UK: EU Plans Give Staff Greater Say!

For the first time in the UK employees are to have a general right to request that their employer inform and consult with them on issues affecting the business in which they work.

The Information and Consultation of Employees Regulations come into force on 6 April 2005 for employers with more than 150 employees. The Regulations have the potential to dramatically change employee relations in the UK. They also raise a number of important strategic and tactical issues for employers. It is crucial that employers are aware of, and are adequately prepared for, this major development.

Broadly speaking, the Regulations do not oblige an employer to take any action to establish information and consultation arrangements unless a request is received from 10% of the workforce in any six month period. Importantly, this threshold can be raised where the employer has a Pre-existing Agreement.

Where a valid request is received, the employer has a three month period to elect negotiating representatives and commence negotiation on information and consultation arrangements with a view to reaching a Negotiated Agreement. Those negotiations are to be completed within a six month time period.

A Negotiated Agreement must cover all of the employees of the undertaking and set out the circumstances in which the employer will inform and consult employees. If agreement cannot be reached, then the Regulations impose some default provisions, known as the Standard Provisions. These are potentially onerous obligations, under which the employer is obliged to :

• inform employee representatives about any recent and probable development concerning the activities and economic situation of the business;
• inform and consult the representatives about employment developments within the business, particularly where there is a threat to employment. For example this obligation requires consultation over collective redundancies to start at a much earlier stage than under existing collective consultation requirements;
• inform and consult with a view to reaching agreement on decisions which are likely to lead to "substantial changes in contractual relations or work organisation

The Regulations impose a statutory duty of confidentiality on the information and consultation representatives. Any breach of the obligations under a Negotiated Agreement or the Standard Provisions can lead to a £75,000 fine.

The Standard Procedures represent the "worst case scenario" under the Regulations. However, it is likely that any Negotiated Agreement would also closely mirror the scheme of the Standard Provisions.

One important issue for employers to consider is whether they wish to pre-empt the Regulations by seeking to enter into a Pre-existing Agreement. Employers should be wary of falling into the trap of assuming that they already have a Pre-existing Agreement simply because they have employee involvement arrangements in place. Employers need to look closely at what they already have in place and may need to make some changes.

Essentially, a Pre-existing Agreement is a voluntary agreement between the employer and the workforce. There is no express requirement for the Pre-existing Agreement to require the employer to consult the workforce – however, it is likely that an informed workforce would try to obtain the same obligations as would be imposed under the Standard Provisions.

A Pre-Existing Agreement is the route which offers greatest flexibility and choice over the content, timing and mechanisms of information and consultation. It creates an additional hurdle for a valid employee request to set up the mechanisms contained in the Regulations. Instead of the request having to be received from 10% of the workforce, where less than 40% of the workforce make a request, the employer can ballot the employees on whether or not they endorse the request. Only if more than 40% of all employees and a majority of those who vote, endorse the request must the employer move away from the existing arrangements and pursue a Negotiated Agreement under the Regulations. There is no sanction for a breach of a Pre-existing Agreement.

It should also be borne in mind that information and consultation is much more than a legal issue – there is much research about the organisational benefit of enhancing employee involvement and participation. Indeed, it may well be that many employers consider that these benefits and their impact on morale and employee retention would be the main driver for taking a proactive approach towards setting up a Pre-existing Agreement.