Towards a Europeanization of indirect employee participation: Polish experiences

Introduction

The need to adapt Polish legislation to the requirements of EU law resulted in the emergence of new forms of indirect employee participation in Polish industrial relations. Representatives to European works councils (EWCs) have been appointed in Polish subsidiaries of multinational companies and works councils have been established in Polish enterprises employing at least 50 workers. The Act on Informing and Consulting Employees, enabling the formation of works councils, sparked a lively debate among trade unions, employers’ organizations, as well as scholars. As from the 1980s, employee participation in Poland used to be mainly associated with controversial employee councils in state-owned enterprises. In the beginning, these employee organizations performed well, but soon became subordinated to the Party and state apparatus. Subsequently, economic transition and the privatization of enterprises almost completely eliminated employee councils from Polish industrial relations. It should be noted, however, that in the first period of economic transformation employee councils played an important role in the process of privatization and creation of employee share ownership (Dryll, 2006). In Poland, which has a rich tradition of employee participation (works committees between 1945 and 1947, workers’ councils between 1956 and 1958), even before the implementation of the 2002 Directive on the Information and Consultation of Employees (2002/14/EC), there were two different solutions in terms of representative employee participation. The first was workers’ self-management in the form of employee councils in the state-owned enterprises. The second involved employees’ representatives on supervisory boards of privatized enterprises.

The sceptical attitude of Polish trade unions to the implementation of the 2002 Directive and establishment of works councils resulted from the fear of competition from the latter and the loss of monopoly on employee participation by the former. In turn, employers did not welcome the councils due to an expected rise in costs of enterprise operation and a risk of disclosure of corporate secrets. In time, however, trade unions came to accept works councils as partners, and actually it was the unions that were the main initiators of the councils in Polish enterprises. Research shows (Bednarski, 2010) that employers have also changed their attitude towards works councils. Interviewed representatives of company boards expressed generally positive opinions of works councils and perceived them as partners easier to deal with than trade unions.

As the introduction of works councils in Polish enterprises was motivated by the requirements of the 2002 Directive, the question arises as to whether this has actually affected the position of the main representatives of workers’ interests. Trade unions still remain the leading actors on the employee side of Polish industrial relations due to the strong tradition of trade unionism, the positive impact of trade unions on socio-economic order (Goździewicz, 2001), the indisputable achievements of trade unions as organizations protecting employee interests, as well as the predominance of union representatives in works councils. In contrast, the position of Polish works councils is rather weak as their powers are smaller than those of their counterparts in Western Europe; in Poland they only enjoy the right to information and consultation. This is compounded by the fact that in many cases they do not make good use of their statutory rights.

Interestingly, trade unions exhibit quite a different attitude to works councils at the European level (European works councils). Polish trade unions, and above all Solidarity (Solidarność), pioneered EWCs in the countries of Central and Eastern Europe. Even before Poland’s accession to the EU, they had played an active role in negotiating and renewing EWCs agreements. Trade unionists were also the dominant group among Polish representatives in EWCs (see Rudolf, 2001; Skorupińska, 2006). It is estimated that at present Polish representatives are members of nearly 200 EWCs. However, not a single EWC has been established in Poland even though some multinational companies headquartered here fall under the EWC Directive.

This article discusses changes in Polish industrial relations after Poland’s accession to the EU, focusing on the difficult process of the development of a new institution of employee participation in the form of works councils. The following section presents some conceptual remarks regarding the Europeanization of employee participation and reasons for the introduction of its representative forms in countries of Central and Eastern Europe. The third section outlines the history of employee councils in Poland, which were a sort of equivalent to EU works councils. The process of implementation of the EWC Directive into Polish legislation is then explained and the experiences of Polish representatives in those organizations operating in multinational companies are described. The fifth section reports on the discussions and disagreements between the social partners which accompanied the introduction of works councils in Polish enterprises. Experiences from the functioning of these institutions, whose emergence in Polish industrial relations changed the system of employee representation from single to dual, are related in the sixth section. Finally, the concluding section discusses the effects of the Europeanization of indirect employee participation on Polish industrial relations.

Employee participation: Prospects of Europeanization

The literature on employee participation provides a wide range of arguments for the introduction of its forms within companies. Poutsma (2001) identified four main arguments supporting employee participation: the humanistic argument, power-sharing argument, organizational efficiency argument and redistribution of results rationale. Summer and Hyman (2005) subsumed these arguments under the three main reasons for the introduction of participation, called the economic, social and governmental. These reasons in large measure correspond to the three functions fulfilled by participation according to the Knudsen’s concept (1995), i.e. higher efficiency, industrial democracy and social integration. Also, the European Commission justifies the introduction of participatory solutions in the EU countries using a wide range of rationales from company law harmonization, through prevention of social dumping and extension of workers’ rights to more recently, participation as a ‘productive factor’ (Gold, 2010). These reasons and their acceptance are meant to contribute to the harmonization of the varied industrial relations in the area of employee participation in the EU countries. The Europeanization of participation is associated primarily with the implementation of the three directives in the member states: the European Works Councils Directive, the European Company Statute and the Directive on the Information and Consultation of Employees.

