Business chiefs attack plan for consultation

The leaders of 135,000 businesses in Britain yesterday condemned Government plans to force companies to consult employees over major workplace changes.

The leaders of 135,000 businesses in Britain yesterday condemned Government plans to force companies to consult employees over major workplace changes.

Proposed legislation, which would result in fines of up to £75,000 for companies which breach the law, could increase the cost of red tape by another £800m, says the British Chambers of Commerce (BCC).

David Frost, director general of the BCC, said "Middle Britain" would find the proposalsdamaging. The planned legislation - worked out after prolonged negotiations between ministers, the CBI and the TUC - would add to the burdens faced by UK companies attempting to compete internationally, he said.

The law, which is being introduced to ensure that Britain conforms with European directives, is aimed at ensuring that workers no longer hear about mass redundancies through the media. However, there was no precise definition available in the government consultation document about which management decisions qualified under the law.

A spokesman for the Department of Trade and Industry said all major restructuring plans which could result in workers being made redundant or relocated would have to be relayed to employees. Workers would also have to be told about business forecasts that affect their future.

It was not clear, however, what impact the law would have on takeovers and mergers, which are the subject of strict Stock Exchange rules.

The proposals would initially apply to companies with more than 150 staff, and come into effect in 2005. They would then be phased in for companies with more than 100 workers by 2007 and for firms of more than 50 employees by 2008.

Employers must begin informing and consulting their workers on management decisions affecting their future if 10 per cent or more of the workforce ask for the process to be set up.

But Patricia Hewitt, the Trade and Industry Secretary, stressed that it was not a "one size fits all" solution, and that companies which already had a successful consultation process would be free to continue their existing systems. "I want these changes to lead to a 'no surprises' culture at work where employers and employees discuss common ground and find solutions to mutual problems," she said.

David Yeandle of the Engineering Employers' Federation said important issues still needed to be resolved, particularly the inter-relationship between this new legislation and existing law about informing and consulting employees on collective redundancies and business transfers. "It is critical that employers do not have to cope with meeting the requirements of more than one set of regulations when handling these difficult issues," he said.

Digby Jones, the director-general of the CBI, said the new law would not be welcomed by employers. But he added that the Government had "made sense of a poor piece of EU legislation". He said: "Good employers already consult workers properly but business never accepted that this was an appropriate area for EU legislation."

The TUC general secretary, Brendan Barber, said only "bad managers" would resent having to communicate with their staff. "Today is a real milestone on the long march to winning information and consultation rights in Britain's workplaces," he said. "People at work are on the brink of securing the right to be told what's going on and the right to be heard. These new rights could lead to the biggest change in workplace relations for a generation."