Seanad Éireann debate -
Tuesday, 25 Jun 1996

Vol. 148 No. 3

Transnational Information and Consultation of Employees Bill, 1996: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Minister of State at the Department of Enterprise and Employment (Ms E. Fitzgerald)

The purpose of the Bill is to promote information and consultation of employees in large scale multinational enterprises. The Bill's provisions introduce for the first time in Ireland employees' rights to dialogue with management on business development information and give rights for the first time in statutory form to workers in private sector companies.

In today's globalised and increasingly competitive markets greater participation by employees is of paramount importance so that companies will be able to successfully manage ongoing change. Effective and efficient information and consultation of employees is a prerequisite to the achieving of greater employee involvement in the development of companies.

The transnational information and consultation arrangements in multinational companies which will develop as a result of this Bill will enable employees to contribute to the ongoing success of the trans-European companies in which they work. From an employee's rights perspective, it is of course proper that employees should be informed and consulted about developments in their companies which are likely to impact on their jobs and on the nature and organisation of their work. Employees are important stakeholders in companies. As much as and even more than management, they are concerned about the future health and prosperity of the company. The ability of companies to manage change is crucially dependent on how they can mobilise their workforces and work in partnership together rather than in confrontation. Both sides, by working together, by pooling information and commitment, will be able to manage the process of change which faces each and every company.

This particular Bill will transpose into Irish law the provisions of the European Union Directive (94/45) on informing and consulting employees. Often called the European Works Council Directive, the directive was adopted by the Council of Ministers on 22 September 1994 on the basis of the Social Protocol or Social Chapter of the Maastricht Agreement. The directive must be transposed into our law by 22 September this year. It applies to 17 countries — the member states of the European Union, excluding the United Kingdom, and Norway, Iceland and Liechtenstein.

A unique feature of this directive is that large scale multinational companies which fall within its application must comply with the transposition law of the member state in which the central management is located and also, in certain aspects, with the transposition laws of each of the member states in which they have employees.

Under the Maastricht Agreement, one of the objectives of the Community is to promote dialogue between both sides of industry, between management and labour, in order that companies and economic development can prosper. The expressed purpose of the directive is to improve the right to information and consultation of employees in Community scale undertakings and Community scale groups of businesses. In accordance with the principle of proportionality, the directive allows some degree of competence to member states to reflect their own employment relations and employment concerns in their transposition legislation.

The European model of social partnership, which underpins the directive, recognises that employees, as stakeholders in their companies, should have a right to be informed and consulted about important business developments that will affect their futures. In drawing up this legislation I consulted widely with representatives of the business community and with worker representatives through the Irish Congress of Trade Unions. As part of this process we published a consultation paper last July. My approach to the Bill has been to facilitate a co-operative and positive approach by individual companies and their employees in meeting the objectives of the directive.

The legislation will implement the directive. It will not bring about information and consultation in every Irish company. This legislation is about implementing the directive and does not go beyond that to extend more widely to other companies. I hope that will, however, be on the agenda and will be discussed by the social partners in the run up to the next Programme for Competitiveness and Work.

The legislation reflects our own industrial relations traditions in how we have adapted the EU directive. It is important that companies and their employees should have some degree of flexibility in adopting information and consultation arrangements which best suit their own circumstances.

This will apply to companies which employ at least 150 in each of two member states and at least 1,000 overall in the Community. Such companies whose central management is located in Ireland will be required to comply with the provisions of the Bill as a whole. There are also provisions in the Bill which apply only to Irish employees of those European scale companies covered by the directive, whether or not their central management is located here. In all, it is estimated that the Bill will impact on some 200 multinational companies with operations in Ireland, including some of our own native multinational companies like Bord na Móna and Smurfit.

The objective of the directive, and thus the Bill, in terms of information and consultation arrangements can be met in three ways. First, pre-directive or pre-Bill-agreements, which must be adopted by companies and their workers before the 22 September 1996, provide for transnational information and consultation arrangements which cover the entire workforce. Here, the Bill goes beyond the text of the directive by providing for legal protection for valid agreements and by making the validity of agreements entered into before 22 September contingent on their being accepted by the majority of the workforce.

That is the quality test to ensure that any pre-directive agreements which take account of the flexibility offered by this approach are not shoddy agreements which undersell the workers. A majority of the workforce will have to agree if a pre-directive agreement is negotiated. Where such agreements are adopted the provisions of the Bill will not apply, other than those provisions which provide for pre-Bill agreements.

The second form of agreements are those under the Bill which are to be agreed between a representative body of employees — the Special Negotiating Body or SNB — and central management. As stipulated by the directive, the Bill provides a framework for such agreements which may invoke an information and consultation body — a European Employees' Forum — or alternatively may establish an information and consultation procedure. Under the directive companies and workers can set up a Special Negotiating Body to negotiate what particular type of information and consultation arrangements they will have. The Bill adds to the provisions of the directive by requiring that such agreements include arrangements for informing and consulting Irish based employees on the matters relevant to the transnational or European information and consultation arrangements. So, there is a feedback mechanism for Irish workers.

