Time to put your cards on the table

The Information and Consultation Directive will take time and resources to
implement, which is why HR must ensure it is not left to the last minute.
Roisin Woolnough reports

Employers need to think long and hard about how they communicate business
news and changes to staff, following the Government’s announcement on the
Information and Consultation Directive. While the legislation itself does not
require companies to have an employee consultative body, it does stipulate that
if just 10 per cent of the workforce demand it, then the company must provide
it.

What form that consultative body takes is to a certain extent left up to the
employer. The framework has taken into account the varied nature of existing
arrangements between employers and employees, some of which are highly
successful, and the DTI has avoided a one-size fits all approach.

One thing the DTI, employer and employee industry bodies are all agreed upon
is that companies should at the very least establish if they comply with the
directive and what the business implications are. Any organisations that fall
foul of the directive could face a fine of up to £75,000.

"HR people are going to want to drive this initiative, rather than
respond to demands from employees," says Ken Allison, Head of HR
Consulting at Bond Pearce. "There are good business reasons for doing it
ahead of time, so that you have the machinery in place and representatives can
handle their roles well."

The EU-legislation takes effect for companies with 150 employees or more in
March 2005, in 2007 for those with 100 or more employees and in 2008 for those
with 50 or more employees.

Information and consultation means just that and nothing more.

"People tend to think consultation is the same as negotiation, but it
is not," says Patrick Burns, director of advocacy for The Work Foundation
consultancy and think-tank. "Consultation still very much leaves decision
making in managers’ hands. The directive says a company must be prepared to
listen to employees’ views, state its own views and then make a decision,"
he adds.

The legislation came about because of EU concerns about the number of
companies making public announcements about fundamental changes to their businesses
– such as restructuring and mass redundancies – with no prior warning to staff.

Employees have to be informed and consulted on management decisions that
affect their future, and the consultation has to be meaningful. It also needs
to be done right down to departmental level and at the time the decision-making
process is taking place – not when plans have already been finalised.

"If the board signs this off, saying ‘Yes we must consult’, but then
they go through the motions at national level, then there is a problem,"
says Burns. "All the personnel we have spoken to said consultations have
to take place while there are still options and the decision can still be
affected."

If companies only pay lip service to the notion of consultation, Burns believes
employees and unions could bring about cases of non-compliance.

"If I had to predict a potential flashpoint," says Burns, "it
would be confidentiality. Accidental exposure is a problem, but not if people
learn from good management."

A major concern expressed by employers is that employee reps will leak
sensitive corporate information, but Burns sees no reason why this should
happen if they understand what is expected of them. He says representatives
need to be given good training to ensure issues such as confidentiality are not
breached. Senior and middle management also need to understand just what the
process entails, what information needs to be disseminated and when it should
happen.

"It is very important to work out if both sides feel confident that
they have the skills to deal with this," says Burns. "Clarity is very
important as accidents of confidentiality often happen because protocols and
procedures are not clear enough."

It is up to HR to set the guidelines, audit the systems already in place,
provide the framework, organise elections and monitor progress. That whole
process takes time and resources, which is why it is important that it is not
left until the very last minute.

"It’s very hard to see how an organisation will get something set up
that is credible, functioning and compliant in under six months," says
Burns. "You need to find out how well your system works and match it to
requirements and have effective dialogue with employee representatives and at
board level."

Global companies also need to bear in mind how their EU counterparts
interact with employees.

"There are issues around links between UK arrangements and European
arrangements," says Allison. "The works council in the UK would have
to nominate a rep to the EU council, which might be a lot more trade-union
dominated."

This could be tricky for employers and it’s up to HR to negotiate it
successfully. Whatever happens, Allison says that for employee councils to be
effective, companies need to set them up and treat them in an appropriate
manner.

"Make sure it’s not imposed from the top – implement it in a
consultative way," he says.

weblinks

www.cbi.org.uk
www.dti.gov.uk 
www.tuc.org.uk 
www.theworkfoundation.co.uk  

Philippa James, HR Officer at Alfalval

The sales and services arm of Swedish process engineering manufacturer
Alfalaval has had an employee representative body since mid-1999.

