Best Practice Consultation An outline of the IPA's best practice Option Based approach to consultation with employee representatives Expand In today’s fast moving economy it can seem as if there is little time to involve the workforce particularly when facing pressures from shareholders, regulators and media to take quick decisions. However, those tasked with implementing change will understand the benefits of undertaking a process that means that decisions are understood by the workforce and have some legitimacy. Time taken in consultation can often save time during the implementation phase by removing resistance and gaining valuable feedback on the problems that may arise. The IPA’s recent research report, “ICE and Voice 10 years” illustrated that discussions at consultative forums seem to be increasingly focused on the management’s chosen option, rather than providing for an open discussion on potential options. To support organisations to carry out effective consultation the IPA developed option-based consultation. Its relevance has become more acute as concerns about the sharing of sensitive information, who makes the decisions, how much influence employees really have, and how much time all this will take begin to develop amongst organisations. Option-based consultation does exactly what it says. When the need for business change is identified, it is good sense for the managers of an organisation to consider a number of options to meet that need. It is extremely rare that a decision is taken without looking at a number of ways to achieve an objective but, in all cases, there are two: do something or do nothing. Option-based consultation allows employee representatives to influence decision making from the earliest stages, but should this opportunity be missed for some reason, they are still able to influence the implementation. Even in some partnership organisations, consultation takes place, at best, once a decision to implement business change has been reached. This is not true consultation but it can still be an effective way of improving communication and, therefore, of implementing change. The Options Based Consultation model is focused unreservedly on the business case. It is about getting the best outcomes when managing change and critically, it is about making sure that decisions, sometimes unpalatable, have legitimacy in the eyes of the staff. It is rare for employees to be fully informed of the range of options managers have considered before making a decision, and often they feel that managers do not give sufficient thought to how employees will be affected. In a redundancy situation, for example, employees might believe that the redundancies are the business objective itself rather than a consequence of it. Buy-in to any change process is difficult to achieve in such circumstances. Because it is rare for employees to be involved at an early stage of the decision making process, there can be the feeling that it is too late to influence the outcome by the time the discussions about implementation start. Principles of Option-Based Consultation As soon as a business objective is identified and options to meet that objective have been looked at, consultation with representatives should, ideally, begin before one option is selected as the way forward. This, of course, has implications for managers in sharing potentially sensitive information but this establishes everybody’s responsibilities right at the beginning of the process. Representatives have to be aware that a single breach of this confidence will lead to trust being undermined. For managers, it is a good opportunity to develop their skills in both the consideration of an issue and their ability to communicate their thought process. Since all this happens before a final decision is made, the representatives’ opportunity to influence the outcome can be a real one. The discipline of stating the business objectives and the thought process involved in developing them is a good one for managers and, if the representatives are concerned by the current options on the table, they can always suggest alternatives. This, in turn, presents the representatives with a greater challenge than merely saying “no” and it is important that they think carefully about any further options that may be more palatable to employees but will still meet the business objective. At this point in the process there will be a shared understanding of the need for change and the various ways available to make the change. There may not yet be agreement and nor is that necessary, but a clear understanding of why something has to change is fundamental to the success of the process. The representatives should challenge the business case if they do not understand it or agree with it. They should challenge the options presented to them but management should also challenge the representatives to come up with alternatives. It should produce a healthy, mature and courteous discussion aimed at producing the best decision for the organisation’s needs while taking into account the general views and concerns of its employees. With all of the information about the options and the representatives’ accurate temperature check in front of them, management now have the responsibility to make the decision. This process is not about removing the right of managers to make decisions; in fact it firmly establishes this right and responsibility where there may have previously been some ambiguity. More importantly, it extends the right of the representatives to having a clear and full understanding of why a decision has been made and why other options were rejected. This is important for the representatives because, although they will not like every decision that has been taken, they will be able to explain the reasons for them with authority to their constituents or members. This authority must never be underestimated in its contribution to achieving a more open, transparent and trusting culture. In the vast majority of cases, employees will see that an unpopular decision is a last resort. Communication between representatives and their constituents or members is an integral part of the consultation process. These representatives will need to establish the “hot topics” amongst the staff on a regular basis in order to provide that accurate temperature check. On very rare occasions this communication might take place very early by means of a genuine canvassing of views and reporting them back. This is more likely to happen at an operational rather than strategic level. More usually, the consultation process will require total confidentiality until an announcement or a joint-announcement is made. Best practice strongly suggests that the options under consideration should always be confidential at a strategic level until the final decision is communicated, as premature discussion with employees can lead to a great deal of confusion and disengagement. For example, employees may get the impression they are voting on strategic decisions – cynicism can develop if the option they thought they were voting for was not the one that was finally implemented. All parties have a shared interest in making sure communication is delivered well. Discussing the communication process as part of the consultation will achieve this and it is particularly helpful in ensuring that neither party surprises the other with what they say and when they say it. Benefits of Option-Based Consultation Option-based consultation will also achieve real business benefits in terms of better decision making and removing the gap between decision makers and those affected by their actions. It can work equally well in a unionised or non-unionised environment provided the representatives and managers are fully trained in the skills and behaviours necessary to make the process work properly. Option-based consultation will give representatives greater ability to influence by intellect and reason than they might have by simply using power. It should also make managers more comfortable in engaging in the consultation process earlier. A key benefit of option-based consultation is greater awareness among employees of the thorough process of management decision making which leads to greater acceptance of the quality of the decision being implemented even if the change is unpopular. Moreover, the development of a consultative culture and improved communication of the organisation’s strategic agenda can support better employee engagement through the development of employee voice and a line of sight between organisational strategy and employees’ day to day work. Perhaps the key benefit of option-based consultation is the removal of residual issues, complaints and general disengagement of staff when change is implemented. Research has shown that the UK economy has been losing around £26 billion per annum as a result of employee disengagement. Much of this occurs when employees do not understand why change has happened or how well the decisions have been thought through. In these circumstances, employees tend to default to negative thinking. Option-based consultation will fill the knowledge gaps and create an informed workforce more likely to embrace change. This can happen when the model is used prospectively or retrospectively allowing greater flexibility for managers than the standard definitions of consultation suggest.