Secondly, where there is disagreement, we provide that the parties to such agreements — central management and employees' representatives — agree an arbitrator for determining disputes that arise about the interpretation of agreements entered into under the Bill. Where the parties do not agree an arbitrator, the Bill enables the Labour Court to appoint an arbitrator or arbitrators, when requested to so do by either party. Amendments were made to the Bill in the Dáil which will facilitate a less formal approach to arbitration. Where agreement on transnational information and consultation arrangements is not reached after a period set down in the Bill, the provisions of the annex to the agreement come into play. In other words, if workers and management do not conclude an agreement themselves before 22 September, having set up a Special Negotiating Body or in the absence of such a body, the default provisions come into play. Under these requirements, companies will be legally obliged to establish a European works council or EWC as prescribed in the Bill. The details will be spelled out in the Bill.

The Bill includes two provisions in respect of the prescribed EWC which go beyond what is in the directive. Management will be obliged to consult with representatives on the arrangements for holding meetings of the EWC. Also, minutes of EWC meetings will have to be agreed between management and the EWC.

A number of other provisions in the Bill reflect Irish employment relations, traditions and concerns. Overall, I stress that the Bill reflects the Irish industrial relations tradition of allowing management and employees to determine the nature of their relationship. At the same time, however, the Bill provides legal rights for employees and their representatives. In drawing up the Bill we sought to strike a balanced approach to reflect as far as possible the concerns on both sides expressed to us during the consultation process.

At the suggestion of Ireland, following the adoption of the directive by the Council of Ministers, an expert working group of representatives from each member state was established. The objective of the group was to encourage, as far as was practical, a smooth and even transposition of the directive into national laws, bearing in mind the differing industrial relations traditions in different member states. The conclusions of this working group are not binding on member states, but I am happy to acknowledge the contribution of the deliberations of the group to the formulation of draft transposition legislation across the member states, including Ireland. We want to ensure as much uniformity as possible where it makes sense.

I now want to outline the broad purposes of the sections of the Bill, which I hope all sides of the House can find it possible to support. Section 1, the short title — Transnational Information and Consultation of Employees' Bill — reflects the objective of the information and consultation directive itself.

Section 3 defines terms used in the Bill, drawing on the text of the directive itself as well as interpreting some terms which are not defined in the directive, including the meaning of employees and employees' representatives for the purposes of the Bill. The section does not discriminate between full-time and regular part-time workers. Each has its rights to representation and to be included as workers for the purposes of the Bill's threshold requirements.

Section 4 is an important one that details the workforce threshold requirements, which determine whether an undertaking or group of undertakings come under the Bill or not. As I have already said, if a company has a workforce made up of full-time and part-time workers, the part-time workers are counted as a single unit for the purposes of these thresholds.

Section 5 sets out the manner in which it may be determined if an undertaking is covered by the Bill by virtue of being part of a group. Together with section 4, this section provides the legal basis for the scope of the application of the Bill in terms of the large-scale companies to which it will apply.

Section 6 deals with pre-directive agreements which have been accepted by a majority of the workforce and adopted prior to 22 September 1996. It is expected that up to 200 companies across the Community, or about 10 per cent of those covered by the directive, will have adopted such agreements prior to 22 September this year. This section provides greater flexibility for the parties in agreeing the nature and scope of transnational information and consultation arrangements than the provisions in the other sections of the Bill.

Section 7 enables the making of such regulations as may be necessary to give full effect to the Bill, in particular regulations about expenses to be borne by central management and the appointment of arbitrators. An amendment agreed in the Dáil enables the making of regulations on arbitration procedures.

Sections 8 and 9 specify the general obligations and responsibilities of central management with regard to the establishment of information and consultation arrangements.

Section 10 specifies the circumstances where central management is obliged to establish a representative body of employees — the Special Negotiating Body or SNB — for the purposes of negotiating agreed information and consultation arrangements.

Section 11 specifies that the function of the Special Negotiating Body shall be to negotiate with central management for an agreement on the establishment of arrangements for the information and consultation of employees; that the body may be assisted by experts of its choice; that central management shall convene a meeting with the Special Negotiating Body with a view to the conclusion of an agreement; and that central management shall bear all reasonable expenses for these purposes, including the equivalent cost of one expert.

Section 12 imposes on the central management and the Special Negotiating Body an obligation to negotiate in a spirit of co-operation. An agreement for the information and consultation of employees may invoke the establishment of a European Employees' Forum. The parties may also agree to establish one or more information and consultation procedures instead of a forum. The section also sets out a framework for agreements, while leaving the details to be agreed by the parties in negotiation, and provides for the dissolution of the Special Negotiating Body when it ceases to have the function of negotiating an agreement.

Section 13 sets out the circumstances in which the subsidiary requirements of the Second Schedule shall apply. The requirements shall apply if the Special Negotiating Body and central management so agree; where the central management refuses to commence negotiations within six months of a request referred to in section 10 or if, after the expiration of three years from the date of such request, the parties are unable to conclude an agreement. This section is fundamental to the objective of the Bill as it ensures that employees can exercise the information and consultation rights provided for in the Bill, if they so wish, in the absence of agreement with central management.

Section 14 provides for the manner in which employees' representatives to the Special Negotiating Body, the ongoing information and consultation arrangements or a European Works Council are to be selected.

