The Information and Consultation of Employees Regulations 2004 impose new duties on employers to ensure that employees are consulted about various business issues matters regarding the business they work in.
This article explains that duty and the law as well as when and what to consult about.
Does this apply to me?
The Regulations apply to public and private undertakings situated in Great Britain that carry out an economic activity whether or not operating for gain. This covers companies, partnerships, co-operatives, mutual, building societies, associations, trade unions, charities and individuals who are employers, if they carry out an economic activity. It may also include schools, colleges, universities, NHS trusts, and central and local Government bodies, again, if they carry out an economic activity.
The law used to only apply where there were more than 150 employees. In 2007, this number was reduced to 100 employees. From April 2008, the law has changed again. All employers who employee 50 or more employees now have a duty to consult those employees.
The regulations do not apply to businesses with less than 50 employees.
Important note: The requirement to inform and consult employees does not operate automatically. It is triggered either by a formal request from employees for an information and consultation agreement, or by employers choosing to start the process themselves.
How to inform and consult
Your business ideas are likely to be completely comprehensible to you. Perhaps as an employee, or a specialist in a certain field, they may be more difficult for an employee to grasp. It is essential that the employee(s) concerned understand properly what it is that they are being consulted about, to consider the matter and to express their views. Further, arrangements to inform and consult will be different for each employer. The duty requires an ongoing communication between you and the employee. Very simply, this involves any important developments that could affect the people who work for the organisation. “Inform” means you should tell employees what is planned. “Consult” means you should listen and take into account their views when deciding what to do.
There are a number of ways you can inform and consult. For example, information about the company's economic situation could be passed on in small group meetings with departmental managers, or a questionnaire could be sent to staff to find out what employees think about a suggested course of action.
Other ways to communicate include:
Intranet bulletins;
Email ;
Team briefings;
Monthly newsletters;
Video-conferencing.
In larger organisations, it may be helpful to set up a joint consultative committee (or staff council). This helps to build trust between the employer and staff representatives and regular meetings can help make suggestions more useful and relevant.
Because every organisation is different, the new duties allow for flexibility in the way employers do this. Unless the information is commercially sensitive or confidential, you should try to be open about how you do this. How you tell employees will of course depend on:
What you need to tell them;
The size and structure of the organisation;
Employee’s usual work practices.
Note: employees also have a right to request this information and it is automatically unfair dismissal for an employer to dismiss an employee for seeking to exercise rights to which he is entitled under the regulations (regulation 30).
What do I need to tell employees?
There are approximately seven sets of circumstances in which you have specific legal obligations to consult with employees and/or their representatives. They are:
In relation to (unfair) dismissal;
Redundancy;
Business transfers;
Occupational pension scheme arrangements;
Health and safety representatives;
Collective bargaining;
Any other matter that affects the employee’s employment.
General and unfair dismissal:
This is a general duty to consult any employee before dismissing him. Failure to do so will result in the dismissal being treated as unfair dismissal if the employee complains to an Employment Tribunal.
Redundancy
Employers must consult appropriate representatives of employees if 20 or more employees at one establishment are to be made redundant within a period of 90 days (TULRCA 1992, s.188 as amended). The penalty here is an order to pay each affected employee a protective award of up to 90 days' pay (with no maximum limit).
Business transfers
Generally, the TUPE regulations provide that the seller and the purchaser of any business or undertaking must consult appropriate representatives of employees who may be affected by any proposed sale or purchase of the employing business or undertaking. The penalty here is likely to be an award of "appropriate compensation" of up to 13 weeks' pay.
Pension schemes
This is a specific statutory duty to consult any relevant recognised trade union on specified matters concerning occupational pension schemes.
Health and safety
There is a specific statutory duty to consult safety representatives appointed by a recognised trade union on certain matters under the Health and Safety at Work Act (and its amendments). This duty has been around for some time, so should not be new to you. Additionally, if there are any employees who are not represented by safety representatives, employers are now obliged to consult those employees themselves "in good time on matters relating to health and safety and, in particular, with regard to" a list of five specified items (regulation 3 of the Health & Safety (Consultation with Employees) Regulations 1996).
Collective bargaining
The duty is to provide any relevant recognised trade union which is an independent trade union with information for the purposes of collective bargaining.
Translational EC company’s large companies with operations in more than one EU Member State are obliged to inform and consult employees in a variety of situations.
Penalties for non-compliance
The Employment Appeals Tribunal has power to impose a maximum penalty of £75,000 on employers who do not comply with the regulations. The CAC (or Central Arbitration Committee) has monitoring and enforcement powers.
An important note on pre-existing agreements
As a general rule, when a valid employee request is made, the employer will come under an obligation to negotiate an ‘Informing and consulting agreement’ (or I&C agreement) with representatives of the employees. Of course larger organisations may already have in place and I&C agreement because to them, this duty is not new.
If at least 10 per cent of your employees
Formally request an Information and Consultation (I&C) agreement you will need to begin negotiating one within three months. Negotiations can last up to six months and the agreement must:
Set out the circumstances in which you will inform and consult your employees;
Provide for consultation with either the employees directly or employee representatives;
Include all of your employees;
Be approved by your employees;
Be in writing, dated and signed by or on behalf of the employer.
If you do not reach an agreement Standard I&C rules will apply. This involves electing employee representatives, and informing and consulting employees about:
Your business' activities and economic situation;
The employment situation in your business;
Decisions likely to lead to changes in your business' organisation or contractual relationships.
Existing agreements that are working well can continue. Unless there is significant demand from your workforce you will not need to negotiate an I&C agreement if you already have a written agreement.
A pre-existing agreement may cover employees in more than one undertaking, in which case employers may hold a single ballot of the employees in all the undertakings covered by the agreement. Before holding a ballot to endorse an employee request, employers must inform the employees within one month of the request that they intend to do so. They must then wait 21 days before holding the ballot, in case employees wish to challenge the validity of the pre-existing agreement(s) at the Central Arbitration Committee.
To be valid, pre-existing agreements must:
Be in writing;
Cover all the employees in the undertaking (though there may be several agreements which between them cover all the employees, and agreements may cover employees in more than one undertaking);
Set out how the employer will inform and consult the employees or their representatives. The legislation does not impose any requirements or set any restrictions, on the method, frequency, timing or subject-matter of the information and consultation arrangements set up under pre-existing agreements; and
Be approved by the employees. This would include support indicated by a simple majority among those voting in a ballot of the workforce; a majority of the workforce expressing support through signatures; or the agreement of representatives of employees (including trade union and other appropriate representatives) who represent a majority of the workforce. Different agreements may cover different parts of an undertaking, such as different establishments (sites), business units or sections of the workforce. They may establish different consultation arrangements in these different parts of the undertaking, and may be approved by employees separately, in different ways and at different times.
If by chance you find some error of law or fact in any Net Lawman information page, do please tell us. We should also welcome your suggestions for new subjects for information pages. These notes:
Do not provide a complete or authoritative statement of the law;
Do not constitute legal advice by Net Lawman;
Do not create a contractual relationship;
Do not form part of any other advice, whether paid or free.