Statutory Employee Consultation and the Role of the Employee Representative Employment law requires organisations to collectively inform and consult with its employees in relation to certain proposed changes Expand If collective consultation is required, and there is a well established Employee Forum, the organisation may decide to use the Employee Forum Representatives, or a particular area of the Forum, to inform and consult over proposed changes. In these situations, the business will expect them to attend collective consultation meetings and represent the views of their colleagues in relation to the proposed changes, in order to influence the approach prior to any decisions being made. In the event of the Employee Forum being used in this way, members of the Forum should receive training on how to be an elected representative for statutory consultation purposes. Redundancy Redundancy is actually a form of dismissal and many of the general rules about when dismissals are fair apply to redundancies. The law says that redundancy is a potentially fair reason for an employer to dismiss an employee, but for a redundancy dismissal to be lawful an employer must have followed a fair procedure before proceeding to dismissal. Fair and objective criteria must be used when selecting employees for redundancy. The usual laws relating to discrimination also apply so it’s unlawful to select an employee for redundancy because of their sex, race, sexual orientation, disability, age, religion or belief or because they are a member of a trade union. The employer should meet with an employee to explain why they have been selected for redundancy, explore any other employment options and allow the employee to appeal any redundancy decision. Unlike other forms of dismissal an employer must consult with workplace representatives before making groups of employees redundant. Redundancies occur when an employer reduces the size of their workforce. This is usually due to one of two reasons; the workplace is closing or fewer employees are required to do work of a particular kind. Dismissing employees and immediately recruiting new ones would not normally be classed as redundancy, but it’s not automatically unlawful. The new employees may be taking up different posts (or the same posts in a different location) or there may have been an unexpected change in business prospects – a successful tender for a large corporate pension scheme for example. The Legal Process for Consultation There are legal requirements an employer must follow before making employees redundant. In simple terms these are as follows; must follow a redundancy dismissal procedure during which the employee must be given the reasons for redundancy and what alternative employment opportunities are being explored must give notice of redundancies and formally consult where they are considering making more than 20 employees redundant over a period of 45 days most employees with more than 2 years’ service are entitled to redundancy pay must not select redundant employees on the basis of their gender, race, disability, age unless objectively justified, sexual orientation, transgender status, religion or belief, pregnancy or trade union membership Failure to follow these requirements could mean that the employer is unable to make the redundancies or may have to pay compensation due to unfair dismissal. In addition, employers should provide time off for job hunting or training. If the number of redundancies is 20 or less there is no legal obligation to consult, in which case the statutory dismissal procedure must be followed. When an employer is considering making more than 20 employees redundant over a 45-day period they are legally bound to consult with employee representatives. The content of the consultation must include: the reasons for the redundancies the numbers and descriptions of those affected ways of avoiding redundancies or reducing the numbers affected where a workplace is closing, the reason for closure the proposed method of selecting those to be made redundant how any enhanced redundancy payments are to be calculated In addition, there are minimum periods for consultation depending on the proposed number of redundancies: for 20 to 99 employees, consultation must last at least 30 days if 100 or more redundancies are proposed then consultation must last at least 45 days Consultation is an opportunity for the employer to pause for thought and consider alternative proposals submitted by employee representatives. There is no obligation to reach agreement by the end of the consultation period but the employer must consult “in good faith” with a view to reaching agreement. Individual notices of redundancy cannot be issued until the minimum period for consultation has expired. Failure to consult properly or issuing notices of redundancy before consultation ends (30 or 45 days) can result in a claim to an employment tribunal. Justified complaints can result in a protective award being made which requires the employer to pay employees normal pay for the period covered by the protective award (30 or 90 days). The employer should also consult with each individual employee as redundancy dismissals may be unfair if consultation has only taken place with employee representatives. The process for selecting employees for redundancy must be fair and non-discriminatory, otherwise there may be a claim for unfair dismissal. Selection cannot be made on grounds of sex, race, disability, age (unless objectively justified), sexual orientation, transgender status, religion or belief, pregnancy or trade union membership. The following can be taken into account though: skill and capability attendance record conduct record e.g. disciplinary warnings/action plans type of work to be done by those remaining Employees are entitled to know what factors have been used in the selection process and ideally these will have been agreed with employee representatives. Alternative Employment or Work Hours Employers have some responsibilities to assist employees in finding other employment. This may be suitable alternative employment within the same organisation or an associated company. If an employee unreasonably turns down a suitable alternative position then they are no longer legally redundant and would be in the same position as if they had resigned. An employee will lose their redundancy rights if: their employer (or associated employer) offers a suitable alternative job before the current contract expires, it starts within 4 weeks, and the employer makes the offer in writing An employee can reject a job that is clearly unsuitable, but can agree to a trial period to assess suitability. There are basic rules about this too: trial periods are usually for 4 weeks, but can be extended if retraining is required (there should be an agreement in writing to the actual period) if the trial period is successfully completed the employee is therefore deemed not to have been made redundant if the employee rejects the new job before the end of the trial period because it turns out to be unsuitable, or for good personal reasons, redundancy will be considered to have started the day the old job ended It should be noted that if there is disagreement between employer and employee over suitability of the new