Section 15 prohibits members of the Special Negotiating Body, European Employees' Forum or European Works Council or employees' representatives to an information and consultation procedure from disclosing information given to them in confidence. The section also provides for the circumstances in which central management may withhold information which it claims is commercially sensitive.

Section 16 obliges central management and employees' representatives to work in a spirit of co-operation with regard to their reciprocal rights and obligations. Section 17 sets out the protection and the facilities to be provided to employees' representatives.

Section 18 defines offences under the Bill and is necessary in order to ensure the effective application of the Bill. The offences are refusal by central management to disclose data on workforce levels — which obviously triggers a works council, non-establishment of a prescribed European Works Council where such is required and disclosure by employees' representatives of confidential information.

Section 19 sets out the penalties which may be imposed for breaches of the Bill and these penalties reflect the gravity of the prescribed offences. Section 20 provides for referral of disputes between central management and employees, regarding withholding of commercially sensitive information to an arbitrator to be appointed by the Minister.

Section 21 stipulates that the parties agree an arbitrator to determine disputes arising from the interpretation of agreements under the Bill. Where the parties cannot agree on the appointment of an arbitrator, either may apply to the Labour Court, which shall refer the dispute to the arbitration of one or more persons as it thinks fit.

Section 22 states that the Bill shall apply without prejudice to the Protection of Employment Act, 1977, as amended, and to the European Communities (Safeguarding of Employees' Rights on Transfer of Undertakings) Regulations, 1980 (S.l. No. 306 of 1980).

Section 23 provides that the Arbitration Acts, 1954 and 1980, will not apply to arbitrations under the Bill. The intention here is that the arbitration procedure will not be overly complex in the provision of regulations to deal with the precise details of the procedure.

The First Schedule provides requirements for the nomination and election of employees' representatives. The Second Schedule prescribes the nature and form of the European Works Councils to be established where there is no agreement between management and employees on the establishment of information and consultation arrangements.

It is not possible to estimate accurately the costs that will arise under the Bill. However, the EU Commission has estimated an ongoing annual cost of about £8 per employee. It is a modest cost for setting up statutory provisions for workers to be consulted as of right and to negotiate forms in which they will be informed about what their company is doing.

In conclusion, I wish to stress some important points. This Bill is a landmark because it is the first time we have statutory rules for consulting and informing workers about what companies in the private sector are doing and what are their plans. That kind of partnership approach between workers and management is the key to our economic and competitive success and our ability to manage the process of change. If our industrial relations are characterised by confrontation, mistrust and a failure to share information, we are denying workers their basic right to know about their jobs and livelihood. We also make it difficult for companies to win the trust of workers when they are trying to adapt to changing market conditions and to changing products and processes. This is necessary for all companies because we know that change is the one certainty that faces every company. That change is best managed where there is genuine trust and sharing of information, genuine listening on the part of management to what workers have to say and genuine involvement of the contribution workers have to make. In giving statutory rights to workers in the private sector for the first time, this is a landmark Bill.

This Bill is a first step. It does not deal with companies beyond those covered in the directive but in laying down markers, it is an important first step. I hope it will be possible for workers and management throughout Irish industry and companies to conclude agreements. This legislation will be one of the centrepieces of any negotiations in a future Programme for Competitiveness and Work. I know this is of concern to both sides who signed a joint declaration. ICTU, IBEC and the Labour Relations Commission — having issued thoughtful papers on the subject of partnership in business — will see that this legislation is very much a first step and there will be further moves towards development of partnership in Irish business.

It is important we meet the directive transposition date of 22 September 1996 as there will be difficulties for both management and employees should member states not meet the deadline.

The Bill seeks, as it must, to fully transpose the EU Directive on Information and Consultation of Employees — commonly called the Works Council Directive — into domestic law. It is a solid Bill; it is a technical Bill but, on the ground, it will make a real difference in Irish companies. Having framed a balanced Bill, I hope many companies, where they have the option, will choose Ireland as their base for setting up works councils. In Britain, the one European country which has opted out of this legislation, many of the multinationals are setting up information and consultation procedures and negotiating European Works Councils arrangements with their employees, although they are not legally required to do so by European law. Many companies recognise that this kind of consulation makes good business sense.

I look forward to debating the Bill and I hope there will be a speedy passage so that we meet our deadline of 22 September.

Miss Ormonde

I welcome the Minister to the House. We seem to be meeting a lot recently in and out of the Chamber. I welcome the thrust of this Bill. It is a new era of employee participation in Ireland and marks an important development in Irish industrial relations. As the Minister said, this Bill is about participation, information and consultation arrangements in the private sector, to strengthen the consensus approach to industrial relations.

The Bill arises from the European Works Council Directive which is a product of the European social partnership. It means that employees should have a right to be informed and consulted about important business development which will affect their future. This directive applies to the large companies — those which have over 1,000 employees or at least 150 employees in two of the member states. This legislation provides for electing representatives to sit at works councils or employees' fora, which will inform and consult employees on transnational company matters.