There are three mechanisms of Europeanization which can be efficiently applied to the area of employee participation (Fetzer, 2010). They influence the development of participation and changes in industrial relations in the EU countries. The first mechanism involves the direct institutional effects of EU employee participation directives. The circumstances surrounding the implementation of these directives at the national level and the practical functioning of new participatory institutions play an important role here. Among the countries of Central and Eastern Europe, only Estonia implemented the EWC Directive after the deadline (i.e. after 1 May 2014) into national legislation. In Poland, the Act on European Works Councils was passed on 5 April 2002. The transposition of the Directive took a relatively long time in Lithuania, which was primarily associated with a very low level of development of social dialogue in this country (Blažiene, 2004). In the case of the Directive on Information and Consultation only Hungary, Lithuania and Slovakia have implemented it on time (Impact of the Information and Consultation Directive …, 2008).

The two other mechanisms of Europeanization indicated by Fetzer (2010) relate primarily to the impact of EU regulatory attempts on the strategies and power position of government and social partners as well as their ideas and beliefs with regard to participation. In most countries in Central and Eastern Europe, trade unions and employers’ organizations looked upon the need to implement the Directive on Information and Consultation with scepticism and even hostility. Trade unions feared that the new participatory institutions might threaten their organization or position. Employers believed that works councils would interfere in the management of enterprises. In Estonia, trade unions even organized many protests opposing the draft of the Employee Trustee Act, because it significantly reduced the rights of trade union representatives (Nurmela and Kallaste, 2009). Only in Latvia did the debate go smoothly between the social partners on the implementation of the 2002 Directive. The attitude of trade unions and employers’ organizations to new forms of participation was neutral there and the social partners approved the Act on works councils as a necessary aspect of social dialogue development (Karnite, 2009). In two countries of Central and Eastern Europe (Hungary and Slovenia), the operation of works councils had already been settled back in the 1990s and the regulations were later adapted to the requirements of the EU Directive. The issue of employee representation in Hungary was addressed at such an early point because of a desire to reform the economy and society on the model along the lines of Western countries, as well as due to the fragmentation of the trade union movement (Sobczyk, 2007). In Slovenia, the implementation of the law regulating the activities of works councils took place relatively quickly and without objection on the part of employers or trade unions (Končar, 2014). In the Czech Republic the establishment of works councils was preceded by a broad debate between the social partners and the government about the role of these institutions with regard to union representation. The union position prevailed, and in accordance with the amendment of the Labour Code of 2001 councils could be established only in enterprises in which the unions were not present. Works councils obtained very limited rights to consultation, which according to Wratny (2002) means that they act as a kind of prosthesis, and not an institution to offset the lack of trade unions in non-unionized enterprises.

Employee councils as forerunners of indirect employee participation

The idea of workers’ self-management has a long and chequered history in Polish industrial relations, going back to 1919, when councils of workers’ delegates spontaneously began to form under the influence of the October Revolution. However, workers’ self-management in Poland was not given legal foundations until the adoption of a decree on the establishment of works committees in February 1945. These institutions survived only two years and were transformed into trade union bodies. Workers’ self-management was revived in 1956 by the Workers’ Council Act (Przybylski, 2010). The councils were given broad management powers in terms of both economic and employee issues. The Act also made company directors accountable to workers’ councils and the state. However, according to Wratny (2010a), the Workers’ Councils Act promised more than was actually granted to employees. Workers’ self-management in this form lasted only until 1958, when workers’ councils were replaced by workers’ self-management conferences.

It was not until 1981 that workers’ self-management began to thrive with the adoption of the Act on Workers’ Self-Management of State-Owned Enterprises. Employees were given the opportunity to exercise their participatory rights, either directly, by the general meeting of company employees, or indirectly, by the employee council (Stegemann, 2011: 132). These councils were forerunners of representative participation in Poland. Their statutory powers far exceeded the powers of exemplary German works councils, which had already been functioning for a long time. Employee councils in Poland were granted broad supervisory powers in relation to the company’s managing director, including the right to suspend the implementation of his or her decisions if they should be found inconsistent with the council’s resolutions (Ustawa o samorządzie …, 1981: Art. 40). In accordance with Article 24 of the Act, employee councils could pass resolutions on investment, adopt and amend the company’s annual plan, and approve the annual report and balance sheet.

However, research shows that already by the mid-1980s employee councils became subordinated to the management, the Communist Party and the Communist trade unions in the overwhelming majority of enterprises (Wratny, 2010a). With the intensification of the process of privatization in the 1990s, the importance of this institution further deteriorated. The Act of 13 July 1990 on the Privatization of State-Owned Enterprises and another, of 30 September 1996, on the Commercialization and Privatization of State-Owned Enterprises introduced employee representatives to the supervisory boards of privatized state-owned enterprises. To some extent, ‘worker directors’ replaced employee councils as employee representation, because employee councils were dissolved in privatized state-owned enterprises and new companies with Treasury shareholding operated under provisions of the Commercial Companies Code (Ustawa o komercjalizacji …, 1996: Art. 5, Art. 12).

Initially, employee councils were perceived as a potential barrier to the process of privatization of state-owned enterprises (Cox and Mason, 2000: 101) and as the anti-privatization element of the so-called Bermuda Triangle with its vertices being the company’s director, the employee council and the works committee of the Solidarity trade union (Wratny, 2010a). In fact, employee councils generally approved of privatization and played a vital role in promoting employee shareholding and establishing employee-owned companies. According to the Act of 1990, employee councils together with the management could request for their state-owned enterprises to be commercialized. As a result, employees had the right to purchase on a preferential basis up to 20% of the total number of shares owned by the Treasury in their company (Ustawa o prywatyzacji …, 1990: Art. 24). The Privatization Act of 1996 gave the employees an even better position in terms of shareholding as they received the right to acquire 15% of shares owned by the Treasury free of charge (Ustawa o komercjalizacji …, 1996: Art. 36). In addition, the Act made it possible to lease the enterprise for a specified period to a company consisting of the employees of the privatized state-owned enterprise. This gave rise to employee-owned companies.

