It's good to talk

In days gone by, the mere mention of the words ‘consult’ and ‘employee’ in close proximity might have prompted a recoiling in horror among many management teams and Boards of Directors. However, the reality is that, under certain circumstances, UK companies have always been forced to grapple with the concept of consultation in view of their statutory obligations – most commonly where multiple redundancies are taking place, or in the event of a TUPE transfer.

Now, the requirement to consult with employees is very much back in the spotlight. The draft Information and Consultation Regulations, published on 6 April, implement the European National Information and Consultation Directive, in turn introducing new rights of representation for employees.

As a measure of the Regulations’ importance, the Trades Union Congress has heralded them as – potentially – “the most significant piece of employment legislation ever to be introduced in the UK”.

The Regulations couldn’t have been drafted at a more opportune time. Security Industry Authority (SIA) licensing of officers in the private sector, not to mention the introduction of the Approved Contractor Scheme, will inevitably mean heavy and ongoing dialogue between management and staff.

A good many contractors will be bought out, or cease trading, or even move into new lines of business, thereby bringing the TUPE Regulations into play.

On top of that lies the Working Time Directive, which has threatened a huge impact on the industry for some time.

The SIA’s regulation programme will have a knock-on effect for in-house professionals, many of whom will find themselves managing a mixture of licensed and non-licensed staff with different issues affecting their role undertaken on behalf of the client. The Information and Consultation Regulations mean that the private security industry – and several vertical sectors including banking which, until now, have remained relatively untouched by trade unions – must place employee consultation firmly on the agenda.

It has often been said that security clients have benefited tremendously from the weak (or non-existent) union presence among contractors’ members of staff, as there’s no organisation there to put pressure on clients to raise standards (aside from the GMB, that is).

In simple terms, employers will be forced to listen to members of staff and involve them in debates before any fundamental strategic decisions such as redundancies and restructuring are rubber-stamped.

Issues in the workplace

The Information and Consultation Regulations will eventually apply to all those security companies and client organisations employing more than 50 staff (from April 2008) but, due to the phased-in arrangements specifically negotiated by the UK Government, they will initially only affect organisations employing 150 workers or more (as of last month).

The guiding principle behind them is to create a working environment in which employees are consulted on a timely basis about issues affecting them in the workplace.

In essence, the Regulations will provide employees with the right to be:

• informed about the business’economic situation;
• informed and consulted on employment prospects and decisions likely to lead to substantial changes in either work organisation or contractual relations.

The Regulations, it seems, are highly likely to lead to a more in-depth engagement between employers and employees. Many of the former may find this process somewhat culturally difficult in their current workplace environment. As a result, the manner in which employers choose how to respond to the prospect of the new Regulations is increasingly important, not least with regard to future employee relations.

The Information and Consultation Regulations mean that the private security industry – and several vertical sectors including banking which, until now, have remained relatively untouched by trade unions – must place employee consultation firmly on the agenda

Perhaps the most important decision for employers is to consider the likely impacts of the new Regulations, and their subsequent plan of action. Those who act now will extract the best end result from the legislation.

The Regulations allow for employers to enter into voluntary agreements for information and consultation with their workforce. Indeed, employers may have (and many do have) existing arrangements which facilitate the discussion of key issues.

In the absence of a voluntary agreement, employers may be forced into consulting with their staff and risk the imposition of a statutory default procedure. As of this month, employees in the security team who consider either that there is no access to a process of information and consultation open to them – or indeed that any existing process in place is unsatisfactory – may formally request that their employer establish a suitable Forum (or Staff Consultative Committee) for enabling consultation to take place.

Where such a request fails, a default scheme may be imposed. Any such request must be made in writing by a minimum 10% (ie ‘the 10% request’) of all those employees within the organisation (subject to a maximum of 2,500 employees).

In the event of an employee request being made, but where there is already a voluntary pre-existing arrangement (PEA) for information and consultation in place which covers all employees, then the employer can organise a ballot of the workforce to provide all employees with the opportunity to approve or reject the request being made by them.

If 40% or more of the workforce endorses the 10% request, then the employer must proceed down the route of a statutory procedure for a negotiated agreement. Any existing PEA is then overridden.

However, if fewer than 40% of employees endorse the request, and the employer has in place a PEA which provides for a sufficient level of information and consultation and covers all employees, then that PEA will be allowed to continue. Remember that any PEA has to be submitted in writing, cover the entire workforce and be ‘signed off’ by the employees (or their approved representatives).

There is no automatic requirement for the employee representatives to be elected by the workforce, which means that such representatives can be appointed by the employer. As a result, the appointment of employee representatives to approve a PEA for information and consultation procedures could take place after a PEA is drafted and actioned by the employer (eliminating the need to negotiate at each stage the creation of a PEA with employee representatives).