May I refer to research started in the department of psychology in UCD 30 years ago? An American psychologist introduced two theories — theory X and theory Y. Theory X discussed the old approach, the disciplinarian and confrontational approach of the Church, the Army and big firms — do as I say not as I do. This was the old concept of the management/employee relationship. Decisions were made at the top and there was no consultation. Alternative strategies were not considered once a decision was made. That theory was in place 30 years ago. Theory Y, or the McGregor theory, changed that process. It introduced new thinking in relation to consultation processes and the motivation of workers. As I stated earlier, this theory was introduced to the Department of Psychology in UCD in the 1960s.

There are two forms of participation. The first involves direct participation, which begins at the level of the job itself. All employees should be consulted about their line of work and their motivational requirements. Another kind of participation in which companies engaged in the past was quality group work. This involved assessment of quality, the improvement of quality and worker participation in relation to particular companies. The second main form of participation is indirect in nature and is currently being brought on stream. This was advocated by psychologists and researchers during the past 30 years, but we are only now putting it into practice. The basis for this discussion emerged because we must involve employees in consultation and consider their work and way of life. We must look at how the position and welfare of workers within a firm might be enhanced. Ensuring employee satisfaction is one way to promote motivational factors within particular firms. This is a welcome concept and we must work together to see that it is developed.

Social partnership should first identify employees as people and then recognise the work they do. People should be considered in terms of their strengths, not their weakenesses. Exploitation, which coloured our thinking in the past, should not be part of the new agenda. If we do not bring about development on the part of workers and do not encourage their involvement in the making of decisions, there will be no communication, leadership or commitment from the members of any given organisation. The Bill is very worthwhile in that context. I congratulate Padraig Flynn for the important part he played in bring about agreement on the directive in question. I also congratulate the Minister of the day, Deputy O'Rourke, who played a major role at the Council of Ministers in bringing this agreement to fruition.

My thinking about the Bill comes unstuck in relation to the works council. I understand that this council, involving representation from each company, will meet once a year to discuss issues of employment, investment trends, cutbacks, changes in their organisations, etc. This will be the substance of future communication.

I regret that this legislation was not introduced during the crisis involving Packard's development, which represented a golden opportunity for consultation. The Minister of State at the Department of Enterprise and Employment, Deputy Rabbitte, was involved in that crisis, but discussions broke down because there was not consultation. It would have been useful to apply this legislation had it been in place, even though the jobs in question would still have been lost. The employees at Packard would have appreciated being consulted regarding the barriers to and breakdown of communication. I welcome the introduction of this legislation because it will prevent future crises of this kind.

There are a number of areas of the Bill about which I am concerned. What will be the effect of this new approach in the case of part-time employees and will they be represented on the council? The provision of costs for bringing together representatives of Irish companies and their partnership companies in other states seems clumsy. The Minister of State's presentation did not refer to this issue, but perhaps it could be teased out in relation to the various sections? I do not have an understanding as to how the new directive will work in this regard. The council or forum will involve the participation of representatives from each member state who will reflect the problems experienced in their respective countries before they assume major significance. How will this work? It appears satisfactory in theory, but will Irish workers be bothered by events in Europe? Good working conditions, job security and welfare prospects are all that we want for employees. I do not believe they desire anything more. The question then arises as to whether this legislation is required? In this context, we are stating that we need to motivate our workers. How should we proceed to do this? Is this Bill needed? Will we become hung up on legislation?

I accept the concept of the legislation. Last week we discussed the protection of young people in employment and introduced legislation relating to the time at which they should finish work. This will affect young people employed in trades which do not operate normal nine to five jobs. The Bill before the House is aimed at enhancing the social partnership. It involves identifying and considering communications between managers and employees and linking the participation of individual workers to a sense of team spirit. I am concerned because many managers do not have good communication skills. We must consider how this type of legislation might be best implemented.

The United Kingdom and Northern Ireland are excluded from the provisions of the European Union directive governing this Bill. There has been much discussion of the peace process and the removal of trade barriers relating to the movement of goods and services between North and South, but the Bill before us forms such an obstacle. Has there been any consideration with regard to overcoming this problem in the future? Perhaps it will form part of the overall picture. I do not know. However, the major question in this context relates to whether it will benefit Irish workers or save jobs? Ireland has a thriving economy and low inflation, but there are in excess of 250,000 people unemployed. Will this legislation do anything to enhance or motivate the creation of employment and the generation of profits? If a profit is made, it can be invested in the economy to create further jobs.

I welcome this legislation, which represents the grand finale of research carried out in the past 30 years. I contributed to this area through many of my research papers and I have no difficulty with the broad thrust of the legislation. I am concerned about the effectiveness of its implementation. This is a good Bill, but I would like to know more about the cost of its implementation and whether it will work in Ireland. The legislation involves personalities — those of managers and workers — and reaching out in terms of consultation and negotiation. If we get it right in our own area it is easy to transfer that into transnational consultation. I have difficulty with that thinking because it is concerned with the relationship between a boss and his worker. My position is that if we get that right, we do not need legislation.

Mr. Farrelly

I welcome the Minister to the House again; she comes here almost every week. This Bill reminds me of my time on the Council of Europe and of the committees which prepared legislation to create greater equality across the Union. The Bill derives from a directive which has been filtered through the system and undoubtedly it has taken many months and years to bring it to this point.