job the employer may refuse to pay redundancy. This could result in a claim to an employment tribunal and it would be up to the employee to show why the job was unsuitable. If the tribunal agrees with the employer then the employee will lose all rights to a redundancy payment. If the employer is proposing a change to an employee’s contract - e.g. by changing work hours or patterns, or changing pay or other terms and conditions of employment – this will only be lawful if the employer has agreed any change with the employee representative body. An unauthorised, unilateral variation is a breach of the contract of employment. If an employee is selected for redundancy and has worked continuously for the same employer for a minimum of 2 years on the date notice expires, the law says that they are entitled to reasonable paid time off to look for work or training. The law doesn’t give a specific amount of time to be deemed as “reasonable” and any dispute over this could only be settled in an employment tribunal. Generally, a sensible and realistic attempt to find work or appropriate training is likely to be deemed “reasonable”. Normal pay should be paid for reasonable time off, though the law allows an upper limit of 2/5 of a week’s pay to be applied. Collective Consultation in Practice If we take the example of more than 20 employees at risk of redundancy as our basic scenario then collective consultation is, in its simplest form, a two-step process which begins with an informal pre-consultation discussion between, typically, the senior management of the affected area(s) and senior Staff Representatives from the same area(s). The pre-consultation meeting (or meetings as this isn’t limited to 1 meeting) allows the company an opportunity to explain the rationale behind their review of the current organisational structure and, if appropriate, all options considered. There should be an indication of the proposed timeframe to complete the process and all relevant material relating to the company’s current position should be provided. Basically, pre-consultation is a “heads up” to the Staff Representative body about potential redundancies. The second step is to enter into formal collective consultation and this signals the start of the 30 or 45-day period. The collective consultation will focus on: consultation on the proposals alternatives already considered but not believed to be viable the impact on employees reasons why redundancies are proposed suggestions on how to mitigate redundancies The company should disclose, in writing, certain information: reasons for proposed redundancies definition of ‘establishment’* numbers and descriptions of affected employees the proposed time period over which dismissals will take effect the proposed selection process and how employees are to be pooled how dismissals are to be carried out the method of calculating redundancy payments Collective consultation will usually begin on the day the company announces its proposals to employees identified as at risk of redundancy. Appropriate managers will make this announcement and explain the business proposals, the collective consultation process and period (30/45 days), how employees should feedback on the proposals and when individual consultation will begin. Affected employees should also receive relevant documentation at this stage such as: business rationale for the proposed changes staff guide structure charts copy of any presentation slides Q&A document The company should individually consult with all employees whose role is at risk of redundancy. This includes those who are absent from their role for whatever reason (maternity, illness, secondment). Individual consultation can be run in tandem with (but not before the start of) the collective consultation process. Employees at risk of redundancy should be given adequate time to absorb, process and respond to the formal announcement that their role(s) are at risk of redundancy before entering into individual consultation. This will facilitate a more meaningful discussion between the individual and their manager. In much the same way as the collective consultation, the purpose of the individual consultation is to advise an employee that they are at risk of redundancy, discuss any ways to avoid or mitigate this and consider options for alternative employment, retraining or outplacement support. The manager should do the following throughout the individual consultation process: provide the employee with additional, relevant information about the proposed changes explain how the proposed changes affect the individual employee allow the employee to air their views, ask questions and discuss their circumstances confirm that their role is at risk of redundancy ensure the employee understands the proposed method of implementing the proposed changes discuss all options available to the employee The individual can be accompanied by a Staff Representative or a certified Trade Union official. There are 3 main stages in the individual consultation process: initial consultation meeting provisional outcome meeting final outcome meeting In a redundancy situation, one of the following scenarios will apply: the number of employees required to perform a particular task is to be reduced – this is known as a diminished requirement a particular role is no longer required – these are known as redundant posts There may be other employees in the affected area(s) who are not at risk of redundancy and fall within one of the following categories: Unaffected – the proposed changes have no impact on their role Matched – new roles that are materially the same have been identified in the new structure and individuals will move across and be ‘matched’ into them A selection pool is a group of employees who are currently performing the particular role that will either cease or diminish. All employees within a pool should perform the same or substantially similar role and may not necessarily be from the same department or division. For example, if the proposal was to reduce the number of secretarial support staff, this could encompass the entire company as the functions and skills are interchangeable and not specific to any one department, though clearly location would be a factor in any pooling exercise. Legislation doesn’t define selection pools so this is a matter for collective consultation. Communication Employees will expect representatives to keep them updated with any relevant information, so they should be familiar with the proposed changes and have considered how they will impact upon employees (remember that those not at risk of redundancy but impacted by the proposals need to be included). Employees will be interested in: the changes and what they mean to them the timescales for key stages of implementation having the opportunity to ask questions and make suggestions having the opportunity to raise queries on a confidential 1 to 1 basis understanding the role of an Employee Rep their options if they do not agree with the proposed changes Objectivity It’s extremely important for representatives to remain objective throughout any consultation process, particularly so when there is a risk of redundancies and doubly so if the representatives themselves are included as part of a selection pool. If there is any risk of a representative’s objectivity being compromised or questioned by other eligible employees then it should be considered whether withdrawing from the collective consultation team is the best course of action for the representative concerned and allowing another Staff Representative to take over. Representation Just a reminder that Staff Representatives represent employees, which includes managers delivering the message. This can be a difficult challenge as redundancy situations are often divisive and can cause views to be entrenched along staff/management lines. Representatives should maintain objectivity and impartiality at all times and endeavour to complete the collective consultation process with due diligence and pragmatism. Confidentiality It is imperative that confidentiality is maintained at all times and that information is only given to relevant parties at the appropriate time. Employees impacted by a redundancy programme will naturally be concerned with securing the best outcome for themselves and any hint of favouritism