Thematic feature - works councils and other workplace employee representation and participation structures

This article examines the UK situation, as of September 2003, with regard to works councils and similar workplace employee representation and participation structures. It looks at the regulatory framework, statistical data, evidence on practice and the views of the social partners.

The issue of works councils and similar workplace employee representation and participation structures is topical at present, with the EU Member States required to implement the recent Directive (2002/14/EC) establishing a general framework for informing and consulting employees in the European Community (EU0204207F) by March 2005 (though countries which currently have no 'general, permanent and statutory' system of information and consultation or employee representation may phase in the Directive's application to smaller firms up until 2008). The Directive applies to undertakings with at least 50 employees or establishments with at least 20 employees (the choice is left to the Member States). It provides employees with the following rights to information and consultation:

• information on the recent and probable development of the undertaking's or the establishment's activities and economic situation;
• information and consultation 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; and
• information and consultation, with a view to reaching an agreement, on decisions likely to lead to substantial changes in work organisation or in contractual relations.

Information and consultation arrangements set out in agreements between management and labour, including at undertaking or establishment level, may differ from those laid down in the Directive.

While the Directive does not stipulate that information and consultation must be provided through any particular channel or structure, it defines such information and consultation as taking place between the employer and the employee representatives provided for by national laws and/or practices. It is these representatives, who in most EU Member States sit on standing 'works council'-type structures (and in many countries already enjoy all or most of the information and consultation rights laid down in the Directive) that are the focus of this article. The existence of workplace employee representation and participation structures, based on law or widespread collective agreements, is seen in some quarters as a distinctive and important feature of the (mainland) European industrial relations model. Indeed, the idea has been raised of using the coverage of such worker involvement arrangements as an indicator of 'quality' in industrial relations (as suggested, for example, by the European Commission’s June 2001 Communication on Employment and social policies: a framework for investing in quality).

In this context, in September 2003, the EIRO national centres in each EU Member State (plus Norway), were asked, in response to a questionnaire, to provide information about the current situation with regard to national (rather than European level) works councils and similar bodies – the regulatory framework, statistical data (or estimates where not available), evidence on practice and the views of the social partners. The UK responses are set out below (along with the questions asked).

Regulation

What is the legislative framework in your country concerning works councils and/or other workplace employee representation and participation structures? Please include here: definition; workforce-size threshold for establishment; composition/election; subjects for information, consultation and co-determination; conditions under which information, consultation and co-determination should take place (ie timing, methods, contents, level of representation, type of response by employees, form of interaction etc); meetings; confidentiality; protection of employees’ representatives. If there is no legislation on this issue in your country, please refer to widespread systems of works councils etc based on collective agreements.

There is no system of statutory works councils in the UK. Trade unions are the primary vehicle for the consultation of employees, in addition to their collective bargaining role. With no specific legislation concerning standing bodies for general consultation, practice within companies is highly variable. However there is legislation providing for consultation of employees over certain issues, and this is outlined below. In addition, 'joint consultative committees', based on collective agreements or voluntary practice, remain significant and these are further discussed below under 'Statistics' and 'Practice'.

• Statutory requirements for consultation in respect of collective redundancies (1975) and transfers of undertakings (1981) were introduced in response to the relevant EU Directives (now, following amendments, Directives 98/59/EC and 2001/23/EC respectively). Section 188(2) of the Trade Union and Labour Relations (Consolidation) Act states that redundancy consultation should be genuine and meaningful and include ways of avoiding, reducing and mitigating the consequences of dismissals. The employer must also provide information concerning the reasons for its proposals, numbers affected, methods of selection and compensation. Consultation must also be undertaken with a view to reaching agreement with the appropriate representatives. An amendment to the Regulations in 1999 required employers to consult through a trade union where there was union recognition, or in the absence of a recognised trade union through an existing consultative committee or specially elected employee representatives (UK9910134F).
• The Safety Representatives and Safety Committees Regulations 1977 required consultative committees on health and safety to be established where a trade union is recognised and two or more of the union-appointed safety representatives request it. Safety representatives also have their own information and consultation rights. These provisions were extended by the Health and Safety (Consultation with Employees) Regulations 1996 to cover workplaces without trade union-appointed safety representatives. Employers must also consult over health and safety with employees who are not represented by a safety representative, either through elected representatives or with them directly (eg through briefings, quality circles, notice boards, newsletters and the internet, according to the Health and Safety Executive). According to the Workplace Employee Relations Survey 1998 (WERS 1998) (UK9811159F), 39% of workplaces operated joint health and safety committees (either separately or as part of a wider consultative committee), 29% consulted through safety representatives and 30% directly with employees. A committee was found in 47% of workplaces with a recognised trade union and 31% without any union members (where 27% also had elected safety representatives).
• The Working Time Regulations 1998 provide for the conclusion of 'workforce agreements' with elected employee representatives (or, in small firms with 20 or fewer employees, signed individually by a majority of the workers concerned) to regulate working time where there is no collective bargaining (UK9810154F). This is a voluntary mechanism for employers to obtain the same flexibilities in the application of the Regulations available through collective agreements with trade unions. The concept of workforce agreements was subsequently extended to the issue of parental leave in 1999 (UK9912144F).

