Employee Consultation in International Corporate Restructurings: National Works Council Focus

National Works Councils: Advisory Rights in Reorganisation Contexts

In many jurisdictions, national Works Councils play a central role in corporate decision-making that affects employees. Legislation typically requires that employee representatives be consulted prior to the implementation of “important decisions” concerning the company. In the context of international restructurings, this may include:

• Changes in shareholding structures
• Legal mergers between group entities
• Transfers of business or assets
• Changes to governance or legal/financial structure
• Relocation of functions or employees
• Engagement of external experts in relation to such decisions

The consultation obligation often applies even if the decision is made at group level, as long as it impacts the local entity or its workforce. Case law in several jurisdictions confirms that Works Councils must be involved early enough to influence the decision-making process. Failure to do so may result in legal challenges, delays, or reputational risks.

Timing and Substance: Meaningful Involvement is Key

The objective of the consultation process is not merely procedural compliance, but meaningful participation. This means:

• Employee representatives must receive sufficient information about the reorganisations, including rationale, expected consequences, and alternatives
• Employee representatives must be given time to formulate their views or advice
• Management must seriously consider the input of the employee representatives before proceeding

In some cases, informal engagement may be sufficient -particularly where the impact is limited. However, where formal consultation is required, it is advisable to initiate the process well before signing or board approvals to ensure compliance and avoid disruption. In jurisdictions where employee representatives have advisory rights, such advice must typically be obtained prior to signing.

Strategic Considerations for Corporate Clients

For clients managing multi-jurisdictional reorganisations, Works Council processes may seem unfamiliar or procedurally complex. However, with proper planning, they can be navigated efficiently. Key recommendations include:

• Early identification of entities subject to consultation obligations
• Integration of consultation into the transaction timeline
• Coordination between legal, HR, and corporate teams
• Transparent communication with employee bodies

European Works Council

In addition to the national Works Council, companies operating in multiple EU Member States may be subject to obligations under the European Works Council Directive (a new Directive was approved in October 2025). A European Works Council facilitates transnational information and consultation of employees in companies with at least 1,000 employees across the EU and 150 employees in at least two Member States.

While the European Works Council is governed by EU law (implemented in local legislation of the Member States), it must be informed and consulted on decisions with transnational implications, such as cross-border mergers or spin-offs, relocations, or restructurings.

For corporate reorganisations with a European footprint, it is advisable to assess whether European Works Council involvement is legally required and to coordinate timing and messaging between national Works Councils and the European Works Council. This ensures consistency and avoids conflicting narratives across jurisdictions.

Thinking about a cross-border reorganisation? Our ICR and Employment team at Eversheds Sutherland is ready to support you at every stage. Let’s talk about how we can help you understand employee representation obligations in your reorganisation.