The essence of systemic transformation in Poland consisted in the rejection of a centrally planned economy model and the transformation of the Polish economy to a free market system. The Balcerowicz plan, introduced in 1990, was to stabilize the economy (and especially tame inflation) and essentially transform the socio-economic system. The following activities were to implement the first purpose: the deregulation of prices, tightening of financial policy towards enterprises and de-monopolization of the economy. In turn, the steps to change the system included, for example, ownership changes, increase of autonomy of state enterprises, reform of the banking system, reconstruction of the country’s finances, development of capital market and the creation of the labour market (Program gospodarczy …, 1989). The changes to the socio-economic system resulted in significant ownership changes, including the creation of new private companies and the transformation of existing forms of ownership (privatization of state-owned enterprises). Restructuring changes in the Polish economy were to eliminate state-owned enterprises as a legal form and were supported by the previously mentioned privatization laws. In the course of ownership transformation institutional forms of employee participation in management were eliminated. The only representative form of participation which remained was a presence of several employees in the supervisory board in companies with Treasury shareholding (Kulpińska, 1998: 25).

After the transformation of the economic system, Solidarity (Solidarność) departed from the idea of workers’ self-management and decided to establish a ‘protective umbrella’ over Balcerowicz’s shock reform of the economy (Gardawski, 2003). According to Weinstein (2000: 58), the rejection of employee councils by Solidarity was closely associated with the ideological change in the union and its hidden support for neoliberal economic reforms. The process of privatization, initiated by the Act of 1990, led to an almost total elimination of employee councils from Polish industrial relations because the privatization of a state-owned enterprise terminated the operation of its bodies, i.e. its director and employee council. According to the Ministry of the Treasury and the Central Statistical Office, while on 31 December 1990 there were 8453 state-owned enterprises, by the end of 2004 their number had shrunk to 1306, the end of 2009 saw 174 such enterprises, and by the end of 2013 there were only 21 left.

Polish representation in works councils at the European level

Representatives of Polish employees working at multinational companies already began to participate in European works councils back in 1995, when employee representatives from the Polish subsidiaries of Benckiser and Thomson were invited as observers to meetings of their EWCs. Thus, the process of Europeanization of indirect employee participation began in Poland. In the mid-1990s, Solidarity started the first round of training on the EU Directive and EWC rules and regulations. In 1996, an EWC was established in ABB corporation, with Polish representatives having the status of full members from the very beginning (Adamczyk, 2004). In subsequent years, Polish representation in EWCs gradually increased and Polish employees not only took part in the work of EWCs as full members, but also became members of select committees (Volkswagen, Heineken, Benckiser, BOC Group and Adtranz) (Matla, 2001; Rudolf, 2001). One must agree with Meardi (2004: 168) that given the voluntary nature of EWC membership in Poland at that time, the scale of participation of Polish representatives in the work of EWCs was significant. Prior to Poland’s accession to the European Union, an impressive number (approximately 80) of instances of Polish presence in European works councils was recorded (Matla, 2004). The number of Polish representatives in EWCs began to grow significantly in 2001, with the impending completion of the EU accession negotiations. In the spring of that year, the Polish Ministry of Labour and Social Policy presented a draft EWC Act. Solidarity proposed several amendments to the draft (which were in part adopted) regarding, inter alia, the Polish equivalent of the term EWC, the definition of the concept of ‘consultation’ and appeal procedures.

The Act of 5 April 2002 on European Works Councils basically adopts the key solutions stipulated in the 1994 Directive. Pursuant to Article 2 of the EWC Directive, the term ‘employees’ representatives’ means the employees’ representatives provided for by national law and/or practice. This implies that the member states were given some freedom as to regulating the process of appointing employee representatives to EWCs and special negotiating bodies (SNBs). It should be emphasized that the right to appoint Polish representatives to EWCs and SNBs was granted by the Polish EWC Act to representative trade unions, defined as trade unions with at least 7% of the workers in an enterprise (provided that a given trade union is part of the central union federation represented in the Tripartite Commission for Social and Economic Affairs), or, otherwise, to at least 10% of the workers in an enterprise. If workers in a Polish subsidiary of a multinational company are represented by more than one representative trade union, and if those trade unions do not reach an agreement on appointing representatives to the EWC or the SNB, the unions have the sole power to nominate candidates, who will be then voted on by all workers. Only in cases where workers are not represented by representative trade unions does the appointment of representatives to EWCs or SNBs rest entirely in the hands of employees.

The leading role of trade unions in promoting European works councils and appointing Polish representatives to these organizations at the European level has been confirmed by research results (Gardawski, 2007; Pióro 2004; Rudolf, 1999, 2001; Skorupińska, 2002, 2006). In almost half of the 57 EWCs analysed in 2005 the initiative to appoint Polish representatives to EWCs was taken by Polish trade unions. Trade unions also played a major role in the selection of representatives to EWCs, either by appointment or by election by trade unions’ works committees. In some instances (e.g. Volkswagen, Pratt & Whitney), EWCs automatically granted membership to the chairperson of the largest trade union in Polish enterprises (Skorupińska, 2006). Trade union members have always been the dominant group among Polish representatives in EWCs. In a study conducted in the years 1997–1998, as many as 18 of 19 Polish representatives in nine EWCs were unionists (Rudolf, 1999). In a subsequent study, in the years 2000–2001 trade union members accounted for 90% of Polish representatives in the 25 EWCs analysed (Skorupińska, 2002). On the other hand, in a study conducted in 2005, the share of unionists in the group of Polish representatives in EWCs decreased to 80% (Skorupińska, 2006). This situation was caused by the increasing use of general elections to EWCs in which all employees could nominate the candidates, and not only union members.

