Draft Information and Consultation of Employees Regulations 2004
Fourth Committee on Delegated Legislation
Thursday 16 December 2004
[Mr. Jonathan Sayeed in the Chair]
Draft Information and Consultation of Employees Regulations 2004
2.45 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe): I beg to move,
That the Committee has considered the draft Information and Consultation of Employees Regulations 2004.
Welcome to the Chair, Mr. Sayeed. I also welcome colleagues to our deliberations on the regulations, which I am pleased to discuss in Committee. I notice that hon. Members who are here today also attended the debates on informing and consulting employees during the passage of the Employment Relations Bill, so the subject will be reassuringly familiar to them.
The regulations, made under section 42 of the Employment Relations Act 2004, implement the European Commission directive 2002/14/EC on informing and consulting employees. They give employees in the United Kingdom new rights to be informed and consulted on an ongoing basis about developments in the organisations for which they work. The Government strongly support the directive's objectives.
The regulations implement the CBI-TUC framework agreement, and I shall explain some of their key provisions. They apply to undertakings in the UK with 50 or more employees. They will be phased in, giving smaller firms longer to prepare, but will not apply to firms with fewer than 50 employees. The Government encourage all organisations, whether or not they are covered by the legislation, to inform and consult their employees as a matter of good practice.
Regulation 4 provides a method of calculating the number of employees in an undertaking, which is averaged out over 12 months. Regulation 5 provides the employees of an undertaking with an entitlement to data from that employer, to be used to calculate the number of employees in that undertaking.
Part III of the regulations relates to agreements. Importantly, regulation 7 gives employees the right to request formal information and consultation arrangements from their employer. The employer will be required to initiate negotiations where at least 10 per cent. of employees in an undertaking request information in consultation arrangements. The status quo will continue unless employees trigger the legislation in the way that I described, but if an undertaking has a pre-existing agreement on information and consultation, and if a request for new arrangements is made by less than 40 per cent. of employees, the employer may hold a ballot to determine whether the wider work force endorses the
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request. It follows that where employers and employees are content with their current arrangements, the regulations do not force them to change anything.
Regulation 9 allows for a combined ballot to be held where a pre-existing agreement covers a group of undertakings. Regulation 11 permits employers to initiate negotiations for new information and consultation arrangements on their own initiative without waiting for an employee request.
Where an employer is required to negotiate an information and consultation agreement, regulation 14 sets out what steps have to be taken, including the appointment or election of negotiating representatives. The employer should initiate negotiations with the representatives of the employees as soon as is reasonably practicable, and within three months at the latest.
Regulation 16 sets out what a negotiated agreement must contain, and how it must be approved. The legislation sets only very limited requirements for the contents of negotiated agreements. It purposely leaves it to the employer and negotiating representatives to decide, giving them considerable flexibility to agree arrangements best suited to their particular circumstances. Agreements must set out the circumstances in which employees will be informed and consulted, but does not specify the subject matter, the method, the frequency or the timing of information and consultation.
Once arrangements are in place, information and consultation may take place through elected or appointed representatives, including trade union officials. However, the regulations also allow for communication directly with employees, if that is what they want.
The standard information and consultation provisions in part IV apply only where negotiations have failed to lead to an agreement, or where an employer fails to initiate negotiations for an information and consultation agreement as required. They require employers to inform and consult on specified matters in the way set out in regulation 20.
Regulation 19 obliges the employer to hold a ballot for the election of information and consultation representatives to act under the standard provisions. However, information and consultation representatives and employers may come to a negotiated agreement at any time after the standard information and consultation provisions apply, if the standard provisions do not suit their particular circumstances.
Part VI deals with compliance and enforcement. Regulation 22 provides for complaints to the Central Arbitration Committee about the operation of a negotiated agreement or the standard information and consultation provisions. It also provides for an application to be made to the Employment Appeal Tribunal for a penalty where an employer has failed to comply with a negotiated agreement or the standard provisions. A fine of up to £75,000 may be issued.
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Part VII deals with confidential information. Regulation 25 allows employers to impose a confidentiality restriction on information provided to representatives or employees, and it places a duty on them not to disclose it. However, the recipients may challenge the need for such a restriction at the CAC. In addition, regulation 26 allows an employer not to disclose information to representatives of employees when to do so would seriously harm or prejudice the undertaking. Again, however, the employee may challenge employers who do so at the CAC.
