Concern about consultation laws 'unjustified'


A new report by The Work Foundation has rejected claims by employers groups that new European legislation giving staff the right to be consulted about major business decisions poses a threat to British business.

The legislation will give employees in companies with over 50 employees the right to be informed about the business's economic situation, informed and consulted about employment prospects, and informed and consulted about decisions likely to lead to substantial changes in work organisation or contractual relations, including redundancies and transfers.

The UK has until 23 March 2005 to implement the EU directive. The Department of Trade and Industry is currently drawing up draft legislation and is expected to begin consultation on it next month.

An agreement with the EU allows the UK to restrict application of the directive in the first instance to businesses with 150 or more employees. After 2007 it will also apply to businesses with 100 or more employees, and after 2008 to ones with 50 or more employees.

The directive does not apply to firms with fewer than 50 employees. Businesses with 50 or more employees account for only about one per cent of all businesses in the UK but employ some three quarters of the workforce.

Employers' organisations such as the Confederation of British Industry are concerned that the new employee rights will lead to staff jeopardising share prices, competitive position, or mergers and acquisitions by leaking commercially sensitive information. They also worry that legislation will slow decision-making or open the door to demands for negotiation with workforce representatives on business strategy.

But The Work Foundation report, New Dialogue at Work - making consultation law work, argues that the new rights will be much less disruptive to business than critics forecast. And while legislation must support employers who want to take action where confidentiality is breached, its research suggests that employers are unfairly stigmatising union and other employee representatives.

In interviews with personnel professionals, it found that managers were as likely as employee reps to leak business secrets. Moreover where staff did betray business confidences, it was mostly accidental and could be prevented by clear guidance on dealing with classified information.

According to The Work Foundation’s research, employers that already consult with staff are less likely to fear that legislation will open the door to negotiation with union or other employee representatives on business strategy. As the report points out, "negotiation is bargaining that requires mutual agreement for a resolution; consultation seeks opinions and even alternatives, but leaves decision making firmly in management's hands."

Among its recommendations, The Work Foundation suggests that the DTI should consider piloting the new legal framework with a small number of companies to test out implementation issues. The government should also address the issue of skills’ needs and shortages among both management and employee representatives and take action to help address gaps.

When legislation is introduced, The Work Foundation argues that it should support the rights of employers to take action in the event of any worker or management representative breaching agreed confidentiality and provide for effective sanctions for non-compliance – preferably financial.

Patrick Burns, director of advocacy at The Work Foundation and co-author of the report says: “This study suggests new information and consultation rights will be much less disruptive to business than critics forecast. Many companies already do what the likely legislation will require. The DTI now needs to do a lot of practical piloting to help and guide the employers and workforce reps for whom consultation will be a new experience.”

Copies of New Dialogue at Work - making consultation law work are available from The Work Foundation's website.