The Requirement to Inform and Consult with Employees
The Information and Consultation of Employees Regulations 2004 require businesses to have procedures for consultation between employers and workers’ representatives. The provisions have affected businesses on a graduated basis starting firstly with employers having at least 150 employees then those with a 100 or more and now with effect from 6 April 2008 the Regulations will apply to employers with only 50 or more employees.
The Regulations actually apply to an “undertaking” which carries out an “economic activity”. The activity does not have to be for profit. The organisation has to have its place of business in Great Britain.
The requirement to inform and consult arises when:
- If there is no existing system for information and consultation and 10% of employees ask for a procedure to be adopted, the employer must start negotiating with employee representatives.
- If there is an agreement in place and
- Less than 40% of employees make a request the employer can either start negotiations or arrange a ballot to see whether the workforce endorses the request. The employee request is endorsed (so that the employer must start negotiations) if the majority of those voting and at least 40% of the workforce vote in favour; or
- 40% or more of the workforce make a request the employer has to start negotiating a new mechanism.
If the need to negotiate is instigated in one of the above ways then the employer and staff representatives should try to reach an agreement on consultation. If they cannot default procedures set out in the provisions will apply.
What are the default procedures? They require an employer to inform and consult with representatives as follows:
- Inform as to recent or probable developments in activities and the economic situation.
- Inform and consult as to probable employment developments to include business sales, restructuring, an introduction of new technology.
- Inform and consult upon specific decisions likely to lead to substantial changes in work organisation or contractual relations including in relation to collective redundancies or proposed changes to terms and conditions of employment. In this case consultation goes beyond mere consultation so as to include an attempt to seek agreement over the proposed changes.
What are the sanctions for failure to comply? A complaint can be made to the Central Arbitration Committee (“CAC”) which can order the employer to comply. Ultimately penalties of up to £75,000 can be imposed.
An employer is not obliged to disclose confidential information during consultation, nor to disclose information if it would harm the business. The CAC can order disclosure, however.
Pre-existing agreements have to comply with the Regulations and thus be “valid”.
There are advantages in having a valid pre-existing agreement. These are usually regarded as:
1. If employees feel that they have a say they are less likely to press for a “negotiated” agreement.
2. The employees would have to have more support (40% or more of their number) to force the employer into a negotiated agreement.
3. An employer is likely to have more control over the issues upon which he will consult and the method of that consultation.
The above are advantages for the employer but there are also likely to be advantages for the employees in that agreements put in place by employers without being forced encourage good relations between employer and employee and entitle employees to feel that they have a role in rather than just working for the business.
The perceived wisdom, therefore, is that employers would do well to be proactive in putting in hand methods of staff consultation which meet the requirements of the Regulations.
07 May 2008
This article is for the purpose of general awareness only and the law may have changed since it was originally published. It does not constitute legal or professional advice and readers should not act on the basis of the information included. Readers should take appropriate advice upon their own particular circumstances.