Furthermore, there can be more than one PEA covering different areas of the workforce – the key point being that the whole workforce must be covered. Indeed, the Regulations also specify that an existing agreement for collective bargaining for Trade Union recognition can be a PEA for the purposes of the Regulations. Any employer who has such agreements in place should consider how these might offer an opportunity to inform and consult on wider issues (always bearing in mind the requirement that a PEA covers the entire workforce).

Due to the simple fact that a good many collective agreements cover only certain employees, it will also be necessary for other groups of employees to fall within the scope of other forms of PEA.

Why take any action now?

A PEA allows employees maximum freedom to create a Forum which reflects their company’s structure and values before there is a possibility of a valid employee request arising and triggering the statutory negotiation process. Employers can therefore tailor-make a consultative body which suits their own culture, determining exactly what employers are prepared to inform and consult upon.

When all’s said and done, a PEA provides a good barrier against entering automatic negotiation after a 10% request is made (provided that, following a ballot, less than 40% support has been demonstrated by those seeking to impose new arrangements).

As of this month, employees in the security team who consider either that there is no access to a process of information and consultation open to them – or indeed that any existing process in place is unsatisfactory – may formally request that their employer establish a suitable Forum (or ‘Staff Consultative Committee’) for sharing information

Another advantage to a PEA is that it doesn’t have to be negotiated at every stage with employee representatives (as with the more formal negotiated agreement mechanism). With regard to how a PEA is approved by employees, and therefore becomes valid, the draft Regulations provide that this could be by means of either a simple majority support in a ballot, a majority of the workforce expressing their backing by way of signatures or the agreement of employee representatives speaking on behalf of the ‘staff majority’.

Boards of Directors and section managers are urged to undertake an industrial relations audit, allowing them to benchmark their position in this area. Managers and members of the workforce must be made to understand the Forum for information and consultation such that they can easily absorb cultural change. However, this may require substantial training and input from senior management if it is to happen in practice.

Negotiated and default agreements

Where a valid request is made and supported by over 40% of the workforce, a PEA will fall away and an employer will then have six months to negotiate an agreement on a voluntary basis with existing employee representatives, who can either be appointed or elected for the negotiation process.

After six months, if no agreement has been reached between the employer and the existing employee representatives, then the employer must hold a statutory ballot to elect new employee representatives. They then have a further six months in which to reach a negotiated agreement.

Employers must seek to attain such agreement with genuine employee representatives on the practical arrangements for information and consultation following the receipt of an employee request. Any negotiated agreement must be in writing, be signed by the employers, cover all the employees in the undertakings and be signed off by a majority of the employees’ representatives. The argument must either be approved by all the employee representatives signing it or by a majority of those representatives signing it with either 50% employees approving the agreement in writing or 50% of employees in support (as evidenced by a ballot).

That said, if after the further period of six months no negotiated agreement has been reached, the statutory default provisions included in the Regulations will apply. Under those statutory provisions, an Information and Consultation Committee must be established to represent all employees in the undertaking by election of representatives through a ballot. The number of representatives has to be proportionate to the number of employees.

A threat to the business?

Thus far, responses to the Department of Trade and Industry’s consultation on the draft Regulations – from both management and employees – have indicated that benefits are envisaged from regular staff consultation.

Employees have suggested that they believe information and consultation will provide them with a greater say in their workplace, which in turn creates an improved and safer working environment (with better working organisation and conditions, and enhanced training for staff). Employees envisage plus-points associated with higher morale resulting from feelings of greater value, enabling them to be better prepared for change. They also consider that the business will improve as a result of staff retention and less absenteeism.

For their part, businesses believe they can make use of improved communication and access to a wider pool of knowledge, expertise and ideas from their workforce. Like employees, they anticipate that the workforce may become more responsive and less resistant to change.

Company directors must now review basic business plans, Human Resources strategies, policies and procedures and their existing communications culture, and consider the workforce and anticipate employees’ desire for change – both now and in the future.

A thorough impact assessment will enable organisations to determine whether a PEA is the best route forward. If it is, what form should that PEA take? To ensure its validity, any PEA must be specific, robust and set out in written form. Among others, it should cover the following areas:

• the scope and remit of the Employee Forum or Staff Consultative Committee, including the subjects for consultation and the extent of information to be provided;
• the appointment (and dismissal) of employee representatives, length of service and any relevant experience required;
• confidentiality provisions.

While it is perhaps too early to appreciate the full impact of this new legislation and the ‘Works Councils’ it will create, one thing is abundantly clear: all employees, right through from security officers to senior management, must prepare for that change and do so now.