Domestic works councils

The European Information and Consultation Directive is set to become law in
the UK for larger business (those with 150 employees) with effect from March
2005. Smaller businesses (of 50 plus employees) will follow suit later. As
previously outlined in Letter of the Law on 25 September 2001, this new
legislation will be revolutionary for many employers in the UK. The Government
is now grappling with exactly how to implement the legislation here.

The Government’s Conundrums

The main issue is what exactly employers will have to inform and consult
their workforce about, and how they should go about doing it. The directive
lays down that employee representatives should be informed about "the recent
and probable development" of the company’s "activities and economic
situation". Information and consultation in the directive (meaning the
exchange of views and establishment of dialogue) should take place in two
areas, both very vaguely set out. The first is the "situation, structure
and probable development of employment, including anticipatory measures,
especially where there is a threat to employment". The second is on
decisions likely "to lead to substantial changes in work organisation or
contractual relations".

One hopes that the Government will translate these obligations into language
which makes sense to UK employers. The obligation to inform should be, for
example, on how the business has performed recently, say, in the last six
months, and likely prospects of the business over, say, the next six months.

Similarly, the first area of information and consultation should be
triggered where it is, say, likely that substantial recruitment or downsizing
is envisaged, or where the business is expected to expand or contract by 10 per
cent or more. The second might be triggered where an employer is considering
major restructuring or changing material issues in contracts of employment.

Recasting the issues into understandable language will greatly help employers
in terms of clarity. The Government also has to decide on appropriate timing,
method and content of these obligations, and one would hope, straightforward,
clear boundaries are set. A code of practice is envisaged, and should be as
practicable as possible.

Key issues requiring decisions

The Government also has several other key issues to decide upon:

– Should employers be obliged to set up standing or permanent employee
bodies? Although this might be a gloss on the directive, it would make sense
for many employers;

– Whether to provide that employees must ‘trigger’ the right to be informed
and consulted, or whether the obligation simply applies automatically. The
directive gives scope for either, but it would be in accordance with a light
touch to allow such a trigger.

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