The legislative burden upon organisations, both public and private, seems to get heavier and heavier as time goes on. However, some have emerged for very good reasons. The Sarbanes-Oxley Act in the United States emerged from the Enron and Worldcom scandals, and enforced a greater need for corporate transparency and accountability.
There’s also the Freedom of Information Act, The Working Time Regulations, the Disability Discrimination Act (e.g. website and physical accessibility), the Data Protection Act, an increasing number of laws and regulations that enforce equal opportunities, and now – since it came into force in the United Kingdom in April 2005, regarding organisations of more than 150 employees – there’s the Information and Consultation of Employees Regulations. If your organisation fails to comply, it could face a hefty fine of up to £75,000.
What a nightmare? No, not really! With Corporate Social Responsibility (CSR) in mind, these shouldn’t be seen as resource-draining interferences into an organisation’s everyday life. If you are able to become a thought-leader, and turn these into opportunities rather than consider them as potential threats, then you will be able to create both financial and economic value for all of your stakeholders.
Therefore the UK’s Direct Marketing Association (DMA) welcomes the new legislation, and it believes that most large companies already have had some sort of information and consultation process in place anyway. However, were these regulations to apply to companies and organisations with one or more employees in the future, the DMA fears that the legislative burden could become disproportionate and unnecessary. Even so, an 11th annual survey by DLA – a law firm – showed that 64% of public sector and 56% of private organisations believe that this legislation is more beneficial than interfering.
Benefit from informing and consulting your employees
“In the DMA’s opinion, happy employees will provide better customer-focused service. If the system becomes cumbersome or too stringent, then this places additional burden upon management, which is not in the general interest of the company.” Source: Michelle Wicker, Solicitor, Employment, Legal and Public Affairs Adviser of the Direct Marketing Association.
According to the European Union, The Information and Consultation of Employees Regulations, should help to make the EU more competitive (Source: 3i – ‘Managing Growth, Management strategies – Cutting through the red tape’, by Emma Davis). Companies should therefore focus more on the benefits of the legislation, which should make them more competitive for the reasons cited below. Little value will be derived from failing to comply and concentrating on its negative aspects.
The key benefits include better staff motivation, retention, less absenteeism, better customer service and acquisition (if staff feel respected, they are more likely to empathise with customers), and this will present – tied together with compliance to other laws – an image of greater corporate social responsibility. The end result could be an increase in a company’s share price, which would please shareholders and even staff if the right incentives were also in place. It will also create a more collaborative and harmonious environment for improving industrial relations, helping employees to better understand the day-to-day issues.
The three steps to implementation
This law will, in the first instance, affect 3% of the UK’s organisations. Due to the potential disproportionate burdens that could be placed upon smaller organisations, the legislation comes into force in three stages:
- 2005 for the aforementioned firms;
- Those with at least 100 staff have until 2006 to complete the full implementation process;
- SMEs, those with less than 50 employees, are being given until 2008.
The regulations establish Works Councils, which are elected representatives of an organisation’s employees. It is their responsibility to work with mangers to facilitate and ensure that the process is followed, and that pre-existing agreements are considered, re-negotiated if and when necessary, and abided by.
The regulations aren’t activated automatically though. At least 10% of an organisation’s employees, as shown by the DTI’s flowchart below, must sign and present a petition before they can be enacted. Part of the employee consultation process would include a ballot, and if less than 40% of the organisation’s employees participate, managers have no legal obligation to consult further or negotiate, where an agreement is required, with their representatives. If there is a pre-existing agreement in place, and less than 40% of the employees respond to any consultation, then that agreement continues…
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