New laws will oblige them to make fundamental changes to the way they deal with their staff, says the Employers' Forum on EU Social Policy, whose corporate membership employs 250,000 people.
While companies have developed team and individual briefings to make contact with their workforce, European legislation will introduce a system based on collective representation. Together with the Government's intention to make union recognition compulsory when workers vote for it, the new European law has critical implications for industrial relations in this country.
The forum concedes, however, that its membership, made up of personnel directors, have a battle on their hands to convince their boards of the seriousness of the issue.
The European Union statute will force companies with more than 50 employees to consult and inform on a wide range of issues. "What they got away with in the past they will not be able to get away with in future," said Elaine Aarons, of Eversheds solicitors and chairwoman of the forum.
She argued that British companies already ignored domestic law on consultation. She believed it would be a mistake for companies to think it was merely a question of "compliance" with the new statute.
European unions and employers' bodies have been given most of next year to agree the shape of works council structures to be introduced with a view to the law being enacted at the end of next year. If no deal can be struck, the European Union will draw up its own system which would then be imposed on business by the end of 1999.