Q&A: Information and Consultation Directive

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

High Performance Workplaces –
Informing and Consulting Employees
was published on Monday 7th July2003. The consultation closes on
November 7, 2003.

Where did the Information and
Consultation Directive come from?

The 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.

The UK Government has issued draft
regulations for consultation – the Information and Consultation of Employees
Regulations 2005.

What is the purpose of the directive?

The 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

When do we need to

It depends on how large your
organization is.

● Organisations with 150
employees or more will need to comply by March 2005
● Those with 100 or more by March 2007
● Those with 50 or more by March 2008

How will it work?

The 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 procedure.

Employers 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

Importantly, organisations do not
have to use the process if disclosing information to employees could harm the

It 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

For 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 proposed.  

What are the penalties for failing
to comply?

The 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).

While 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 employer.

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.

The 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.

The 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?

Most 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

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

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.

Effective consultation
is likely to mean:
● notifying the representatives of all proposals, such as company
● discussing the proposals with them
● obtaining any feedback from them
● discussing any areas of concern and attempting to address these where
● notifying the representatives of any final decision that has been made
and on what basis.

Provided the
consultation process is conducted with the overall aim of securing employee
involvement, understanding and agreement of the business issues under
discussion (and not merely a sham), 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.  

What does HR have to start doing now?

The 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

This 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.

Consultation 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.

Employers 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 place.

Is there any advantage to acting now?

The 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

By 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.


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