Currently the laws allow larger employers to inform and consult with a forum of employee representatives about workplace change with cross-border implications.
But the new regulations will require them to share detailed and confidential information with, and obtain opinions from, their EWCs sometimes before cross-border business sales, mergers and other restructuring decisions have been made.
And according to international law firm Eversheds, this continental style approach to employee relations could inject delay and litigation into business deals, costing time and money.
Thomas Player, partner at Eversheds, said: "The establishment of a European works council is a major step for any business. It is not just that it opens up the prospect of convening meetings of employee representatives from across Europe with senior managers, it is the cost of these meetings, the management time spent in preparation, attendance and in the follow up.
"The draft regulations will substantially impact on the way employers interact with either new or re-negotiated EWCs. These changes, particularly when combined with the effects of the global recession, mean that large employers are well advised to take EWCs more seriously than has perhaps previously been the case when contemplating transnational reorganisations and other cross-border change. The risks of getting it wrong can include adverse publicity, delays to restructuring as well as fines and other legal complications.
"For potential investors from outside Europe, this development will be viewed as yet another obstacle to doing business in UK and Europe."