Research conducted among Polish representatives in EWCs confirmed in many cases that EWCs promote transnational networking among unions, enhance the collective identity of EWCs and foster international solidarity, potentially contributing to the Europeanization of industrial relations, as it has been repeatedly suggested in the literature (Meardi, 2004; Pulignano, 2008). One of the benefits of working in EWCs mentioned by Polish representatives was the exchange of experiences between EWC members, strengthening of the position of Polish trade unions in negotiations with local management, and so-called international solidarity, which becomes evident during economic downturns. One of the Polish representatives described EWCs as a ‘platform for trade union cooperation’ (Rudolf, 1999, 2001; Skorupińska, 2006). The role of EWCs as catalysts for international trade union cooperation was also indicated by Solidarity’s Coordinator for International Relations at a conference held in Gdansk on the 10th anniversary of the adoption of the EWC Directive (Matla, 2004). According to Gardawski (2007), participation in EWCs enables Polish trade unionists to learn the culture of dialogue and compromise present in European industrial relations, which may transform Polish industrial relations. He points to a positive example of the functioning of an EWC in one German corporation, where all parties (including a Polish representative) conduct a well-developed dialogue taking into account interests of all subsidiaries and the long-term development of the whole corporation.

Polish representatives in the EWC also appreciated the direct contact with members of the parent company’s management, contacts with worker representatives from other countries (especially during preparatory meetings) and the personal benefits, i.e. satisfaction and pride in representing Polish plants at an international forum. However, according to Polish representatives in EWCs, the most positive aspect resulting from membership in these organizations is access to information about the company’s situation. According to Gilejko (2005: 71), actual access to information is a prerequisite for the effectiveness of employee participation. In the case of EWCs, information concerning the development prospects of multinational companies or planned closure of plants enabled Polish members of EWCs to take action to protect the interests of employees in the Polish subsidiaries of those companies. For instance, when a French corporation was about to close one of its largest plants in Poland, Polish members of the EWC publicized the issue, bringing it twice to the agenda. Although the decision to close the plant had seemed a foregone conclusion, the parent company’s management eventually backed down (Skorupińska, 2002).

Reflecting on the process of Europeanization of indirect employee participation one should also mention Europeanization of the identity among employee representatives within EWCs. Trade unions seem to be able to build transnational identity through EWCs to identify common interests and values of representatives from different countries to define and carry out a common strategy. The factors conducive to the development of transnational collective identity are: support for European trade union federations, the significance of transnational company structure and external pressure and risk. However, building a common European identity requires overcoming cultural and language barriers, developing frequent and intensive communication between representatives and overcoming the obstacles arising from the operation in various industrial relations (Whittall et al., 2009).

Studies conducted among Polish representatives in EWCs between 2000 and 2001 showed that members of EWCs often have divergent interests and different perceptions of the councils. In some EWCs Polish representatives were blamed for ‘stealing’ jobs and Polish respondents complained about the resulting suspicion and misunderstanding on the part of members of the council from other countries (Rudolf, 2001). Cultural differences in Europe and the division of members of the EWC into the employees of the ‘old’ and ‘new’ Europe were also identified by Matla (2006) as main obstacles to the full use of the EWCs’ potential. At the same time, the author assumes that a stable composition of the EWC and appropriate involvement of members in the work of these institutions can overcome these divisions and mutual prejudices. The results of the research (Rudolf, 2001; Skorupińska, 2002) showed, however, also positive examples of mutual assistance between EWC members from different countries, which with time may contribute to the development of a European identity by EWC. This can be illustrated by an intervention letter from the Polish EWC members in a German corporation to the president of this corporation and by the fact that they obtained the support of the Spanish and Belgian members of the EWC for the letter.

EWCs undeniably bring various benefits to Polish trade unions and employees, but do these institutions actually function efficiently? ‘Research so far reveals a general weakness of employee representatives in EWCs’ (Gold, 2010: 20). According to Polish employee representatives in EWCs, the parent company’s management often provides information about activities that are already under way, EWC meetings boil down to data presentation, EWCs often do not develop common positions, are not very effective and the scope of consultations is limited (Rudolf, 2001; Skorupińska, 2006). More than half of the representatives surveyed in 2005 reported that the position of their EWCs was weak and they were rather ‘symbolic’. Only 17% of the representatives in the study conducted by Skorupińska (2006) described their EWCs as organizations actually involved in the consultation process, and in some cases even in the process of negotiating with the parent company’s management, which according to the classification of Lecher et al. (2001) corresponds to participative EWCs. A qualitative study by Gardawski (2007) shows that there are transnational companies (especially Anglo-Saxon) which hinder the work of their EWCs.

