Report assesses companies’ responses to information and consultation law

In October 2007, the UK government published a research report examining employee information and consultation bodies in a range of organisations following recent legislation on the issue. The report found that their influence on company decisions is often limited, but that they are taken seriously by management, and that consultation practice is evolving.

In October 2007, the Department for Business, Enterprise and Regulatory Reform (BERR) published a report (1.27Mb PDF) outlining initial findings from a research project examining the implementation of the UK’s Information and Consultation of Employees (ICE) Regulations 2004 (UK0502103N). The research is being undertaken by academics at the University of Warwick and the University of the West of England (UWE), and is co-sponsored by BERR, the Advisory, Conciliation and Arbitration Service (ACAS) and the Chartered Institute of Personnel and Development (CIPD).

Background

The ICE Regulations provide a general statutory framework giving employees the right to be informed and consulted by their employers on a range of business, employment and restructuring issues. The legislation has applied, since April 2005, to undertakings with at least 150 employees and since April 2007 to those with at least 100 employees; from April 2008, it will apply to undertakings with 50 or more employees. The regulations allow considerable flexibility of response and enable the adoption of organisation-specific information and consultation (I&C) arrangements.

The research is investigating companies’ responses to the regulations, using longitudinal case studies to track developments in a range of organisations over a two-year period. The case studies entail interviews with senior management, trade unions (where present in the various organisations) and employee representatives, as well as documentary analysis and an employee survey. The latest report is based on the first phase of the research, involving initial interviews and employee surveys in 13 organisations with at least 150 employees. These organisations varied in terms of size, ownership, workforce profile, sector, trade union presence and approaches to I&C.

Types of I&C arrangements

Most of the 13 organisations had recently set up an I&C body, while a minority of organisations had revamped existing arrangements for consulting employees. I&C bodies in eight of the organisations, including the five which do not recognise trade unions, were elected by all employees. Six organisations, all of which recognised unions, had ‘hybrid’ I&C bodies involving both union representatives and elected representatives of non-union employees. In two of the organisations, site-based variations were evident in the approach taken in relation to I&C arrangements.

Eight organisations’ I&C arrangements were based on voluntary agreements with employee representatives, including some which were regarded by management as ‘pre-existing agreements’ under the terms of the ICE Regulations. In addition, one organisation’s (draft) agreement was intended to have the status of a ‘negotiated agreement’ reached through the regulations’ statutory procedures. In four cases, management had not sought employee representatives’ agreement to the I&C arrangements.

Company strategy

The report identifies a number of factors influencing the company’s strategy in relation to I&C.

  • A commitment to good citizenship or social responsibility was a notable factor, particularly where the organisations were foreign-owned/controlled or not-for-profit.
  • The experience of major changes, such as rapid growth, acquisitions, moving out of the public sector and audit failure, prompted moves to reform employment relations and improve engagement with employees.
  • In a majority of cases, newly appointed managers were influential in driving the introduction of I&C arrangements.
  • In virtually every case, representative-based I&C arrangements operated alongside extensive direct employee involvement mechanisms.
  • Trade union avoidance was a factor in some organisations, as was moving beyond a union-based employment relations culture in others. In some cases, union concerns influenced the I&C arrangements adopted.
  • In many cases, the ICE Regulations were seen as a catalyst for change, and in a few organisations they were critical in kick-starting the introduction or reform of I&C bodies.

Representation

In most cases, senior operations managers – sometimes the chief executive officer (CEO) or managing director – were regular participants in meetings of the I&C body, alongside human resource managers.

In terms of employee representation, non-union employee representatives were elected by secret ballot in all cases. Where trade union representatives had seats on the I&C body, they were nominated by their union. In some cases, union representatives directly represented the sections of the workforce for which they had recognition. In other cases, recognised unions were allocated specific seats alongside employee representatives who were elected by the workforce, irrespective of union membership.

Most elections for employee representatives were contested. Some difficulty was reported in filling seats in particular constituencies and, in one case at least, some representatives had been encouraged to stand for election by management. In only one case where the company did not recognise trade unions, a significant presence of union members was evident among the employee representatives elected.

