9.1 Formulation of the problem

The increasing cross-border mobility of limited liability companies affects the role which employees play within the company for which they work. Europe is well-aware of this, too. From the time legislators began to think about European regulations which would enable limited liability companies to merge across borders, the role to be accorded to employees became a high-priority issue. That employees would be given a role was obvious. The discussion focused on how this should substantively be fleshed out in the regulations.

In terms of workers involvement in the undertaking (information and consultation), a solution was quickly found. The directives promulgated earlier in this area could be followed. Agreeing on a compromise regarding employee participation at company level (employee board level representation) proved more difficult. This form of employee involvement is a controversial item in Europe, due to the Member States’ different views on the subject. The European legislator, however, could not avoid the subject, given the nature of employee participation. Employee participation is linked to the company’s legal structure. This allows companies to get around national participation rules through cross-border mergers. After all, with crossborder mergers, one or more domestic companies cease to exist and lose their legal structure. The Member States ultimately found the solution in Article 16 of the Tenth Directive.

European rules are unclear about how the role of Dutch employees gains shape and substance when the company in whose business they work decides to merge with a foreign company. This is especially true as regards employee participation at company level. The Member States could not agree on a substantive, standard level of employee participation. A compromise was reached through a coordinating provision. Article 16 Tenth Directive coordinates the divergent national rules on employee participation. Application of Article 16 Tenth Directives requires knowledge of the various national employee participation systems. The law of the Member States where the companies participating in the merger are located and the law of the Member State where the company resulting from the merger is located, are relevant. Hence, Article 16 Tenth Directive is applied differently to each merger. The question of workers involvement in the undertaking seems clearer. Substantive regulations have been harmonised in that area. This has occurred through ‘minimum directives’, though. Under such an approach, the local legislature may formulate regulations which are more favourable to employees. As far as workers involvement in the undertaking goes, the European rules thus largely allow the local lawmaker to decide which rights Dutch workers have. The European regulations are also not specifically tailored to proposed cross-border mergers.

The tension between the European rules on the one hand and the specification of these rules for Dutch employees on the other hand led me to the following formulation of the problem in Chapter 1: What obstacles do the regulations pose concerning the involvement of Dutch employees (and/or their representatives) in cross-border mergers of limited liability companies, and to what extent can these obstacles be overcome, in light of the principles underlying the Tenth Directive in this area?