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Transposition of the SE legislation in Lithuania (Final update: June 2005)

On 12 May, the Lithuanian Parliament adopted the transposition law on workers' involvement in European Companies (SE). The law came into effect from 28 May 2005. The transposition of the SE Regulation and of the SE Directive took separate paths. The Ministry of the Economy, which is usually responsible for issues of company law, was designated to prepare the necessary legal acts for transposition of the SE Regulation, while the Ministry of Social Security and Labour was made responsible for transposition of the SE Directive on workers’ involvement. Preparation of the necessary national legislation was not coordinated and the two acts do not seem connected.

The Parliament (Seimas) adopted the Law on SEs on 29 April 2004. This law concerns the Regulation on the SE Statute only and contains very few articles which deal explicitly with European Companies from an administrative point of view. The separate Law on employee involvement in SEs should have been adopted before October 2004 but the deadline was not met.

The first draft of the Law on employee involvement in European Companies was prepared by the Ministry of Social Security and Labour in April 2004, agreed with other Ministries and the subject of consultation with the social partners, who expressed no dissent. However, before sending the draft law to the government and Parliament for adoption, the Ministry asked for academic legal commentary in September 2004. This turned up many technical obstacles and the Ministry prepared a second draft, starting another consultation process in December 2004. Due to disagreements with the Ministry of Finance regarding the regulations on the financing of SNBs and European Works Councils, as well as the reimbursement of travel and living costs, the Ministry of Social Security and Labour could submit the draft to the Tripartite Council only after a delay of several months. The Tripartite Council approved the draft on 25 January 2005, as did the government on 9 March 2005 before forwarding it to the Parliament for adoption.

Adoption of the Law on employee involvement in European Companies passed smoothly through the Parliament. The Law was adopted on 12 May 2005 and came into force from 28 May 2005, after promulgation by the President and publication in the State Gazette (Valstybes Zinios).

Commentary:

The law is divided into five titles. Title I contains aims and definitions; Title II deals with setting-up or general provisions on workers’ involvement; Title III deals with negotiation processes; Title IV contains provisions (standard rules) on statutorily established works councils at European Companies; and Title V contains final provisions

The Law on employee involvement in European Companies relied heavily on the rules established by transposition of the EWC Directive in 2004. Both national laws have the same structure, as well as similar definitions, content of established procedures and wording. There are a few exceptions worth mentioning, however.

First, the appointment/election of Lithuanian members of the SNB (mutatis mutandis, members of the works council of a European Company – hereafter, EWC). The SE Law takes the existing principle that Lithuanian members of the SNB shall be appointed by the “workers’ representative” in a given company or establishment (Art. 11 (1) SE Law), and, if there are several companies or establishments operating in Lithuania, by mutual agreement of the “workers’ representatives” of all companies or establishments. According to Art. 19 (1) Labour Code, “workers’ representatives” in an enterprise or establishment shall be, first, the enterprise-level trade union, or, where there is no functioning trade union and if the employee general meeting has not transferred the function of representation to the sectoral-level trade union, a works council elected by secret ballot at the general meeting of employees.

If no agreement is reached among workers’ representatives within 30 days, or one or more companies or establishments have no workers’ representatives in place, the workers’ representatives in other companies lose the competence to appoint their members and all the members of the SNB shall be elected by secret ballot at the conference of the ad hoc elected employees’ representatives (at the conference 10 employees are represented by one delegate) (Art. 11 (3) SE-Law). This novelty seems to constitute an obstacle for workers’ representatives (trade unions or works councils) in expressing their legitimate will and, second, would make it difficult to proceed quickly in forming an SNB or EWC).

Another interesting anomaly, hopefully temporary and merely theoretical, concerns the formal foundation of the whole system of workers’ involvement in the Labour Code. Art. 47 Labour Code contains clear reference to a special law on EWCs with regard to workers’ information and consultation. However, there is as yet no analogous reference to European Companies. Since the Labour Code establishes the principle primus inter pares , rights and obligations of the parties to employment and industrial relations beyond the statutory regulations of the Labour Code may be challenged with regard to their conformity with the Labour Code. This situation is very unlikely, but may give rise to some tensions.

As in the Law on EWCs, in the SE Law the Lithuanian legislator has adopted a rather minimalist approach. It does not provide national, sectoral or regional trade unions, nor their representatives (if they are not a separately functioning trade union in an enterprise), with rights of participation in the setting up or operation of SNBs and EWCs. Furthermore, works councils are limited to consulting one expert. The issue of confidentiality is solved in the same manner as in the EWC Law: the employer has the right to withhold confidential information but the SNB, EWC or its committee have the right to dispute this withholding of information in a court (Art. 7 SE Law).

Art. 8 of the SE Law deals with the protection of the Lithuanian members of SNBs and EWCs. The Article prohibits the dismissal of members of the said bodies on the initiative of the employer without the prior consent of the body by which the employee was appointed (in case of election at a conference, without the prior consent of the Labour Inspectorate). This guarantee is broader than was established for members of the representative body of national workers’ representatives, who are protected only in the case of dismissal with notice (Art. 134 Labour Code). Also, the members enjoy rights to paid leave for meetings of SNBs, EWCs or their committees and to full compensation of expenses. If compensation is not paid, Lithuanian workers may claim compensation directly from their employer (Art. 14, 28 SE Law).

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