I move: "That the Bill be now read a Second Time."
I am very pleased to present to the House this Bill which introduces a new era of employee participation in Ireland and marks an important development in the history of Irish industrial relations. It is another landmark in strengthening the consensus approach to industrial relations issues we have developed here since 1987. It enshrines for the first time in legislation participation, information and consultation arrangements in regard to the private sector.
The Bill arises from the European Works Council Directive which is a product of the European model of social partnership. This model recognises that employees, as stakeholders in their companies, should have a right to be informed and consulted about important business developments which will affect their futures.
The directive, and as a result of legislation, applies to large-scale companies which employ at least 150 in each of two member states and at least 1,000 overall in the Community. In all, it is estimated that the Bill will apply to some 200 multinational companies with operations in Ireland.
When it is in operation, the process which this legislation will set up will bring together representatives of employees from all those countries in the European Union and the European Economic Area in which a company has operations. Employees of many Irish multinationals will elect representatives to sit at a forum with their opposite numbers from other EU countries, where they and the company can work out shared approaches to future developments. This forum will provide an important place for the company and its employees to jointly discuss the opportunities and problems confronting them, as well as ensuring that employees are fully informed and consulted about important issues for the operation of the company.
In drawing up this legislation, I consulted widely the representatives of the business community and representatives of employees. As a part of this process a consultation paper was issued by my Department in July of last year. 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. This approach, I believe, will result in legislation which recognises, to the extent permitted by the directive, the voluntarist tradition in Irish industrial relations and which will facilitate multinational companies and their employees in establishing effective and efficient transnational information and consultation.
The objective of the directive, and thus the Bill, can be met in three ways. It can be met by Pre-Directive or Pre-Bill-Agreements, which must be adopted before 22 September 1996 and 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 dependent on their being accepted by the majority of the workforce. Where such agreements are adopted the provisions of the Bill will not apply, other than those provisions which provide for pre-bill-agreements.
The objective can be met by the provision for agreements 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. 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 and 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, where requested to so do by either party.
Where agreement on transnational information and consultation arrangements is not reached, after a period set down in the Bill, the subsidiary or annex requirements will 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 Bill includes two provisions in respect of the prescribed EWC which are not required by the directive. Management will be obliged to consult with representatives on the arrangement for the holding of meetings of the EWC. Also, the minutes of EWC meetings will have to be agreed between management and the EWC.
There are a number of other provisions in the Bill which reflect Irish employment relations, traditions and concerns. Overall, I stress the Bill reflects the Irish industrial relations tradition of allowing management and employees to determine the nature of their relationship. At the same time the Bill provides legal rights for employees and their representatives. In essence, the Bill seeks to provide a balance between the rights and concerns of employees and the need for information and consultation arrangements which are appropriate to individual companies and their development.
Those 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 companies covered by the directive, whether their central management is located in Ireland or in another member state.
The Bill will transpose into Irish Law the provisions of the European Union Directive 94/45 on informing and consulting employees. The directive was adopted by the Council of Ministers on 22 September 1994 on the basis of the Protocol on social policy, generally known as the Social Chapter of the Maastricht Agreement, annexed to the EEC Treaty. The directive must be transposed into national law by 22 September this year. The directive 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 its 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 and the member states is to promote dialogue between management and labour in order that economic activities will develop in a harmonious fashion. The purpose of the directive is to improve the right to transnational information and consultation of employees in Community-scale undertakings and Community-scale groups of undertakings. In accordance with the principle of proportionality, the directive allows some degree of competence to member states to reflect their employment relations and employment concerns in their transposition legislation.
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 as between 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.
I would like to outline the broad purposes of the Bill, which I hope all sides of the House can find it possible to support.
Section 1 deals with the title of the Bill, which reflects the objective of the Information and Consultation Directive.
Section 3 defines terms used in the Bill, drawing on both the text of the directive itself, but it also interprets some terms 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 and, in determining thresholds under the Bill, part-time workers are included as full units along with full-time workers.
Section 4 is an important section which details the workforce threshold requirements which determine whether an undertaking or group of undertakings is a Community-scale undertaking or a Community-scale group of undertakings and thus covered by the Bill.
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 exempts from the other provisions of the Bill those companies where agreements on transnational information and consultation, which have been accepted by the majority of the workforce, have been adopted prior to 22 September 1996. I understand 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 next. 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.
The fact that such agreements must be agreed by the majority of the workforce is an important provision to guard against mickey mouse agreements. There will not be any question of slipshod agreements which do not meet in full the principles the Bill sets out to undertake because the test of that would be that workers would have to support whatever agreement is negotiated as a Pre-Directive Agreement.
Section 7 enables the making of such regulations as may be necessary to give full effect to the Bill, in particular, regulations on expenses to be borne by central management and the appointment of arbitrators. Central management must carry the expenses incurred by workers under this Bill.
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. Those experts may be a trade union official or any other expert nominated by the workers.
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 — the establishment of a prescribed European Works Council — shall apply, in other words the provision of the annex to the directive. 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 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. Again, trade union officials are entitled to stand for election to the special negotiating body or may be appointed by the workforce if it agrees.