"We started it because we had a new managing director who was very much
into being open and communicating with employees," says HR officer
Philippa James.

Called the Employee Consultative Forum, it meets three times a year with
five representatives from different divisions of the business. Representatives
from the UK’s 200-strong workforce are elected for a two-year period.

"Employees can ask most questions they want to, particularly things
such as whether there are any areas that cause problems and office improvements
in working methods," says James.

The company will not discuss any issues that are deemed strictly
confidential or anything relating to particular individuals, and the forum does
not cover minor workplace issues, such as washroom provisions. "That’s for
the facilities people," says James.

Before each meeting, the agenda is set out so that suggestions can be put
forward, and James says that employee opinion surveys show the staff feel the
forum is working. On the question ‘I’m kept well informed on the company’s
progress’, the opinion surveys show that 50 per cent of employees agreed in
2002, compared with 34.2 per cent in 2001. And the staff response to ‘The
company does a good job of keeping employees informed about matters affecting
us’, showed an increase of 25 per cent from 2001 to 40.4 per cent in 2002.

James feels the forum is fairly well aligned with the directive, although
she feels the company may need to make the processes a bit more in-depth in the
future.

www.alfalaval.com

Information and consultation regulations

When will the regulations begin to
apply to my company?

Organisations which employ more than 150 employees will be liable
to act on a staff request to set up a new information and consultation
(I&C) body (a works council) from 23 March 2005 onwards.

Where the organisations have more than 100 employees, the
operational date is 23 March 2007, and where the undertakings have more than 50
employees, the operational date is 23 March 2008. As from those dates, the law
does not require employers to do anything. However, if requested by their
employees, they will from those operational dates be required to commence
negotiations on the setting up of an information and consultation body/works
council.

How will such a request for an
information and consultation body/works council be triggered?

Employers will be required to set up an I&C body when they
receive a petition of more than 100 employees from within the undertaking. This
kickstarts a process whereby the employer has six months in which to negotiate
an I&C agreement. If an agreement is not reached, a lead-in period of a
further six months will operate, at the end of which the ‘default model’
I&C body will automatically operate.

In the next six months, the employer has the opportunity to
continue to try to reach an agreement on a voluntary I&C body and/or to
arrange the transition arrangements for the operation of the I&C default
model.

What is the position where my
organisation already has an I&C-type body such as a staff consultative
forum? Will this have to be disbanded?

Unlike the position for European works councils, having an
existing agreed I&C body is not a complete defence to stop new negotiations
proceeding to set up a works council under the I&C regulations. However,
the draft regulations do provide some limited measure of support in this
situation. Existing I&C arrangements can remain in place unless and until a
formal petition, from more than 10 per cent of employees, is received.

Where the employer wishes to preserve its existing staff
consultative forum, it has the option to call a ballot of all the employees in
the undertaking to vote on whether they want to proceed with the statutory
I&C negotiation process. If less than 40 per cent vote in favour of
progressing with the negotiation for a new I&C agreement, then the employer
can continue with the existing employee consultative forum, and the employees
cannot submit a new petition for an I&C negotiation for a period of three
years.

Where the original petition to set the I&C negotiation
process into motion is signed by at least 40 per cent of the employees in the
undertaking, there is no entitlement for an employer to hold a ballot. The
employer is forced to go ahead with the negotiation for a new I&C
agreement.

What does the default model
provide for?