or different standards of service may result in claims of bias. Obviously, this is to be avoided at all costs. TUPE - Transfer of Undertakings (Protection of Employment) Regulations What is TUPE? The purpose of TUPE is to protect employees if the business in which they are employed changes hands. Its effect is to move employees and any liabilities associated with them from the old employer to the new employer by operation of law. TUPE is an acronym for the Transfer of Undertakings (Protection of Employment) Regulations. The Regulations were first passed in 1981 but overhauled in 2006. TUPE is a significant and often tricky piece of legislation adopted by the UK in order to implement the European Acquired Rights Directive. TUPE applies every day to an enormous number of different business transactions. TUPE can apply (to name but a few of many examples) when employers: sell or buy part or all of a business as a going concern; outsource or make a "service provision change" involving either (a) an initial outsourcing of a service (e.g. where services transfer from the customer to an external contractor); (b) a subsequent transfer (e.g. where services transfer from the first external contractor to a different external contractor; and (c) bringing the service back in-house (e.g. where services transfer from an external contractor back to the customer); grant or take over a lease or licence of premises and operate the same business from those premises. When is TUPE likely to apply? In essence, TUPE applies where there is a "relevant transfer". The 2006 Regulations clarified complicated case law to determine that a relevant transfer means the "transfer of an economic entity which retains its identity". In determining whether this has happened, the courts take into account factors such as: the type of undertaking being transferred; whether any tangible assets (buildings, moveable property etc.) are transferred; whether any intangible assets are transferred and the extent of their value; whether the majority of the employees are taken on by the new employer; whether any customers are transferred; the degree of similarity between the activities carried on before and after the transfer; the period for which the activities were suspended, if any. The question of exactly when TUPE does and does not apply is a very complex one. If you think a transaction you are involved in might be covered by TUPE you should always take specialist legal advice. Virtually all service provision changes are covered so it is safe to assume that TUPE applies to most outsourcing without the need for protracted legal argument. However, because of the uncertainty surrounding when TUPE applies, it is common for this issue to be regulated by contract. What does TUPE mean legally? Employees who are employed in the undertaking which is being transferred have their employment transferred to the new employer. Employees can refuse to transfer (or "opt-out"), but depending on the circumstances of the case, they can lose valuable legal rights if they do. TUPE states that "all the transferor's rights, powers, duties and liabilities under or in connection with the transferring employees' contracts of employment are transferred to the transferee". This all-embracing concept encompasses rights under the contract of employment, statutory rights and continuity of employment and includes employees' rights to bring a claim against their employer for unfair dismissal, redundancy or discrimination, unpaid wages, bonuses or holidays and personal injury claims etc. Employees therefore have the legal right to transfer to the new employer on their existing terms and conditions of employment and with all their existing employment rights and liabilities intact (although there are special provisions dealing with old age pensions under occupational pension schemes). Effectively, the new employer steps into the shoes of the old employer and it is as though the employee's contract of employment was always made with the new employer. For this reason it is essential that employers know all about the employees they might inherit if they are planning to take over a contract or buy a business and that they make sure that the contract protects them from any employment liabilities which arose before they became the employer. This is helped by the fact that the old employer is required to provide to the new employer written details of all employee rights and liabilities that will transfer (see below). For example, if Company A plc has been carrying out a contract to supply an insurance company with IT services and then loses the contract to Company B Ltd, Company B Limited will not only take over the contract to supply IT services, but will also inherit all the employees of Company A plc who were formerly involved in supplying the IT services to the insurance company. If Company A plc has failed to pay its employees their wages for the past few weeks, Company B Limited will inherit the liability to the employees for the unpaid wages under TUPE. Any dismissals will be automatically unfair, where the sole or principal reason for the dismissal is the transfer. This is also the case where the sole or principal reason for the dismissal is a reason connected to the transfer, unless it is for an economical, technical or organisational reason (an "ETO" reason) requiring a change in the workforce. This ETO defence is narrow in scope and can be difficult to rely upon. Even if the employer can rely upon an ETO defence and the dismissal is not automatically unfair, it may still be unfair for other reasons (such as a failure to consult properly in a redundancy situation). As the new employer is required to take on the employees on their existing terms and conditions of employment, it is prohibited from making any changes to the terms and conditions of employment of the transferred employees if the sole or principal reason for the variation is the transfer. This is also the case where the sole or principal reason is connected to the transfer, unless there is an ETO reason for the change, usually requiring a change in number of the workforce. This often makes it difficult, if not impossible, for incoming employers to harmonise terms and conditions of employment of staff after a TUPE transfer. Where an independent trade union has been recognised by the outgoing employer in respect of transferring employees, recognition will transfer to the incoming employer to the same extent. What do you need to do to comply with TUPE? (1) Outgoing employer must inform and consult with staff Employers involved in a business transfer must inform appropriate representatives of the affected employees of the transfer and any measures proposed, and must consult on any proposed measures. Certain specified information must be provided to the representatives long enough before the transfer to enable the outgoing employer to consult with them about it. If there are any changes or proposals for changes following the transfer, these "measures" will have to be discussed with the representatives of the affected employees. The incoming employer is required to provide the outgoing employer with information on proposed measures to allow the outgoing employer to comply with its duty to inform and consult. There is no set timetable for consultation, but the larger the transaction and the more staff affected, the longer the timetable will need to be. If there is a failure to inform and consult, a complaint can be made to the Employment Tribunal. If successful, the Tribunal can award whatever compensation it considers just and equitable having regard to the seriousness of the employer's failure up to a maximum of 13 weeks' pay per affected employee. Information and consultation failures can result in joint and several liability between the outgoing and incoming employers, although the contract governing the transfer can cater for apportionment of liability here. (2) Outgoing employer must provide employee liability information to incoming employer The outgoing employer has a duty to provide the incoming employer with written details of the transferring employees (including identity, age, particulars of employment, disciplinary and grievance records, employee claims and collective agreements) together with all associated rights and liabilities that will transfer. This