Lawyers are warning employers to start the ball rolling on establishing
their national works councils within the next few months. The experience of contract
caterer Compass suggests this may be valuable advice. Simon Kent reports
The Information and Consultation Directive (ICD) officially comes into force
in the UK in March 2005. At this point, companies with more than 150 staff will
have to inform and consult with their own works councils on matters relating to
ongoing and future business issues. Two years later, the ICD will cover
companies with more than 100 employees, with those employing 50 or more coming
under the legislation’s reach the following year.
In each case, the establishment of the works council will only be necessary
if there is sufficient interest in such a body from an organisation’s
employees. While some companies argue that interest will never arise, there
seems to be a general consensus that it is better to be proactive in this area,
setting the ground work for such an agreement and keeping control of the
procedure, rather than waiting and hoping that such a situation does not occur
– then having to react to a demanding workforce who have the backing of the
law.
The time and resources required to prepare the ground for a legitimate works
council should not be underestimated. According to Fraser Younson,
vice-president of the Employers’ Law Association, effective works councils need
to run for nine to 12 months prior to the legislative deadline if they are to
iron out the wrinkles without experiencing pressure for legal compliance.
"This means the works council agreement should be in place by about May
2004," he says. "To achieve this, management will have to roll out
its staff communications to the workforce and have discussions with relevant
recognised unions by September or October 2003."
Staff consultation
This might seem lawyer-cautious, but is it? Take the experience of contract
caterer Compass Group. Responding more to its experience of using an
‘unofficial’ works council than to legal requirements, it signed an agreement
for establishing arrangements for staff consultation in November 2002. Its
first national works council meeting was held on 14-15 May this year and,
according to Mike Burton, HR director for Compass Group UK and Ireland, the
event was "a great success".
As suggested by Younson, the road to creating Compass’s official agreement
has been a long one. The company has had a European Works Council for the past
five years while the new UK-based national works council is built on the
foundations of a previously established council which already met twice a year.
With a smaller number of unelected employee representatives attending, Burton
needed no persuasion on the merits of the organisation.
"We have already developed an excellent rapport with the
representatives of our employees over the past few years and so have already
experienced the benefits that the Information and Consultation Directive
aspires to encourage," he says.
Compass’s new national works council consists of 15 seats divided between
the unions in proportion to employee membership. There are seven trade unions
involved in total, so three seats each go to the TGWU, Unison, GMB and USDAW
(who have most members in the company), and the remaining seats are held one
apiece by the RMT, CWU and PCS. Elections for representatives take place every
four years and are entirely the responsibility of the unions themselves.
The council is chaired by Compass’s CEO – demonstrating the seriousness with
which the organisation takes this initiative and its commitment to getting
employee views to the top table.
Burton acts as secretary and a trade union member, currently from the TGWU,
performs the administration duties of the council. According to Burton,
everyone involved in the council has received one day of training to support
their activities so far – an event that was led by the company itself and
incorporated input from a training representative from the TGWU.
The council is set to meet annually every May with a second meeting in
winter, described by Burton as "an informal gathering just before
Christmas to update representatives on the company’s business performance."
It will share and discuss information concerning ongoing business issues, the
state of the company and its future plans, and issues that may affect job
security, in accordance with the ICD requirements.
Assembly triggers
The ICD also stipulates that consultation needs to take place in the event
of substantial changes in contractual relations or work organisation. Burton
points out that arrangements have been made to trigger an assembly of the
council if a sale or purchase of a business is made, or if the prospect of
major redundancies arises.
The ICD also states that in all discussions, the employer retains the right
to keep back confidential information if it feels disclosure may cause serious
harm to the business, but Burton notes a great sense of trust exists in the
council itself. There is the sense of a professional attitude being taken
towards all those involved in the discussion process.
"Information explicitly disclosed as confidential by the company will
be entrusted to Compass works council representatives with an obligation of
non-disclosure even after their term of office expires," he says.
Realistic benefits
While consultation on contractual relations or work organisation should be
‘with a view to reaching agreement’, the council is only a consultative and
communications-focused entity throughout these activities and should be
recognised as such. The ICD gives no direct power to the council itself, but
Burton is clear that there are realistic benefits for all involved in the
process.
"This is an advisory body and as such has no formal powers," he
notes. "But it has been founded in the climate of the previous smaller
council that had formed strong relationships."
Having already felt the benefits of the works council in enhancing company-wide
communications and relations, Burton is confident that the structures put in
place fulfil all obligations set out by the EC directive and forthcoming UK
national law. Moreover, following its first works council session, there are no
immediate changes planned for the council’s structure – though naturally, there
are processes in place to enable such action should it be necessary in the
future:
"The Works Council may initiate modifications through a written request
to the secretary of at least two-thirds of the representatives," says
Burton.
"But from the advice we have taken, and in particular, the support we
have had from a TUC employment policy adviser, we are confident that we have
established a robust set of arrangements that will further advance our
relationship with our trade union groups."
Burton’s top tips for creating a works council
– Enter discussions in an open and honest
way
– Make it clear to both sides what is in scope and what is not
– Do not set up an overly long, unworkable formal agreement
– Make sure you do not spend all your time referring to the
agreement rather than getting on and working with each other
The ICD in brief
– Its purpose is to establish a
general framework setting out minimum requirements for the right to information
and consultation of employees in undertakings or establishments within the
community
– It applies to undertakings of 50 or more employees or
establishments of 20 or more – the UK is set to go for the undertakings option
– Such undertakings must inform and consult on:
a) The recent and probable development of the undertakings’
activities and economic situation
b) The situation, structure and probable development of
employment within the undertaking or establishment and on any anticipatory
measures envisaged, in particular where there is a threat to employment
c) Decisions likely to lead to substantial changes in work
organisation or in contractual relations (including mass dismissals and
transfers)
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
– Employees are to be informed in such a way as is appropriate
to enable representatives to conduct an adequate study and where necessary
prepare for consultation
– Employees are to be consulted in such a way as to enable
representatives to meet the employer and obtain a response, and the reasons for
that response to any opinion they might formulate, with a view to reaching
agreement on decisions likely to lead to substantial changes in work
organisation or contractual relations.