Section 15 prohibits members of the special negotiating body, European Employees' Forum or European Works Council or employee's 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. We have provided for an arbitration procedure in the Bill with regard to commercially sensitive information or if management is seeking to throw a cloak of secrecy over information which it is valid for it to disclose.
Section 16 obliges central management and employees' representatives to work in the 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 to ensure the effective application of the Bill. The offences are refusal by central management to disclose data on workforce levels, nonestablishment 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, which reflects 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, and to the European Communities (Safeguarding of Employees' Rights on Transfer of Undertakings) Regulations, 1980 (SI No. 306 of 1980).
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 for companies from the meeting of the requirements of the Bill. However, the EU Commission has estimated that an ongoing cost of the order of 10 ECU or £8 per employee per annum may arise. It is a small price to pay for information and consultation arrangements involving workers in running their companies. There will be benefit to companies which should compensate for the costs, especially where information and consultation arrangements are established which assist in the development of more co-operative employement relations.
I stress four important points. First, it is particularly important that the transposition date of 22 September 1996 is met as there will be difficulties for management and employees if member states do not meet the deadline. Second, the Bill is a step in the establishment of general information and consultation arrangments for Irish-based employees. It is an important first step because this is the first time that private sector workers are being given a statutory right to be consulted and informed about the progress of their company.
Third, the subject matter of the Bill is transnational information and consultation for employees in large scale multinational companies. The question of national information and consultation, including works councils at the national level, is a subject for another day. I am sure this will be pursued by both sides in the context of negotiations to a possible successor to the Programme for Competitiveness and Work.. It is also a subject on the table of the European Council in the context of the European Companies Statute. The EU Commissioner for Social Affairs, Mr. Flynn, recently circulated to the Council of Social Affairs Minister a communication on the area of information and consultation. Those issues are now being referred to a high level working group which will include representatives of both the social partners of employees and management. It is an issue which is very much alive at the European level.
Fourth, the Bill seeks, as it must, to fully transpose the EU Directive on Information and Consultation of Employees into domestic law. Many of its provisions have the purpose of establishment of effective and efficient information and consultation procedures that accord with Irish employment and industrial relations concerned.
In preparing this Bill I have taken a consultative approach. I have tried to strike a balanced approach, to be faithful to the directive and to ensure that the right of workers to information with regard to their companies will be a real right and will have genuine force. The key to this is our three stage procedure. First, where a pre-directive is in place, that agreement must have the backing of the majority of the workforce. This is the important test to ensure they are genuine agreements and that they do not try to circumvent the spirit of the directive. The endorsement of the workforce is the key to ensuring that those pre-directive agreements are genuinely negotiated agreements which reflect the concerns of both sides.
Second, the structured negotiating procedure through the special negotiating body is there to ensure that workers and managers can agree between themselves the form of information and consultation which they believe best suits their business. Finally, if management is reluctant to enter negotiations or if they do not prove fruitful, we have the procedure whereby the provisions of the annex to the directive where the prescribed form of information consultation is laid down.
This is an important day for Irish workers. The only other legislative provision with regard to participation and consultation relates to the appointment of worker directors in the semi-State sector. This is the first time we have a statutory right for employees in private sector businesses enshrined in Irish law.
I have established a unit in my Department to promote partnership in enterprise because it is extremely important that management and workers work together in a co-operative way to ensure that their businesses are in a position to meet the challenge of change. We know that workers bring not only their hands but their brains, ideas and commitment to work.
If managements want to ensure the full commitment and acknowledgement of what their workforce can contribute, if they want to proceed with the changes facing all Irish companies in adopting to new markets, new competition and new processes, they need to engage in full information and consultation and to set up participative structures. We are pursuing this in the Department through working with companies, working through the Irish productivity centre and through the work of the unit for partnership in enterprise. I want the start we are making today in terms of a framework for information and consultation to be agreed across Irish industry, where workers and managements will take initiatives to put in place arrangements where they can manage change and involve both sides in the shared success of their enterprise which is so important for the workers whose livelihoods depend on the success of the company as well as for managements.
In introducing this Bill we have taken an important first step. However, it is certainly not the end of my Department's work in this area of promoting consultation and partnership. Only last Monday in Waterford we held a very successful seminar at which workers and management from a number of companies explained how they had set up partnership arrangements, how they were managing change and putting in place structures and procedures which would enable both sides to work together on issues that affect both. Through that process of demonstrating how partnership works in Irish companies, I hope we will encourage more companies to go down that road. Today is just the start. The function of this Bill is to transpose a European directive into Irish law, but the job does not end there. The Department intends to continue its work of spreading the partnership message so that Irish companies can meet the future competitive challenge in a way that will involve everybody who works for a company in a shared effort, in recognition of what each has to contribute. This partnership approach is already delivering success for those Irish businesses that have gone down that road and will continue to contribute to success, to job security, to the development of new jobs and to the prosperity of Irish business. I commend this Bill to the House.