Part VIII provides protections for employees taking part in negotiations, information and consultation procedures or elections, including protection against unfair dismissal and detriment. It also gives employees' representatives the right to reasonable time off.
The CAC has an important role to play throughout the entire process—from taking decisions on the validity of employee requests or pre-existing agreements to enforcing information and consultation arrangements. The Advisory, Conciliation and Arbitration Service, too, has a central role in conciliation, trying whenever possible to help employers and employees to agree arrangements and resolve disputes.
As stated in the explanatory memorandum, the provisions of the regulations are compatible with the European convention on human rights. We also considered it important that the regulations reflect the recent recommendations of the legal adviser to the Joint Committee on Statutory Instruments. For that reason, the regulations laid before Parliament last week included a small number of technical but valuable changes.
The rights that I have outlined are without doubt important, and their potential is significant. We understand the importance of publicising those new rights. The Department has consulted widely, and on three separate occasions over the past two years we have starting running awareness regimes, with highly successful regional road shows and master classes being run throughout the country. My Department has produced guidance on how the regulations will work, and we have consulted on them to ensure that they provide the help that people want. We are grateful to ACAS for its work in putting together good practice advice and training materials.
We are looking to do more than simply raise awareness of the new legislation. We want to encourage businesses, employees and unions to see the benefits of having a better-informed and consulted work force. The Government have high ambitions for the regulations. Approached in the right way, they have the potential to bring about a culture change in workplaces throughout the United Kingdom. I commend them to the Committee.
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2.52 pm
Mr. Henry Bellingham (North-West Norfolk) (Con): First, Mr. Sayeed, I welcome you to the Chair. This is the first time that I have served under your chairmanship, and I hope that it is the first of many such occasions.
I thank the Minister for his cogent and speedy explanation of the regulations. We debated the subject at length during consideration in Committee of the Employment Relations Act 2004; most of the points that we raised at the time have been carefully considered, and I am pleased to say that some have been taken on board. There is no question but that proper consultation and information will have obvious benefits to both sides of industry. Empirical evidence shows that it results in lower employee turnover and higher productivity, and sometimes in higher profitability.
I support the Minister in what he said during consideration in Committee of the 2004 Act; he pointed out that genuine and ongoing consultation can help to develop a climate of trust and co-operation, which can make implementing business decisions easier as well as ensuring that employees are treated fairly and are better informed about decisions affecting their future. We made it clear in Committee that we would have preferred a voluntary approach that brought both sides together on a best-practice basis, and we took the view that transposing an EU directive into our law was not the right way to proceed.
That having been said, the directive allows quite a lot of flexibility, and the Government have taken benefit of that flexibility in implementing it, which we welcome. We compliment the Government on making a real effort to consult all sides of industry. They had extensive discussions with the CBI, the Engineering Employers Federation and a number of other organisations, with academic groups and, of course, with trade unions and other bodies.
I have a couple of points to put to the Minister. The first is about what we see as the Government's undue haste in laying the regulations on 20 October, presumably to meet their own 12-week implementation period for all new legislation, without first receiving the comments of their legal advisers. I have given the Minister notice of that question, and I hope that he will answer it.
We will come back to the matter in correspondence and in future discussions because it is, to an extent, a moving target. However, can the Minister give us more detail about the one-off costs and the annual costs to business? There is some indication that the estimates are predicated on the basis of a single works council, rather than on multiple arrangements. I can think of a particular bank that has 21 business units. Do the estimates take into consideration the fact that businesses have such multiple arrangements? Perhaps the Minister will consider that. Furthermore, what is the estimated benefit of the regulations? What cost benefits will they will bring to business? The benefits
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have been estimated as being in the hundreds of millions of pounds net every year, but can the Minister be more specific? Has any research been done, or is any likely to be done? The Minister has been exact about the ongoing costs, but it must be possible to put a figure on the ongoing benefits also.
Finally, the Minister mentioned the roles of ACAS and of the CAC. In my capacity as shadow Employment Minister, I shall spend Monday with ACAS; I am looking forward to hearing its views on the new set of arrangements. Can the Minister indicate what the extra costs will be to ACAS and the CAC? Broadly, as we mentioned in Committee, we are grateful to the Minister for the work that he has done. We would not have taken the same approach had we been in Government, but he has made the best that he could have done of the situation.
