A company may be under an obligation to inform and consult its employees about work-related issues, under the Information and Consultation of Employees Regulations 2005. The Regulations currently cover only those employers that have a workforce of 100 or more but in April 2008 employers of 50 or more will be brought within their scope.
Because the Regulations are complex, this Guide only summarises their content. The Department of Business, Enterprise and Regulatory Reform has produced detailed guidance on the Regulations (appendix). Your Association can provide you with advice on how the Regulations apply to your organisation, and the EEF Guide to Information and Consultation which contains an EEF model information and consultation agreement that reflects the Regulations’ requirements.
Triggered by request
The thrust of the Regulations is to require an employer to negotiate and operate a procedure for informing and consulting with its workforce, if it has received a written request to do so by at least 10% of its workforce or 2,500 employees, whichever is the lesser. The request may be a single request from at least 10% of the workforce, or a number of separate requests totalling at least 10% of the workforce and made within any rolling six-month period. Employees may submit their request through the Central Arbitration Committee, if they would prefer the employer not to know their identity.
Because the application of the Regulations is triggered by a request from the workforce, a company that receives no request, or receives a request that is not endorsed by the requisite number of employees, need take no action. There are good reasons, however, for an employer to take the initiative in setting up an information and consultation arrangement, even if does not currently anticipate receiving a request, as explained below.
A company that receives a request to negotiate an information and consultation procedure may already have an arrangement for informing and consulting. Whether that pre-existing arrangement affects the company’s legal duty to enter negotiations on a new procedure depends on a number of factors. First, in order to have any legal effect, the pre-existing arrangement must be in writing, must set out the way in which the employer will inform and consult, it must cover all employees and it must have been approved by the workforce (through a ballot, for example, or by being agreed with a union that represents a majority of the workforce). The Regulations provide a degree of flexibility here: the arrangement can meet these conditions even if it covers employees in more than one company, or provides for different arrangements in different parts of the business, or consists of several agreements covering different parts of the business.
If the pre-existing arrangement meets the conditions, then its legal effect depends on how many employees requested negotiations on a new procedure. If 40% or more of the workforce made the request, then the employer must negotiate. If fewer than 40% made the request, the employer has two options: it can decide to negotiate or it can conduct a secret ballot of the entire workforce on whether they want to endorse the request. If the employer opts for a ballot, then it must negotiate on a new procedure if the request is endorsed in the ballot by at least 40% of the employees and a majority of those who voted.
Benefits of a proactive approach
Although it is possible for a company to take no action on an information and consultation procedure unless and until it receives a request to negotiate, it may be advisable for the company to adopt a proactive approach, and put in place an agreement that meets the conditions above ( pre-existing arrangements) before any request is received. By putting in place a pre-existing agreement, an employer can demonstrate a positive commitment to keeping its workforce involved in the business, with all the benefits that brings (benefits of employee involvement), rather than seeming to be coerced into the process reluctantly by an employee request. Further, the legal enforcement mechanisms that apply to procedures reached under the Regulations (see below) do not apply to pre-existing agreements.
Negotiating the procedure
If it receives a valid employee request, the employer’s first step is to arrange the election or appointment of negotiating representatives. These employees will represent all the employees of the undertaking in negotiations with the company on what form the procedure for information and consultation will take. All employees must be eligible to take part in the election or appointment of the negotiating representatives.
The Regulations lay down few requirements for the agreement that results from the negotiations. They simply say that the agreement must:
• cover all the employees in the business;
• set out the circumstances in which the employer will inform and consult; and
• either provide for the appointment or election of employee representatives with whom the employer will inform and consult, or provide for the employer to give information directly to, and consult directly with, the workforce, or provide for both methods.
It is therefore up to the negotiators to decide the method, frequency, timing and subject-matter of the information and consultation process. (The BERR guidance on the Regulations and the EEF model agreement may be of assistance here.)
Standard fall-back provisions
If the company and the negotiating representatives are unable to reach agreement after six months of negotiation (or whatever further period the parties may agree), or if the employer fails to negotiate at all, then the Regulations set out standard information and consultation provisions that will automatically apply.
In summary, these are:
• The employer must arrange for the election of information and consultation representatives. The ballot must meet detailed requirements, the most important being that all employees must be entitled to vote, the employer must consult with employee representatives about the ballot arrangements and the ballot must be independently supervised. There must be one representative for each 50 employees, subject to a maximum of 25. (If fewer people than this stand as candidates for election, then those candidates become the representatives without the need for a ballot.)
• The employer must provide the representatives with information in these three areas:
1. The recent and probable development of the business’s activities and economic situation.
2 The situation, structure and probable development of employment within the business any measures planned, including in particular any threat to employment .
3. Decisions likely to lead to substantial changes in work organisation or in the employer’s contractual relations with its employees, including large-scale redundancies and changes connected with the transfer of the business or part of it.
• The employer must consult with the representatives on the second and third of these areas, unless it already has a duty to consult as a result of the specific legislation on large-scale redundancies, business transfers and pension changes ( warning and consultation) ( informing and consulting the workforce) (consultation on pension changes) and has notified the representatives in writing that it will be meeting its duties under those provisions instead.
• The employer must ensure that the timing, method and content of the consultation are such as to make the process meaningful. The consultation will be based on the information the company has supplied and the representatives’ own views. The consultation will need to be conducted by the level of management that is most relevant to the subject under discussion, and the company must provide the representatives with a reasoned response to their opinions. In relation to the third area listed above, consultation must be entered into with a view to reaching agreement on any decisions that fall within the employer’s powers.
Penalty for not complying
An employer who negotiates an agreement under this statutory procedure but then fails to observe it, or is covered by the fall-back procedure and fails to follow it, is liable to a penalty of up to £75,000, payable to the Government and imposed by the Employment Appeal Tribunal. The size of the penalty will depend on the gravity of the failure and the reason for it. No penalty will be imposed if the Tribunal is satisfied that the reason for the employer’s failure to inform and consult was beyond its control, or that it had some other reasonable excuse for its failure. The fact that a person by which the employer is directly or indirectly controlled (such as a parent company) has failed to provide it with the relevant information does not amount to a valid excuse.
Duty to co-operate
Whether they are negotiating or implementing a negotiated agreement or operating the fall-back provisions, employers and employees are under a duty to work in a spirit of co-operation and with due regard for their respective rights, obligations and interests.
Preserving confidentiality
The Regulations require employee representatives not to disclose any information or documents that the employer has given them on a confidential basis (unless the employee reasonably believes this would be a protected public interest disclosure – ( protection for 'whistleblowers'). An employer is not required to disclose any information or documents that, on an objective assessment, would prejudice the business or seriously harm its functioning.
Three-year moratorium
There is generally a moratorium on further employee requests for negotiation for three years after a negotiated agreement on an information and consultation procedure has been reached, or the fall-back provisions apply, or a ballot has failed to endorse fresh negotiations where a pre-existing arrangement exists. On the other hand, if there have been material changes in the business that mean that the negotiated agreement no longer covers all the employees, or pre-existing arrangements no longer cover all employees or are no longer approved by the employees, then another request for negotiations may be made.
Rights of employees
Employees who act as negotiating representatives or information and consultation representatives are entitled to a reasonable amount of paid time off during working hours in order to carry out their functions. Employees are also entitled to protection from dismissal, selection for redundancy or other detrimental treatment for exercising their functions as representatives or as candidates or voters in an election for representatives, or for asserting or exercising their rights under the Regulations. This protection applies to all employees, regardless of their age or length of service.