Consultation proposals raise contentious issues

In February 2005, Ireland's draft legislation to transpose the 2002 EU information and consultation Directive was proving controversial, despite not yet having been finalised. For instance, employers have criticised the 23 March 2005 deadline for implementing 'pre-existing' agreements on information and consultation. In the longer-term, the legality of employers implementing the Directive through 'direct' methods of consultation (ie without employee representatives) could be called into question, in the event that worker demands for indirect representation are not met.

Details of some of the main features of the future Irish legislation transposing the 2002 EU information and consultation Directive (2002/14/EC) (EU0204207F), which is due to be implemented by 23 March 2005, were recently disclosed by the Industrial Relations News (IRN) weekly. It is far from certain that this deadline will or can be met, with a number of sources expressing doubts to IRN that it can.

The Irish legislation - the Information and Consultation of Employees Bill, which is currently being finalised - will not give workers an automatic right to information and consultation, and the provisions appear to constitute a rather 'minimalist' interpretation of the Directive. In Ireland, the legislation will apply to 'undertakings' (those with at least 150 employees from March 2005, at least 100 from March 2007 and at least 50 from March 2008), rather than 'establishments' (the choice is left to the Member States).

Onus on workers

It is significant that, under the draft legislation, negotiations to set up an information and consultation structure in Ireland will have to be triggered by workers themselves, in the form of a written request from 10% of the workforce, subject to a minimum of 15 employees and a maximum of 100. The employee 'trigger' is a lighter threshold than the UK provisions (UK0502103N), under which a 10% trigger also applies, but is subject to a minimum of 15 employees and a maximum of 2,500. The decision whether to adopt an 'opt-in' or 'opt-out' approach to transposition was one of the most critical issues that had to be decided by the Irish government, given that the Directive leaves this decision open. The Irish Business and Employers Confederation (IBEC) wanted a trigger, while the Irish Congress of Trade Unions (ICTU) argued that workers should have an automatic right to consultation (IE0309204F and IE0411202F).

The so-called opt-in route - chosen by the government - means that an employer will have to set up an information and consultation structure only if formally asked to do so by a group of employees. In contrast, an opt-out approach would have meant that every employer would be obliged to put a structure in place unless employees made it clear they were not interested.

Crucially, the opt-in route places the onus on workers themselves to trigger the process if interested. The possibility cannot be ruled out, therefore, that, in some instances, employees could face difficulties when attempting to trigger the procedures, and may have to 'fight' to secure information and consultation rights. In the main, IRN argues, employers are unlikely to volunteer to introduce such arrangements, unless they can perceive a competitive advantage in so doing, and, outside of union heartlands, workers in non-union firms may be largely unaware of these new rights.

Pre-existing agreements

Under Article 5 of the Directive, management and employee representatives are free to open discussions to establish information and consultation structures before the Directive comes into force on 23 March 2005, or bring existing provisions into line with the Directive. In relation to this, a notable measure in the draft Irish legislation is that pre-existing agreements under Article 5 of the Directive must be in place by 23 March 2005. They must comply with a number of criteria though, within these, substantial flexibility is possible. For instance, the Irish Bill allows employers to continue with systems of information and consultation that deal with employees directly (ie not through representatives), and that match their own specific circumstances, provided that employees have agreed to continue without change. However, employees must be free at a later stage to exercise their right through representatives of their choosing.

It is significant that, after the 23 March 2005 cut-off date, the parties have to negotiate in accordance with the law's procedures. This is in contrast to the UK, where there is no deadline date for pre-existing agreements to be in place - rather, it appears that pre-existing agreements can be put in place in the UK at any time before a 10% worker request is received, even after the March 2005 deadline. The social partners in the UK negotiated a 'framework' covering information and consultation provisions which formed the basis for the approach taken by the subsequent implementing legislation (UK0307106F) and, therefore, have had plenty of prior warning of what to expect. In contrast, the social partners in Ireland say they are still in the dark as to what the final shape of the legislation will be.

IBEC reservations

With regard to this proposed cut-off date for pre-existing agreements, a representative from IBEC expressed reservations about the practicality of having a 23 March 2005 deadline when the precise details of the legislation are not yet clear. This means, he said, that employers wanting to apply pre-existing agreements have to make judgments on information and consultation provisions without actually having sight of what exactly will be in the legislation. This is creating uncertainty among employers.

One possible response to this is that the procedures on pre-existing agreements are meant to refer mainly to information and consultation provisions that are already in place. Employers have long known that the deadline for the Directive's implementation was approaching, and could have implemented their own specific information and consultation arrangements long before 23 March 2005. Ultimately, it might be argued, most employers should be able to live with the new provisions, as it seems they will not intrude very far onto the terrain of management prerogative. Employers were afraid that the Directive could potentially open up the door for de facto trade union recognition in previously non-union firms. To a large extent, employer opposition to indirect representative structures has been based on the concern that they could frighten away foreign inward investment by 'non-union' multinationals, many of which - particularly US-based companies - are opposed to collective employee representation (IE0403201N).

In the absence of a pre-existing agreement, and where employees do decide to 'pull the trigger' after the 23 March 2005 deadline, employing organisations will have six months within which to negotiate an agreement with employee representatives. In instances where no pre-existing agreement is in place, or where the parties fail to introduce a negotiated agreement within six months, then a 'standard' or 'fallback' model, based on Article 4 of the Directive (which prescribes the subjects and mechanisms of information and consultation), will come into force, and will require employers to introduce an 'employee forum'- something akin to a works council. It seems likely that the Transnational Information and Consultation of Employees Act 1996 (the legislation implementing EU Directive 94/45/EC on European Works Councils in Ireland) could serve as a template for the structures of an employee forum. It may be that the possibility of having to introduce an employee forum/works council could encourage a certain number of employers in Ireland to implement their own arrangements before the standard employee forum mechanism is imposed. Thus, there could be a fair amount of activity in this area over the remainder of 2005.

