The reform of the EWC Directive – new compliance obligations for multinational companies in sight

The EU's planned reform of the EWC Directive is in its final stages. The draft of the Commission ("Commission Draft") has been available since the beginning of 2024. In the course of the trilogue discussions, the Council forwarded the final draft compromise ("Final Draft") to the EU Parliament on 28 May 2025 as the basis for voting on the Directive.

The European Parliament approved this Final Draft on 9 October 2025. Since the Council of Ministers has also signalled its approval, nothing should now stand in the way of the revised Directive’s adoption. The Directive is therefore already expected to come into force by the end of 2025. The Member States have two years after its entry into force to transpose the Directive into national law. The new provisions (with the exception of the regulations on voluntary EWC agreements) are then applicable at the latest three years after the entry into force of the reform.

The reform entails significantly stricter obligations for companies and extended rights for European works councils ("EWCs"). Below, we have summarised the most important changes that companies should be aware of.

Overview of the most important changes in the planned reform

1. Expansion of the definition of "cross-border matters"

According to the current version of Article 1(4) of the EWC Directive, a matter is considered cross-border if it concerns at least two business establishments in two different Member States.

The new definition significantly broadens the scope of application. According to the explanatory memorandum to the Commission Draft, the new definition in Article 1(4) of the EWC Directive will include a presumption rule. According to this, a matter is already considered cross-border if it can reasonably be expected that at least two business establishments in two different Member States could be affected. This does not only significantly lower the threshold for EWC participation. It also makes it easier for employee representatives to prove their case, as they no longer have to prove the actual cross-border nature of a measure. Rather, the company will have to rebut the legal presumption if it wants to avoid EWC participation.

In practice, companies will far more frequently find themselves in a situation where they have to justify why, under certain circumstances, a matter is not cross-border.

2. Two annual meetings of the EWC and central management

The obligation of the central management to report to the EWC once a year has so far only been included in Annex 1 to the EWC Directive and has been incorporated accordingly by the German legislator in Section 29(1) of the German Act on European Works Councils (Europäische Betriebsräte-Gesetz, EBRG).

There are plans to increase the frequency of this regular reporting to twice a year. The Final Draft adopts this requirement and additionally stipulates that meetings must be held in person in future.

Companies will therefore have to allocate considerable time and organisational resources and can expect significantly higher costs – for travel, meals, and possibly interpreters – for EWC members from different countries if they cannot agree with the EWC on holding virtual meetings.

3. Gender parity in the EWC and the negotiating body

The reform proposal additionally pursues the goal of achieving gender parity in employee representation. A binding minimum quota of 40% for both women and men is envisaged, both in the special negotiating body (besonderes Verhandlungsgremium, "bVG") and in the EWC.

While the Commission Draft did not provide for any sanctions whatsoever for failing to meet the quota, the Final Draft is stricter in this regard. In cases where the quota is not met, the bVG and EWC are obliged to provide the employees with a written explanation. This does not entail an automatic obligation to fill the vacancy, however. On the contrary, the Final Draft also emphasises that the establishment of the committees is to be valid regardless of compliance with the gender quota.

The goal of gender parity is pursued more vigorously through the introduction of a reporting obligation. There is no threat of immediate sanctions in case of a violation, however.

4. Right to a substantiated response from the central management

In Germany, Section 1(5) sentence 2 – in excessive implementation of the applicable EWC Directive – already stipulates that a consultation with the EWC must always be followed by a substantiated statement from the central management.

This obligation to issue a statement in good time before a decision on a cross-border matter is now also included in the draft reforms to the EWC Directive. This means that we can expect the obligation already familiar in Germany to also be included in the implementing legislation of other Member States. The Final Draft deliberately leaves open what constitutes "in good time". This gives companies a certain amount of leeway for considering circumstances such as the urgency, complexity and significance of the measure in individual cases.

Fortunately, however, the Final Draft distances itself from the original demand for the obligation to issue a statement to be accompanied by the possibility of enforcement by interim injunction!

A change will therefore particularly be felt by EWCs that were not previously formed on the basis of the German Act on European Works Councils.

5. Specification of financing obligations

Also under the current Directive, the employer must provide the EWC with financial and material resources (Art. 6(2)(f) EWC Directive). This requirement is now being specified in more detail. The list of measures to be financed that was introduced with Commission Draft is being retained.

In particular, this shall include the costs of organising meetings and providing interpreters, as well as the accommodation and travel expenses of EWC members. In future, all reasonable costs for experts, including legal experts, must also be borne by the central management, i.e. the current limitation to only one expert is therefore being abolished. In addition, the Final Draft gives Member States the option of legally regulating "budgetary rules" for EWC matters, taking these requirements into account.

6. Confidential information and non-disclosure

The Final Draft introduces detailed regulations on confidentiality and the withholding of information from the EWC. A distinction is made between the confidential transmission of information (Art. 8) and the complete refusal to provide information (Art. 8a). Information may be transmitted confidentially if this is in the legitimate interest of the central management and the conditions are met according to objective criteria that are to be laid down in the respective national law. In such cases, the central management must state the reasons for the confidentiality and, to the extent possible, its duration.

If the transmission is refused entirely because it would seriously harm the company, specific reasons must be given. To this end, Member States may provide for an administrative or judicial authorisation requirement.

The new regulations create greater transparency and verifiability without introducing a general disclosure requirement. Companies are advised to review their internal processes and existing EWC agreements with regard to confidentiality and the transmission of information. 

7. Sanctions and access to legal protection

The Member States are required to introduce binding enforcement mechanisms and clearly defined sanctions.

According to Article 11 of the Final Draft, Member States will have to introduce effective, dissuasive and proportionate sanctions in future. When determining the level of sanctions, Member States must take into account, among other things, the severity, duration, consequences and degree of fault; the annual turnover of the company also has to be taken into consideration, or a comparable dissuasive effect must be ensured.

In addition, the EWC or bVG is to be given access to judicial or administrative proceedings. Member States are obliged to either regulate the payment of the costs of legal representation by the central management or to provide equivalent measures (e.g. access to legal aid) so as not to effectively prevent access for financial reasons. If access to the courts is made dependent on prior out-of-court dispute resolution, this requirement must not lead to a de facto denial of justice.

For companies, this significantly increases the pressure to comply, especially in cases where the existing EWC was formed under the legal statue of a country which previously did not allow access to court proceedings (such as Ireland). At the same time, more far-reaching measures, such as the introduction of interim proceedings, have fortunately not been implemented.

8. Impact on “voluntary EWC agreements”

All “voluntary” EWC agreements concluded prior to 23 September 1996 must be adapted to the new EWC Directive within two years of the reform’s implementation. If negotiations with the EWC fail, the EWC will no longer be dissolved, but the subsidiary provisions (EWC “by law”) will apply.

Conclusion

The new EWC Directive will more firmly implement the proclaimed goal of strengthening employee co-determination at European level. Even without the introduction of interim proceedings, the rights of EWCs gain in enforceability due to the additional areas of application, clearer regulations and stricter sanctions.

Companies operating across borders should prepare themselves for the significant impact on co-determination, HR and compliance. We are still awaiting the entry into force of the final version of the reformed EWC Directive, but it is already clear that it will bring new compliance challenges for companies.

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