The long-awaited Employees (Provision of Information and Consultation) Act 2006 (the Act) came into effect on 24 July 2006. Although the Act provides for a phased implementation, it is already applicable to undertakings with at least 150 employees and will become applicable to companies with fewer employees over the next two years.

All employees in qualifying organisations will have a right to be informed - and in certain cases consulted - through their elected representatives or directly. The precise areas to be covered by such information and consultation are not clearly specified in the Act, but it is probable that they would include the company's activities and economic situation, employment within the company and decisions likely to lead to substantial changes in work organisation or in contractual relations.

Examples could include the launch of new products or services, mergers or takeovers, reorganisations, changes in senior management or the organisation's financial situation, changes in overtime or working hours or retirement policies, redundancies, changes in the pension scheme or disciplinary procedures and so on. As a result, an employer and its employees will need to negotiate and implement an information and consultation agreement.

How Does it Work?

Once employees have initiated their rights under the legislation, an employer has six months to negotiate an agreement. There is much flexibility as to how the legislation's requirements are met, and information and consultation may be conducted through employee representatives or directly with employees. If a negotiated agreement is not instituted within six months, then a set of 'standard rules' automatically apply. Such standard rules also apply where an employer refuses to enter negotiations within three months of receiving a valid request from its employees.

Consultation is defined in the Act as 'an exchange of views and establishment of dialogue between either or both employees, employees' representative(s) and an employer'. Therefore, it would not appear to require negotiation. However, it should be noted that the employer is required to consult 'with a view to reaching agreement' in some circumstances.

Confidential Information

The Act provides that there is a duty on employees and their representatives to respect the confidential nature of the information provided by an employer. For this confidentiality to be established, the information must be expressly provided in confidence and the confidentiality requirement must be justified by legitimate business interests. An employer is not obliged to communicate information where its disclosure would seriously harm the functioning of the company or be prejudicial to it.

The Unionised Workforce

Employers with a unionised workforce now face the possibility of dealing with both recognised trade unions and specially-elected staff representatives.

Penalties

Fines of up to €30,000 and / or up to three years in prison may be imposed for breach of the provisions of the Act.

When Does it Begin?

Since 4 September, 2006, the Employees (Provision of Information and Consultation)
Act 2006 has applied to companies with at least 150 employees and from 23 March 2007 will apply to companies with at least 100 employees. From 23 March 2008, it will apply to companies with at least 50 employees. The legislation does not give workers an automatic right to information and consultation once the thresholds referred to above are reached. Instead, workers' rights under the legislation must be triggered by an employer or employees. An employer may independently opt to enter into negotiations to set up an information and consultation structure or at least 10% of the employees may present a written request to an employer to do so. The 10% requirement is subject to a minimum of 15 employees and a maximum of 100 employees presenting the written request.

If neither of these things happen, then no information and consultation structure needs to be set up. Where the employee threshold of 10% is not met at the time the request is made, employees are not then allowed to make another request for at least two years.

For further information please contact Jennifer O'Neill, Mike Kavanagh or Aoife Bradley.


Winter 2006.