The European Cooperative Society (Involvement of Employees) Regulations 2006

Explanatory Note

(This note is not part of the Regulations)

These Regulations implement Council Directive 2003/72/EC supplementing the Statute for a European Cooperative Society with regard to the involvement of employees. The Directive supplements Regulation 1435/2003/EC.

The Regulations set out the provisions relating to the involvement of employees in the European Cooperative Society (known as the “SCE”); a new form of cooperative which can operate across the European Economic Area on the basis of registration in one Member State.

Part 2 of the Regulations sets out details of the participating individuals and legal entities and the special negotiating body which should negotiate the employee involvement agreement. It makes provision for the circumstances in which the Regulations apply (regulation 4) and the exemption of certain formations below a de minimis threshold from the provisions of the regulations (regulation 5). It also makes provision for the Regulations to apply if a formerly exempt SCE increases in size to fall above the threshold or a request is made by a sufficient proportion of the workforce (regulation 6).

Regulations 7 and 8 impose a duty on participating individuals or legal entities involved in forming an SCE to provide information to the employees or their representatives, who may complain to the Central Arbitration Committee (CAC) if such information is not provided correctly.

Regulations 9 and 10 define the function of the special negotiating body and its composition, and regulation 11 provides for a right of complaint if the special negotiating body is not established in accordance with the requirements set out in regulation 10.

Part 3 of the Regulations addresses the election or appointment of UK members of the special negotiating body. It sets out details of the arrangements for and conduct of the ballot by which members of the body should be elected (regulations 12 and 13) and provides that in certain circumstances members shall be appointed by a consultative committee instead of being elected by a ballot (regulation 14). There is a right of complaint to the CAC on the grounds that the consultative committee is not correctly constituted (regulation 14). Regulation 15 also sets out when an individual is to be treated as an employee representative after being elected or appointed.

Part 4 deals with negotiation of the employee involvement agreement. Regulation 16 sets out the timing of the requirement to negotiate the agreement and regulation 17 sets out the content and scope of the agreement. Provision is made for the decision-making procedure of the special negotiating body (regulation 18) and the consequences of a decision not to open or to terminate negotiations with the participating individuals or legal entities (regulation 19). Decisions of the special negotiating body may be subject to complaint to the CAC (regulation 20).

Part 5 sets out standard rules on employee involvement which shall apply either if the parties so agree or have reached the end of the negotiation period without an agreement being reached and certain other criteria apply (regulation 21). Standard rules on participation set out in Schedule 2 will apply in certain circumstances set out in this regulation.

Part 6 deals with compliance and enforcement. Complaints may be brought before the CAC where the terms of the employee involvement agreement or the information and consultation provisions have not been complied with and if the complaint is well founded a penalty notice may be issued by the Appeal Tribunal (regulations 22 and 23). A complaint may also be brought over the misuse of procedures (regulation 24).

Part 7 deals with confidential information and provides that it shall be a breach of statutory duty for a recipient of such information to disclose it except in accordance with the terms on which it was disclosed to him (regulation 26). Provision is also made for the withholding of information in certain circumstances (regulation 27).

Part 8 deals with protection for members of the special negotiating body and other representatives. It provides for rights to remuneration for time off (regulation 29), protection from unfair dismissal (regulation 31) and protection from detriment (regulation 33) and provides for recourse to an employment tribunal for breach of such rights.

Part 9 deals with miscellaneous provisions and covers matters relating to CAC proceedings (regulation 36), the Appeal Tribunal (regulations 37 and 38) and ACAS (regulation 39). There are restrictions on contracting out of the provisions of the Regulations (regulations 40 and 41). Finally provision is made for the interaction with other existing rights.

Schedules 1 and 2 contain the standard rules referred to mentioned in regulation 21 above. Schedule 3 provides for modifications to be made in the application of the Regulations in Northern Ireland.

A full Regulatory Impact Assessment of the effect that this instrument will have on the costs of business may be obtained from the General Insurance, Mutuals and Inclusion Team, HM Treasury, 1 Horse Guards Road, London SW1A 2HQ or from HM Treasury's website (www.hm-treasury.gov.uk). Copies of the regulatory impact assessment have been placed in the libraries of both Houses of Parliament.