information must be given not less than 14 days before the transfer, although in practice the incoming employer will aim to attain this information much earlier. If there is a failure to comply with this duty by the outgoing employer, the incoming employer can apply to the Tribunal for compensation which will be assessed with regard to the losses suffered with a minimum award of £500 per employee. A failure to comply with TUPE could therefore expose employers to claims large enough to undermine the entire transaction. What other practical steps can you take to protect your business from the effects of TUPE? There are steps which both the outgoing and incoming employers can take to divide up TUPE liabilities contractually between them. Whilst under TUPE employment liabilities connected to the transferring employees will always transfer to the incoming employer (so employee claims should always be made against the new employer), the parties can still agree contractually to divide up the liabilities between them in a different way. This ought to be done by means of contractual indemnities. If this is something you think would be useful for your business, you should always take specialist legal advice. The purpose of an Employee Representative is: to ensure all staff affected understand the strategic narrative. to contribute to high quality communication to staff affected by providing information and context that will enable staff to understand why this is happening. unpick the “what”, the “why” and the “what else” – the other options considered but rejected. provide staff with influence via the employee voice having created an environment where that employee voice will be constructive. to listen to, understand, filter and voice the informed opinions of staff which affect the organisation as a whole or which affect a significant group within the organisation. to support constituents with other minor concerns or individual issues by directing them to their line manager. The responsibilities of a TUPE/Redundancy representative are: to create an informed workforce which can contribute ideas to the operational implementation of strategic decisions. to develop closer communication links and trust between management and staff, promoting two way understanding with the new organisation. to develop a deeper understanding of business strategy and performance amongst their colleagues. to present ideas, options or alternatives in discussions. to respect the confidentiality of matters and individuals. to raise personal issues regarding yourself or a third party with an appropriate manager and not consultation meetings. Tips for the TUPE/Redundancy Representative familiarise yourself with the legislation. understand that you will be unlikely to take issue with the organisation in terms of its legal obligations. make sure both organisations are being fair. establish what you can and can’t influence straight away. remember that it will be better for all individuals if they transfer in a positive, engaged state of mind. Contact us for more information
A Guide to the Information and Consultation of Employees Regulations The ICE Regulations, as they are known, were introduced on 6 April 2005 and apply to organisations with more than 50 employees Expand The regulations give employees the right, subject to certain conditions, to request that their employer sets up or changes arrangements to inform and consult them about issues in their organisation. The requirement to inform and consult employees does not come about automatically. It can occur either following a formal request from employees for an information and consultation agreement – this would set out the mechanism by which employees would be informed and consulted over workplace issues - or by employers choosing to start the process to agree this with their employees themselves. If a company already has an agreement in place to inform and consult with employees, it may not be necessary to make any changes. To be valid the pre-existing agreement must: be in writing cover all the employees in the undertaking set out how the employer will inform & consult employees or representatives be approved by employees – either by a ballot or being signed by elected employee representatives. Key provisions of the ICE Regulations The terms of any ICE agreement should set out: the issues to be discussed when and how often discussions should take place. The subjects and issues to be informed and consulted over will be a matter for agreement between the employer and employee representatives, but the ‘standard provisions’ of the ICE regulations set out the areas where employers are obliged to inform and consult. These are: the business's economic situation employment prospects decisions likely to lead to substantial changes in work organisation or contractual relations – consultations should take place with a view to reaching an agreement. Any arrangements must cover all employees. Definitions of terms in the regulations An undertaking is defined as “a public or private undertaking carrying out an economic activity, whether or not operating for gain.” An employee means an individual who has entered into or works under a contract of employment. Where do they apply? The Regulations apply to undertakings whose registered office, head office or principal place of business is situated in Great Britain (identical but separate Regulations apply in Northern Ireland). If an undertaking has its registered office in Great Britain and its head office in Northern Ireland (or vice versa), the British Regulations only apply where the majority of employees are employed to work in Great Britain. How do Information and Consultation Arrangements Come into Operation? There are two ways in which information and consultation arrangements can come into operation: Employees make a request to their employer to establish arrangements An employer initiates negotiations to establish arrangements How do employees make a request? Currently to make a valid request under the Regulations, 10% of the employees in an undertaking must make the request; the 10% figure is subject to a minimum of 15 employees and a maximum of 2500. The Government has accepted the recommendation of the Taylor Review of Modern Working Practices and has laid before Parliament the necessary statutory instruments to amend the relevant legislation to reduce the threshold of employees making a request under the Regulations to 2%. This is expected to take effect from April 2020. The minimum of 15 employees will remain in place. Employees can make the request as individuals or a group of employees can make a single request. Where separate requests are added together to achieve the threshold figure, all the requests must be made within a six month period of each other. Making an employee request As a first step, employees can request data from their employer about the number of employees in the undertaking. This allows employees to calculate whether the undertaking has sufficient employees to come within the scope of the Regulations. They can also calculate how many employees need to support a request to establish information and consultation arrangements to meet the percentage threshold. If employees want to request this data, they must write to their employer and date the request. If the employer refuses to provide the data, or if the employer provides data which the employees consider is false or incomplete, the employees can make a complaint to the CAC (Central Arbitration Committee). The first stage in the formal process is for employees to make a request to their employer for information and consultation arrangements. Employees can do this even if they have not made a request for data. If employees wish to make a request on a confidential basis, they can write to the CAC giving their own name and address, the employer’s name and address and, if possible, the name of the appropriate manager whom the CAC should contact, and ensuring that their letter is dated. The CAC will then contact the employer to obtain a list of the names of the undertaking’s employees and will check whether the requests are from individuals whose names are on the list. The CAC will then write to the employer and the employees to inform them of the number of employees who have made requests to the CAC. The CAC