CONSULTING WITH EMPLOYEES

This week, the DTI published two Consultation Documents on proposed requirements for employers to consult with employees within the workplace. The first Consultation Document considers the European Commission’s intended review of the European Works Directive, and the second Consultation Document considers implementing the provisions of the Information and Consultation Directive. The DTI has invited interested parties to comment on the issues raised in the Consultation documents, by 7th October, and 7th November 2003, respectively. The aim of this update is to provide readers with an overview of the existing legislation and the proposed changes.

European Works Directive

The UK implemented the provisions of the European Works Directive in January 2000. The Directive applies to undertakings with 1000 or more employees, of which at least 150 employees must be based in two or more Member States. The aim of the Directive is to facilitate discussions within the workplace between employers and employees on key issues. The Directive requires employers, following a request in writing to do so from 100 of more employees, to set up a mechanism for informing and consulting with employees on workplace issues. Employers may also decide to set up their own mechanisms, in accordance with the legislation, to improve communication links within the workplace.

Any mechanism adopted, should comprise employee representatives from each Member State, in which the employer operates, to ensure that all employees are consulted regarding workplace issues, irrelevant of where they are based. The Directive also sets down a timetable for employers to negotiate, and implement the nature of the mechanism to be introduced, and sets out default provisions to be followed in the event that the timetable laid down in the Directive is not adhered to.

The European Commission is expected to review the provisions of the Directive by the end of this year, and it is for this reason that the Government has published a Consultation document on the Directive. The aim of this Consultation document is to invite comments from employers on possible amendments to the legislation in this area. In particular the Government is interested in receiving comments on the following issues:

· At present the provisions of the Directive only apply to undertakings with a 1000 or more employees, with at least 150 employees in two or more Member States. This may be amended under new legislation. It is proposed that the provisions of the Directive should apply to undertakings with 500 or more employees, of which at least 100 must be based in two or more Member States.

· Each Member State is required to ensure that employee representatives receive the same level of protection under domestic legislation as other employee representatives. However, there is no requirement to grant employees time off for training, and it is proposed that legislation should be introduced to amend this.

· At present a breach of the provisions, may result in the employer being liable to pay a fine of up to £75,000. The Government is considering reviewing the potential penalties that may be imposed to ensure that the sanctions do not require strengthening.

· Views are also invited on the nature of the mechanisms introduced to inform and consult employees, and the nature of the default provisions in place, to ensure that the legislation is pitched at the right level to achieve a balance between the requirement, to consult against the burden to be placed on the employer to implement a mechanism in which information may be imparted to employees, for consultation purposes.

Comments on the proposed changes are invited by the DTI, to be lodged by 7th October 2003. Following which further legislation may be introduced in this area.

Informing and Consulting with Employees

In July 2002, the DTI published a Consultation document on “the role of employee involvement in a modern economy”. The aim of this Consultation document was to invite comments from employers on the proposals to introduce the provisions of the EC Directive on Informing and Consulting with employees in the workplace. The UK must give effect to the Directive by 25th March 2005, and the Government has therefore published a second Consultation document setting out the provisions to be complied with, and issuing draft Regulations to be considered.

The draft Regulations apply to undertakings with 50 or more employees. Although, it is anticipated that when the Regulations are introduced, they will be phased in over a three year period, and that the Regulations will initially only apply to undertakings with 150 employees, with provision to extend the ambit of the Regulations to undertakings with 100, and then 50 employees over the three year period.

Under the draft Regulations employers will be obliged to set up a mechanism to impart information, and consult with employees, upon receipt of a valid request to do so from employees. Once a valid request has been received, an employer will have a set amount of time to negotiate the form of the body to be introduced, to impart information and to consult with employees, with employees, and to implement the provisions of any such agreement. Under the draft Regulations employers will be required to inform employees of:
 
· “Recent and probable development of the undertaking’s activities and its economic situation

· Situations and probable developments of employment within the undertaking and any anticipatory measures that will be introduced, in particular where there is a threat to employment, and

· Decisions likely to lead to substantial changes in work organisation or in contractual relations including collective redundancies and business transfers.”

Failure to set up an appropriate mechanism, or follow the procedures laid down may result in an award of damages being made against an employer. At present it is expected that awards will be capped at £75,000. Employers may therefore wish to consider the implications that the Regulations will have on their businesses, and express any concerns on the provisions to be introduced to the DTI, by 7th November 2003, before the wording of Regulations is finalised.

For further information, please contact:

Chris Magrath  Tel: (020) 7317 6713 Email: Chris.Magrath@Magrath.co.uk;
Jessica Knight    Tel: (020) 7317 6787 Email: Jessica.Knight@Magrath.co.uk;
Adele Martins  Tel: (020) 7317 6719 Email: Adele.Martins@Magrath.co.uk;
Michael Sissons  Tel: (020) 7317 6793 Email: Michael.Sissons@Magrath.co.uk;
Kerry Candy     Tel: (020) 7317 6783 Email: Kerry.Candy@Magrath.co.uk; or
Robert Starr         Tel: (020) 7317 6722 Email: Robert.Starr@M

Associate Offices Gibney Anthony & Flaherty LLP Attorneys-at-Law 665 Fifth Avenue New York NY 10022 USA. David Hole Rechtsanwalt and Solicitor Widenmayerstrasse 28/1V 30538 Munich Germany.

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