I’m still standing - should employers set up a standing body for collective consultation?
10 March 2021
Employers may have to contemplate difficult decisions as they look ahead to the lasting effects of the pandemic, including potentially making redundancies. This article discusses whether now might be an opportune time for employers with no recognised trade union to set up a standing body for collective consultation purposes.
As we move towards the next stage of dealing with the Covid-19 pandemic, with the rollout of the vaccination programme and the furlough scheme coming to an end, employers will now be thinking about how to manage their employees’ return to work and ensure that their businesses are fit for the future. For some organisations, this may mean having to consider severe measures such as implementing redundancies or closing final salary pension schemes. If so, these may trigger collective consultation obligations.
For example, an employer must consult with representatives of affected employees where it is proposed that 20 or more employees will be made redundant at a single establishment within a 90-day period. Appropriate representatives for these purposes would be:
- a recognised trade union if there is one, or
- only if employees are not covered by a union recognition agreement, either:
- directly elected representatives
- a standing body of representatives.
It is for the employer to choose with which of these types of representatives it consults if there is no recognised union, so some businesses may now be thinking about whether this is a good time to set up a standing body.
Pros and cons of standing bodies
A standing body can be elected at any time, so could be put in place even in the absence of any redundancy proposals. This would have the advantage that the body would be ready to go as and when needed, whereas an election of employee representatives usually means having to add weeks to a project’s overall timeframe. Having a standing body would mean you are able to progress collective consultation much more quickly. It could be given a remit not only for collective redundancies but also any future TUPE information and consultation exercises.
Some employers may worry that proposing a standing body now will set hares running about redundancies being on the horizon, yet that is just one of many things about which a standing body may be consulted. You could try to assuage concerns by presenting the body’s consultation remit as one that covers various Covid-19 matters, including fulfilling your obligations to consult with employees on the health and safety implications of returning to work. Employers have an obligation to consult employees on the introduction of any measure in the workplace which may substantially affect their health and safety. While it is not mandatory to elect representatives for this purpose - and direct engagement with employees is possible - collective consultation may be a more manageable approach in a virtual environment.
You may also seek to include “softer” matters on which it is not mandatory to consult, but which may help you to manage the return to work and implement your objectives. These might include, for instance, agile working, resourcing issues, vaccinations or other topics on which it may be useful for you to seek employees’ feedback in your planning.
You will not, however, be able to avoid mentioning redundancies. Although a standing body does not have to be elected solely for the purpose of redundancy consultation, it will be for the employer to demonstrate – if challenged – that the body had authority to be consulted for that purpose. That capacity cannot be conferred subsequently. Accordingly, it is necessary when setting up the standing body to make clear that its roles could involve actively engaging in consultation “with a view to reaching agreement” in the context of proposed collective redundancies or TUPE measures, whenever they may occur.
Consulting with a standing body is not risk-free. There may be circumstances in which its authority is challenged, if it is not sufficiently representative of the affected employees. This might be the case, for example, if the body contains representatives from various parts of the business but only a small team is affected by a redundancy proposal.
An existing works council may be regarded as a relevant standing body. Works councils are likely to be consulted about ongoing strategic decisions such as financial and personnel matters, which may ultimately lead to redundancies.
Further information and consultation obligations
Redundancy consultation apart, employers may be required to set up more general information and consultation arrangements under the Information and Consultation of Employees Regulations 2004 (ICE Regulations) if:
- they have 50 or more employees in the UK, and
- employees make a valid request to negotiate.
One of the employment law changes that came into effect in April 2020 was a reduction in the usual threshold needed for a valid request to require an employer to set up information and consultation arrangements under the ICE Regulations – from 10% to 2% of employees (subject to a minimum of 15 employees). This means that many more businesses may now be faced with such a request. Despite originating from an EU Directive, and unlike similar legislation on European Works Councils, Brexit has not affected the ICE Regulations.
If you are establishing a standing body, you should therefore consider whether to do so using what the ICE Regulations call a “pre-existing agreement”. If the standing body’s constitutional document meets the tests for this, you may be able to avoid having to establish a second information and consultation body under the ICE Regulations. This is because such a request would then instead have to be made by 40% of employees or a request under the usual threshold rules would have to be endorsed by at least 40% of employees and a majority of those voting in an endorsement ballot.
It is helpful to avoid having two bodies in place with different remits. Also, it is free and relatively straightforward under the ICE Regulations for employee representatives to complain to the Central Arbitration Committee about alleged information and consultation failures. There can be financial penalties of up to £75,000 and, to date, we have seen fines of £10,000, £20,000 and £55,000 being imposed.
The test for a “pre-existing agreement” is that it must meet each of the following requirements:
- it is in writing
- it covers all employees
- it is “approved” by the employees - in practice, employers often secure approval by asking a preliminary question on approval as part of the ballot to elect the potential body’s new members
- it sets out how the employer is to give information and seek views on it.
The past few decades have seen a marked decline in collective representation in UK workforces, despite new legal options to seek to secure representation under the statutory trade union recognition scheme and the ICE Regulations. Nonetheless, the Covid-19 pandemic and its lasting impact may well see a resurgence in collective action as employees turn to unions for support and advice as the economic implications of the crisis deepen.
How we can help
While it is currently unclear exactly when and how the lockdown will be eased and eventually lifted, employers need to start thinking about their next steps. We can help by:
- advising on exactly when you need to inform and consult
- recommending which options for collective consultation may be appropriate
- helping you to set up a standing body and advising on the extent of authority you should give to it.
Information and consultation10 July 2020
Employers with at least 50 employees can be required to establish arrangements for informing and consulting their employees on business developments. These arrangements are commonly called ‘works councils’.
Redundancies, restructuring and insolvency
Inflation and other cost increases are causing businesses to consider cuts and changes to their workforce to remain competitive.