Firms need to plan for consultation law

Full compliance with the Information and Consultation
Directive is not due until 2005. Rather than putting it on the back burner,
employers need to start planning to deliver the right solution

At long last, the Information and Consultation Directive is finalised.
Despite being resisted by successive British governments for 25 years, it was
sneaked through in February at a meeting of EU agriculture ministers.

The Government has won special arrangements and the directive will not apply
fully in Britain until 2008 – even big companies will not have to comply until
2005. But beware of placing it in your pending tray with the intention of your
successor having to deal with it – this is the biggest development in employee
relations for a generation.

Employers need to plan the best course to compliance. You can be sure that
the trade unions are already doing so, with the directive offering
opportunities and challenges for them. It could open the door for them to full
recognition in thousands of workplaces; or employers could use it imaginatively
to create the best employee involvement system for their own organisation,
which may or may not include union involvement.

What emerges from the road shows that law firm Eversheds is currently
running is there is no simple ‘right’ decision for all businesses. Employers
must weigh up a number of factors – the directive deadlines, its terms, the
likely shape of UK regulations, what other employers are doing and how employee
relations are changing in their organisation.

While it is important to start planning, it is also crucial not to rush to
answers. When the European Works Council Directive (EWC) came into force, many
employers moved at once to negotiate deals, so as to escape the full rigours of
the directive. In the small print of the new directive there is a similar
provision. But there are important differences employers must be aware of.

The new directive is less prescriptive and it lacks the EWC law’s detailed
blueprint of what must be put in place by those who fail to do their own deals.
Sadly, that makes it more difficult to work out what you need to do to comply.

The directive leaves many big issues for the Government to determine. Can
information and consultation take place at an organisational level, or must it
be handled up the line at a UK level?

Will you be able to make agreements that satisfy your obligations with
non-union employees or their representatives – like the ‘workforce agreements’
that have featured in other recent legislation? What happens when employees
fail to show sufficient interest in taking up what the directive offers? Will
businesses then be able to avoid making any changes to their current practices?
On this and more the DTI will decide.

Employers do not want to get their response wrong. The penalties for failure
to comply will be ‘effective’ and ‘dissuasive’. The majority of workplaces in
the UK have no standing employee representative arrangements – unlike their
continental counterparts. This will have to change with companies with as few
as 50 employees in the whole of the UK, or just 20 at one establishment, being
affected. This directive will have a much wider impact than either the European
Works Council Directive or statutory recognition arrangements for trade unions.

There are two steps that should be taken at this stage. First, managers need
to understand the directive – which is a sorry example of Euro-drafting – and
what requirements are likely to flow from it. Second, you then need to perform
an option appraisal to assess the best route forward for the business. This
needs to be done before the end of this year, so you have time to negotiate the
right deal for your business.

By Robbie Gilbert, a consultant in the HR group at law firm Eversheds and
chief executive of the Employers’ Forum on Statute and Practice

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