Employee consultation

There is a lot of legislation which gives employees the right to be informed and consulted. Unfortunately, employee rights vary with each piece of legislation, resulting in a confusing picture. The following sections give a broad overview of the legal aspects and communications best practice.

Information and Consultation Regulations 2004

The Information and Consultation Regulations 2004 cover all undertakings employing 50 or more people.

The regulations give employees a right to be:

• informed about the business’s economic situation

• informed and consulted about employment prospects

• informed and consulted about decisions likely to lead to substantial changes in work organisation including redundancies and transfers.

On the last point it should be noted that if organisations are consulting with employees under TUPE or TULR(C)A (Trade Union and Labour Relations (Consolidation) Act 1992), these requirements will suffice, providing the organisation states, in writing, that this is what it is doing.

It has been suggested that there may be problems with the need to inform and consult employees and City requirements for Stock Exchange announcements. Given that consultation can be carried out under other legislation, a simultaneous announcement is possibly acceptable.

Thresholds

The important thing about these regulations is that they are voluntary until 10% of the workforce requests an information and consultation system, subject to a minimum of 15 and a maximum of 2,500 people. However, any organisation may elect to implement the regulations to gain the business benefits, such as reduced staff turnover and greater productivity, that good communication brings. In addition, although fines of up to £75,000 can be imposed for non-compliance, no organisational decision can be reversed.

If an organisation already has an information and consultation system that has been agreed with staff (referred to as a pre-existing agreement in the legislation) then 40% of workers would have to request a new system. The employer can then arrange a ballot and only has to change the system if a majority voting in the ballot requests a change.

Requirements

The regulations require that an information and consultation system be negotiated with employees (whether it is initiated by employers or employees). This is the only part of the regulations that requires negotiation (consultation is defined as the exchange of views and establishment of a dialogue) and there is a six-month period to come to an agreement, although this can be changed if both sides agree. If there is a failure to agree, then the statutory default of an information and consultation committee will be imposed.

Usually there is a three-year moratorium on changing the arrangements but this does not apply when changes to the business structure mean all employees are no longer covered or when the statutory default is imposed. The regulations give a lot of space to the ‘information and consultation committee’, which has caused some confusion, as many people believe having a committee is a requirement. However, the requirement is a ‘system’. The question of whether there will be a committee depends on how the organisation operates and whether either party feels there is a need for a committee.

The regulations stem from an EU Directive that calls for a strengthening of dialogue and promotion of mutual trust between employers and employees. It also discusses the reactive nature of communications, thus implying that communications need to become more anticipatory. There are a number of potential problems with the regulations, which will have to be clarified by Central Arbitration Committee (CAC) rulings or appeal hearings. A note of caution: in the past, organisations have often refused to ‘publish bad news’. The regulations’ requirements mean this attitude could lead to a challenge before the CAC. For organisations with popular and successful communications systems in place, it seems some kind of administrative exercise will have to be carried out to ensure these systems are covered by the regulations. They must:

• be in writing

• cover all employees in the organisation have been approved by the employees

• set out how the employer is to give information to the employees or their representatives and how the employer seeks their views on such information.

Research indicates that although a number of organisations have set up committees or modified existing systems so they comply with the regulations, in practice very few have received a staff request or are expecting to receive one.