Polish trade union representatives had high hopes for increasing and strengthening the position of EWCs as a result of amending the EWC Directive. Solidarity took an active part in the campaign to introduce fundamental changes in EWC regulations. Although not all expectations as to the amended Directive were eventually met, the amendments were certainly beneficial as they introduced a definition of information, clarified and strengthened the right to consultation and recognized the role of trade unions in negotiating agreements on EWCs. The new Directive 2009/38/EC was to be implemented into the legislation of the member states by 5 June 2011. The relevant Act was adopted in Poland with a slight delay, on 31 August 2011. Yet the hopes placed in it regarding the formation of more EWCs have not been fulfilled. So far, not a single EWC has been established in Poland, although some multinational companies headquartered in this country are subject to the provisions of the Act (e.g. PKN Orlen, Fabryka Płytek Ceramicznych Opoczno and Maspex). According to Adamczyk (2011), this is largely due to Polish trade unions, who are not willing to work for the establishment of EWCs. As a result, most of the provisions of the Polish EWC Act have yet to be used in practice and practically remain ‘dead’.

Difficulties with the establishment of works councils

Interest in works councils as a form of indirect participation was rekindled by Directive 2002/14/EC and the obligation to implement it into Polish legislation. As in other countries of Central and Eastern Europe, employee participation in Poland was very slim (Meardi, 2007: 504), with industrial relations resembling the Anglo-Saxon model rather than the Continental European model (Funk and Lesch, 2004: 264). Although the EWC Act had been in place in Poland for several years, only a small group of workers at multinational companies were involved in employee participation. In turn, the previously mentioned employee councils in state-owned companies almost ceased to exist. The implementation of the Directive 2002/14/EC in Poland was delayed by more than a year because of considerable disagreement between the state and social partners as to the content of the law to be enacted. At issue was the size of enterprises that were to fall under the law, the way in which employee representatives were to be appointed, the cost of works council operations and the scope of protection granted to members of the councils.

In general, both employers and trade unions were reluctant to establish a new institution of participation in the form of works councils. Mindful of the employee councils of the 1980s, employers feared that the new organizations would interfere with the companies’ management and limit its freedom of action. Furthermore, it was thought that a new employee representation would increase the cost of doing business. Employers did not want to broaden the access of workers to information about the functioning of companies and their financial and economic situation (Ciompa, 2007). They admitted that while exchange of information and consultation with employees could have a positive impact on businesses and the working atmosphere, they preferred to use the other procedures for informing and consulting employees allowed under Directive 2002/14/EC, rather than to form new statutory bodies, i.e. works councils.

In discussions on the draft Act on Informing and Consulting Employees, the Confederation of Polish Employers (Konfederacja Pracodawców Polskich) saw works councils as ‘yet another trade union which would be made into a super-union by the unions already present in enterprises’ (Dryll, 2006: 19). In the opinion of another employers’ organization, the Polish Confederation of Private Employers ‘Lewiatan’ (Polska Konfederacja Pracodawców Prywatnych), the draft Act prepared by the government contained provisions more restrictive than the recommendations of Directive 2002/14/EC, and their introduction into the Polish legal system would be detrimental to employers and result in an additional administrative and financial burden. According to the draft Act from January 2005, the obligation to establish works councils was to apply to companies with at least 20 workers. Employers’ organizations also opposed what they called excessive protection of council members against dismissal, which was proposed in the government draft (involving the two-year term in office and one year after its expiration) (Opinia Polskiej …, 2005).

While employers’ reluctance to establish a new participatory institution is to some extent understandable, the idea of works councils was also met with scepticism by trade unions. This attitude resulted from fears of competition from works councils, which could lead to a loss of trade union monopoly on employee participation. That is why trade unions were in favour of the so-called ‘Czech model’, in which councils were established only in non-unionized plants, whereas in unionized plants the tasks related to the implementation of Directive 2002/14/EC were executed by trade unions (Projekt ustawy …, 2004). In addition, trade unions feared that employers could incite conflict between these two employee representations (trade unions and works councils). However, according to Ciompa (2007: 8), this argument was unfounded because of the different competencies of these organizations, as negotiations on wages and redundancies have always been the domain of the unions, while works councils were only to receive information and consultation rights. This negative attitude on the part of trade unions to the introduction of a new participatory institution was prevalent in the countries of Central and Eastern Europe. Even in Hungary, where the councils had been created earlier (under the 1992 Labour Code), unions were reserved or even hostile towards the idea of creating works councils, which they perceived as a Trojan horse in the field of workers’ representation (Kisgyörgy and Vámos, 2001).

In turn, in the opinion of many researchers (Gardawski, 2006; Rudolf, 2007; Wratny, 2002), the institution of works councils was seen as an opportunity which could be used to strengthen trade unions and promote the representation of workers’ interests. The establishment of works councils was also to some degree a response to the de-unionization of Polish industrial relations (Przybylski, 2010). However, the general weakness of social dialogue in Poland was not conducive to creation of strong participatory institutions in the form of works councils. It should be noted that the formation of this dialogue had not been in evidence before the 1980s and its beginnings were very difficult (highly politicized unions, poor representation of the interests of private employers). The low efficiency of the representation formula (union pluralism) is the weakness of the social dialogue in Poland, which not only makes agreements with employers difficult, but is also critically evaluated by the workers themselves. The difficulties inherent in the dialogue in a situation of a multitude of trade unions resulted in a sceptical and reluctant attitude on the part of employers to a new form of representation (Męcina, 2011). The social dialogue in Poland is further characterized by underdevelopment of autonomous dialogue, the marginal role of collective agreements, the vanishing of bilateral sectoral bargaining in the private sector (Adamczyk and Surdykowska, 2012), illegal strikes which spoil the unions’ image (Gładoch, 2012) and the strong influence of political parties on the dialogue in the Tripartite Commission (Abramowicz, 2009).