Other statutory provisions require employers to disclose information or to consult with representatives of trade unions where they are recognised, and there is a right to trade union recognition in companies of 21 workers or more if the majority of employees wish it, established under the Employment Relations Act 1999 (UK0201171F). Notably:

• under legislation first introduced in 1975 and now contained in the Trade Union and Labour Relations (Consolidation) Act 1992, employers have a general duty to disclose to recognised unions information for collective bargaining purposes on request;
• the Social Security Pensions Act 1975 requires employers to consult with recognised trade unions over contracting-out of the state earnings-related pensions scheme; and
• where trade union recognition came via the statutory provisions of the Employment Relations Act 1999, and a legally-specified method of bargaining applies, employers must consult union representatives on training issues every six months.

Furthermore, company law requires organisations employing over 250 people to include a statement in their directors’ report describing action taken in the preceding financial year to introduce, maintain or develop arrangements for informing and consulting employees or their representatives.

Finally, the Transnational Information and Consultation of Employees Regulations were introduced in 1999 to implement the EU European Works Councils Directive (94/45/EC) (UK0001146N). They offer a range of statutory information and consultation rights concerning transnational issues in multinational companies, and provide for the first time in the UK for the creation of a standing works council-type body, albeit of an international nature.

As mentioned above, in addition to legal provisions, there is a well-established body of voluntary or collectively agreed arrangements providing for information and consultation through standing representative structures. Much consultation occurs through negotiating channels with trade unions. There is also a history of 'joint consultative committees' (JCCs) in the UK, though these are often enmeshed with trade union and bargaining arrangements. These 'works council-type' structures date back at least as far as the Whitley Committee, established by parliament towards the end of the First World War to draw up suggestions for improving employer-employee relations (see Works councils for the UK? Assessing the impact of the EU employee consultation Directive, Mark Hall, Andrea Broughton, Mark Carley and Keith Sisson, IRS/IRRU, 2002). It recommended the creation of joint industry councils at sector level and workplace committees in individual establishments, but its main impact was felt in the public sector. In private sector industries with strong trade unions, information and consultation tended to develop closely alongside arrangements for collective bargaining. Employers were concerned to limit wider incursions into management prerogative, while trade unions were wary of 'dual channel' structures separating information and consultation from union representation (UK9904197F). However, there is some case study evidence of a recent revitalisation of consultative arrangements in large organisations at least, and increasing 'dualism', partly in response to prospective EU legislation and partly reflecting the rise of 'partnership agreements' (UK9907214F) between employers and trade unions (see Hall et al, 2002, cited above) - see below for further details.

Statistics

Please provide the most recent available statistics (in absence of statistics please provide estimates referring to sources) on the following (referring to other workplace employee representation and participation structures where works councils are not present and to widespread collective agreements on the issue where there is no legislation):

• the total number of employees and undertakings/establishments in your country;

According to the Office for National Statistics (Labour Market Trends July 2003), the total number of workforce jobs in the UK (seasonally adjusted, March 2003) is 29,475,000. Of these 3,570,000 are self-employed, leaving 25,784,000 employee jobs.

In terms of number of enterprises, there were 1,623,715 enterprises registered for Value-Added Tax (VAT) in 2003. These statistics are the best guide to the number of businesses in the UK. Coverage of the statistics is complete in all parts of the economy except a few VAT-exempt sectors (such as health, education and public administration) and the very smallest one-person businesses operating below the threshold for VAT registration (currently GBP 56,000 a year). In 2003, 43% of VAT-based enterprises were corporate businesses (ie companies or public corporations), 34% sole proprietors, 21% partnerships and 2% general government or non-profit-making bodies. Sectoral and size patterns are available at: http://www.statistics.gov.uk/downloads/theme_commerce/PA1003_2003/PA1003_2003.pdf.

