12.6 Employee Issues 425After the founding of the SE, the participation rights of its employees are gov-
erned by the before-after principle. This principle means that participation rights
which exist within one or more companies establishing an SE should be preserved
through their transfer to the SE, unless the parties decide otherwise.^73
This means that the mandatory co-determination regime applied to a German AG under
German law does not apply to an SE. This can be illustrated by the Porsche case. In 2007,
Porsche AG was a company with friendly unions. Before attempting to acquire full control
of Volkswagen AG, a company with powerful unions hostile to Porsche, Porsche AG de-
cided to form a holding SE under the SE Regulation.^74 This enabled the management of
Porsche AG to agree on the terms of employee participation in the new holding company,
Porsche Automobil Holding SE, with friendly unions.^75 The idea was that the subsequent
acquisition of Volkswagen AG would not influence the form of employee involvement.^76
European Works Council. The purpose of the EWC Directive is to improve the
right of employees in Community-scale undertakings and Community-scale
groups of undertakings to be informed and consulted. A Community-scale under-
taking means any undertaking with at least 1 000 employees within the Member
States and at least 150 employees in each of at least two Member States.
The EWC Directive requires the establishment of a European Works Council or
a procedure for informing and consulting employees in every Community-scale
undertaking and every Community-scale group of undertakings.
In addition to their other rights to be informed and consulted, European Work
Councils have a right to be informed where there are exceptional circumstances
affecting the employees’ interests to a considerable extent. In particular, such cir-
cumstances may exist in the event of relocation, closure or collective redun-
dancy.^77
The EWC Directive gives employees’ representatives in unions and national
works councils the opportunity to consult with each other and to develop a com-
mon European response to the employers’ transnational plans. The management
must consider employees’ response before those plans are implemented.
The EWC Directive lays down a confidentiality obligation^78 and provides for an
escape: there is no obligation to “transmit information when its nature is such that,
(^72) Regulation 2157/2001 (SE Regulation): recitals 19 and 21 as well as Articles 1(4), 8(3),
12, 20(1)(i), 23(2), 26(3), 29(4), 32(2), 32(6), and 37.
(^73) Recital 7 of Directive 2001/86/EC.
(^74) Articles 2(2) and 32 of Regulation 2157/2001 (SE Regulation).
(^75) Article 3(3) of Directive 2001/86/EC: “The special negotiating body and the competent
organs of the participating companies shall determine, by written agreement, arrange-
ments for the involvement of employees within the SE ...” See also Arbeitsgericht
Stuttgart, judgment of 29.4.2008 (12 BV 109/07) (VW/Porsche).
(^76) See nevertheless § 18 SEBG. See also Amann M, Porsche, VW und die Juristen, FAZ,
23 September 2008 p 22.
(^77) Directive 94/45/EC (EWC Directive), Annex, paragraph 3.
(^78) Article 8(1) of Directive 94/45/EC (EWC Directive).