Revisited: Divestitures and the Role of EWCs

A little over a year ago, I wrote a blog post about the role of EWCs in corporate divestitures. The topic has only become more relevant since then, as we’ve seen this phenomenon occur in quite a number of EWCs over the past year.

In short: what is a divestiture?

A divestiture happens when a company decides to sell or spin off part of its business. It’s a delicate and often complex process.

Shock first, clarity later

When employees learn that their part of the business is suddenly up for sale, shock is usually the first reaction. It’s easy to feel discarded or no longer wanted by the parent company. This creates not only sadness, but also deep uncertainty about the future.

For the EWC, this marks the start of an intense period of work — and responsibility. Handled well, a divestiture doesn’t have to be a disaster. In fact, it can open new opportunities. But it requires a careful, informed approach.

How to Navigate a Divestiture — The 5 Key Steps for EWCs

Divestitures come with a tangle of legal obligations and procedures. Here are the five most important steps an EWC can take to guide the process effectively:

1. Protect terms and conditions

One of the biggest employee concerns is what happens to their working conditions after the sale. Fortunately, European “transfer of undertaking” laws state that all existing terms and conditions must be carried over and respected by the new owner.
That said, there are always exceptions, so it’s wise to create a full overview of all employment terms, both under current and future ownership.

2. Build a question portfolio

Once informed about the intended sale, the EWC should develop a detailed list of questions covering:

• The sales process and its timeline
• How and when the EWC will be involved
• Details of the due diligence process (the data room)
• The buyer’s profile — strategic investor or private equity?
• How the acquisition will be financed
• Under what terms and conditions will the business be divested

3. Stay in regular contact with management

Divestitures can easily take nine to twelve months. During that time, plan several meetings with management to stay up to date. Topics to keep on the agenda include:

• The process of disentangling (carve out) from the parent company
• The due diligence phase with potential buyers
• Transfer of employees and assets
• The involvement of European competition authorities

4. Meet the buyer

Once a buyer has been identified, securing a meeting with them is crucial. This is the chance to hear directly from the new owners; why they want this part of the business, how they plan to grow it, what is the business strategy, and what their vision is for its people.

5. Communicate clearly

After gathering all the facts and confirmations, the EWC should draft a formal statement, opinion to particularly support the employees in the divested business. Transparency is key. And don’t forget to coordinate closely with local works councils and trade unions. Aligning your messages and sharing insights strengthens everyone’s position and ensures that no important issue slips through.

A divestiture can feel like a breaking point. But when managed with care, and with an EWC that’s informed, proactive, and engaged — it can also be a beginning.

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More Easily Said Than Done

As I mentioned, over the past 12 months we’ve seen several divestment initiatives in the EWCs we advise. Unfortunately, the checklist above isn’t always followed. Steps may be skipped or carried out half-heartedly — for reasons ranging from urgency and timing to lack of resources and knowledge, budget constraints, or even cultural clashes. Sometimes there’s simply a lack of patience, empathy, or, ultimately, trust.

Once dialogue breaks down and positions harden, it becomes difficult to carry out the five steps — especially step five: open and transparent communication. Local or national differences can play a major role here.

A Matter of Culture and Context

I often witness how differently employees and unions across Europe react when a company announces a divestiture or restructuring. In one country, representatives immediately reach out for dialogue – believing that open discussion and negotiation are the best way forward to secure fair terms and protect jobs. In another, the same announcement can lead to strikes, protests, or even burning tyres outside the factory gates.

Both reactions stem from a genuine belief that their approach will best defend employees’ interests. These contrasts are rarely about a lack of cooperation; rather, they reflect cultural traditions, industrial relations systems, and national legal frameworks that shape how social dialogue takes place.

For management, this diversity can be puzzling – what looks like escalation in one country might be considered normal negotiation in another. For employee representatives, it can be just as frustrating to see that management interprets or values dialogue differently depending on local context.

As an EWC expert, I support EWCs in navigating these cross-cultural and legal complexities. True transnational dialogue goes beyond ticking the compliance box; it requires mutual understanding, trust, and cultural sensitivity. When these elements come together, European Works Councils can become genuine platforms for cooperation – helping both employees and companies manage change more effectively and sustainably

Let’s just say it’s still a work in progress. To be continued.