Consultation exercise

Employee consultation is coming back under the spotlight with the introduction of new legislation on 6 April 2005. The Information and Consultation Regulations will implement the European National Information and Consultation Directive and introduce new rights of representation for employees.

Ultimately the Regulations will apply to organisations that employ over 50 staff. It will initially only affect those who employ 150 workers or more. These Regulations will provide employees with the right to be:

• informed about the business’ economic situation;
• informed and consulted about employment prospects and decisions.

They allow for employers to enter into voluntary agreements for information and consultation with their workforce.

The right to information

From April 2005, employees that consider they have no access to a process of information and consultation or that any existing process is unsatisfactory, may formally request that their employer establish a suitable forum. When such a request fails, a default scheme may be imposed. Any request must be made in writing by at least 10% of the employees – ‘the 10% request’ – subject to a minimum of 15 and maximum of 2500 staff.

If a request is made where there is a voluntary pre-existing arrangement (PEA) in place that covers all employees, the employer can organise a ballot to give all staff the chance to approve or reject the request. If 40% or more staff endorse the 10% request, the employer must follow the route of a statutory procedure for a negotiated agreement. Any existing PEA will be overridden. If under 40% endorse the request and the employer has in place a PEA that provides a sufficient level of information and consultation, that PEA will continue.

PEA – the detail

Any PEA has to:

• be in writing;
• cover the whole workforce;
• be approved by the employees or employee representatives.

There is no automatic requirement for the employee representatives to be elected by the workforce. Also, there can be more than one PEA covering different areas of the workforce. The key point is that the whole workforce must be covered.

The Regulations also specify that an existing agreement for collective bargaining for trade union recognition can be a PEA for those purposes.

A PEA allows employers maximum freedom to create a forum that reflects the company’s values before there is a possibility of a valid employee request arising and triggering the statutory negotiation process. Employers can tailor a consultative body that suits their culture, determining exactly what they are prepared to inform and consult over. A PEA provides a good barrier against entering automatic negotiation after a 10% request is made.

Employers who choose to adopt a ‘wait and see’ approach run the risk of receiving a valid request when employee dissatisfaction is high, for example directly after the announcement of changes affecting staff or prospective job losses. The timing of a request in such circumstances will be wholly inconvenient and will influence those employee representatives who are ultimately elected. This will in turn affect the culture and atmosphere in which any information and consultation process is required to operate.

A further advantage of a PEA is that it can offer freedom from any enforced statutory model and enables the employer to limit those who are eligible to stand as staff representatives.

Meeting the requests

When a valid request is made and supported by over 40% of the workforce an employer will have six months to negotiate an agreement on a voluntary basis with employee representatives. The agreement must be approved by all or by a majority of the employee representatives signing it, with 50% of the employees approving the agreement in writing or a ballot.

If there is no negotiated agreement, the statutory default provisions under the Regulations will apply. Under these, an information and consultation committee must be established, representing all the employees by election of representatives through a ballot. The number of representatives must be proportionate to the number of employees.

Employers must examine their business to establish how to place themselves in the most advantageous position to benefit from this new legislation. This will involve reviewing business plans, human resources strategies, policies and procedures and the existing communications culture. It will also require them to consider the workforce and anticipate employees’ desire for change.

To ensure its validity, any PEA should be specific, robust and set out in writing. It should cover, among other things:

• the scope and remit of the forum, including subjects for consultation and extent of information to be provided;
• the appointment and dismissal of employee representatives, length of service and relevant experience required;
• confidentiality provisions.