On 7 July 2004 the revised draft Information and Consultation of Employees Regulations were issued, reminding us all again that 6 April 2005 is to herald a major departure from current employment practice.
This is the legislation which gives employees new and potentially far reaching rights regarding their involvement in the business decisions of their employers. Implementing the European Information and Consultation Directive 2002/14/EC, the aim of the Regulations is to promote dialogue between management and its workforce so that those most affected by major decisions have a voice and are actively involved in the decision making process. This is intended to give employees an opportunity to mitigate the consequences of a proposed business decision, for example by suggesting alternative measures.
At the end of last year in a bumper two part column, HR Law Auntie explained the new draft Information and Consultation Regulations, then under consultation. The new draft Regulations do not change the principles set out in the draft we commented on last year, rather they clarify points where concerns were raised or where the way in which the Regulations would function were not clear.
By way of a quick summary the Regulations provide that either you or your employees (provided that they make up at least 10 per cent of your workforce) can “trigger” a statutory procedure which provides for the compulsory negotiation of an agreement between you and your staff governing your obligations to inform and consult with them. If an agreement is not reached within 6 months (which can be extended to 12 months, by mutual agreement), the parties are then given a further 6 months to negotiate an agreement under the “standard procedure” stipulated in the Regulations. If agreement is still not reached after this period, a default information and consultation agreement (dictating how, why and when you will inform and consult) will be imposed, in line with the standard procedure.
Who do the Regulations apply to?
The Regulations aim to bring the UK into line with the position in the rest of Europe where many countries have a very strong culture of collective consultation. As the UK does not have a history of formalised information and consultation, the Directive (and therefore the Regulations) allow longer grace periods for compliance by smaller businesses within the UK.
The Regulations will come into force on 6 April 2005. However, they will have a staggered introduction and the exact date when they will apply to you depends upon the size of your organisation.
If you employ (or will employ)
* more than 150 employees, the Regulations will apply to you on 6 April 2005; or
* more than 100 employees, the Regulations will apply to you on 6 April 2007; or
* more than 50 employees, the Regulations will apply to you on 6 April 2008.
You should be considering your options now!!
In each case the Regulations will apply where an “undertaking’s” registered office, head office or principal place of business is in the UK.
Why should you comply?
Failure to comply with your obligations under the Regulations could not only expose your organisation to financial penalties, but, perhaps more importantly, also have a seriously detrimental impact on employee relations.
The Regulations provide that if an employee (or employee representative) makes a complaint that your organisation has failed to establish or negotiate an information and consultation agreement, or has failed to comply with the terms of such an agreement, you could be liable to pay a fine of up to £75,000.
Individuals may also be able to bring claims in an Employment Tribunal. For example, if they suffer a detriment as a result of acting as an employee representative, or if they argue that your actions in failing to comply are sufficiently serious to amount to a breach of the implied term of trust and confidence, therefore exposing your organisation to the risk of claims of constructive unfair dismissal.
When should you act?
If you will (or are likely to) fall under the ambit of the Regulations at some point in the future, the key question that you should be considering, is whether to take the initiative and invite negotiations now or, alternatively, to wait until such time as your employees trigger the compulsory process.
If you consider that your workforce is unlikely to trigger compulsory negotiations, or if you are happy with the standard default agreement detailed in the Regulations, then you may be right to sit back and bide your time. However, employees are becoming increasingly aware of their employment rights, and it may be unwise for employers to bury their heads in the sand.
There are clear advantages for you in taking the initiative and inviting negotiations now on a voluntary basis. You will maximise employee goodwill by pre-empting the compulsory scheme and can drive the process. You are also likely to have more chance of putting in place the structure that you want. You will have control of the nature of your information and consultation body, the means of choosing/identity of the employee representatives, the timing for information and consultation and, most importantly, the context and subject matters upon which you will inform and consult. All of this can be negotiated, effectively giving you almost total freedom to determine how the Regulations will affect you.
If a pre-existing arrangement is in place when the Regulations apply to you, it will take at least 40 per cent of your employees to back a request to renegotiate the terms of your information and consultation agreement. Therefore, not only is there a real advantage in putting in place a structure and agreement that you want, but also, once this is in place, such arrangements are likely to stay.
The new draft Regulations
The new draft Regulations provide useful information concerning technical details – such as the definition of “undertaking”, the way representatives are elected as well as crucial practical points, such as how this consultation obligation interrelates with other existing statutory consultation obligations (for example in a transfer of an understanding situation or a collective redundancy situation) and also how the new obligation fits with existing collective agreements made with trade unions. To discuss these issues is beyond the scope of this article but if you would like any further information about the new Regulations please contact a member of the Information and Consultation Team, Mark Watson, Carl Richards or Meena Tostivin.
How do you take things forward?
If you may be affected by the Regulations, you should start preparing now. Although the final version of the Regulations is not expected until towards the end of the year, if your organisation wishes to take the initiative and negotiate a pre-existing information and consultation agreement, time is running out.