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Lithuanian company law nowadays allows enterprises to choose between a one-tier (administrative board) or a two-tier (management board and supervisory board) structure. There is no legal right for workers to be represented on the board or supervisory board of a company (this applies to both state-owned and private companies).
Several factors hinder the establishment of board-level participation. To the majority of Lithuanians, it is still to some extent considered a restriction of the employers’ initiative and a foreign body or even a hindrance in a market-oriented economy. The rather negative experiences with such collective rights in the socialist past mean that among employees there is still little interest in reviving them.
Moreover, the experience with introducing such rights during the early stages of transition (1990–1994) was not successful. At that time, the Law on State Enterprises established the right of employees to elect up to two-thirds of the members of the supervisory board. However, their presence on the supervisory boards of state enterprises could not prevent abuses, corruption and manipulation in the early stages of privatisation. Consequently, the right was abolished again. Since those days no debate has developed on introducing a modern form of worker board-level participation.
The Lithuanian system of industrial relations is strongly oriented towards the enterprise level. Although legally allowed also at national, sectoral or regional level, collective bargaining mainly takes place at company level. The number of employees covered by collective agreements, however, is relatively low, which is also the case for trade union membership density. Workplace representation in Lithuania until recently followed the single-channel approach with an exclusive right of representation of all workers for enterprise-level trade unions. This meant that in the absence of trade unions there was no collective representation at all. In November 2004, a Law on Works Councils was adopted that allowed their establishment in enterprises without trade unions. The existing system can now be described as single-channel representation with a supplementary channel for non-unionised workplaces. If a trade union is established in an enterprise, it enjoys exclusive rights of representation of all workers and no works council can be established. In Lithuania, worker representatives have the legal right to information and consultation about the general situation in the enterprise, dismissals of employees on economic or technological grounds and restructuring of the workplace. On a few questions (such as modification of internal work regulations) the consent of the workers’ representatives is required.
Source: The European Company - Prospects for worker board-level participation in the enlarged EU (edited by Norbert Kluge and Michael Stollt). Brussels 2006.
The country reports on board-level participation in the new member states are available in several languages.
Documents
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As regards transposition, no specific national debate has yet developed among the social partners. As in the case of transposition of the EWC Directive, the reluctance of the social partners to get involved can be explained by three things:
a) lack of experience in information, consultation and, especially, participation, not to mention crossborder social dialogue;
b) difficulty of European legal norms (SE Regulation and SE Directive) in terms of their aims, methods and language;
c) lack of interest of Lithuanian enterprises in Societas Europeae.
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(3) Transposition process
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Update June 2005:
by Dr Tomas Davulis (Vilnius University Law Faculty)
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. (Documents)
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).
DOCUMENTS: Text of law transposing the SE Directive on worker involvement (Link to EU Commission website, inofficial translations are available for some countries)
Text of the Lithuanian Law on employee involvement in European Companies (Direct Link, Lithuanian language)
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Update Country Report: Transposition (24 March 2005)
by Dr Tomas Davulis (Vilnius University Law Faculty)
The draft Law on Employee Involvement in European Companies was prepared by the Ministry of Social Security and Labour in October 2004. Due to some disagreements with the Ministry of Finance regarding the rules 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 was able to present the draft to the Tripartite Council only after a delay of several months. After the Tripartite Council reached agreement on the draft on 25 January, the Government approved it on 9 March and sent it to the Parliament (Seimas) for final adoption. The Law is likely to be adopted before June.
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Country Report: Transposition
The Parliament of the Republic of Lithuania (Seimas) adopted the Law on SEs on 29 April 2004. This law concerns the Regulation on the SE Statute. The separate Law on employee involvement (Transposition law) will be adopted for the purpose of transposing Directive 2001/86/EC.
The Ministry of Social Security and Labour has not presented a draft of the transposition law to the Government. Such a draft will appear in September 2004. Supposedly the Transposition law will be adopted without any significant social partner involvement. So far, the social partners have not been involved in the working group on the drafting of the transposition law. The Tripartite Council that, according to the relevant Government Regulation, must discuss draft labour legislation will not meet until November. However, the social partners are not particularly concerned by this state of affairs since in their view the Transposition law does not really affect their activities.
The Ministry of Social Security and Labour intends to have the legislation in force by 8 October 2004.
by Dr Tomas Davulis (Vilnius University Law Faculty)
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So far, SEs and workers’ participation have not given rise to specific research.
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(5) Other relevant information (Info-Box)
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