The judgement delivered by the Court of Justice of the European Union (CJEU) on 18 October establishes that the transformation of a company governed by national law into a European company (SE) must not reduce the participation of trade unions in the composition of the Supervisory Board.
In this case the interpretation of Article 4(4) of Directive 2001/86/EC supplementing the Statute for a European company with regard to the involvement of employees. Article 4(4) provides that, in the case of the establishment of an SE by means of transformation, the agreement will provide for the same level of all elements of employee involvement as the ones existing within the company to be transformed into an SE.
The dispute concerns the compatibility of Directive 2001/86/EC with German legislation determining that, in the case where an SE with its registered office in Germany is established by means of transformation, a separate selection procedure for persons nominated by trade unions for a certain number of supervisory board members representing the employees must be guaranteed.
Two German trade unions, IG Metall and ver.di, disputed before the German courts the arrangements for appointing employees’ representatives within the Supervisory Board of the SE SAP, which consists of an equal number of members representing the shareholders and the employees.
The contested arrangements were agreed upon between SAP and the special negotiating body established within that company in the context of its transformation – until then, SAP had been a public limited-liability company established under German law – into a European company (SE). Those arrangements provide that, if the number of the members of SAP SE’s Supervisory Board is reduced from 18 to 12, the trade unions may still nominate candidates for a portion of the six seats allotted to the employees’ representatives; however, those candidates are no longer elected on the basis of a ballot that is separate from that established for the election of the other members representing the employees. Therefore, it is no longer guaranteed that the employees’ representatives within that Supervisory Board will actually include a trade union representative.
In tis judgement, the CJEU established that Article 4(4) of Directive 2001/86 must be interpreted as meaning that the agreement on arrangements for the involvement of employees applicable to an SE established by means of transformation, as referred to in that provision, must provide for a separate ballot with a view to electing, as employees’ representatives within the SE’s Supervisory Board, a certain proportion of candidates nominated by the trade unions, where the applicable national law requires such a separate ballot as regards the composition of the Supervisory Board of the company to be transformed into an SE, and it is necessary to ensure that, in the context of that ballot, the employees of that SE, of its subsidiaries and of its establishments are treated equally and that the trade unions represented therein are treated equally. [Para. 50].
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