Information and Consultation of Employees Regulations 2004: legal overview
Vince Toman and Lucy Carter of Lewis Silkin provide an overview of the Information and Consultation of Employees Regulations 2004.
Introduction
The aim of the Information and Consultation of Employees Regulations 2004 is to give employees of larger organisations the right to demand that they are regularly informed and consulted about various matters affecting the business such as changes in structure, mergers and plans for redundancies.
Initially, the Regulations will apply only to businesses with 150 or more employees, but will be extended to cover those with 100 or more employees in April 2007 and 50 or more in April 2008. Once they are fully in force, the Regulations will apply to 75% of UK workers.
The idea behind the Regulations is that if enough employees in an organisation want to have a consultative body put in place their employer will be required to set one up. This can happen in one of two ways. Either the employer can negotiate with the workforce as to how staff representatives will be elected and the issues that will be discussed with them, or, if there is no agreement, a consultative body will still have to be set up, but this will be governed by the fallback or standard provisions set out in the Regulations, which are explained below.
Many employers already have staff consultative bodies in place and, unless at least 40% of the workforce requests a negotiated information and consultation agreement, these will not be affected by the Regulations so long as they comply with the pre-existing agreement criteria and any employee request for a new agreement is not endorsed by a workforce ballot. See below for further information.
How the process works
The process is triggered if 10% of the workforce (subject to a minimum of 15 and a maximum of 2,500 people) makes a formal request for a negotiated information and consultation agreement.
Once a valid request is made, the employer has three months to ensure that representatives are elected or appointed to negotiate the information and consultation agreement. These are not the representatives who will actually serve on the body once it is set up, but simply those who will be involved in trying to reach agreement with the employer as to how the body will be set up and run.
The employer and the negotiating representatives then have six months to try to agree how an information and consultation agreement will operate in their workplace, although they can agree an extension to this period.
How an agreement is negotiated
An information and consultation agreement must be dated and in writing. It must cover all the employees in the undertaking and must:
provide for the appointment or election of information and consultation representatives, or the provision of information to and consultation directly with employees; and
set out the circumstances in which the employer must inform and consult.
Although there is freedom to agree what information is covered by the information and consultation agreement and what is not, in practical terms it is likely to be negotiated with the standard provisions in mind (see below).
Once an agreement has been reached it must be signed by the employer and approved by the workforce. It will be treated as approved only if:
all the negotiating representatives sign it;
a majority of negotiating representatives sign it and at least 50% of the workforce approves the agreement in writing; or
a majority of negotiating representatives sign it and it is approved in a ballot by at least 50% of those employees who vote.
If no agreement is reached the standard or fallback provisions will apply.
The standard provisions
The standard or fallback provisions require an employer to provide information and consultation representatives with information on:
the recent and probable development of the business's activities and economic situation;
the situation, structure and probable development of employment within the business;
any measures envisaged to reduce or deal with threats to employment, such as possible redundancies (this applies even when the number of redundancies envisaged is below the threshold of 20 used for collective redundancy consultation purposes); and
any decision likely to lead to substantial changes in work organisation or contracts of employment, including collective redundancies, business transfers and outsourcing (this will also include plans for changes to terms and conditions).
The information must be given in enough time to enable the information and consultation representatives to consider it and properly prepare for consultation.
The employer must then consult on all of the above except for the first point, on which there is only a duty to provide information.
Where there is an overlap with the duty to consult collectively on redundancies or business transfers, the employer can choose whether to consult with the information and consultation representatives for these purposes. If the employer opts not to consult with the information and consultation representatives, it must give them notice that it will be consulting instead with the representatives under the transfer of undertakings or collective redundancy legislation.
Pre-existing arrangements
Some employers have existing arrangements for informing and consulting with their employees and in certain circumstances these arrangements may constitute a pre-existing agreement.
A pre-existing agreement will exist if it:
is set out in writing;
covers all the employees in the undertaking;
governs how the employer gives information and seeks views on that information from the whole workforce; and
has been 'approved' by the majority of the employees.
It is possible for a pre-existing agreement to be made up of more than one agreement provided that together the agreements cover all the employees.
The Government's guidance suggests that an employer could demonstrate that a pre-existing agreement is approved through:
a majority of employees voting in a ballot;
a majority of employees signing to indicate their approval; or
the agreement of employee representatives who represent a majority of the workforce.
In the case of a pre-existing agreement there is no requirement for any particular type of information to be given or for a particular type of consultation forum.
The process where a pre-existing agreement is in place
Where there is a pre-existing agreement in place, if a request for a negotiated information and consultation agreement is made by at least 40% of the workforce, the employer must arrange for the election of negotiating representatives and start negotiating a new information and consultation agreement.
Where the request is made by less than 40% of the workforce, the employer can either accept the request and enter into negotiations, or force a ballot of the entire workforce to see whether 40% of the workforce and a majority of those voting support the request.
If the 40% threshold in this ballot is not reached the pre-existing agreement will remain in place and the employees will be prevented from making a further request within a three-year period.
Penalties
If an employer refuses to cooperate with the process of information and consultation or fails to comply with its obligations, the representatives (or employees, if representatives have not been appointed) can apply to the Central Arbitration Committee (CAC). The CAC has wide-ranging powers that require employers to comply with their duties and enable information and consultation to take place.
Once a negotiated agreement is in place or the standard provisions apply, employers and representatives can apply to the CAC if the agreement or provisions are not complied with. Although the CAC can order compliance, it cannot suspend or set aside acts of the employer.
If an order is made against an employer, the representatives may then seek a further order that the employer pay a penalty of up to £75,000. This penalty is payable to the Secretary of State.
An order of the CAC is treated as a High Court order and an employer may be liable for contempt of court if it does not comply.
Confidentiality
Employers will be expected to give representatives confidential information (unless doing so would cause serious harm to the business) but can tell representatives that the information that they are being given is confidential and cannot be disclosed.
If a recipient then discloses the confidential information he or she will be in breach of a statutory duty and could be sued for damages. However, the consultation representative will be protected if he or she reasonably believed that the disclosure was protected under the public interest disclosure legislation.
If representatives do not believe that the information is truly confidential they can apply to the CAC for a ruling. It is possible for an employer to make the disclosure of confidential information a disciplinary offence in either a pre-existing or a negotiated agreement. There is no provision for this in the standard provisions.
Protection for information and consultation representatives
There are a number of rights to protect information and consultation representatives.These include the right to paid time off to perform their functions as such, the right not to be unfairly dismissed and the right not to suffer a detriment for performing their functions as a representative or exercising their right to paid time off work to perform these functions.
Next week's article will provide the answers to frequently asked questions on the Information and Consultation of Employees Regulations 2004.
Vince Toman and Lucy Carter are part of the employment team at Lewis Silkin (Vince.Toman@lewissilkin.com and Lucy.Carter@lewissilkin.com)
Further information on Lewis Silkin can be accessed at www.lewissilkin.com