Provision of time off, facilities and training for representatives was extensive, but independent networking activity was minimal or limited in the great majority of cases. Provision for pre-meetings of employee representatives ahead of I&C meetings with management was widespread, but in practice was taken up in only a few cases, reflecting workload pressures or the failure of employee representatives to take the initiative to make such arrangements. The level of reporting back to the workforce by employee representatives was variable, and was identified in a number of cases as needing improvement.

I&C in practice

In many cases, the role of the I&C bodies was largely confined to the discussion of management-provided business information, along with the resolution of employee-raised ‘housekeeping’ issues. Typically, senior management sought to use the I&C body to highlight the ‘bigger picture’ in terms of business or organisational performance, in order to contextualise and explain the case for proposed initiatives. Employee representatives often saw the agendas of I&C bodies as being predominantly management-led, whereas some management respondents wanted employee representatives to be more proactive and less concerned with ‘tea and toilets’ issues.

A widespread perception among employee representatives was that the balance of activity was weighted towards information rather than consultation, and often concerned decisions that management had already taken. However, four I&C bodies were reported to have had specific impacts on management decisions by securing modifications to the implementation of major restructuring initiatives and/or changes affecting terms and conditions of employment.

Notwithstanding the widespread management emphasis on ‘strategic’ issues, over half of the case study organisations cited examples of agreed solutions to housekeeping issues raised by employee representatives, or reported general satisfaction with management responsiveness to such issues.

Confidentiality clauses featured in the constitutions of most I&C bodies, but the handling of confidential information was reported to be a significant operational issue in very few cases.

Only three organisations formally excluded pay from the remit of their I&C bodies; in practice, some aspect of pay systems or the reward package had been discussed by the I&C bodies in all but two of the case study organisations – and by all of them if pensions issues are included.

Despite some initial trade union concerns, little tension was reported to have arisen regarding the overlap between the roles of I&C bodies and established collective bargaining arrangements. In two cases where management had sought to integrate union-based and I&C bodies, the provision that I&C representatives would leave the meeting when ‘negotiating’ issues were being discussed was reportedly not followed much in practice, and union representatives did not feel that their role had been adversely affected.

Employee perceptions of I&C

Employee surveys showed that direct involvement mechanisms were perceived to be most valuable as a means of providing information, whereas indirect mechanisms, including I&C bodies, were rated more helpful as a consultation method. A significant proportion of employees claimed not to be aware of these indirect forms of involvement – a finding that may be partly linked to the relatively recent introduction of I&C arrangements.

In most organisations, employees considered that management were responsive to their views, comparing favourably with the national picture shown by the 2004 Workplace Employment Relations Survey (WERS 2004, UK0607019I). However, employees generally rated the performance of employee representatives poorly – again, possibly reflecting the immaturity of some I&C arrangements.

In terms of employee commitment, employees generally exhibited higher levels of loyalty, pride and identification with company values than their WERS 2004 counterparts.

Overall assessment

During the first phase of the research, most of the I&C bodies examined were still at an early stage of development and evidence on their operation and impact was mixed. Therefore, any evaluation can only be deemed provisional.

The research to date suggests that, in every case study, the management’s approach to I&C was strategic in that it was part of a wider approach to developing effective employee involvement. Initial trade union concerns about the introduction of I&C bodies appear to have largely given way to growing acceptance. The case studies suggested that management treated the I&C bodies seriously, and in many cases placed important issues on the agenda for discussion. Reported instances of the consultation process influencing management decisions or at least their implementation were sparse, and employee representatives inevitably need time to grow into their role; nonetheless, evidence suggests that consultation practice is evolving.

The longitudinal dimension of the research will enable the development – or sustainability – of the I&C bodies to be monitored in the light of subsequent events.

Mark Hall (University of Warwick), Sue Hutchinson (University of the West of England), Jane Parker, John Purcell and Michael Terry (University of Warwick)

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