The legislation gathers the collective thinking about multinationals to ensure that the events which happened in Packard, for instance, would be avoided in the future. When one notes what happened in that case and the way it happened, it is valuable to bring forward legislation to prevent multinationals acting without consultation with their workers, as they did in the past. The Bill is also topical because a multinational company announced today that it is to increase its employment in Ireland by 750, which is a welcome development. The company has been in business for 40 years and is already in Ireland, but this European legislation will not discourage it or other multinationals from setting up here.

The Bill provides a forum for the company and its employees jointly to discuss the opportunities and problems confronting them. That should always have been the case, but it is only in the last five to ten years that companies built up those relationships — when difficulties arose, no one knew anything about them. We have the opportunity to visit companies at various times and many of them now have large conference rooms. An important part of joint development is the involvement of employees as well as management in achieving the company's goals and aims and those partnerships should continue and grow. What we are doing today is directing those companies which are not or have not been inclined to have such partnerships to become involved in them.

Things have changed dramatically even in the last few years. Managers are far younger and have different ideas. Recently, the youngest ever member of a State board was appointed chief executive of An Bord Tráchtála. All the media reports of the appointment said he would bring major changes in thinking, because he will not have a chip on his shoulder about any particular area but will seek to bring out the best in employees.

I am also glad that the Council of Ministers adopted the Irish suggestion to establish an expert working group of representatives from each member state whose objective will be to encourage as far as practicable a smooth and even transposition of the directive into national law. This means we are not simply passing legislation and hoping everyone will implement it, because things do not happen like that. The working group will be in place to help companies in implementing the provisions and by informing them if further clarifications have to be made. There is no point introducing and passing legislation and expecting that everyone will follow it from the day it is written into law — we like to think that will be the case but it does not always happen that way. This proposal came from the Irish Ministers and it will make possible the implementation of the legislation across the EU, as Ministers will be able to discuss the results and progress made by the working groups.

Part-time workers are also being introduced to these schemes, which is welcome. In the past those workers only had jobs for the period of their contract and management could do things without letting them know, but that is no longer the case. This legislation ensures that management must deal with part-time workers in the same way they deal with full-time workers, which is a welcome step.

This legislation also coincides with the developments of major national and international companies which are moving around the world and into Ireland as a base to supply Europe. When the Bill is implemented it is only right that it should take account of this. It has also been ensured by the Irish suggestion which was approved by the other member states. I hope the Minister informs us in about two years of how successful the legislation has been and how helpful it has been to the companies and employees concerned.

The Minister said the cost of the legislation would not be huge, but she suggested in her contribution to the Dáil that the companies should pay part of it. Although the system may only cost £8 per person, that amounts to a lot of money for a company which employs a huge number of people. What is the exact intention in this regard? Will it be the employee who pays or will employers and employees pay jointly? Is the amount of money mentioned necessary for the implementation of the scheme? I welcome the Bill.

Mr. Farrell

I welcome the Minister to the House and support the main thrust of the Bill. In the seventies and early eighties we had full employment; but since then we have introduced various EU Directives and Regulations, the result of which is that 300,000 people are unemployed. It is the same all over Europe.

The laws and directives brought in to create a better climate for workers seem to have created a bad climate for many. While the thrust of the Bill is good I wonder if it will solve the problem. Many people gave up to 20 year's service to Packard Electric and took a cut in wages 18 months ago because they were dedicated to the firm. However, they found out on the evening news that they would lose their jobs. That is not good enough. Will this measure offer any security of employment? Can firms wind up overnight and throw a dedicated workforce out as happens at present? While the rules and directives apply to EU firms, many firms are leaving to go to Third World countries to find cheaper labour.

There is no longer security of employment in the public service. People who started work 25 years ago knew they could get a mortgage and get married because they had a job for life as long as they did their work. However, that no longer applies. If one takes out a mortgage nowadays one cannot know if one will be able to pay it. Security of employment has disappeared over the last 20 years, ever since we started to implement one EU directive after another. While we may attempt to achieve equality we end up creating more inequality than ever.

We may have adopted too dogmatic an approach in the past, as Senator Ormonde said, but at least we had security. Nowadays, a team of experts can be brought in to assess the competitiveness of organisations and, although they get paid for the task, many people may end up on the dole. Is that good for a country? It may be good economics for the organisation that rationalises but it is awful for the morale of the country.

I worry that the directives take us away from the humane approach and that is bad for morale. In the past when people worked diligently they knew they would be paid and promoted. However, that is no longer the case; one may be the hardest worker in a firm yet be replaced for being too old or too set in one's ways. Where has humanity gone? We may consider the EU Directives to be in favour of people but they are not.

A local authority may evict a person from a house because they cannot pay the rent. However, the health board or another State agency has to house them. Similarly, when a person is thrown out of a job they have to go on the dole and the State has to pay one way or another. Society is demoralised because people do not know if they will keep their jobs. In years past one built up a relationship of trust with one's bank manager. However, nowadays, bank accounts are managed by computers. The human touch is gone.