will not reveal to the employer the names of the employees who have written to the CAC. It is then up to the employer to decide if information and consultation arrangements should be established and, if appropriate, to begin negotiations. Can an employer challenge an employee request? An employer may wish to challenge the validity of a request for information and consultation arrangements. For example, the employer may consider that it is not an ‘undertaking’ as defined by the Regulations or that the undertaking does not employ sufficient employees to come within scope of the Regulations. If that is the case, the employer may make an application to the CAC which will decide if the employer is required to act on the employees’ request. What is a pre-existing agreement? An employer may also consider that there is a ‘pre-existing agreement’ in place which provides for informing and consulting employees and that it should not be required to establish information and consultation arrangements under the Regulations. In these circumstances, if 40% of employees request information and consultation arrangements, the employer must nevertheless start negotiations to establish such arrangements. However, if the number of requests is at least 10% but less than 40%, the employer can choose to run a ballot for the employees to decide if the employer should initiate negotiations to establish information and consultation arrangements. Running a ballot to determine if negotiations to establish information and consultation arrangements should be initiated If the employer decides to run a ballot, it must inform the employees within one month of the employees’ request; the ballot should not take place earlier than 21 days after the employer notifies the employees of its intention to run a ballot. If the employees consider that there is no valid pre-existing agreement, they can make a complaint to the CAC which will decide the matter. Employees may also make an application to the CAC if they consider that the employer did not notify them that a ballot was to take place, that the ballot has not been held or that it took place before the 21 day period had expired or that the ballot did not conform to the requirements of the Regulations Balloting requirements The balloting requirements include the facility to vote in secret and the necessity to ensure that votes are accurately counted. The CAC can order the employer to arrange the ballot in line with the requirements of the Regulations. If there are one or more pre-existing agreements that cover employees in more than one undertaking, an employer may choose to run a combined ballot involving the employees in all the undertakings. Employees may make an application to the CAC that the employer is not entitled to run a ballot on this basis or that, if such a ballot does take place, that the conditions described above have not been met. If a ballot does take place, the request to establish information and consultation arrangements must be supported by a majority of those voting and 40% of those entitled to vote to be successful. If either of those criteria is not met, the request is unsuccessful and the employees cannot make another request for three years. If the result of the ballot is that the employees support the request to establish information and consultation arrangements, or if there is no pre-existing agreement, or if the employer has decided to initiate negotiations, the procedure moves to the next stage which is to start the negotiating process. When should the negotiating process start? This process must begin within three months of a valid request being made or the employer issuing a valid notification. The first step is for the employer to make arrangements for the election or appointment of representatives who will negotiate the information and consultation arrangements with the employer. These are referred to in the Regulations as ‘Negotiating Representatives’. How to start the negotiating process If an employer decides to initiate negotiations without waiting for a request from employees, it must inform the employees in accordance with the following requirements: it must state that it intends to start the negotiating process and that the notification is given for the purposes of the Regulations; it must state the date on which the notification is issued; and it must be brought to the attention of all employees in the undertaking Employees may make an application to the CAC that the employer did not conform to these requirements. Negotiating Representatives must be elected or appointed in accordance with the following requirements: all employees must be represented by one or more Negotiating Representatives all employees are entitled to take part in the process for appointing or electing the negotiating representatives. Employees may make a complaint to the CAC that these requirements have not been met. It is for the employer to choose whether Negotiating Representatives are elected or appointed but the employees are entitled to take part in the process once the employer has chosen the method. If the Negotiating Representatives and the employer successfully conclude an agreement, the agreement must nevertheless conform to the following requirements: it must set out the circumstances in which the employer must inform and consult the employees; it must be in writing, dated and signed on behalf of the employer; it must be approved by all the Negotiating Representatives or, if it has been approved by a majority of the Negotiating Representatives, it must be approved in writing by 50% of the employees or supported in a ballot by 50% of those voting; and it must provide for the appointment of Information and Consultation Representatives or provide that the employer must inform and consult directly with all employees. If a ballot of employees is held to approve the agreement, it must conform to the requirements of the Regulations; these include the facility to vote in secret and the obligation to ensure the votes are accurately counted. A complaint can be made to the CAC that these balloting requirements have not been met. Is there a deadline for concluding the negotiations? The Regulations state that there is a six month period for the employer and the Negotiating Representatives to reach an agreement. The six month period starts three months after the employer receives a valid request from its employees for information and consultation arrangements or three months after the date on which the employer decides to initiate negotiations itself. The six month period can be extended by agreement between the employer and the employees. If it does not prove possible for the employer and the Negotiating Representatives to reach an agreement, or if the employer fails to enter negotiations, the ‘Standard Information and Consultation Provisions’ will automatically apply. Generally, if the employer has refused to enter into negotiations, the Standard Provisions will apply six months from the date on which a valid request was made (or a valid notification was issued by the employer) or the date on which on which Information and Consultation Representatives are elected whichever is the sooner. If, however, negotiations have taken place but did not result in an agreement, the Standard Provisions will apply six months from the expiry of the time limit described above, or the date on which Information and Consultation Representatives are elected, whichever is the sooner. What are the Standard Provisions? The Standard Information and Consultation Provisions are not a formal procedure of the type that may be agreed between an employer and its employees or, traditionally, the sort of collective agreement that is agreed between an employer and a trade union. They are a series of obligations on the employer to inform the employees’ representatives on a range of issues affecting the undertaking’s activities. The employer is under an additional duty to consult employees’ representatives on some of those issues. Under the Standard Provisions, the employer also has to arrange a ballot to elect Information and Consultation Representatives and a complaint can be made to the CAC if that obligation is not met. The Regulations relating to the Standard Information and Consultation Provisions are: Where the standard information and consultation