In spite of that, it was assumed that councils could fill the representation gap caused by the decline in unionization, fragmentation of the union movement and the growing number of non-unionized workplaces. Since the early 1990s, the level of membership in Polish trade unions has been continuously decreasing. Trade union density in Poland has significantly declined from 28% in 1991 to a stable level of 15–16% at present (Czarzasty et al., 2014). Trade unions in Poland have lost both a significant proportion of their members and their position. Gardawski (2009: 485) lists two groups of factors which have undermined trade unions: endogenous factors inherent in the Polish trade union movement and exogenous (external) phenomena. Endogenous factors primarily involve the fragmentation of the union movement, so-called conflicting pluralism, a very low number of sectoral collective agreements, internal organizational problems (i.e. trade unions tend to be best organized at the workplace level, while both regional and national structures are rather weak), as well as the political polarization of the two large unions, Solidarity and the All-Poland Alliance of Trade Unions (OPZZ) (Gardawski, 2003, 2009; Krzywdzinski, 2011). The external causes include above all the privatization of state-owned enterprises, reduced employment in the industrial sector and the growth of the service sector, globalization, the unwelcoming attitude of employers to workers organizing themselves, increased flexibility of the labour market due to the emergence of new, flexible forms of employment, and the general crisis of trade unions in market economies.

Finally, after long and difficult negotiations in the Tripartite Commission, the social partners reached a compromise. On 7 April 2006, the Act on Informing and Consulting Employees, implementing Directive 2002/14/EC, was finally adopted. Employers had agreed that works councils in unionized enterprises would be elected by the unions. According to Ciompa (2007: 8), this solution placated trade union activists as it prevented the emergence of an alternative representation of workers in these workplaces. In return for this concession, employers negotiated a higher employment threshold for the establishment of works councils, i.e. more than 50 employees.

Works councils: Operation and practice

The implementation of Directive 2002/14/EC has changed the form of representation of workers’ interests in Poland and in most other countries of Central and Eastern Europe. In Poland, pure union representation (except for state-owned enterprises also having employee councils) has been transformed into a dual representation system (trade unions and works councils). Dual-channel representation has also been introduced in other countries of Central and Eastern Europe, such as Slovenia, Hungary, Slovakia, Estonia, Latvia and Bulgaria. Furthermore, in the first two of the these countries the activity of works councils had already been regulated in the early 1990s and the implementation of the Directive only strengthened the legal basis of their operation. In turn, in Lithuania, Romania and the Czech Republic an alternative system of representation was established (Kohl, 2009: 25), sometimes referred to as the ‘Czech model’ because it was first introduced in the Czech Republic in 2001 (Funk and Lesch, 2004: 268). In this model, works councils may be established only in enterprises without trade unions.

Under the Act of April 2006, works councils could be established in Polish companies without trade unions at the written request of at least 10% of employees. In turn, in companies with representative trade unions it was the unions that were tasked with setting forth rules for establishing a council and its mode of operation (Ustawa o informowaniu …, 2006: Art. 4, Art. 8). In accordance with Article 6 of the Act, if trade unions could not come to an agreement, they should notify the employer, who was then obliged to hold an election to form a works council from among the candidates nominated by trade unions. The dual system of employee representation, formally present in Poland, in fact combined two systems (dual and alternative), resulting in an intermediate model. In companies with trade unions, works councils were in practice union structures, since their members were appointed or nominated by trade unions. This meant that the remaining non-unionized employees did not have the opportunity to elect their representatives to works councils (Skorupińska, 2009: 32–33). In this respect, Polish legislation violated the provisions of Directive 2002/14/EC, under which all workers were guaranteed the right to be informed and consulted. According to the Confederation of Polish Employers (Konfederacja Pracodawców Polskich), this legislation also violated Poland’s Constitution, because it unlawfully differentiated the rights of employees depending on their union membership. Thus, works councils in Poland did not correspond to Rogers and Streeck’s definition (1995: 6), according to which ‘works councils represent all the workers at a given workplace, irrespective of their status as union members’. The Constitutional Court upheld the position of the Confederation of Polish Employers and, as a result, on 22 May 2009, the Act on Informing and Consulting Employees was amended, and consequently completely eliminated the union-based mode of appointing works councils.

The theoretical maximum number of works councils is dependent on the employment threshold, i.e. the minimum size of companies in which councils should be established. Poland, like Hungary and Slovakia, set the threshold at 50 employees, which number is much smaller than in Germany and Austria. Furthermore, the fact that councils are mandatory above a certain number of employees does not imply they are established automatically (Addison, 1999) as initiative must be taken by employees or trade unions. In Poland, it is trade unions that have been the main driving force behind the formation of these organizations. According to data from the Ministry of Labour and Social Policy (May 2007), representative trade unions were present in 80.6% of the companies in which works councils were established (Balsam, 2008). This means that only one-fifth of works councils at that time were elected by all employees from among candidates nominated by them. The first version of the Polish Act, incompatible with Directive 2002/14/EC and with the Polish Constitution, promoted union participation. According to Ziętara and Kuczyński (2009), this confirms the view that favourable legislation is the source of union influence.

