Information and consultation: case studies

Introduction

When assessing the impact of the Information and Consultation of Employees Regulations 2004 on employers, the most important point to note is that no two cases are ever likely to be the same! However, in the course of giving advice to clients in this area, our experience has shown that there are broadly three categories into which organisations fall:

a. Employers whose existing arrangements can be categorised as complying, or nearly complying, with the rules relating to pre-existing agreements under the Regulations.

b. Employers that have existing (often ad hoc or piecemeal) arrangements in place, but where these fall some way short of the requirements for pre-existing agreements under the Regulations.

c. Employers that currently have little or nothing in the way of information and consultation arrangements. If such an employer is to be proactive, this will necessitate the creation of an information and consultation process - ideally fitting within the Regulations' requirements for a pre-existing agreement.

This article looks at practical situations in two of the above categories - categories 'a' and 'c'.

Category 'a' scenario

One substantial listed company has long had what it calls its National Forum, far-sightedly comprised of elected representatives from the whole of its workforce. The National Forum has its own written constitution, which covers its purpose, the scope of the issues it will deal with and its composition. It also deals with a whole host of other issues, such as how elections are carried out, the duration of time in office for representatives and their roles and responsibilities, and how meetings are conducted. Each of the representatives is asked to sign the constitution on election and, so far, has done so.

As such, the National Forum looks at first sight as if it either complies, or is close to compliance, with the requirements for a pre-existing agreement set out in the Information and Consultation of Employee Regulations 2004, regulation 8. These are that the agreement must:

The main advantage of having a pre-existing agreement is that the employer is likely to be able to continue with this arrangement for the foreseeable future, provided that it has the general support of employees. An employer that has no information and consultation arrangements amounting to a pre-existing agreement can be triggered into the statutory negotiation process by only 10% of its workforce. In contrast, where a pre-existing agreement is in place, the employer can resist such a trigger if it wishes, and insist on a ballot being held. Only if 40% or more of the workforce vote against the pre-existing agreement can it be overturned and the negotiating process forced upon the employer.

In other words, employers can create and entrench significant flexibility for themselves by having a pre-existing arrangement. Where an employer has arrangements that come close to complying with the statutory requirements for a pre-existing agreement - or arguably already comply - it makes commercial sense for it to try to 'tweak' the arrangements to ensure that they comply with the criteria.

In giving practical advice to the client in this case, the main task was to ensure that it was in a position to say with credibility that its National Forum met all the preconditions for a pre-existing agreement. The fact that the Forum's constitution was in writing and available via intranet to nearly the whole workforce meant that there was a strong defence to the first requirement. Some work was, however, necessary to make the constitution fully available to those employees who, on account of remote working, might not have as full access to the intranet as other employees.

The question of whether or not the National Forum covered all the employees in the undertaking was one that took some research and checking. We dealt with this by looking at the history of the elections over recent years and making sure that the constituencies for those elections covered the entire workforce, including management. (Many existing information and consultation mechanisms routinely miss out senior management levels and so cannot be said to cover all the employees in the undertaking.)

The third requirement - approval by employees - is likely to be one of the most tricky areas should a pre-existing agreement ever be challenged. There is no specific definition of what constitutes 'approval' for the purposes of the Information and Consultation of Employees Regulations 2004 so this matter is not entirely clear. The Government guidance suggests that approval could be obtained through:

In this particular case, the fact that, on election, representatives were asked to and did sign the constitution provided cogent evidence that the National Forum was 'approved' within the meaning of the Regulations. The Government guidance makes clear that some form of overt approval is required, so employers should not risk arguing, for example, that approval of an existing information and consultation mechanism can be shown simply by custom and practice or by the fact that it has been in use for a long period of time.

The guidance goes on to state that where employers are minded to argue that they have a pre-existing agreement, they are advised to review the situation in consultation with their employees or with the representatives on the existing employee consultation forum. This is not strictly speaking necessary in law, but it is certainly advisable for an employer at least to consider raising the issue with the current representatives and confirming that it will contend that the current arrangements amount to a pre-existing agreement if challenged.

The potential downside of this approach is that it flags up the issue and might encourage any mavericks on the existing forum to start an employee debate as to whether or not to challenge the arrangements as in fact constituting a pre-existing agreement, as well as whether or not to use the process under the Information and Consultation of Employees Regulations 2004 to seek to get a more employee-friendly mechanism in place. The issue of whether or not to be upfront therefore remains a judgment call for the employer. In this case, it was decided to raise the issue neutrally at a scheduled meeting of the National Forum and deal with in a low-key manner. This appears to have been successful.

Finally, on the question of the content of the agreement, the National Forum's constitution in this case did fully cover the arrangements for informing and consulting representatives. This was despite the fact that it arguably fell well short of the detail and scope of the 'default' provisions under the Information and Consultation of Employees Regulations 2004, which set out a very specific and potentially onerous agenda to include all major changes to contracts and work organisation. The National Forum's constitution in this case more than adequately fulfilled the much less demanding requirement for a pre-existing agreement under regulation 8, which is simply to set out how information is to be given and how views are to be sought.

Accordingly, with a small amount of research and rejigging, it was possible to give this employer strong advice that its National Forum arrangements should be strongly defensible as a pre-existing agreement under the Regulations.

Category 'c' scenario

The category 'c' situation is the most challenging for employers, not to mention their legal advisers! Where an employer has little or nothing in terms of current information and consultation mechanisms, it needs to gauge what it may gain, and what it may risk, from approaching the issue in a proactive way.