• the total number of undertakings/establishments covered by the works councils legislation in your country and their total employment (data should be as much as possible disaggregated by gender, company size and sector);

Not applicable to the UK.

• the total number of undertakings/establishments in your country which have established works councils and their total employment (data should be as much as possible disaggregated by gender, company size and sector).

There are no works councils as such, so the following refers to joint consultative committees (JCCs). The key representative datasets on JCCs are the successive Workplace Industrial Relations Surveys (WIRS) and the 1998 WERS. They refer to coverage by establishment rather than number of employees. According to the 1984 WIRS, JCCs were present in a third (34%) of establishments with 25 or more employees, with a somewhat higher proportion where trade unions were recognised (36% compared with 20%). By the 1990 WIRS, the overall figure for JCCs had fallen to 29% of establishments. In the 1998 WERS survey, the figure for any consultative committee at workplace level remained 29%, though only 23% could describe it as functioning. The presence of a JCC was closely linked to workplace size, and had retreated in the smaller establishments and in the public sector - see table 1 below.

Base: all establishments with 25 or more employees. Source: Hall et al 2002, based on All change at work? British employment relations 1980-98, N Millward et al, London, Routledge, 2000, using 1990 WIRS and 1998 WERS data.

The above data refer, however, only to workplace-level bodies. In fact, in multi-site companies UK consultation arrangements are more likely to centre on organisation-wide arrangements. In all, in 1998, 43% of private sector workplaces and 82% of those in the public sector had a JCC at the level of the workplace, undertaking or both - see table 2 below. Private sector JCCs are more likely to be found in privatised industries such as electricity, gas, water, transport and communications. Workplace and organisation size is also important in determining whether there is a JCC.

Base. All workplaces with 25 or more employees. Figures are weighted and based on responses from 1,890 managers. Source: Britain at work: as depicted by the 1998 Workplace Employee Relations Survey, M Cully et al, London, Routledge, 1999.

Significantly, only 34% of establishments without trade unions had a JCC at one or more levels, compared with 74% of those with union recognition. A similar relationship held when controlling for size, showing that consultative committees and union representation 'go hand-in-hand rather than being substitutes for one another' (M Cully et al, 1999, cited above). In 80% of establishments with JCCs where trade unions were recognised, some or all employee representatives on the committee were also workplace union representatives.

Please provide any other national data indicating the number/diffusion of works councils.

A recent survey of partnership initiatives in 34 organisations by Industrial Relations Services ('An open relationship', Employment Review 779, IRS, July 2003) found that company councils were much more common in unionised organisations and indeed that in three-quarters of these the council did not include non-union representatives. Of the 34 organisations, 26 had company councils (20 of the 22 unionised companies and seven of the 12 non-union), 22 used joint problem-solving groups, and 27 had direct methods in the form of team briefings. The survey also found that in terms of remit, two-thirds of company councils went beyond communication and consultation to discuss and negotiate changes in working practices and around a half negotiated over terms and conditions of employment. Similar variation in practice concerning composition and role of company councils was found in case study research by Incomes Data Services ('Company councils', IDS Study 730, June 2002).

Trade unions remain the primary vehicle for the systematic consultation of employees but recognition by employers steadily fell from the mid-1980s to the late 1990s. Though unions retain a strong presence in the public sector, recognition is much lower in the private sector. According to WERS 1998, nearly two-thirds (64%) of private-sector workplaces with more than 25 employees have no union presence and only one in four have a recognised trade union; for the public sector the relevant figures are 3% and 95%. There is some evidence of a small recovery in trade union fortunes following the reintroduction of a statutory recognition procedure in the Employment Relations Act 1999. According to the TUC there were 50% more recognition deals in the two years following the introduction of statutory recognition (770), than the total number of deals made in the five years before it came into force (513). However this is unlikely to be sustained: 282 trade union recognition deals (plus 24 through the Central Arbitration Committee, CAC) were signed between November 2001 and October 2002, down significantly from 450 recognition deals (plus 20 through the CAC) between November 2000 and October 2001 (UK0202101N).

Practice

If there are any other statistical sources or recent research on the current practice of works councils or other workplace representation/participation bodies, please give details of the results paying attention to the issues covered by Question 1 (Regulation). Please provide as much quantitative data as possible - eg how many meetings and how often, chair, agenda, composition (eg how many representatives of management, if any, workers, proportion of women members, proportion of women as head of works councils etc) and identify factors of success. Please indicate how the works councils (or works council-type bodies) institution has evolved over the years.