The negotiating body will be comprised of people from all over Europe. They will be in touch with one another but what happens the workers from Tallaght or Grange, County Sligo? Who will talk to them? I appreciate the Minister of State's task is not easy and that she and her staff are doing their best. However, the approach over the last 20 years has been wrong. We have to return to a climate of job security so that people know they can afford to pay their mortgage and educate their children. As it is people do not know when they will be out of work. None of the EU Directives gives job security, although we are told they will.

The EU Directives implemented do not seem to be in the best interests of the workforce. However, I would like to see directives that might reduce taxation or equalise the price cars in the EU, for example. Why is everything not equal for the member states? We are great Europeans but we are getting all the stick and none of the carrot, so to speak. We are told we cannot afford the measures that are good for us but we can afford the other measures.

I felt sorry for the workers of Packard Electric who heard on the news that they would be on the dole. Even in the public service people are no longer assured of their jobs. There seems to be increasing insecurity and disloyalty because it seems the human element is no longer considered. The Minister should convey the message to Europe that workers are not consulted and that there is no security of employment. Society will be disrupted because if people are not happy at work they will be happy at nothing. The days of happiness at work are gone because of job insecurity.

I welcome the Bill. However, ordinary workers in Tallaght or Sligo are not being consulted. Productivity and efficiency studies may be carried out yet ultimately they result in people losing their jobs. That is why there are nearly 300,000 people unemployed in Ireland and why there is unemployment all over the EU. We cannot keep cutting jobs and putting people on the dole because the few left working will not be able to pay the bill. If we do not get a strong grip on it fairly fast, we will end up with more problems because there will no jobs and no money in the kitty to pay those who are not working.

I agree with the Bill, but I am worried that we are not coming to grips with unemployment and that we are making more people insecure. I would like to know if any of the EU directives we have implemented over the years has provided security. Can the Minister stand up with her hand on her heart and say that the Bill means there will never be a case like Packard again, a factory will never close overnight and people will never be thrown out of their jobs without warning? People should at least get time to put their houses in order rather than being thrown into a crisis. I do not think this Bill will do that; I would love if it would.

We seem to be putting too much value on this great Special Negotiating Body with whiz kids from all over Europe. Will they have the answers, or will they just tell us that in the interests of economics and competitiveness, the only way is more computerisation and less humanisation.

Ms O'Sullivan

I welcome this legislation. The Minister can be thankful that she has more time available for this Bill than we had for the Protection of Young Persons (Employment) Bill last week. The Bill implements an EU directive and is part of the Social Charter and the Protocol of the Maastricht Treaty. Unfortunately, the UK is not covered by the Social Charter.

I share Senator Farrell's concern about people being replaced by machines, but in directing his concern at this legislation he is directing it at the wrong place. This directive and legislation have nothing to do with the problems which Senator Farrell mentioned. They are embedded in the market driven economics which treats people as commodities which can be dispensed with at the whim of a company. The protective legislation which the EU is trying to introduce, particularly under the Social Charter, protects against much of the activity which treats people as things with which companies can dispense.

I share Senator Farrell's concern, but there are many other reasons why people are being replaced. New technology is the major factor. This legislation tries to establish a co-operative or partnership approach between companies and the people who work in them. Research in firms and multinationals has shown that where the people working in a company have a stakehold and know why they are being asked to work hard and do certain things, they are more inclined to give their loyalty to the company and work harder. They are inclined to be flexible in their working arrangements if they understand the reasons why flexibility is being demanded of them.

This partnership approach can often be as motivating as the wages people are paid. Some companies are voluntarily adopting this approach. The Japanese model indicates that the consultative and "we are all in this together" approach is effective. It is interesting to note that a number of UK companies are adopting this approach to dealing with their work force, even though they are not obliged to do so because the UK is not party to the Social Charter. It indicates that it is an effective strategy for achieving good morale in a company and a good relationship between management and employees.

This approach does not just benefit the workers. It is also in the long-term interests of the profitability and development of the company itself. In that regard it should not be seen as legislation which is only in the interests of employees. It should also be seen as being in the interest of the general development of the company.

It is directed at large companies which have over 1,000 employees, with 150 in each of two member states. We are not talking about small firms, but companies which work on a large scale. We are dealing with a disparate group of workers and it is appropriate that there should be a common approach to how their rights are maintained and how they are given information about what is happening in the company.

I have some questions about the exclusion of the UK in light of the Border between the UK and ourselves. How does it affect our relationship with Northern Ireland and the rest of the UK? A company may have employees in this country and also north of the Border or in other parts of the UK. How will the implementation of the Bill be affected by the fact that the UK is not covered under the Social Charter?

The consensus partnership approach is clearly the thrust of this legislation, not just in what it sets out to achieve but also in its detail and the structures provided for under the legislation. A European works council is only needed if agreement has not already been reached under a number of different headings, whether pre-directive agreement — that is, if agreement has already been reached before the implementation of the directive — or through other intermediary steps.

I welcome the provision of translation. When something applies across EC countries it is important that there is a translation facility so people in one country will have a clear understanding of the information being given in relation to another country.

