Information and consultation: frequently asked questions

For the purposes of the Information and Consultation of Employees Regulations 2004 what is consultation?

The Regulations define consultation as 'the exchange of views and establishment of a dialogue' between the employer and employees' elected representatives.

The information that representatives must be given and the matters on which they must be consulted are controlled by the Regulations only if the employer refuses, or is unable, to reach agreement with its employees about how information and consultation should happen in the workplace. In this situation, the 'standard provisions' apply.

Under the standard provisions, according to the DTI guidance, consultation is more than simply providing information. Representatives should be given 'a fair and proper opportunity to understand fully the matters about which they are being consulted, and to express their views on those subjects - that is, they must be given adequate information and time…to consider the matter, form a view on it and express that view'. The employer should in turn give the representatives' views 'genuine and conscientious consideration'.

However, there is no obligation, even under the standard provisions, to follow the opinion of the representatives and they are not being given the right to direct company policy.

What is an undertaking for the purposes of the Regulations?

The Regulations will apply to 'undertakings' with: at least 150 employees from 6 April 2005; at least 100 employees from 6 April 2007; and at least 50 employees from 6 April 2008. Undertakings with fewer than 50 employees will not be affected.

An undertaking is defined as 'a public or private undertaking carrying out an economic activity, whether or not operating for gain'. It may be a single company, or a smaller entity within a larger organisation so long as it is 'carrying out an economic activity'. According to the DTI guidance, this must be a separate legal entity rather than just a workplace, a branch or a business unit.

How is the number of employees employed in the undertaking calculated?

The number of employees employed in the undertaking is calculated as an average over the period of 12 months before the request was made (or less if the undertaking has been in business for less than 12 months).

Taking it month by month, employers should calculate the number of employees employed during the month, whether they were employed throughout the whole month or not. These figures should be added up and divided by 12 (or the number of months in the reference period if less).

It should be remembered that only true employees count and that certain categories of workers should not be included. The DTI's guidance gives the example of temporary agency workers and sub-contractors as workers who should not be included. The genuinely self-employed are also excluded and the guidance lists three issues to consider when trying to identify self-employment:

  • Does the person have to undertake the work personally? (If so, this suggests that he or she is employed.)

    • What level of control does the employer have over the person? (The more control, the more likely he or she is to be an employee.)

  • Are there any other factors in the relationship that would be incompatible with the contract being one of employment?

    There are special rules for part-time employees, that is employees who are not required to work more than 75 hours in a month. The employer can choose to, although is not obliged to, treat them as half an employee for any month during the whole of which they worked part time.

    Can you give an example of such a calculation?

    Where a hotel has 130 full-time employees, ie employees working more than 75 hours a month, eight employees working 75 hours or fewer a month and 50 casual employees who are not supplied through a third-party agency working for three months, the calculation is as follows:

  • 8 part-timers divided by 2 = 4 employees;

  • (4 + 130 + 50 employees) x 3 months = 552 employees;

  • 134 employees x 9 months = 1,206 employees;

  • 552 + 1,206 = a total of 1,758 employees.

    The number of employees is divided by 12, which results in 146.5 employees. Since there are fewer than 150 employees in this example, the Information and Consultation of Employees Regulations 2004 will not apply until 6 April 2007.

    Is confidential and sensitive information protected?

    The Regulations oblige any employee who receives confidential information not to disclose it except within the terms under which he or she received it. If an employee does so, he or she will be in breach of the Regulations and can be sued for damages. The employee may, however, escape this penalty if the disclosure is protected under the public interest disclosure legislation.

    Wrongful disclosure of confidential information can be included as a disciplinary offence in a pre-existing or negotiated agreement. However, if the standard provisions apply, the employer's only remedy will be to sue for damages.

    When can the employer withhold information?

    An employer is entitled to withhold information where disclosure would seriously harm the functioning of, or be prejudicial to, the business. If the representatives dispute whether the information in question falls within this description, they can make an application to the Central Arbitration Committee (CAC). If the CAC believes that disclosure will not cause serious harm, it will make a declaration requiring the employer to disclose the information. Moreover, if the employer's breach is serious a fine up to £75,000 can be imposed.