From the very beginning, the actual number of works councils in Polish companies was very low. Within a year of the enactment of the Act on Informing and Consulting Employees, works councils were present in only 6% of private sector companies falling under this Act. It should be also noted that the Ministry of Labour and Social Policy was notified about 4040 agreements concluded between employers and worker representatives (Balsam, 2008). In accordance with Article 24 of the Act, these agreements ensured conditions of employee informing and consulting at least equal to those specified in the Act, but could have been signed only before the Act came into force. Such a large number of agreements shows that many employers wanted to avoid the establishment of works councils, while at the same time implementing the provisions of the Act. According to the Ministry of Labour and Social Policy, in March 2007 there were about 1900 works councils in Poland, and at the end of November 2009 this number rose to 2976. However, this significant increase did not result from greater interest in the process of establishing councils, but from the expiry of the transitional period (Wratny, 2010b: 127). According to Article 26 of the Act on Informing and Consulting Employees, before 23 March 2008 works councils were to be established in enterprises employing at least 100 employees. After this date, the threshold was lowered to 50 employees. In subsequent years, however, the number of works councils considerably declined, and they largely disappeared from Polish enterprises. Out of the 3081 councils that completed their first four-year term according to the Act of April 2006, only 606 continued their activity. In addition, 422 new councils were established after the amendment of the Act on Informing and Consulting Employees. ¹ Also in other countries of Central and Eastern Europe the range of new institutions of employee participation is rather small. For example, employees’ trustees were elected in 11% of Estonian companies (Muda, 2014: 79), while in Lithuania, works councils were established in only 4% of companies (Blažiene, 2009).

Why new works councils are not established and their number in Polish enterprises is declining results from many causes. The first of these is undoubtedly the amendment to the Act on Informing and Consulting Employees, which eliminated trade union monopoly on establishing councils in unionized companies. The new Act is entirely based on general elections from among candidates nominated by employees. To a certain extent Wratny’s (2010b: 126) predictions concerning a possible total ‘extinction’ of works councils proved to be right here, because in the vast majority of cases it was trade unions that were the driving force behind the formation of councils. The first Act, which was not fully in line with Directive 2002/14/EC, gave trade unions some time to get used to the new form of employee representation. Over time, the unions changed their negative or at least sceptical attitude towards works councils and began to perceive them as useful bodies providing unions with extra information and strengthening the unions’ influence in the company (Bednarski, 2010). The elimination of unions from the process of establishing works councils probably reduced the motivation to promote this form of worker participation in those companies in which the unions were not sure if they could get their people elected. Unfortunately, no studies have been conducted so far on the impact of trade unions on the election and operation of works councils established after the amendment of the Act on Informing and Consulting Employees.

In several other countries in Central and Eastern Europe, the attitude of trade unions towards works councils also began to change, albeit to varying degrees. In Slovenia, trade unions quickly accepted and supported the introduction of work councils into enterprises, which resulted in cooperation between these representative bodies (Kohl, 2009). In Hungary, the distrust of trade unions towards work councils with time eased off, but still unions treat the councils as a ‘domestic competitor’. It should be noted, however, that the councils were usually created in those undertakings in which trade unions operated, which indicates that in most cases the union officials initiated elections to councils (Kovács, 2014). There are, however, Central and Eastern European countries in which the reluctance of trade unions to the new institutions of participation has not changed significantly with time, as exemplified by the mutual relations of works councils and trade unions in Lithuania (see Petrylaité, 2014). Also in the Czech Republic, the unions have not changed their negative attitude to works councils, although, according to Hůrka and Vrajík (2014), one can speak about the free competition between these two forms of employee representation since April 2008. It was then that the judgement of the Constitutional Court resulted in the conversion of a previous alternative system of representation into the dual system. However, in a possible confrontation trade unions are still in a privileged position, mainly due to the very difficult process of electing works councils compared to establishing unions and the strictly limited powers of works councils.

Considering other reasons for the lack of employee involvement in establishing works councils in Poland one can indicate the limited competence of these organizations. The scope of matters which are the subject of information and consultation of works councils in Poland is generally in line with the guidelines of the 2002 Directive, but it has been defined in very general terms. A number of studies have found that works councils have restricted access to information, especially that related to the financial results of the company; employers often pass information to councils too late for the latter to adequately appraise the matter and prepare for consultation, and in many cases the consultation process is conducted in such a way that an agreement cannot be reached (Monitoring …, 2007; Prezentacja …, 2011). In accordance with the Polish Act, works councils may conclude individual agreements with employers as to how information is to be conveyed and how consultations are to be conducted. However, in most councils such agreements were not reached. In turn, where an agreement was reached, the matter of paying for external experts and principles of conveying information was often the main contentious issue (Bednarski, 2010).

