals submitted by the workforce. The agreement also provides for store workers to be involved in assessing new working methods at selected pilot stores, and for special protection against staff dismissals and demotions during the digitalization process. In addition, any bonuses paid will be based on the development of turnover, to offset the decline in commission payable on in-store sales, as a result of the growth of on-line sales (see press releases issued by ver.di and UNI Europa).

Sharing the benefits of economic growth : At a time when inflation has returned, attention has focused once again on sharing the benefits of economic growth, the UK’s Trades Union Congress (TUC) has produced a report, published on 16 October, entitled “Companies for People – How to make business work for workers”. It emphasises the contrasting trends seen between 2008 and 2019 in the increases in dividend payments (which rose by 6.3% per annum) and wages (1.9%), and points out that in real terms (after inflation is taken into account), the average wage fell by 0.3% per annum, while dividends rose by 4% per annum. The report establishes a link between the teaching delivered in business schools, which is focused on strategies based on shareholder value, and the growth of precarious forms of employment, which means that workers are the ones who lose out. The report argues that the interests of shareholders and workers need to be balanced more fairly, and puts forward a series of recommendations: directors’ duties should be amended to require directors to focus on the company’s long-term success; one third of the seats on the board of companies with over 250 staff should be assigned to worker directors; collective bargaining should be boosted by simplifying the procedures in place for unions to have access to workplaces and for establishing union recognition; and fragmented employment relationships should be tackled by introducing strict joint and several liability for core employment rights in UK supply chains (see press release).