Information and Consultation Regulations

From 6 April 2005, employers with more than 150 employees will be bound by the terms of the Information and Consultation of Employees Regulations 2005 ("ICE Regulations"). Employers with more than 100 employees will be bound by the terms of the Regulations from April 2007, those with more than 50 from April 2008, and there will be no application to employers with fewer than 50 employees. The legislation allows implementation by the UK of the Information and Consultation Directive 2002.

It is hoped that through the information and consultation process, the Regulations will encourage a more flexible working environment, and promote mutual trust between employer and employee, meaning that employees appreciate and respond more effectively to their organisation’s changing needs. This may be achieved because of the fact that employees will hopefully be better able to understand the challenges which their employer faces. Employees will also have a better understanding of why and how particular business decisions are reached, which should result in a working environment of increased mutual trust and co-operation.

The Regulations apply to "undertakings", defined as "a public or a private undertaking carrying out an economic activity whether or not operating for gain". This definition means that an undertaking can include schools, colleges and charities, if those institutions carry out an economic activity as defined above. Ultimately, it will be for the tribunals to decide what the definition of undertaking actually includes.

The number of employees within an undertaking will be calculated according to the average number of employees in the undertaking during the previous 12 months.

Voluntary and compulsory procedures

There will be no automatic obligation for employers to commence consultation with employees. However, employers can commence negotiation of an information and consultation agreement on their own initiative or it can be triggered by a request from their employees.

This compulsory consultation process will be triggered should 10% of the workforce make a request, known as an "employee request". Employers should be aware that it will be possible for such an employee request to be comprised of a number of separate requests made within a rolling six month period, the total of which amounts to at least 10% of the workforce.

The actual process that an employer will be required to follow will be dependent upon whether or not there is a pre-existing information and consultation agreement. If there is a pre-existing agreement in place, and a valid employee request is received, then the employer can opt to hold a ballot to determine whether the workforce endorses this employee request. If such a ballot is held and 40% of the entire workforce and a majority of those voting endorse the employee request, the employer will be required to enter into negotiations for a new information and consultation agreement. However, where less than 40% of the workforce or less than a majority of those voting endorse the request, there will be no obligation to negotiate a new agreement and the employer can instead maintain the arrangements of the existing information and consultation agreement.

If an employer receives a valid employee request, has a pre-existing agreement in place, and fails to hold a ballot, the employer will then be obliged to enter into negotiations for a new agreement.

From the date of the employee request, the employer will have three months to initiate negotiations and, during that time, the employer should appoint employee-negotiating representatives. Once those negotiating representatives have been appointed, the employer will have up to six months to negotiate the information and consultation agreement and this six month period will be extendable by agreement between the parties.

The terms of the negotiated agreement must be in writing and dated, cover all of the employees in the workplace, set out the circumstances in which the employees will be informed and consulted, be signed by or on behalf of the employer, be approved by the employees and provide consultation and information with the information and consultation representatives or directly with the employees or with both.

One of the advantages for the employer if the employer reaches agreement with the employees is that both employer and employees can agree the content of the information and consultation agreement. They will not then be required to include the information that must be provided under the statutory default procedure. That procedure will apply where an agreement has not been reached. In that situation, the employer will be obliged to establish an elected committee of representatives. The statutory default procedure means that employers will have a duty to inform relative to the business's economic situation, they will have a duty to inform and consult relative to employment prospects and a duty to inform and consult with a view to reaching agreement on decisions likely to lead to substantial changes in the work organisation or contractual relations, including redundancies and transfer situations. The definition of contractual relations in this situation includes, for example, changes to the disciplinary and grievance procedure, changes to the compulsory retirement age or changes to terms and conditions.

Confidentiality

Employers concerned at releasing confidential information should be aware that information may be withheld on the grounds of confidentiality in certain circumstances. It is advisable for the employee representatives to be asked to enter into a confidentiality agreement linked to the undertaking’s disciplinary procedure. That confidentiality agreement should also provide for recovery of loss from the individual as a result of any breach of confidentiality by the representative.

It is important that employers are aware that if they refuse to impart information on the grounds of confidentiality, the employees will have the right to complain to the Central Arbitration Committee, which can order disclosure of that information. An employee can also complain relative to defective ballot arrangements and the Central Arbitration Committee can make a finding in respect of this.

Complaints and protections

A complaint to the Central Arbitration Committee for failure to comply with the terms of the Regulations may also result in an order being issued by the Committee for specific performance or a financial penalty up to £75,000. They will take into account factors such as the gravity of the employer’s failure, the reason for the failure and the number of employees affected by it. The employer will have the right to appeal to the Employment Appeal Tribunal against such an order.

The protection afforded to employee representatives by the ICE Regulations means that it will be automatically unfair to dismiss an employee or subject them to any detriment as a result of performing a function in their role as a representative or candidate for election as a representative. Representatives will also have the right to reasonable paid time off from normal duties to undertake their representative roles.

Given the penalties for failure to comply with the terms of the Regulations, employers are advised to familiarise themselves with the terms of the legislation to ensure that they comply with them.

It is also worth noting that in many respects, the Regulations may well be of assistance to the employer. They should be viewed as a means by which employers can more effectively communicate with their employees and have an opportunity that they would not ordinarily have to obtain constructive feedback from them. They provide potentially for increased stability, in that employees will have a much better understanding of the reasons for business decisions being taken and therefore have a much more transparent and secure environment in which to work.