provisions apply, the employer must provide the information and consultation representatives with information on “the recent and probable development of the undertaking’s activities and economic situation”. This information should be given at such a time, and in such a fashion and with such content as are appropriate to enable the representatives to conduct an adequate study and where necessary prepare for consultation. The employer must consult the information and consultation representatives on: the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged, in particular, where there is a threat to employment within the undertaking; and decisions likely to lead to substantial changes in work organisation or in contractual relations, including those referred to in sections 188 to 192 of the Trade Union and Labour Relations (Consolidation) Act 1992; and regulations 10 to 12 of the Transfer of Undertakings (Protection of Employment) Regulations 1981. The employer must ensure that the consultation is conducted: in such a way as to ensure that the timing, method and content of the consultation are appropriate; on the basis of the information supplied by the employer to the information and consultation representatives and of any opinion which those representatives express to the employer; in such a way as to enable the information and consultation representatives to meet the employer at the relevant level of management depending on the subject under discussion and to obtain a reasoned response from the employer to any such opinion; and with a view to reaching agreement on decisions within the scope of the employer’s powers. The duties to inform and consult the information and consultation representatives on decisions falling cease to apply where the employer is under a duty under: sections 188 to 192 of the Trade Union and Labour Relations (Consolidation) Act 1992 referring to an employer’s obligation to consult employees’ representatives in a redundancy situation. regulations 10 to 12 of the Transfer of Undertakings (Protection of Employment) Regulations 1981 refer to an employer’s obligation to consult employees and their representatives prior to the transfer of an undertaking; and they have notified the information and consultation representatives in writing that he will be complying with his duty under this legislation instead of under these Regulations. Where there is an obligation in these Regulations on the employer to inform and consult his employees, a failure on the part of a person who controls the employer (either directly or indirectly) to provide information to the employer shall not constitute a valid reason for the employer failing to inform and consult. Issues where a complaint can be made to the CAC If a Negotiated Agreement is in place or if the Standard Provisions apply, there are three issues on which an application or a complaint can be made to the CAC: a complaint can be made to the CAC that an employer has failed to comply with a Negotiated Agreement or the Standard Provisions; where an employer has disclosed information to an employee or an employees’ representative and has required them to keep that information confidential, the recipient of the information can make an application to the CAC for a decision on whether it was reasonable for the employer to impose that requirement; and an application to the CAC by either an employee or the employer that disclosing information would seriously harm the functioning of, or be prejudicial to, the undertaking. Contact us for more information
The Five Key Steps to Employee Engagement Taking an employee forum through the five key steps to employee engagement. Expand Step 1: Bring employees closer to strategic decisions made by the senior management of the business – “The Strategic Narrative” To achieve an engaged workforce, every employee should understand why and how key strategic decisions are taken in the business. Thus, strategy has to form the basis of discussions at employee forum meetings in order that employee representatives can scrutinise and evaluate management decision making. This will require the representatives to have the knowledge and skills to ask questions that may not otherwise be asked by employees. The answers to these questions should be the foundation of high quality communication back to the wider workforce - essential for the success of the process. As a result of employee forum representatives asking a series of key questions, the workforce should be able to trace any change in their circumstances to a strategic decision. This helps employees to see change as something that involves them, rather than as something done to them. Step 2: Creating "buy-in" to the strategic decision. "Buy-in" does not mean employees agreeing with or being happy with organisational change. The basis of employees buying–in to a decision that results in organisational change rests with their complete understanding of that decision. This requires an understanding of both why these decisions have been made and how they have been made. In a mathematics exam, marks are given not just for the final answer, but also for the process by which the answer is reached - "showing your working". Scrutinising senior management’s decision making is like that – it is not so much the decision at the end of the process that achieves buy-in, it is be able to understand management’s “working”. Respect for decisions comes when employees understand the process and appreciate the quality of the decision. When managers begin to fully explain to employees their reasons for making a decision, and how the decision was made, trust between managers and employees increases. Step 3: the What, the Why and the What Else. Employees often need reassurance that decisions have been made with proper consideration. An exploration of the “what else” will support this and involves managers talking through the options that were considered before the final decision was reached. This will, ideally, be done before that final decision has been taken but it can be done retrospectively. The timing is actually of secondary importance to the quality of the communication that the employee representatives and managers provide to the employees. It is this regular communication that will lead to Step 4. Step 4: Continued improvement in employee satisfaction and the building of trust As organisations move through the preceding three steps, employees’ trust in senior managers and the decisions they make will increase. There is security in the predictability of knowing that employees will be involved and that the decision making process is open and transparent. Step 5: Create an informed and credible employee voice in a culture where employees want to contribute and get involved. It is within a open and positive culture that employees will be interested in talking about organisational strategy. There will be less speculation about why something has happened and more interest in debating what might happen next. Progress through these five steps should be seen in improved engagement scores in employee surveys. A further measurement of success will be more employees standing for election as forum representatives as the role is proved to have real value and influence in the organisation and as more people become aware of the role as a result of better communication.