It should be noted that works councils in Poland (as councils in other countries of Central and Eastern Europe, except for Slovenia and Hungary) have only been granted the right to information and consultation, but not to co-determination. It is noted in the literature that information and consultation represent the lower levels of influence afforded to employees (Błaszczyk, 1988; Knudsen, 1995; Wratny, 2002). Not only do works councils in Poland not have the right to co-determination, which has been enjoyed by most of their counterparts in the former EU-15 for a long time (albeit to varying degrees), but in addition they do not fully exercise their right to information and consultation. The main causes of this situation include the fear of reprisal from employers, a lack of confidence in the new participatory institution and a misunderstanding of the idea of employee representation by workers. Also Muda (2014) writes that employees do not understand the role of the new form of representation in the development of labour relations, indicating it as one of the main reasons for the low popularity of employees’ trustees in Estonia. Another point emphasized by researchers (e.g. Goździewicz, 2008; Skorupińska, 2009) is the lack of a clear separation of powers of works councils and trade unions in Poland regarding collective redundancies or takeovers of companies or their parts. In such cases, the employer must conduct consultations several times both with the unions and the council. The question of overlapping or duplication of works council and trade union competencies also appears in other countries of Central and Eastern Europe, mainly in Slovenia, Lithuania and Latvia (see Baikov, 2014; Končar, 2014; Petrylaité, 2014), and certainly, does not improve the strengthening of a new form of employee representation in the area of industrial relations in these countries. A study conducted in 2008 in Polish companies showed that works councils rarely acted as an instrument used by management for communication with the personnel. It was found that works councils were either weak, but relatively independent of management, or strong, but subordinated to trade unions (Bednarski, 2010). There are no studies examining changes in the importance and role of works councils in Polish industrial relations after the amendment of the Act on Informing and Consulting Employees.

Conclusions

The process of formation of works councils in Polish industrial relations was difficult and varied. During the economic transformation the forms of participation present in Polish enterprises were strongly related to the processes of privatization. In turn, the need to implement the EU directives was the main source of the emergence of new forms of indirect participation (EWCs, works councils). At the European level, European works councils were welcomed by the Polish trade unions, and it was the unions that were the main instigators of Polish membership in these institutions. In this case, the process of Europeanization of indirect employee participation began many years before the Polish accession to the EU. In turn, the idea of creating works councils at the national level resulted in many disputes among the social partners and the government, just as was the case in most other countries of Central and Eastern Europe. The weakness of social dialogue in Poland did not facilitate opportunities for the emergence of new, strong representative institutions either. The introduction of works councils to the Polish enterprises has not changed the position of trade unions as the main representative of the interests of employees.

Taking into account the three mechanisms of Europeanization in the field of employee participation (Fetzer, 2010: 4), one can argue that their impact on Polish industrial relations has been uneven. At first glance, the direct institutional effects of the EU employee participation directives left the most distinctive mark because they gave rise to new forms of employee representation in Poland. However, the Europeanization of law on employee participation has not translated into effective functioning of new employee organizations in practice. Works councils did not emerge from the internal need of the workers themselves, but were transplanted into Polish soil from outside (partly following the pattern of German works councils). The main rationale given by Knudsen (1995) for the introduction of employee participation by the state, i.e. social integration, did not apply in the case of Poland.

The development and the process of ‘settling down’ of new participatory forms in Polish industrial relations were also significantly affected by two other mechanisms of Europeanization of participation presented by Fetzer (2010). Trade unions and employers’ organizations in Poland were sceptical about works councils, so their emergence in enterprises was primarily motivated by the need to implement Directive 2002/14/EC. One could say that the unions and employers were ‘convinced’ by the first of the four rationales identified by Gold (2010: 11) and used by the Commission to justify its employee participation proposals, i.e. company law harmonization. Over time, the attitude of both trade unions and employers towards works councils has evolved, but this has not fundamentally changed the position of these organizations in Polish enterprises.

The vast majority of councils established in the early years of the Act operated in unionized enterprises, and trade unions took advantage of the additional information obtained by these councils. When unions lost their exclusive right to elect councils in unionized enterprises after the amendment of the Act, the councils began gradually and naturally to disappear from Polish enterprises. Employers significantly softened their initially negative attitude to the councils, probably because it turned out that these institutions did not play a significant role in enterprises. The number of works councils in Poland is small (about 2% of companies affected by the Law), and they are not perceived as effective. Europeanization of works councils at the national level has not succeeded in the Polish industrial relations scene. Works councils have not widened the scope of participation mechanisms in Polish enterprises and have not filled the representational gap caused by the decline in unionization, as it had been assumed before the implementation of the 2002 Directive.

The Polish experience with works councils is quite similar to that found in other countries of Central and Eastern Europe. Generally, works councils are not very active and have a limited impact on the decisions of employers (Czech Republic, Bulgaria) and play a marginal role in the development of labour relations (Estonia) (see Hůrka and Vrajík, 2014; Muda, 2014; Sredkova, 2014). In the case of Hungary, these institutions are rather weak and are ineffective in performing their tasks (Kovács, 2014), while in Romania, in principle, there are no works councils in enterprises (Dimitriu, 2014). Even in Slovenia, where these institutions received the greatest range of powers, the number of works councils has slightly decreased in recent years (Končar, 2014). Probably only in the case of Lithuania can one speak about a positive trend. According to Petrylaité (2014), the establishment of works councils in this country is gathering momentum and employees previously completely unrepresented prefer councils to trade unions.

In the case of European works councils, Polish trade unions exploited the opportunities offered by this form of employee participation at the European level from the very beginning. Following the adoption of the EWC Directive in 1994, Polish trade unions made efforts to appoint their representatives to EWCs at least as observers, 10 years before full participation was guaranteed by law. Trade unions have also played an active role in negotiating and renewing EWC agreements and conducting training sessions on the functioning of these organizations. The process of Europeanization of employee participation through participation in EWCs is going quite well in Poland and does not differ significantly from that in Western Europe. Polish representatives in EWCs, like their counterparts from other countries, see the potential of EWCs and appreciate the benefits of participation in these institutions. However, there are still many barriers and differences which hinder the development of a common European identity and impede the effective functioning of these institutions towards ‘participative EWCs’.