INFORMATION & CONSULTATION

1. INFORMATION & CONSULTATION Are You Ready ? Tom Flanagan 7 October 2004

2. Popular Misconceptions • The new Regs require you to create a “Domestic Works Council” - NO ! • You must put something in place by 6 April 2005 - NO ! • A Pre-Existing Agreement means that you escape the Regs requirements - NO ! • If you satisfy these Regs, you avoid the risk of penalties under existing laws on TUPE and collective redundancy - Not necessarily !!

3. Structure of Talk • Choose your approach • Directive: basic principles • Regulations: current state / introduction • Overview • Key practical issues • Practical solutions

4. Choose your Approach • Don’t care / too busy / irrelevant • Compliant • Gain positive advantage (“High Performance Workplace”) • Evangelical

5. The Directive - Basic Principles (1) • General framework - up to Member States • Existing law on I&C inadequate • Earlier I&C preferred (Renault / M&S / Vauxhall) • 3 levels: (Article 4): • inform • inform and consult • …with a view to reaching agreement

6. The Directive - Basic Principles (2) • Exception (Article 5) • Basis of “Pre-Existing Agreement” • Agreement between “management and labour” • Which does not need to follow Article 4 • As long as “respecting the principles laid down in Article 1”

7. I&C Regs: Current State of Play • In force by 25 March 2005 • UK Government plans 6 April 2005 • 2 Consultation Papers: “High Performance Workplaces” - 2002/2003 • Current Draft Regs / DTI Guidance • DTI seeks views before 22 October 2004 • Possibility of further change ?

8. I&C Regs: Introduction • April 2005: >150 employees (c.14,000) • March 2007: >100 employees • March 2008: >50 employees (c.38,000 in all) • Employees “in the undertaking”

9. Overview • “High Performance Workplaces” • Flexibility (allegedly) • Obligation to I&C • Comply with Directive • Empowering Trade Unions ?

10. Overview : The Structure of the Regs (1) • Voluntary • Negotiated • Statutory

11. Overview : The Structure of the Regs (2) • Obligation to negotiate an I&C process • if either/or… • employer volunteers • trigger is pulled • Trigger: • 10% of workforce • min. 15% / max 2,500 • Unless: pre-existing agreement • If neither: Standard Provisions (statutory fall-back)

12. Key Practical Issues • Undertaking • Pre-existing agreement • Sanctions • Overlap with existing law

13. Undertaking • “a public or private undertaking carrying out an economic activity, whether or not for gain…” (similar to “old” TUPE • DTI: “a separately incorporated legal entity” (why?) • Not “establishment, division or business unit of a Company” • But if TUPE jurisprudence applies, DTI guidance must be doubtful

14. Significance of Undertaking • Application • Trigger • Pre-existing agreement • Election / appointment of negotiating reps • Election of I&C reps

15. Pre-Existing Agreements (1) • Valid employee request (10%/2,500 (etc)) • By less than 40% “in the undertaking” • Agreement • in writing • covers all employees “in the undertaking” • approved by the employees • sets out I&C procedures • More than one undertaking’s employees

16. Pre-Existing Agreements (2) • Content not prescriptive • ACAS guidelines • Different parts of undertaking • As long as, together, cover all employees of the undertaking • Collective agreements

17. Pre-Existing Agreements (3)Employee Approval • Simple majority in ballot • Majority through signatures • Agreement of those representing majority • Different methods for different agreements

18. Pre-Existing Agreements (4)Effect • No “Article 13” opt-out • Still have to ballot or negotiate • 40%+ majority = endorsement  negotiate • Pre-existing agreements still exist? (Collective Agreements) • <40% or minority = no endorsement • Therefore, no obligation to negotiate • Pre-existing agreement stands • 3 year moratorium

19. Pre-Existing Agreements (5)Effect • Does not let you off the hook • Still need a ballot • If survives - 3 year moratorium • If it doesn’t survive - negotiate a new I&C process • Going on to the negotiated procedure

20. Do You Have a Pre-Existing Agreement ? • Irrelevant unless trigger pulled already • Don’t drive policy based wholly on it • Adapt existing processes • …with half an eye to a PEA • Unlikely that you can satisfy it

21. Why is it Unlikely ? • Covers all employees in the undertaking • Approval of the workforce

22. Sanctions • Complaint to CAC (not for PEAs) • Declaration • Penalty notice, from EAT • Max of £75,000 per failure • Paid to DTI

23. Overlap with Existing Law (1) • Collective Redundancies (s188 TULRCA) • TUPE • “Double” jeopardy • protective award: redundancy - up to 3 months • compensation: TUPE - up to 13 weeks • I&C Regs: up to £75,000 fine

24. Overlap with Existing Law (2) • Overlapping obligations • redundancy: TU Reps / elected • TUPE: TU Reps / elected • ICON: reps under Regs • Exclude ICON in redundancy / TUPE cases ? • Hidden trap ?

25. Practical Solutions • Employees in the undertaking • umbrella agreement • sub-committees • Employee approval • existing procedures • reps are truly representative • “employee representative” not defined • Voluntary / PEA: do what you like ? • Collective agreements survive a PEA

26. Conclusion • “DON’T PANIC • Avoid the trigger • Not necessarily a PEA • Satisfied workforce • Engage trade unions