Date 6 March 2008
The Information and Consultation of Employees Regulations provide minimum rights for employees to be informed and consulted by their employers in respect of a range of work-related issues. The Regulations presently apply to businesses with 100 or more employees, although on 6 April 2008 this will be extended to businesses with 50 or more employees. As many employers will be caught by this extension, we have set out below answers to some commonly-asked questions on the implications.
Is there anything that we actively have to do to comply with the Regulations?
No. An employer only has to set up and information and consultation framework where 10% of the employees requests that it does so, subject to a minimum of 15 and a maximum of 2,500 employees making such a request. For example, if a company has 50 employees, 15 of those employees must submit a request for it to be valid; and where a company has 100,000 employees, only 2,500 of them need to make such a request. As an alternative, an employer could start the negotiations themselves.
How is the number of employees calculated?
The above figure is calculated with reference to the number employed in an undertaking. The number of employees employed in the whole of any group of companies is irrelevant for these purposes, although it is possible for an organisation to agree information and consultation arrangements to apply to a group rather than a single undertaking. The number of employees will be the average number employed over a 12-month period. Only employees are counted, which would exclude temporary workers and self-employed contractors.
If our employees make a valid request, what do we need to do?
The employer must make arrangements for the appointment of negotiating representatives within three months of receiving a request to negotiate an information and consultation (“I&C”) agreement. Negotiations will typically take up to six months to complete. The agreement reached must:
- set out the circumstances in which the employer will inform and consult with its employees;
- allow freedom to agree on the subject matter, method, frequency and timing of information and consultation;
- provide for the appointment or election of employee representatives, or for direct consultation between the employer and its employees;
- cover all of the employees;
- be approved by the employees (which can be by way of a simple majority); and be in writing, dated and signed by or on behalf of the employer.
With whom should we negotiate?
There is no requirement as to whom the negotiations should be with. The employer has to ensure that all employees can take part in the process for appointing or electing representatives, and that all employees are represented during the following negotiations.
Do we have to enter into a new agreement if we have a pre-existing agreement in place?
Employers may already comply with their obligations under the Regulations if they have an existing agreement that:
- is in writing;
- covers all of its employees; and
- sets out information as to how employees should be informed and consulted
If a valid agreement is already in place and a request is received to renegotiate, the employer will have to choose to either renegotiate or put the continuance of the existing agreement to an employee ballot. If over 40% of the employees request that the existing agreement be renegotiated, the employer is obliged to renegotiate as requested.
If the employees approve the pre-existing I&C agreement, the employer will gain the benefit of a three-year moratorium preventing any further requests to negotiate the agreement within that timescale.
What if we can’t reach agreement with our employees?
If six months have lapsed since the original request from the employees was received without reaching agreement, the standard statutory procedures will apply. Briefly, these are as follows:
1. The employer must provide information to elected representatives (being one representative for every 50 employees up to a maximum of 25 representatives) on:
(a) The recent and probable development of the business’ activities and economic situation;
(b) The situation, structure and development of employment within the business and on any anticipated measures, including any threats to employment; and
(c) Decisions likely to lead to any substantial changes in work organisation or working conditions.
2. The information must be given in an appropriate way to enable the representatives to conduct adequate study and (if necessary) prepare for consultation.
3. Employers must consult representatives on points (b) and (c) above:
(a) In a way to ensure that its timing, method and content are appropriate taking into account any opinions expressed by the representatives;
(b) In a way to allow representatives to meet the appropriate level of the employer’s management and to obtain a reasoned response to any opinions given; and
(c) Where substantial changes are proposed, with a view to reaching agreement on these decisions.
What type of things should we consult with the employees about?
If an agreement is reached without the default statutory provisions applying, information and consultation is only appropriate in situations as per the agreement with between the employer and its employees. If the statutory provisions apply, there are three categories of information which should be provided, the latter two of which should also be the subject of consultation:
- Information on the recent and probable development of the business’ activities and economic situation;
- Information on the situation, structure and development of employment within the business and on any anticipated measures, including any threats to employment; and
- Information on decisions likely to lead to any substantial changes in work organisation or working conditions.
Do we have to disclose confidential information?
An employer may place a representative under a duty of confidentiality when disclosing confidential information. The Regulations state that a representative who discloses such information will be in breach of the Regulations and potentially subject to disciplinary proceedings. A representative is entitled to challenge an employer’s duty of confidentiality before the Central Arbitration Committee, who will then determine whether the disclosure of the information is likely to damage the employer’s business interests. In exceptional circumstances it is possible for an employer to refuse to provide information provided that the employer can demonstrate that disclosure would seriously harm or be prejudicial to the functioning of the business.
What if we refuse to comply?
The Central Arbitration Committee has the power to order an employer to comply with the Regulations, although doesn’t have the power to suspend or alter the effect of any I&C agreement. Where a complaint is upheld against the employer, an application is possible to the Employer Appeal Tribunal which has the power to impose a penalty on the employer of up to £75,000 payable to the Secretary of State.
Summary
Provided that fewer than the requisite number of employees ask to negotiate an I&C agreement, there is no immediate need for employers to take action under the Regulations. However, it might well be only a matter of time before employees make a valid request, with any subsequent agreement likely to significantly increase the obligations on employers to consult with employees on strategic decisions affecting the business at an earlier point in time. Employers will need to ensure compliance with the Regulations, failing which a penalty for non-compliance could ultimately be imposed of up to £75,000.
If you require any further information or assistance with any of the issues featured in this article, please contact Chris Cook on 01727 798017 or at chris.cook@salaw.com.
© SA LAW 2008
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual cases.