No guarantees for unions

On the employee side, negotiations must be conducted by elected employee representatives covering the entire workforce. Under the draft Irish legislation, there will be no automatic right for trade unions to be involved in the process, and there is no specified role for experts to assist employee representatives in the negotiating process or afterwards - though this can be agreed between the parties. Trade unions are unlikely to be too pleased with the proposals pertaining to employee representatives. They would no doubt have wanted stronger guarantees relating to the role of union representatives, as a potential means of gaining a greater foothold in non-union firms. However, employers were strongly opposed to any guarantees that would have resulted in trade unions being the sole channel of representation.

The fact that the draft transposing legislation does not give trade unions an automatic guarantee that they will be the sole employee representative channel should not present too much of a problem in workplaces where unions are strongly established and management is used to dealing with them. However, difficulties are more likely to arise at non-union sites, partially unionised sites (for instance, where there are union members, but recognition has not been granted), or in unionised sites where management wants to bypass unions. This raises the prospect that non-union consultation forums could end up in competition with trade union structures, particularly in sites where unions are hoping to organise.

Legal challenge?

Some labour lawyers and industrial relations experts have questioned the long-term legality of 'direct' methods of information and consultation in terms of meeting the criteria implied in the information and consultation Directive. In this regard, there is a possibility that, in future, employer attempts to impose direct methods of information and consultation in the face of employee demands for independent indirect representation - whether through unions or other elected employee representatives - could open up the possibility of a legal challenge, perhaps in the European Court of Justice (ECJ). In this regard, it would perhaps be wise to be mindful of two ECJ judgments issued on 8 June 1994 on the requirement to consult employee representatives, in cases C-382/92 on the safeguarding of employees’ rights in the event of transfers of undertakings and C-383/92 on collective redundancies. Both these judgments found against the UK government in relation to inadequate provisions for consulting employee representatives on the issues concerned (UK9708152F).

In C-383/92 (collective redundancies), the ECJ declared:

By failing to provide for the designation of workers’ representatives where an employer does not agree to it, by laying down statutory provisions designed to implement Council Directive 75/129/EEC of 17 February 1975 … relating to collective redundancies that are narrower in scope than the Directive, by not requiring an employer contemplating collective redundancies to consult the workers’ representatives with a view to reaching an agreement and in relation to the matters specified in the Directive, and by failing to provide for effective sanctions in the event of failure to consult the workers’ representatives as required by the Directive, the United Kingdom has failed to fulfil its obligations under the Directive.

It is not entirely clear how the new Irish information and consultation provisions pertaining to employee representatives will fit with the country's existing statutory provisions on collective redundancies and transfers of undertakings, which prioritise consultation with representatives of recognised unions where they represent the employees concerned.

Alternatively, there could be a complaint to the European Commission on the viability of direct methods of employee communication, possibly resulting in some kind of review. It would be somewhat surprising if no attempt were made, soon or later, to test the boundaries of the Irish information and consultation law against the terms of the Directive. One such test could be whether information and consultation structures limited to direct methods of employee involvement - at the expense of consultation indirectly through employee representatives - comply with the Directive.

In this regard, the Directive clearly states that: 'This Directive is without prejudice to those systems which provide for the direct involvement of employees, as long as they are always free to exercise the right to be informed and consulted through their representatives.' In short, it appears where sufficient numbers of employees want to be informed and consulted indirectly by representatives of their choice - which by definition goes beyond direct communication by management - then employers would have to provide for this, or else risk legal reproach.

According to the European Commission (DG V) Industrial relations in Europe 2004 report (EU0501206F), the information and consultation Directive relies on a 'representation mechanism' providing arrangements for regular and permanent information and consultation of workers’ representatives. This points to permanent joint consultative councils or works councils, the implication being that information and consultation arrangements require employee representation.

Employee representatives will have to be elected by employees - possibly in a secret ballot - rather than being picked or imposed by management, and should enjoy adequate protections. The final shape of the Irish legislation in this regard is not yet clear. Article 7 of the Directive states: 'Member States shall ensure that employees’ representatives, when carrying out their functions, enjoy adequate protection and guarantees to enable them to perform properly the duties which have been assigned to them.'

On a practical level, where employers use direct methods only, it is not clear how employers can reach a negotiated agreement directly with the entire workforce. A negotiated agreement arguably implies two parties with a degree of independence from each other. Direct methods do not readily fit this description.

Commentary

Overall, it would seem that although the transposing legislation will bring Irish employment relations into uncharted waters, the extent of change will not be as far-reaching as perhaps might have been anticipated if the legislation had provided for more wide-ranging forms of employee 'voice' and workplace partnership. It is more likely that a 'hotchpotch' of information and consultation practices will emerge. In other words, we can more or less expect a continuation of what is already happening, although the legislation is yet to be tested in the field. Although the changes may not usher in a transformation in workplace industrial relations, the changes are of such magnitude as to require the assistance of government, employers' organisations, trade unions and other institutions to help steer this particular ship through what are undoubtedly uncharted waters (Tony Dobbins, Industrial Relations News).