The Information and Consultation of Employees Regulations 2004 imposes a duty on larger employers to ensure that employees are consulted about various issues relating to the business they work in.
Consulting within this context means informing employees about business decisions (voluntarily or after an employee has made a request) and allowing staff to contribute ideas or concerns.
The regulations apply to public and private organisations in Great Britain that employ more than 50 people and that carry out an economic activity, whether or not operating for gain.
Types of organisation might include: companies, partnerships, co-operatives, mutual, building societies, associations, trade unions, charities and even some individuals - if they are employers who carry out an economic activity. Additionally, schools, colleges, universities, NHS trusts, and central and local government bodies must comply.
An employee request is not a valid unless it is either:
- a single request made by at least 2% of the employees in the undertaking; or
- a number of separate requests made on the same or different days by employees that when taken together mean that at least 2% of the employees in that undertaking have made requests, provided that the requests are made within a period of six months.
How to inform and consult
Your business strategy and 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 someone outside the management chain to grasp.
It is essential that the employees concerned understand properly what it is that they are being consulted about, so that they are able 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 communicating 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
- e-mail messages
- team briefings
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
- employees' usual work practices
Note: employees have a right to request information under regulation 30. An employer who dismisses an employee who seeks information does so unfairly.
What do employers need to tell employees?
There are approximately seven sets of circumstances in which employers have specific legal obligations to consult with employees and/or their representatives.
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 seeks redress at an employment tribunal.
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 for not doing so in this situation is an order to pay each affected employee a protective award of up to 90 days' pay (with no maximum limit).
Read more about collective redundancies.
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 for not doing so in this situation is likely to be an award of 'appropriate compensation' of up to 13 weeks' pay.
There 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) such as noise at work.
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).
An employer has a duty to provide any relevant recognised trade union that is an independent trade union with information for the purposes of collective bargaining.
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 (Central Arbitration Committee) has monitoring and enforcement powers.
As a general rule, when a valid employee request is made, the employer comes 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 two percent 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 then 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 agreements 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.
be approved by the employees
Approval 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.