If this legislation had been in place it would have been of great benefit to Packard workers in so far as they would have known what was going on. However, at the end of the day there is not much that this legislation or any of us could have done to save those jobs. The jobs were not lost because the workers did not know what was happening, but because they were competing with people who were willing to work for much less. We do not want a low wage economy which forces people to work for slave wages. We must balance the rights of workers and the rights of companies to carry out their business.

It is interesting to look at the recent report of the IDA which discusses the difficulties in attracting large companies to this country. They have been relatively successful, particularly in light of the announcement, referred to on the Order of Business, of a sizeable number of jobs for the Dublin area. It was interesting to note that they did not identify the protection of workers and regulations under EC directives as a major impediment to attracting companies. The major problem was competition from other countries offering large incentives. There is constant competition between us and other countries who are trying to attract multinational companies. It is a question of deciding how high one can go in offering incentives.

The criticism of this legislation, which came, for example, from the Progressive Democrats in the Dáil, to the effect that this kind of regulation was impeding multinationals from setting up in Ireland is unfair. There is no evidence that legislation that allows for information and consultation of employees would in any way discourage a multinational company from coming into this country. We have been successful in attracting multinational companies. They come here for a variety of reasons, such as the incentives that are offered by the IDA, the fact that we have an excellent well trained workforce, that Ireland is an excellent place to live and is a good point of entry into the big European market. These are the factors that influence multinational companies in coming into this country. I reject the allegation that legislation such as this would be likely to stop a multinational from deciding to come here. Companies realise it is profitable for them to consult with their employees and to keep them informed rather than have the approach that "We will not tell you anything about what we are doing." That is less likely to encourage people to work hard and to feel that they have a stake in the company they are working for.

I welcome the fact that anybody who goes on these works councils is protected from dismissal or unfair treatment. This is important because sometimes there is a perception that if you are involved in these matters you get a bad name with management as being a bit of a troublemaker. I reject that approach totally and I am glad to see that it is dealt with in the Bill. I assume that other aspects of workers' rights are protected by other legislation in this area.

I was confused by the reference to the Labour Court in section 21. Because these companies are multinational, I assume it would be equivalent of the Labour Court within the country in which the people are employed that would be involved. There is a reference to where the multinational is centrally based and I assume that you go to the equivalent of the Labour Court in that country if you have a problem.

There is a reference to confidentiality, and that is always a difficult issue. It says that if information is expressly provided in confidence, it should not be disclosed. I assume again that means that the people in the negotiations would know what information was provided in confidence and, therefore, could not disclose it.

I have difficulty with the definition of an "expert". That was brought up under another piece of legislation here a few weeks ago. The definition of an "expert" in section 3 is "a natural person, and may be the holder from time to time of a named office or position in a body corporate or other body or organisation". I find that a strange definition of an "expert" and I wonder where it comes from.

Ms E. Fitzgerald

A trade union official probably.

Ms O'Sullivan

It is a strange definition and it could probably apply to almost anybody, but that is a minor problem in the Bill.

Overall, I welcome the approach of the Bill, which is basically about people working in a company being treated as members of the team, as part of the company and who have a right to know certain pieces of information about their employment. It fits in well with our approach to partnership on a national level which has worked well through various agreements. It will be to the benefit of companies rather than being an impediment. I welcome the legislation.

Minister of State at the Department of Enterprise and Employment (Ms E. Fitzgerald)

I thank the Senators for a constructive and positive debate. Senator Ormonde underlined the cross-party origins of this legislation. Commissioner Flynn revived a directive that had been around for 25 years. You could go back 30 years in looking at the origins of workplace psychology, but this is 25 years on the go and Commissioner Flynn did breathe life into it. It was adopted two years ago by my predecessor, Deputy O'Rourke. We have transposed it now into legislation. There is cross-party agreement on what this is trying to achieve and that constructive attitude was reflected in the debate.

Senator Ormonde asked about part-time workers. Regular part-time workers, for example, as protected by our employment protection legislation are counted as full-time units under the Bill and are entitled to stand for election or to vote for the SNB. Who pays the cost? Senator Farrelly raised the same point. Management pays the cost. It pays, for example, for sending workers to a works council in relation to training for people because there may be language training or some training in what is involved. There are developments in that under DG5 and they will be coming forward with finance towards training people to fulfil their role properly in this regard. The cost of an expert attached to the Special Negotiating Body will also be paid for by the company. We are talking about big companies. The costs involved will be modest. If you have 1,000 employees at an average of £8 a head, that is £8,000. That is small money for a company of that scale out of its payroll. It would be peanuts. It will pay off in terms of what was emphasised on all sides — the importance of having consultative mechanisms involving people in what is going on.

Everybody who spoke in the debate, bar myself, mentioned Packard. It has been a salutary lesson for us because everybody, on a human level, was shocked at how individuals who had given ten to 15 years to a company heard on the news that their company was gone. I have to ask myself a question. Would that company have gone that early had there been a consultative mechanism in place between head office and the Irish based workforce where the Irish based workforce knew what the decisions were to have been taken at head office, were able to have their say, were given the full information through a structured arrangement such as a works council and would have been able to put positive suggestions on the table about how best to run the Tallaght plant? When it came to difficult decisions should there have been better trust between both sides so that difficult decisions, if they had to be taken, could have been taken earlier and the plant could have been rescued and vital orders saved? Had we this kind of structure in place earlier on would multinationals like Packard have been able to anticipate trouble earlier let alone when it came to making an announcement? It would not have happened over the airwaves because there would have been a proper consultative process in place.

