Labour & European Law Review Weekly Issue 491 12 October 2016
Following the prime minister’s announcement that she wants workers to be represented on company boards, a TUC report says the change could be law within a year.
The report, “All Aboard: Making worker representation on company boards a reality” sets out the case for worker board representation as well as detailed proposals for implementation.
It argues that as workers’ interests are affected by the priorities and decisions of company boards, it is therefore a matter of justice that they should be represented within those discussions.
The report points out that worker board representation would bring people with a very different range of backgrounds and skills into the boardroom, thereby helping to challenge “groupthink”. It also cites evidence from countries with worker board representation showing that the perspective of an ordinary worker is particularly valued by other board members.
Currently across the EU, 19 out of 28 member states make some provision for workers’ representation on company boards. In 13 of these countries the rights are extensive in that they apply across much of the private sector. Countries with strong worker participation rights perform better on a whole range of factors, including R&D expenditure and employment rates, while also achieving lower rates of poverty and inequality.
The TUC proposes that:
- Workers should have the right to board-level representation in all listed and private companies with 250 or more workers
- Workers in companies of 100 or more workers should be able to trigger board representation rights through their unions or bodies established under statutory consultation procedures
- Worker representatives should comprise a minimum of one third of the board, with a minimum of two worker representatives per board
- Recognised trade unions plus representative bodies established through statutory consultation machinery should be able to nominate candidates for election
- A worker representative would be responsible for bringing the perspective of a worker to the boardroom, rather than for directly representing all company workers.
Neil Todd, from Thompsons Solicitors, said: “This report is very welcome in light of Theresa May’s recent announcement and sets out how worker representation on company boards can change the culture of the boardroom and help employers focus on long-term company growth.
“The report also acknowledges the role that trade union representatives could potentially play in this capacity given recent examples we have seen of unions and employers working together to develop strategies to achieve company success. The important thing now is that the Government acts and legislates to make worker boardroom representation a reality.”
To read the full report, go to: https://www.tuc.org.uk/sites/default/files/All_Aboard_2016.pdf