The Business Case for Employee Voice Outlining the evidence supporting the business case for listening to the workforce. Expand More than any of the other enablers of engagement, it is in terms of voice where the UK seems to struggle the most. The ETUI index of employee participation has the UK as second lowest – ahead of only Lithuania[1]. Evidence from WERS shows that just one in two employees (52 per cent) say that managers are good or very good at seeking their views. Fewer still – just one in three (32 per cent) – say that managers are good or very good at allowing employees to influence decision-making[2]. Yet the evidence is strong that voice can have a huge array of benefits for the employer as well as the employee. Engagement, productivity and discretionary effort It should come as no surprise that workers who feel they have a say at work, can put forward suggestions and have some discretion over their daily work tend to be more motivated and more productive. Voice has been directly associated with organisational commitment[3], as well as being identified as one of the four key determinants of employee engagement.[4] Engagement in turn is a key driver of productivity; in a survey of over 23,000 business units, Gallup found that those with engagement scores in the highest quartile were 18 per cent more productive than those in the lowest quartile[5]. Research from Eurofound across 24,000 European organisations has concluded that those which “used joint employee-management decision-making on daily tasks” and “have extensive practices for direct participation score best both in terms of company performance” across a range of metrics.[6] Meanwhile, according to a UK inquiry by the Smith Institute, listening (both individually and collectively) to what staff have to say was rated as the top factor that would improve the value of services or products produced by an organisation. However, just 14 per cent of employees thought management always listened to employee suggestions for improving productivity, while 26 per cent though they never did. As one respondent put it: “Our management do not listen to staff. Very, very simple, inexpensive and quick fixes would make a huge difference to productivity, but they just don’t seem to care.”[7] Absenteeism, and turnover Voice has also been directly associated with reduced absenteeism and reduced staff turnover, as a result both of higher commitment to the organisation, effectiveness of resolving problems that may otherwise have led to quitting and also genuine improvements in employee health and wellbeing that reduce the need for sickness absence. According to a study by health and safety expert, Dr Dominic Cooper, engaged employees are five times less likely to be involved in an accident, and the costs of disengaged employees are about six times more for an incident than for an engaged employee. Research in the NHS found that one standard deviation increase in engagement was correlated with a 5% reduction in absenteeism, saving £200,000 in annual salary costs to an average acute NHS trust with 4,500 staff[8]. Research published by the DTI (now BEIS) in 2007 showed the role of union representatives leads to between 8,000 and 13,000 fewer work-related injuries and 3,000 to 8,000 fewer cases of illness per year, amounting in combination to up to 616,000 fewer working days lost[9]. The same research also found that workplace representatives led to 13,000 to 25,000 fewer dismissals and 17,000 to 34,000 fewer voluntary ‘exits’ per year, worth millions of pounds to employers in staff turnover. This accords with other academic research showing that employees with more voice at work were significantly less likely to quit.[10] Creativity and innovation Engaged employees are, unsurprisingly, more innovative; they seek to continuously improve processes, look for new ways of adding value to their work and are more likely to suggest and follow through on new ideas. In 2007 Gallup found that 59 per cent of the more engaged employees said that work brings out their most creative ideas, compared to just 3 per cent of the less engaged[11]. Workers at the frontline often have the best ideas for how the processes they engage with daily could be improved. Yet to make these improvements, they need a voice; a way of putting forward their ideas to the wider organisation and have them adopted – the Japanese management approach of Kaizen exemplified in the Toyota Way and embodied in many of our most productive businesses is precisely such a system. The IPA’s latest research into police forces in the UK has similarly found clear evidence that better voice structures are needed to enable bottom-up innovation, as well as supporting wider change management[12]. Economist Herbert Simon, commenting on the Hawthorne experiments in the 1920s, coined the “participation hypothesis – the hypothesis that significant changes in human behaviour can be brought about rapidly only if the persons who are expected to change participate in deciding what the change shall be and how it shall be made.” Reputation and whistleblowing and recruitment Another key benefit is in enabling employees to raise concerns early and head off potential scandals. Scandals across the NHS, banking, retail and care sectors in recent years all showed that there are always people within the organisation that knew what was going on. The common factor, however, was that none of these were listening organisations. People were either too afraid or too disengaged to speak up or felt that nobody was listening when they tried. In contrast, at Tesco in 2014 Dave Lewis as incoming CEO asked his employees to email him about their views and concerns. Among the 10,000 emails received were some which revealed to him what a small number of senior people had been doing to inflate their financial figures. A scandal which, if left unchecked could have bought the company down, was dealt with. It was long and painful – but worth it. The biggest obstacles to recruitment are increasingly around organisational reputation – particularly in terms of poor leadership and dysfunctional teams.[13] Nearly half of employees would rule out joining a firm that showed those characteristics, regardless of the pay increase. A 10 per cent raise would only entice just over a quarter to join such a company. As a result, a company with 10,000 members of staff could be spending up to £5.3 million in additional wages to make up for a perceived bad reputation – in other words £3,282 per hire[14] Other benefits Another benefit of having a well-functioning employee voice mechanism is that it allows disputes between management and the workforce to be resolved in a timely and constructive manner, rather than allowing them to escalate into possible industrial action. Workplaces with functioning partnership agreements are far less likely to see days lost to strike action than similar workplaces without such agreements in place. Finally there is increasing interest in benefits to cyber-security. A 2016 study of 874 data breaches found that less than 10 per cent were conducted by outsiders with stolen credentials – compared with 22 per cent caused by malicious employee activity and a shocking 65 per cent as a result of employee or contractor negligence[15]. A workforce that feels they are listened to by management in a respectful way are far more likely to report concerns about a colleague’s behaviour, potentially heading off a major security incident which could cost the organisation up to millions of pounds in damage. Overall, having an employee voice system that is representative, covers meaningful issues, allows employees to be informed and provides representatives with suitable support and training, as well as ensuring their voice will be listened and responded to, is a win-win formula for any major employer, providing a whole array of clear benefits. Contact us for more information [1] ETUI (2010). ‘The European Participation Index (EPI): A Tool for Cross-National Quantitative Comparison’ [2] Workplace Employment Relations Survey (2011) [3] Forth, J. and Metcalf, H. (2014), ‘Young people’s experiences in the workplace’, Acas Research Paper [4] MacLeod and Clarke (2009), ‘Engaging for Success’ [5] Harter et al (2012), ‘The relationship between engagement at work and organizational outcomes’ [6] Eurofound (2015), ‘Third European Company Survey – Overview report’ [7] The Smith Institute, (2015). ‘Making Work Better’ [8] Powell, M., Dawson, J. F., Topakas, A., Durose, J., & Fewtrell, C. (2014). Staff satisfaction and organisational performance: evidence from a longitudinal secondary analysis of the NHS staff survey and outcome data. Health Services and Delivery Research, 2, 1‐336. [9] DTI (2007). ‘Workplace representatives: A review of their facilities and facility time’ [10] Bryson, A., Freeman, R., Lucifora, C., Pellizzari, M and Perotin, V. (2013), ‘Paying for Performance: Incentive Pay Schemes and Employees' Financial Participation’ [11] Kruger and Killham (2007), ‘The Innovation Equation’ [12] IPA (2019), ‘Forces of Change’ [13] Harvard Business Review (March 2016) [14] Clarke, N. (2016), ‘Improving manufacturing productivity through employee engagement - a report for the Business Productivity Leadership Group’ [15] Ponemon Institute (2016) ‘Costs of Insider Threats Report’