arp
appraisal and allocating an ARP award, it will be helpful if both do not take place at the same time as their aims are quite different. The appraisal should provide for constructive discussion about performance and development and also look forward, agreeing additional training and setting objectives for the following year. The pay review is to allocate a monetary reward. However, it is likely that discussion about performance and any challenges by the appraisee of assessments will be largely motivated by the pay links. It will, therefore, be beneficial if the interval between appraisal and the pay review is not excessive so as not to weaken the incentive element and to avoid any accusation that the ARP award does not reflect current performance.
Some employers may consider it inappropriate or impracticable to separate the appraisal review from the process of allocating ARP. In such circumstances every effort should be made to ensure that important elements of appraisal such as developmental and training needs are not overlooked.
Consultation and negotiation
Traditionally, trade unions have been critical of any form of individually assessed performance pay on the grounds that it can be unfair. Employees may also regard ARP with suspicion. It is therefore important to involve employees and their representatives in a participative approach to change from the outset. The scheme itself should be jointly developed through the process of involvement with employees and their representatives.
Where employers recognise independent trade unions they are obliged to disclose certain information for collective bargaining purposes. Acas Code of Practice No 2. Disclosure of Information to Trade Unions for collective bargaining purposes, contains further information.
A recent European directive giving employees in the UK new rights to information and consultation has been agreed. The directive gives employees the right to be informed about the businesses's economic situation and to be informed and consulted about employment prospects and about decisions which may lead to substantial changes in work organisation or contractual relations, including redundancies and transfers.
The UK has until 23 March 2005 to implement the directive which will be restricted initially to businesses with 150 or more employees. By 2007 the directive will be applied to businesses with 100 or more employees and by 2008 to businesses with 50 or more employees. The directive does not apply to businesses with fewer than 50 employees.
Employers may seek to reach agreement through consultation and, where appropriate, negotiation on the following broad areas:
• the objectives and design of the ARP scheme and in particular how it is related to the existing payment system
• the employees to be included in the scheme
• the resources to be made available
• the training to be provided
• how the scheme will operate, in particular how and when performance will be assessed and by whom
• how performance will be related to pay and the nature of any safeguards in the scheme