According to WERS 1998, some 37% of JCCs meet at least once a month, 29% more than once a quarter and 34% less frequently. Those meeting less frequently tend to be in workplaces with recognised unions and where union representatives sit on the committee. A range of issues are subject to joint consultation at the workplace: working practices (86%), health and safety (86%), welfare services and facilities (83%), future workplace plans (83%) and, in exactly half of cases, pay.

The most common selection practice for employee representatives on the JCC was by employee election (46% of establishments with more than 25 employees and a workplace JCC), but other methods included a call for volunteers (22%) or appointment by management (21%) or by trade union or staff association (17%, and 29% where union recognised). In total, 52% of workplaces without union recognition had employee representatives whose only route to the committee was appointment by management or as volunteers (the respective figure for workplaces with recognition was lower at 30%). As M Cully et al (1999, cited above) put it: 'For these workplaces, there may be some doubts about the independence of the employees on consultative committees.'

Management assessment of the influence of the committee in workplace decision-making was also linked to union involvement. Managers were much more likely to regard the JCC as 'very influential' where the representatives were appointed by management (56%) than if they were put forward by unions (16%) or were volunteers (22%). Those with more frequent meeting were also likely to see them as more important. These findings might reflect the primacy of collective bargaining structures where they are in place, as well as management resistance to the influence of committees where unions are more heavily involved and managerial control of appointments is weaker.

Other than WIRS/WERS, there are few authoritative sources of research, especially quantitative data, concerning works council-type arrangements in the UK. Data tend to be patchy, based on small and unrepresentative case study samples (eg IDS 2002 and IRS 2003, cited above), or focused on specific issues for consultation. One such study into consultation over redundancies found that two out of the three non-union companies covered by the research failed to proceed with the election of employee representatives for redundancy consultation purposes ('Reforming the statutory redundancy consultation procedure', Mark Hall and Paul Edwards, Industrial Law Journal 28: 4, 1999). A major reason was a lack of clear guidance for employers concerning the procedures to be followed.

Social partners

Please summarise the views of trade unions on works councils etc and their operation, and outline relations between works councils and trade unions.

Please summarise the views of employers’ organisations on works councils etc and their operation.

The issue of 'works councils' has become a hot topic in the UK given the 2002 EU information and consultation Directive (UK0201116N). The Trades Union Congress (TUC) welcomed the Directive, and the then TUC general secretary John Monks said of the final version that 'this measure is most welcome. (It) potentially opens the door on a whole new era in UK employment relations.' In contrast, the Confederation of British Industry (CBI) said that it supported 'effective employee involvement as a key contributor to business performance', but was strongly opposed to the original draft Directive, calling it a 'completely unacceptable breach of the principle of subsidiarity'. However its deputy director-general, John Cridland, welcomed the UK government’s efforts to 'negotiate flexibilities' and viewed the final version as 'the least damaging deal available'.

On 7 July 2003, the Department of Trade and Industry (DTI) published a consultation document setting out how the UK government proposes to implement the information and consultation Directive (UK0307106F). The approach taken by the draft Regulations is based on a framework established in discussions between ministers and representatives of the CBI and the TUC, who agreed an 'outline scheme' for the implementing legislation which is incorporated in the consultation document. Brendan Barber, current general secretary of the TUC, hailed the proposals as a 'breakthrough' and 'a real milestone in the long march to winning information and consultation rights in Britain’s workplaces'. He said: 'These new rights could lead to the biggest change in workplace relations for a generation. But that’s not a threat, it’s an opportunity for both employees and employers to improve the quality of working life and boost productivity.' The CBI director-general, Digby Jones, commented that 'The government has made sense of a poor piece of EU legislation. It has protected the good consultation which already exists ... and avoided overly rigid rules and damaging one-size-fits-all solutions. Employers won’t welcome the new law but they recognise that the government has taken CBI concerns on board.' The Chartered Institute of Personnel and Development (CIPD), representing the UK’s personnel and human resources managers, also endorsed the government’s 'flexible approach'. Mike Emmott, the CIPD’s head of employee relations, commented: 'The good news for employers is that they can agree with their employees that existing good practice will continue, and will satisfy the requirements of the Regulations. This means for example that where employers currently inform and consult their employees directly, rather than through representatives, they can continue to do so provided their employees are happy with the arrangements. The threat that all employers would be required to squeeze into a single legal straitjacket, and establish works councils, has not materialised.' (James Arrowsmith, IRRU)