A well-known business organisation, separated into several different divisions, faced this issue. It had a history of only sporadic information exercises, and very little in the way of specific consultation initiatives. Furthermore, one of its divisions recognised a trade union that was not recognised elsewhere within the business. Purely ad hoc arrangements had been put together to deal with information and consultation on transfers of undertakings and collective redundancies in the past. These had happened only very rarely.

For this employer, the question was whether or not to be proactive in this area. There were a number of pros and cons for it to consider in this analysis.

The advantages of being proactive

There were, of course, some specific legal reasons for being proactive. Having a pre-existing agreement would protect the employer from being forced into a negotiation with employees against the backdrop of the rather onerous default provisions within the Information and Consultation of Employees Regulations 2004. However, the organisation also had more positive reasons for being proactive. Over recent years, the issue of information and consultation had become one that the HR team had begun to highlight and encourage managers to tackle, as employee attitude surveys were pointing to a general desire for better communication and consultation about issues within the business. This led the HR team seriously to consider an over-arching and effective system for informing and consulting employees about major business issues, as a way of enhancing the already good morale and involving staff more in the business.

The disadvantages of being proactive

Clearly, implementing an information and consultation mechanism would add significantly to administration costs and time, and would require significant input and support from senior management. The business benefits of investing in this way needed to be fully spelt out in a convincing manner to senior management.

On a purely legal note, one argument for not being proactive was that the workforce, in general, was relatively happy with the current state of affairs. Employees were therefore judged to be unlikely to trigger negotiations under the Information and Consultation of Employees Regulations 2004 if nothing was done. On that basis, it was arguable that a proactive policy was unnecessary, since it was unlikely to be resolving an issue that would become a problem in the future.

The decision

The internal debate within the organisation took several months, but in the end the desire to enhance the staff's involvement in and knowledge of the business was the key consideration that struck a chord with senior management. Accordingly, the decision to go ahead and introduce an information and consultation mechanism appropriate to the business, by way of an Employee Forum, was taken.

On account of the assessment that the workforce was unlikely to trigger negotiations under the Regulations at an early stage, or indeed at all, the business took the view that there was no pressing deadline for introducing the information and consultation procedure. It therefore had time to design a process to fit in with the way that the business was run and its own cultural style of communicating. Accordingly, without being rushed, the organisation's management has looked at all the elements of how it proposes to inform and consult and come up with a bespoke solution for the business.

One of the main problems in drawing up the solution was the existence of trade union recognition in one division of the business. This trade union recognition was in respect of employees and freelancers and covered the issues of pay, hours and holiday entitlement.

The employer felt that there were arguments both for and against including the trade union representatives within its proposed Employee Forum for that area of the business. The main advantage was that the representatives would be well informed and would know the area of the business in question well. The disadvantage was that the union was not well supported and had made minimal efforts to involve itself with the staff. Consequently, the union was not perceived by the majority of the members of staff in that part of the business as really speaking for them. It was also felt that there might be resentment if other parts of the business were able to elect their own preferred representatives while this section was effectively represented purely by a minority-supported trade union.

More technically, the terms of the trade union recognition, which included freelance staff, would go beyond the remit for the Employee Forum, which was simply to inform and consult employees.

The preferred solution was to treat this division of the business in exactly the same way as all other divisions. Accordingly, the trade union representatives were invited to stand (as was their right) in the elections for the division. The eventual representatives would then be in a position properly to represent the whole division and could not be attacked as being unrepresentative.

Other complex practical issues

Since this employer was starting at a very basic level, a number of important issues needed to be resolved. For example, how many representatives would be on the Employee Forum? How were those representatives going to be elected? What would the constituencies for those representatives be? How were the elections going to be run? How would meetings of the Forum be organised? What would the standing agenda of the Forum be? How could representatives call for or request ad hoc meetings between standard meetings?

Three of the most significant issues were the agenda, confidentiality and the definition of consultation.

The agenda: The employer took the view that the Employee Forum had to operate within its own culture and language. It therefore shied away from having a set formula for agenda items, and eschewed rigid distinctions between 'information only' and 'information and consultation' issues. The agenda setter was formally the Forum Coordinator, an HR appointee, with representatives having the ability to request agenda items on issues they thought were sufficiently important to form part of the meeting. A dispute mechanism was devised for dealing with any major disagreements about the agenda, but it is thought that this will be used only in extremely rare cases where matters cannot be resolved informally.

Confidentiality: On the issue of confidential information, a more user-friendly formula was adopted than that used in the Information and Consultation of Employees Regulations 2004, under which it is legitimate to withhold information where 'according to objective criteria, the disclosure of that information would seriously harm the functioning of, or be prejudicial to, the functioning of the business'. Instead, a much more practical definition was adopted identifying the principal types of protected information.

The definition of consultation: In line with the employer's objectives, the main aim of the Employee Forum was to increase information and dialogue within the organisation concerning business information. It was, however, important to the management that it would not be put in any situation where it would be obliged either to negotiate with employee representatives or to agree to any of the representations made, if it genuinely felt that this was not in the interests of the business. Considerable attention was therefore given to defining the employer's obligations concerning the nature of the dialogue to be undertaken with the representatives. It was possible to achieve this in a low key and amicable manner and so far it has led to no difficulties.

Next week's article will provide practical points on the Information and Consultation of Employees Regulations 2004.

Russell Brimelow is a partner in the employment and incentives team at Lewis Silkin (Russell.Brimelow@lewissilkin.com)

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