What are your hopes for your business over the next 5 years? For many small businesses employing 50 employees by 2008 may be a realistic ambition. However, achieving that goal may also cause you to fundamentally reassess the way you manage your relationship with your employees. Employment law has changed at a fast pace since Labour came to power in 1997. As a result, most of our articles in FEEDBACK bring you up to date with imminent changes in the law. ELC rarely has the luxury to advise you in any detail of proposed changes to Employment law that are years away. However, the changes that will be brought about by the European Community's Information and Consultation Directive are so fundamental to the conduct of industrial relations in the UK that we strongly suggest you start thinking about them now. For businesses employing 150 employees or more, the Directive will come into effect on 23 March 2005. Businesses employing between 100 and 149 employees will be covered from 23 March 2007 and those with 50 to 99 employees on 23 March 2008. Basically, the Directive will require management to consult with employees over major issues affecting the business prior to making important business decisions. The Government has already produced draft regulations to implement the Directive, that will require businesses to inform and consult employees about the following matters:
- The recent and probable development of the business's activities and economic situation.
- The situation, structure and probable development of employment within the business and on any anticipatory measures envisaged.
- Decisions likely to lead to substantial changes in work organisation or in contractual relations.
It is important to note, however, that an employer will only be obliged to implement these information and consultation procedures if a request is made in writing by 10% of the workforce, subject to a minimum of 15 employees or a maximum of 2,500 employees. However, with the threshold being so low, it is reasonable to assume that many workplaces will be faced with establishing these procedures. The trade union movement is expected to encourage workers to ask for information and consultation committees to be set up. At present, the proposed penalty for failure to set up a committee when requested or failure to inform or consult with the committee properly is a maximum £75,000 civil penalty, payable to the Secretary of State. Clearly, the price of getting this wrong could be very expensive. Whilst allowances will be made under the legislation to protect commercially sensitive information, employers will be required to consult with employees much more widely on strategic matters that may have, until now, been exclusively discussed by the board of directors, for instance. This change in culture will be one of the biggest challenges employers will face in managing their relationships with their workers in this decade. Whether you like it or not, the law is going to require managers of medium and large businesses to take a more consensual approach to running their business. If you had to introduce such a change tomorrow, it may be very difficult for you and your employees to adjust to the new culture. For this reason, we are giving you plenty of notice. If you wish to discuss the implications of this Directive further with a member of our team, please feel free to call our advisory Helpline. |
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