National works councils: Legal Q&A

Amid all the attention surrounding the new age discrimination legislation, another major legal change, which is particularly significant for small and medium-sized employers, seems to have come to pass without much fanfare.

The Information and Consultation of Employees Regulations 2004 introduced national works councils in the UK. Initially applying only to larger employers, the laws will soon apply to a much wider group of employers, who need to be aware of what is coming and take a conscious decision as to how they are to react, regardless of whether they have existing arrangements in place.

Q Who is affected?

A The regulations applied to employers of more than 149 employees from April 2005. From April 2007, this will be extended to employers with more than 99 employees, and from April 2008, to those with more than 49 employees.

Q What has been the reaction since the regulations were introduced in 2005?

A Surprisingly, the reaction to the regulations by larger employers in 2005 was relatively muted. This may have been because they are more likely to have had union recognition or a voluntary arrangement in place already. However, that is unlikely to be true of smaller employers.

Q What do the regulations mean?

A Ten per cent of the workforce can request negotiations, with a view to establishing an information and consultation agreement. The regulations set out basic requirements as to how the resulting forum should operate and the information that must be provided by the employer. If the negotiations are unsuccessful, the regulations provide a mandatory default arrangement. All employers of the requisite size will be caught, but the rules are different for those who already operate a voluntary arrangement. If the arrangement qualifies, the proportion of the workforce required to trigger negotiations is increased to 40%.

Q What are the requirements of voluntary arrangements?

A To qualify, a pre-existing voluntary arrangement must be in writing, have been approved by a majority of (and cover all of) the employees in the undertaking, and set out how the employer is to provide information to, and seek the views of, the consultation forum. There is no set formula for the provision of information or seeking views.

Q What are the relative benefits of voluntary arrangements?

A The employer will have greater ability to control the shape and operation of a voluntary arrangement. Once in place, the voluntary arrangement will help the employer resist a request for negotiated arrangements under the regulations (by increasing the required percentage of staff requesting the negotiations).

For those employers already operating voluntary arrangements, the general impression is that they have a positive effect on the workplace. They allow for open discussion and feedback, staff feel more involved and, as a result, more motivated, and when there is a need for collective consultation (eg, during large-scale redundancies), a suitable forum already exists, so no elections are needed for staff representatives. Both sides are used to the consultation process, and so are better equipped to deal with it.

Q Is there a union angle?

A There is a fear that negotiated arrangements would allow the introduction of union representation by the back door, as the 10% threshold for requesting negotiations is much lower than that required for statutory union recognition, and the people most likely to get involved on the forum will be those staff advocating union representation. Voluntary arrangements should help to resist such a move by raising the required percentage to 40%. But you cannot rule out the risk of union members being the ones who stand for election to the consultation body.

Q Are there lessons that smaller employers can learn from the introduction of the regulations in 2005?

A A lot of the activity of larger employers in the run-up to 2005 was to ensure that existing arrangements satisfied the criteria of the regulations. Ad hoc arrangements were put into writing and formal ballots were held. A major decision by the Employment Appeal Tribunal (EAT) this year was in the case of Moray Council v Stewart, which concerned voluntary arrangements and the requirement that they should set out how information is to be imparted and views sought. The EAT’s decision means employers have to make sure that any document setting out voluntary arrangements is clear as to the information that will be provided, and the area upon which consultation will take place.

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