Worker representation on corporate boards of directors


Worker representation on corporate boards of directors refers to the right of workers to vote for representatives on a board of directors in corporate law. In 2018, a majority of Organisation for Economic Co-operation and Development, and a majority of countries in the European Union, had some form of law guaranteeing the right of workers to vote for board representation. Together with a right to elect work councils, this is often called "codetermination".

Overview

The following is a list of 35 countries in the Organisation for Economic Co-operation and Development and their practices of worker representation on corporate boards of directors.
CountryLawMinimum worker representationNotes
AustriaLabour Constitution Act 197533.3% - 0%A third of supervisory board from 300 employees in private companies. No employee threshold for public limited companies.
BelgiumNo general law, but some public companies have employee representatives.
Bulgaria0%No general law, but employees have rights to speak at shareholder general meetings.
CroatiaLL 2009 art 166Employee representative on the supervisory board if the company has over 300 employees
Cyprus0%No general law
Czech Republic33.3%State owned companies have one third employee representation
DenmarkCompanies Act 2010 s 14066.7% - 33.3%Companies over 35 employees have between two and one third board membership
Estonia0%No general law
Finland1990 Act on Personnel Representation in the Administration of Undertakings20%From 150 employees, there must be an agreement on employee representation. If there is none, one fifth of board members.
FranceCommercial Code Art. L. 225-7933.3%Private companies over 1000 employees in France or 5000 worldwide must have at least one or two board members. State-owned companies have one third.
GermanyDrittelbeteiligungsgesetz 2003, Mitbestimmungsgesetz 1976, Montanmitbestimmungsgesetz 1951 50% - 33.3%Enterprises with over 500 employees must have one third representation on a supervisory board. Over 2000 employees, half representation, but the chair of the supervisory board is a shareholder representative and has a casting vote. In coal and steel companies shareholder representatives do not have a deciding vote.
GreeceState owned companies have one employee board member.
Hungary33.3%From 200 employees, one third of supervisory board members are employees.
IrelandWorkers Participation Act 197733.3%State owned companies have one third employee representation.
Italy0%No general law
Japan0%No general law
Korea0%No general law
Latvia0%No general law
Lithuania0%No general law
Luxembourg33.3%One third employee representation in companies over 1000 employees or state owned.
MaltaNo general law, except for companies owned by unions or the Labour Party.
NetherlandsWorks Constitution Act 1971, amended in 200433.3%Over 100 employees, one third employee representation
NorwayLimited Liability Companies Act 197333.3% + 1From 30 to 50 employees, one employee director. Over 50, one third of seats. Over 200, an extra employee seat.
One director in companies with 30 to 50 employees; one third of the seats in companies with more than 50, with the possibility of an extra seat in companies with more than 200
PolandLaw on Workers’ Self Management of 198133.3%In state-owned companies employees have a third of supervisory board seats, and a seat on the management board.
Portugal1976 Constitution, Arts. 30 and 33 and Law 46/79In state owned companies, workers have a right to be consulted. In private companies work councils may elect representatives, but the number is determined by the employer.
Romania0%No general law, but unions can be heard at meetings.
Slovakia50% - 33.3%In companies over 50 employees, one third employee representation. In state owned companies, half the supervisory board.
Slovenia1991 Constitution art 75, and 1993 law.50% - 33.3%Companies over 50 employees, or with supervisory board, have one third to one half representation.
SpainLaw 41/1962, repealed 19800%Some state-owned companies retain two board members though it has not been compulsory since 1980 to have employee representation in private companies.
Sweden33.3%Over 25 employees, around one third representation on boards.
United KingdomCambridge University Act 1856, etc0%No general law, except in universities, although Financial Reporting Council is introducing comply or explain rules for employee representation in the UK Corporate Governance Code
United States0%No general law, although in Massachusetts manufacturing firm may voluntarily have employees on boards. Any collective agreement can achieve the same result.
Australia0%No general law
Canada0%No general law
Chile0%No general law
Israel1977 Law and a 1985 High Court decision, Dapey Shituf Worker representation in government companies
SwitzerlandNo general law, but there was employee representation in railways, and there is representation in postal services.
Turkey0%No general law

History

Some of the first codetermination laws emerged in universities in the UK during the 19th century, such as the Oxford University Act 1854 and the Cambridge University Act 1856. Further Acts included the South Metropolitan Gas Act 1896 and the Port of London Act 1908. In Germany, there were experiments with worker representation through work councils over the late 19th century, after the first attempts to introduce worker voice by an ex-member of the Frankfurt Parliament named Carl Degenkolb. At the end of World War One, the German trade unions made an historic collective agreement with representatives of German business for full partnership in economic management throughout the country. This was put into the Weimar Constitution article 165, and resulted in a work council law in 1920, and a board representation law in 1922.Aufsichtsratsgesetz 1922. E McGaughey, 'The Codetermination Bargains: The History of German Corporate and Labour Law' The fascist government abolished codetermination in 1934, but after World War Two, German unions again made collective agreements to resurrect work councils and board representation. These agreements were codified in law in 1951 and 1952.
In most countries around Europe, different forms board representation law spread slowly, especially from the 1970s. In the UK there were repeated experiments from iron and steel to the post office, with worker directors. However, after the Bullock Report of 1977 failed to pass and Margaret Thatcher won the 1979 election, almost all worker participation was ended. Germany recast and extended its laws in 1972 and 1976. The European Commission did propose a Draft Fifth Company Law Directive, but it did not complete passage. In the United States, growing interest in worker "involvement" through Scanlon plans led to unions such as the United Steelworkers at Chrysler, or at United Airlines to negotiate board representation, although usually this was forcibly linked to employee share schemes. Notably, the share scheme at Enron failed in 2003. Almost all modern worker representation laws enable votes without any requirement to invest money. In 2013, France became the largest country to create a modern board representation law to mandate workers with equal rights to all other directors to be on boards.

Theoretical explanation

There are three competing interpretations regarding the participation of employees: