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Firms forced into th he open

AGENDA - The EC's information and consultation directive, due to come into effect next April, puts the emphasis on employers to be honest with their employees, writes Russ Lynch

WHINGEING about the management is a pastime almost as old as work itself.

And the staff - so the old joke goes - are the proverbial mushrooms: kept in the dark and fed on the brown stuff.

Of course, this is a slight exaggeration.More enlightened firms are always keen to emphasise the strength of their internal communications to keep up staff morale.

But from April next year regulations are coming into force enshrining new statutory rights for employees as the UK adopts the European Commission's information and consultation directive.

It will mean that staff will have the right to information in advance of how the performance of the business is likely to affect employment issues - more to the point, if the company is planning to axe jobs in more turbulent economic waters, employees must be told.

The existing practice of only consulting on redundancies at the time that they are firmly planned will become unlawful.This is because under the directive, bosses will have to say when job cuts are simply on the table as an option.

And if firms fail to follow this increased consultation process properly, they are potentially liable for a maximum fine of £75,000 if the complaint is upheld by the Central Arbitration Committee.

The CAC is a permanent independent body with statutory powers. Its main function is to adjudicate on recognition of trade unions.

From April 2005 the directive will be introduced for companies with more than 150 employees. But in 2007 it will come into force for businesses with 100 staff, before finally covering firms with more than 50 staff in 2008. It will ultimately affect thousands of employers in the construction industry.

Another of the measures included in the directive causing some concern is that just 10 per cent of staff can come to the employer in order to trigger the new rules if there is no pre-agreed consultation procedure already in place.

When this happens, the onus is on the employer to organise elections for employee information and consultation representatives.

Needless to say, contractors are worried that trade unions could take advantage of the elective element in these new regulations.They fear it could open the way for increased trade union activity via the back door without the numbers necessary for conventional union recognition.

Gerry Lean, the Construction Confederation's industrial relations director, said: 'The principle of consultation and communication is clearly supported by the confederation. But one of our concerns is that the ability to elect information and consultation representatives requires only 10 per cent of the workforce to vote in favour.

'The Government set the required threshold for trade union recognition at 40 per cent of staff in 2000, but the threshold here is 10 per cent.What it means is that at this low level, unrepresentative individuals may find themselves moving into a position of power - this is fairly undemocratic.'

He added: 'There will be businesses where there is 10 to 15 per cent trade union membership, less than the required. Union members will be able to achieve the same objective under a different umbrella, with a backdoor lowering of the threshold for recognition.

'Our advice for members who have had approaches from trade unions would be to negotiate an agreement before April, but I don't see many employers rushing to put them in place. In simple terms they are likely to get a more satisfactory agreement if they initiate things.'

The Construction Confederation is planning a campaign in January next year to make employers aware of the directive and push firms to get their own communications and consultation structure in place before April.

The Trades Union Congress has been pressing for increased consultation rights since the DTI launched its first consultation on the new regulations in July last year. Although the two are unlikely bedfellows, the TUC agrees with the CBI on the principle of increased communication to make staff feel valued, as well as improving the bottom line.

Sarah Veale, the TUC's head of equality and employment, said: 'Our argument would be that if 10 per cent of the workforce is unhappy with the current levels of consultation then the employer has got a problem anyway.

'If employers put in place an existing arrangement before the directive comes in then it will take 40 per cent of the workforce to overturn it.

'It's up to them to set up a system that complies with the directive beforehand - there doesn't have to be a trade union recognition agreement in place, although obviously we think that it is preferable.'

The recent history of the construction industry has thrown up numerous instances where the workers have been the last to hear of major company developments.

Back in 2002, some employees of failed contractor Ballast first heard the news that their Dutch parent company had put them up for sale when Construction News rang them to gauge reactions.

Richard Neall, the managing director of Suffolk firm Jackson Civil Engineering, said that contractors should embrace the opportunity to improve their consultation processes.

He said: 'We have been aware of this directive for some time and from our perspective it sits comfortably with the type of company that we are anyway.

'We have a fairly transparent approach and already have elected representatives in place.We see this as putting a structure to what we have already got.'

Another complicating factor is the commercially sensitive nature of the construction industry.The average client is unlikely to be overjoyed at the prospect of its plans being shared with all of a contractor's employees. But plans may have to be disclosed to staff if, for example, company jobs depend on whether the client awards a contract or not.

Mr Neall said: 'One problem is that we do have a lot of secrecy because the commercial aspect is complex.But it can lead to a culture where you don't tell anybody anything. If there is stuff that we can't talk about we will tell people that.'

Employers will be reassured to know that they will not be forced to reveal anything that could put them out of business, and that the staff are obliged to keep any information confidential.

But an employee can still make 'protected disclosures' in the public interest under the Employment Rights Act 1996.

Staff can also appeal to the CAC, which has the final judgment on whether the company was right to withhold information or whether the individual employee was right to disclose it.

So now the industry has just six months to embrace the 'it's good to talk' culture - or set up its own consultation process before the regulations take hold.

Mr Neall has the final say: 'This is a chance for the best companies to get better and the rest to get a start.The industry needs to speak to its employees like grown-ups.'

The new rules mean employers no longer hold all the aces