Information and Consultation Directive Q&A

Sumra at Human & Legal Resources provides an in-depth look at the DTI’s
plans for implementing the EU Information and Consultation Directive.

Performance Workplaces – Informing and Consulting Employees was published on
Monday. The consultation closes on November 7, 2003.

is the directive and what does it require of employers

European Parliament adopted the Information and Consultation Directive in March
2002 to give all organisations (both private and public) a framework for
informing and consulting employees in the European Community. Member states are
free to stipulate how the directive is best implemented at domestic level.

UK Government has issued draft regulations for consultation – the Information
and Consultation of Employees Regulations 2005. Organisations with 150
employees or more will need to comply by March 2005, those with 100 or more by
March 2007 and those with 50 or more by March 2008.

process is triggered when 10 per cent of the workforce makes a request for an
information and consultation procedure. An employer can also initiate such a

will need to inform and consult employees regarding:

Current and future business developments

Restructuring of the organisation and if this might lead to redundancy

Changes to terms and conditions

ultimate aim of the initiative is to promote mutual trust between employer and
employee. Specifically, its aims to:

Improve any organisation’s ability to anticipate risk

Encourage a more flexible work environment

Help employees respond more effectively to the changing needs of the

Align training and development decisions to the organisation’s needs

Promote improved competitiveness

organisations do not have to use the process if disclosing information to
employees could harm the organisation.

is envisaged that this directive will enhance existing consultation obligations
on employers, particularly in relation to redundancies and restructuring and
also in the context of TUPE transfers.  

the first time, organisations will have to set up what will effectively be a
National Works Council, aligning their practices with other European employers.
The concept of consultation will need to be embedded in the corporate culture
of all employers to whom the regulations apply, whereas previously employers
had only had to consider compliance when redundancies, TUPE transfers, or
significant variations in terms and conditions of employment, were

are the penalties for failing to comply?

draft regulations state that any disputes about an employee request or an
employer notification – simply about whether the legislation applies – must be
made to the Central Arbitration Committee (CAC) whose decisions may be appealed
on a point of law only to the Employment Appeal Tribunal (EAT).

it is the CAC (already familiar to employers in the arena of trade union
recognition) that will uphold or dismiss any complaints of non-compliance with
the regulations, it is the EAT that could then impose a penalty on the

penalty would depend on the size of the organisation, the seriousness of the
failure, the reason it occurred and the number of employees affected. The
maximum penalty is £75,000.

EAT may make take action that  ‘it
considers just and equitable in the circumstances’. There is a suggestion that
this could include an order of contempt of court, which would mean a financial
penalty and/or imprisonment.

consultation paper on the draft regulations states that employers have to
consult ‘with a view to reaching an agreement’. In reality what is this likely
to mean?

employers have been concerned about the extent of employee consultation
required. Is it simply information dissemination or are employers going to have
to negotiate with employee representatives before they can make any decision
about the management of their business? There is no reference to negotiation or
reaching an agreement on the issues for discussion. Indeed, the consultation
paper specifically states that the consultation process must enable employees
to “meet the employer and obtain a reasoned response to any opinion they may
formulate”. At the end of the day the employer makes the final decision after
speaking to employees and will have to provide good reasons for disregarding an
employee’s wishes.

consultation is likely to mean:

notifying the representatives of all proposals, such as company restructuring

discussing the proposals with them

obtaining any feedback from them

discussing any areas of concern and attempting to address these where possible

notifying the representatives of any final decision that has been made and on
what basis.

the consultation process is conducted with the overall aim of securing employee
involvement, understanding and agreement of the business issues under
discussion (and therefore is not a sham excercise), employers will be complying
with their obligations. Where agreement is not possible, any actions the
employer takes as a result should not be subject to reversal or challenge. 

does HR have to start doing now?

most important steps for employers to take now are to consider how to introduce
the concept of information and consultation within their organisation, and to
get buy-in from managers and employees, so that the spirit of the regulations
are welcomed by all. 

cultural change will be a challenge for some organisations, since employees are
generally only consulted when there has been bad news to share. Yet the process
can be hugely beneficial to the organisation and to all its employees.

is most effective when employers take the time to provide good quality
information. They should also provide training for management and employee
representatives to help them gain a broader understanding of their industry,
the wider economy, and where their own organisation fits. This wider context
can lead to a more constructive dialogue that in turn leads to a more effective
information and consultation process. Employees who feel they have contributed
to the decision-making process, rather than having it imposed on them, are more
likely to agree even to significant changes to their workplace, methods or
conditions of employment.

should take advantage of the generous lead-time to the implementation of the
regulations to consult employees about what they would view as to the best
forum for communication, how it should be constituted, to what extent it should
be representative of all parts of the organisation and how it should be put in

employers ensure they put in place consultation arrangements that suit them in
advance of the legislation so they are less likely to have to comply with the
ICD default works council model?

draft Regulations refer to ‘pre-existing agreements’. Where these are in place
they may continue if they are in writing, cover all employees, have been
approved by the employees and set out how both employees and representatives
are to be kept informed and consulted.

taking the initiative early, employees will have more control over the process,
so long as they ensure that it meets all the requirements of the directive.

Comments are closed.