    The Government's guidance reminds employers that restricting information that is not genuinely confidential could hinder representatives in carrying out their role.

    What is a valid request?

    In general, a valid request must be supported by 10% of the employees in the undertaking. However, if fewer than 15 people are in support of the request then it is of no effect even if they constitute 10% of the workforce. Conversely, if 2,500 or more people make a request, that will be valid even if they constitute less than 10% of the workforce. Employees can make their request by approaching the employer directly. Alternatively, they can make an anonymous request through the Central Arbitration Committee.

    It is also possible for employers to trigger a request. They are most likely to do this if they are not happy with the arrangements currently in place or with the people currently performing the role of employee negotiators.

    What happens if no valid request is made by employees?

    There is no absolute requirement on an employer to put provisions in place for informing and consulting with its employees. If an employer considers that not having an information and consultation agreement will not present a problem in the future then, in the absence of an employee request, it is under no obligation whatsoever to put any provisions in place.

    It may, however, be advantageous to the employer to negotiate a pre-existing information and consultation agreement. Where such an agreement is in place this will increase the number of employees required to make a valid request for an alternative agreement from 10% to 40%.

    What happens if an employer cannot reach an information and consultation agreement with negotiating representatives following a valid employee request?

    The employer has six months to negotiate the terms of an agreement with the negotiating representatives. If the parties cannot agree terms, the DTI guidance recommends that ACAS's help is requested. If it is not possible for them to reach agreement or agree an extended deadline, the standard provisions will apply.

    Once the default provisions apply, the employer is under a duty to organise a ballot to elect information and consultation representatives. The number of representatives must be proportional to the number of employees in the undertaking: one per 50 employees (or part thereof), subject to a minimum of two representatives and a maximum of 25. Representatives must be elected by ballot.

    What are the standard information and consultation provisions?

    Under the standard provisions once information and consultation representatives have been elected, the employer is under a duty to provide information to them in a time and fashion so as to allow them to conduct an adequate study of it and prepare for consultation. Information must be given on the recent and probable future development of the undertaking's activities and economic situation. The Government guidance states that the purpose of this information should be to help the representatives understand the context in which decisions affecting employment, work organisation and employees' contractual relations are made.

    Information must be given and consultation occur on the situation, structure and probable development of employment within the undertaking and, in particular, on any measures envisaged where there is a threat to employment within the undertaking.

    Information must be given and consultation occur 'with a view to reaching agreement' on decisions likely to lead to substantial changes in work organisation or in contractual relations. This can include collective redundancies and the transfer of undertakings.

    What affects 'work organisation' or employees' 'contractual relations' will vary from one organisation to another. It would be wise for employers to seek the views of their information and consultation representatives on the sort of information that they would seek to be provided - although this is not a legal requirement.

    Must information and consultation representatives be given paid time off work?

    All employee representatives, whether they are negotiating representatives or information and consultation representatives, are entitled to 'reasonable' time off with pay during working hours to perform their functions. In the event of a dispute this is likely to be decided on a case-by-case basis and is likely to depend on the consultation being undertaken. A representative is entitled to bring a claim in an employment tribunal where his or her employer either unreasonably refuses time off or fails to pay for it.

    Is a collective agreement with a trade union sufficient to amount to a pre-existing agreement?

    A collective agreement with a trade union can be a valid pre-existing agreement if it is in writing, sets out how the employer will inform and consult union representatives and covers all the employees in the undertaking. If the agreement does not cover all the employees in the undertaking, then it can still be a valid pre-existing agreement, but in that case there must be one or more other agreements, whether with another union or otherwise, that, taken together, cover consultation arrangements for the remaining employees and have been approved by the them.

    Where an employer recognises a trade union for collective bargaining purposes, it is under a duty to consult with that union on transfer of undertakings and/or collective redundancy issues. The employer may elect to consult with both the trade union and any information and consultation representatives but it cannot exclude the trade union from these consultations.

    Next week's article will be a case study on the Information and Consultation of Employees Regulations 2004.

    Vince Toman is part of the employment team at Lewis Silkin (Vince.Toman@lewissilkin.com)

    Further information on Lewis Silkin can be accessed at www.lewissilkin.com