Information and consultation of Employee Regulations 2004

As promised in last month’s Newsletter, the Information and Consultation of Employees Regulations 2004 (the ‘Regulations’) comes into force (for those employers with 150 or more employees) on 6 April 2005. The Regulations will apply to undertakings with 100 or more employees from 6 April 2007 and to undertakings with 50 or more employees from 6 April 2008.

The Regulations provide for pre-existing agreements and negotiated agreements. There are also standard provisions which will apply in default.

It is intended that employee relations will be improved where there is appropriate information given to employees (or their representatives) and consultation taking place on issues affecting the business and employment.

Scope

The Regulations apply to undertakings employing the requisite number of employees in the UK which have their registered office, or principal place of business in Great Britain.

The term “undertaking” means a public or private undertaking carrying out an economic activity, whether or not operating for gain. Therefore, the Regulations will apply to companies, partnerships, sole traders/proprietors, trade unions, charities and also educational establishments, government bodies and NHS Trusts provided they carry out an economic activity.

Negotiated Agreements

Employee Requests

An I&C Agreement must be negotiated provided that at least 10% of the employees in the undertaking make the request. Alternatively, if a number of separate requests over a period of 6 months add up to 10% of the workforce, an agreement must be negotiated. The number of employees who can make a request is subject to a minimum of 15 and a maximum of 2,500.

The request(s) must be in writing, state the name of the employees making the request and sent to the registered office, head office or principal place of business of the employer. The request(s) should also be dated.

Negotiating Representatives

Following a valid employee request negotiating representatives must be elected/appointed within 3 months. All employees are entitled to stand and vote. There is no maximum number of representatives.

Once the negotiating representatives have been elected or appointed, they will negotiate with the employer the terms of the I&C Agreement. The agreement must be entered into within 6 months, unless an extension of time is agreed between the parties.

Negotiated Agreements

A negotiated agreement must cover all employees of the undertaking and may consist either of a single agreement or of separate parts covering different sections of the workforce. Each agreement must be in writing and:

• set out the circumstances in which the employer must inform and consult the employees to which it relates;
• be dated;
• be approved by the employees
• be signed by or on behalf of the employer; and
• provide for the appointment or election of information and consultation representatives, or provide that the   employer must give information directly to the employees to which it relates and consult those employees directly.

It is for the parties to decide the methods for informing and consulting, the subject matter and the timing as to when information will be provided and consultation take place.

Further, employers may take the initiate and commence negotiations without an employee request.

Pre-existing Agreements

Where an employer has a pre-existing agreement in place in respect of information and consultation and an employee request is made, the employer can choose to ballot the workforce as to whether they endorse the request. If the request is not endorsed, the employer will not have to negotiate a new agreement.

In order to be a valid pre-existing agreement under the Regulations, the agreement must:

• be in writing
• cover all employees in the undertaking (from the most junior to senior management)
• set out how the employer will provide information and seek the employees’ views
• have been approved by the employees

If the undertaking has more than one pre-existing agreement, provided the above conditions are met and all the employees are covered by the agreements when considered together, the requirements will be met.

Again, there are no requirements as to subject matter and the timing of information.

Where there is a pre-existing agreement and a ballot is held to see whether the employees endorse a request for a negotiated I&C Agreement, a request will be endorsed if at least 40% of the employees in the undertaking and the majority of the employees who vote, vote in favour of the request.

Standard Provisions

Application

The standard provisions will apply where the employer either fails to initiate negotiations following a request or where no agreement is reached between the parties within the requisite time limit. In the case of the former, the standard provisions will apply after 6 months after the request. In respect of the latter, they will start to apply six months after the expiry of the time limit for negotiating an agreement. During this time information and consultation representatives must be elected. The Regulations specify there should be one representative per fifty employees with a minimum of 2 and a maximum of 25.

Information

The employer must provide the following information:

(a) the recent and probable development of the undertaking's activities and economic situation (such as takeovers, new products, increase in sales);

(b) the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged, in particular, where there is a threat to employment within the undertaking (such as redundancies, recruitment, reduced hours); and

(c) decisions likely to lead to substantial changes in work organisation or in contractual relations (such as substantial changes in terms and conditions and changes to procedures).

The employer is required to consult with representatives on paragraphs (b) and (c) above.

The Regulations also make provision for dealing with confidential information. In certain circumstances the information given can be restricted to defined individuals or withheld altogether if its disclosure would be prejudicial to the undertaking.

Enforcement

Complaints can be made to the Central Arbitration Committee where an employer fails to comply with its obligations under the Regulations. The CAC can order the employer to take such steps as are necessary to rectify the failure but cannot suspend any act done or prevent or delay any act (such as making redundancies).

Where a complaint is upheld by the CAC and an application made to the Employment Appeal Tribunal, the EAT can impose penalties of up to £75,000 (payable to the Secretary of State) on the employer where it has failed to inform and consult in accordance with a negotiated agreement or the standard provisions. An employer will only have limited defences.

Employment Issues

Negotiating representatives and I&C representatives are entitled to paid time off to perform their duties under the Regulations.

Further, if an employee is dismissed by reason of being a representative, performing their duties or standing for election, the dismissal will be unfair. The employee will not need a qualifying period of service in order to claim. There are also provisions protecting an employee from suffering a detriment by reason of his or her activities under the Regulations.

Tribunal Awards

By way of reminder, the increase in tribunal awards take effect from 1 February 2005 in respect of dismissals after this date.

The limit on a (gross) week’s pay (used to calculate statutory redundancy pay and basic awards in unfair dismissal cases) rises from £270 to £280 and the maximum compensatory award from £55,000 to £56,800.

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