IRISH employers are understandably nervous about the introduction of yet another EU directive affecting how they run their business, especially when they know that their British competitors have been allowed to opt out, says Mr Stephen Hughes.

But he insists that the British government's decision not to implement the Social Chapter of the Maastricht Treaty, and the obligations it entails for employers, is a strategic mistake.

Already forward looking companies in Britain are recognising this, he says. "British and foreign multinationals are queuing up to sign agreements on works councils," he says.

Already 16 companies have signed up and a further 240, including many Japanese and US firms, are in the process of doing so. Firms already signed up include United Biscuits, Viyella and Pilkington Glass.

Mr Hughes was in Dublin this weekend to take part in a conference on the implications of the Works Council Directive, which is due to become law in Ireland by September. He is currently involved in discussions with the Commissioner on Social Affairs Mr Padraig Flynn, about extending works councils to smaller firms, employing 50 people or more.

Under the new directive, companies who employ over 1,000 people will be obliged to set up councils. Smaller companies may also have to do so, if they have plants in two or more EU countries and the workforce in each plant comprises at least 150.

These work councils will have management and employee representatives. Companies will have to consult with the councils and provide them with information on structures, finance and future commercial plans.

The EU directive is characteristically vague in defining exactly what level of information is required, but the track record of the European Court of Justice suggests it will interpret the directive liberally.

The directive, as currently formulated, makes it clear that companies must engage in a serious consultative process, exchange of views and disclosure of information with employee representatives. It can also be made to convene a central works council for the entire group, rather than create them within each plant or subsidiary company.

"British companies are recognising the sense of a partnership approach," Mr Hughes says. "The aim is to give employees a say, a key involvement in the company.

But he adds that councils can only succeed if the of unions and management are willing to co operate. In Britain, it was noticeable that companies which recognised and dealt with trade unions "are first in the queue" to sign voluntary works council agreements.

He also accepts that the prospect of a Labour government in Britain and the repeal of some anti union legislation has also motivated some companies. He says that the only firm Labour Party commitment was the introduction of a new law which would make recognition of trade unions compulsory in companies where the majority of workers wanted to be represented by a union.

Already many companies are beginning to recognise the value of having unions once more, even in Britain, Mr Hughes says. They now realise they have value, if only as a means of creating a major point of contact with the workforce, through which both sides can discuss problems.

However, not all companies are so benign. Last year, it took Genera! Motors several months to accept that it could not bar trade union officials from its works council structure.

Turning to the question of creating works councils in smaller enterprises, Mr Hughes says he has been in regular contact with Mr Flynn about establishing a council directive for a European association on employee involvement in firms.

Put more simply, this means that a framework document would be drafted and the European employer and trade union bodies would then negotiate how it would operate at local level.

The first such agreement was on parental leave. It was signed by the social partners last December.

Given the resistance of some large companies, like General Motors, to the idea of works councils, obtaining agreement to extend the scheme to small firms may be difficult. Nevertheless, Mr Hughes is optimistic that agreement can be reached.

He attributes much of the progress to date to the "very good working relationship Padraig Flynn and members of his cabinet have with our committee. Without it, we would be nowhere near the current stage of development with the work1s council".

He estimates that there could be works councils in operation in medium to small firms within two years.