The draft regulations provide for information and
consultation in three areas:

– The recent and probable development of the undertaking’s
activities and the economic situation

– The current situation, structure and probable development of
employment within the undertaking and any anticipated measures envisaged which
may put a threat on employment within the undertaking

– Decisions likely to lead to substantial changes in work
organisation or contractual relations, including collective redundancy and TUPE
transfers

In the first two of these, consultation is described as
"an exchange of views or establishment for dialogue". In the third –
substantial changes in contractual relations and work organisation –
consultation is defined as "with a view to reaching agreement". It
should be noted that this ‘higher’ level of consultation comes close to a form
of negotiation, and would include subjects such as terms and conditions, hours
of work, methods of work, places of work, use of machinery and equipment at
work, changed methods of working, and so on.  Interestingly, the I&C Regulations refer
to "decisions likely to lead to substantial changes of work organisation
and contractual relations".

In addition, the default model has provisions relating to
confidentiality. Unlike the position for European works councils, the draft
regulations (in their current form) limit the employer’s ability to withhold
confidential information to where disclosure of it would, judged objectively,
seriously harm or prejudice the undertaking.

What is the timeframe for my
organisation to negotiate an I&C agreement before the default model
structure is applied?

There is an initial negotiation period of six months, beginning
with the date when the petition for the start of the negotiation process is
received by the employer. If an agreement is not reached by the end of that
period, the default model will automatically apply, but there is a further
six-month lead-in period for the employer to make arrangements for this – for
example, employee elections. At any time, the parties can extend the period of
negotiations for an I&C agreement.

Employers must do the following, all within the six-month
period:

– Carry out an audit of its existing I&C arrangements

– Develop a strategy on I&C

– Educate and brief senior management

– Manage employee expectations

– Devise and implement the employee communication programmes on
I&C

– Develop an I&C agreement with which to begin negotiations

– Train line managers on I&C

– Arrange for the election of employee representatives to
negotiate the I&C agreement

– Actually negotiate the I&C agreement

Six months is a very short timescale to do all this, and it
highlights the importance of doing the preparatory work well ahead of the March
2005 deadline.

Compiled by Fraser Younson,
partner, McDermott, Will & Emery

Five key points for hr

Ken Allison’s five key points that HR
needs to get right:

– Have clear and realistic expectations of what the process
will deliver and what it is for, so that employees do not think it is a
negotiating body

– Display a willingness to discuss substantial issues so
employees find it meaningful

– Ensure staff representatives are trained properly and
understand their roles

– Manage the agenda and communications strategy. Everyone needs
to know when consultation is going on

– Ensure that senior management commitment is visible

The legalities

The legislation comes into effect for
companies of:

– 150 employees or more in March 2005

– 100 employees or more in March 2007

– 50 employees or more in March 2008

Employee requests only have to be acted upon if 10 per cent of
the workforce are behind the motion.

If the employer already has a consultative agreement with
employees, then 40 per cent of the workforce need to endorse the 10 per cent
request for a review to be mandatory. How the directive is implemented is up to
the employer and employees to decide, unless they cannot agree, in which case
there are standard directive provisions.

Claire Logan, organisational
change manager at Safeway

Safeway set up what it calls
Colleague Councils in March this year. It started with four councils and has
since added another.

"We have gone for a staged implementation approach and
then we will roll it out across the whole company," says Claire Logan,
organisational change manager at Safeway, which employs 90,000 in its 480
stores across the UK.

Each council meets once a month, with between seven and 10
representatives, and two weeks later, representatives from those councils go to
a Total Council Meeting.

"Individual council meetings provide the agenda for the
Total Council Meeting," says Logan. "That ranges from discussions
about pensions through to piloting a corporate training programme. If there are
particular initiatives we are wanting to work through we talk to them prior to
getting board approval."

Logan says there have been teething problems in the information
flow. "The timing of the meetings is a challenge," she says.
"You need to balance how often you meet with having enough time for people
to get feedback on the outcomes and generate ideas and suggestions. You need to
get that right for it to be effective."

Each council member represents between 50-100 people and 47
members have been trained so far. The training focuses on the legal issues.

There are council sponsors at a senior level and meetings are
chaired by an HR facilitator. Logan says acting as a facilitator swallows up
some HR hours, as does typing up the minutes, but that they have also saved
time and resources through trialling the training programme with the reps.

www.safeway.co.uk

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