Senator Farrell raised the question of the human touch. Again, this Bill is about making sure the people who work for an organisation are as involved as the shareholders, who may be people who buy in today and sell tomorrow, and that the human aspect is heard at central management and at central management in Europe where vital decisions are taken about what happens in a company.

Senator Ormonde asked if people would be interested in what is going in Europe. Are they only interested in what happens in their own firm in terms of their own pay and conditions? When we are talking about multinational companies, what happens in head office and other plants has a vital bearing on what happens at home, because decisions may be taken by head office management to expand the French operation and absorb the Irish operation or sometimes vice versa. I heard last week about a multinational in Cork which has absorbed plants all over Europe and has expanded its employment.

If there is a structured system for listening to what workers have to say, can workers suggest new product lines if they are going to lose their old product lines? Can they say "We have skills that can be combined to produce a different product for which we know there is a market"? The health of an enterprise will be greatly enhanced by the involvement of people and their representatives through formal consultation structures. Today's workforce understand the economic situation and that if their business is losing money, their jobs are at risk. They want to know if they are going to lose orders to the competition or if a particular component or product line will be sourced with a different company in the group or sourced with them. They are interested in these issues. This process will give them the information which they need, for example, to change a particular way of doing business so that they can secure an order against their internal competition, which is important.

Senator Ormonde raised the UK exclusion. I hope we will see a future Government in Britain opt into the Social Charter and the Social Chapter because having one situation in Dundalk and another in Newry, for example, causes anomalies. In this instance I do not believe we are at a competitive disadvantage because, to have in place this kind of structured consultation and to build trust, is to our competitive advantage. Indeed, the go-ahead British companies realise that and, although they are not legally obliged to, they are going ahead with works council arrangements even though their Government has opted out of this directive in what I believe is a short-sighted move. This directive applies not only to the 14 member states; it also applies in Iceland, Liechtenstein and Norway. This means that countries outside the European Union are putting these mechanisms in place.

Senator Farrell asked what good was coming from Europe with all these directives, etc. I would remind the Senator that Ireland is getting about £1,000 million from Europe this year. As good European citizens, we play our part in taking on board European social legislation, implementing the Social Charter of fundamental rights for workers as well as being happy to take the few bob from the German taxpayer and our partners in Europe. I know, because I attend the Council of Ministers meetings, that there is a great deal of concern among my fellow Ministers for Labour Affairs about the possibility of social dumping. They are anxious to ensure that common labour standards apply right across Europe, including this particular area.

Senator Farrell asked whether there was job security. We all know that gone are the days when a person started work at 18 and retired at 65 with a gold watch. The name of the game is change, and the security of any job depends on the ability of the company to manage that change.

Senator O'Sullivan raised the question of people being replaced by machines and the importance, to which all Senators referred, of the human touch. This is about putting people first and ensuring that human values and consultation, as well as punching numbers into computers and taking the printout at the other end, are matters which all companies of this scale must take on board.

Senator O'Sullivan asked about the definition of an expert. I must admit the definition reads a little tortuously. First, it allows workers to nominate a trade union person as their expert, whether that person is a worker, so they can be assisted by somebody who represents the industry. Paul O'Sullivan, for example, could be the nominated expert for Aer Lingus workers. Second, it allows that the expert works for a consultancy. If somebody takes SIPTU as their expert and the job is shared by two officials, a research consultancy or a consultancy specialising in this particular Bill, — such specialists exist — they pay the expenses of a one person equivalent even if it is a two person consultancy.

Senator O'Sullivan asked about the Labour Court. Where the parties cannot agree on an arbitrator, our Labour Court will appoint one for companies which register their agreements and operate in Ireland. Regarding elements of their Irish consultation, it is our Labour Court which will be involved. Obviously, we do not lay down the arbitration procedures for processes and steps in other member states but, with regard to business transacted in Ireland, our Labour Court will appoint an arbitrator where both sides cannot agree. We hope both sides will be able to agree on a suitable arbitrator, be it a legal person for a legal point or somebody versed in industrial relations processes for what is essentially a collective bargaining point.

Finally, with regard to confidential information, the Bill makes it a criminal offence to leak information given in confidence which would be commercially sensitive. Where companies try to hide information which should be shared with their workforce as information given in confidence, we provide for special arbitration. It would be my intention that there would have a similar system as that proposed under the proposed Freedom of Information Bill, which also deals with the arbitration on commercially sensitive information so that there are not two systems operating separately, one for the semi-State companies and one for the private sector. When the Bill is in place we will designate their particular information arbitration function.

It is important that commercially sensitive information which companies share with their workers is not given to the competition. Where such sharing takes place — for example, in Waterford Glass, which has structured consultation arrangements — those confidences have been respected. Workers recognise that the security of their jobs depends on the health of the company.

I thank Senators for their constructive contributions and I commend the Bill to the House.

Question put and agreed to.

Agreed to take remaining Stages today.