EU: CJEU ruling – company transformation into an SE European Company structure does not permit a reduction in trade union representation on the corporate’s governing boards

On 18 October the Court of Justice of the European Union (CJEU) ruled in favour of the German metals and service industry trade unions IG Metall and ver.di, respectively. As part of SAP’s transformation into a European Company (SE) in 2014, the German multinational software company no longer guarantees a place for elected trade union representatives in the share that is normally attributed to employee representatives on the company’s Supervisory Board. In response to a request by the trade unions for a preliminary ruling on the involvement of employees (re. interpretation of Article 4(4) of Council Directive 2001/86/EC supplementing the Statute for a European company) the court sought to determine if a separate ballot must be provided for the election of trade union representatives to an SE’s supervisory board. The CJEU sitting in Grand Chamber interpreted Article 4 of the EU Council Directive on the involvement of employees in such a way that a separate ballot for trade union representatives should be held when this is provided for in national domestic law, and this right should extend to all relevant trade union bodies, i.e. not just German trade unions. The CJEU also states that the organization of a separate ballot allows for the representation of ‘persons who are highly familiar with the circumstances and requirements of the undertaking, while at the same time having external expertise.’ However, the Court ruled out any single European model of employee involvement applicable to the SE, ‘given the great diversity of rules and practices existing in the Member States as regards the manner in which employees’ representatives are involved in decision-making.’