Consultation between employers and workers' representatives
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The Information and Consultation of Employees Regulations 2004 provide a formal framework for consultation between employers and workers' representatives.
The regulations came into force on 6 April 2005 for undertakings with at least 150 staff. From 6 April 2007, they will apply to those with 100 or more employees and from 6 April 2008, to those with 50 or more employees.
What is an undertaking?
The regulations apply to an "undertaking" which carries out an economic activity, regardless of whether it is for profit, and has its registered office or principal place of business in Great Britain. DTI guidance interprets undertaking as a separately incorporated legal entity, such as a company or partnership. Therefore, this means that a separate entity in the organisation, for example, a division of the business, is not an undertaking.
How is the requirement triggered?
The requirement to inform and consult does not operate automatically. It is triggered in the following ways:
If there is no existing mechanism for information and consultation and 10% of employees put in a request for a procedure to be adopted, the employer must start negotiations with employee representatives
What kind of consultation will an employer be obliged to undertake?
If the requirement to negotiate is triggered, employers and staff representatives should try to reach negotiated agreements on consultation, otherwise the default procedures will apply. The regulations set out the default information and consultation procedure requiring employers to inform and consult with representatives on the following three areas:
Any recent or probable development of the employer's activities and economic situation (here the only obligation is to inform only, not consult)
The situation, structure and probable development of employment within the undertaking and any measures envisaged - particularly where there is any threat to employment. This will include business sales, restructuring and the introduction of new technology
Specific decisions likely to lead to substantial changes in work organisation or in contractual relations. This includes an obligation to consult in relation to collective redundancies, or proposed changes to terms and conditions of employment. Here, consultation must include an attempt to seek agreement over the proposed changes.
Employers must give staff representatives relevant information long enough in advance to allow for consultation.
What happens if the employer fails to comply?
If the employer fails to consult properly, a complaint can be made to the Central Arbitration Committee (CAC). The CAC will be able to make an order requiring the employer to comply with the agreed consultation procedure or default procedure within a specified timeframe.
A penalty notice may also be issued by the appeal tribunal, ordering an employer to pay a penalty not exceeding £75,000 (depending on such factors as the gravity of the failure, the reason for it and the number of staff affected by the failure.) An employer will have the right to appeal a penalty notice.
Does this mean an employer can be forced to reveal confidential information?
An employer will not be obliged to disclose confidential information during consultation, although it is possible for employee representatives to challenge the confidential status of information. There is also an exemption for disclosure if it would harm the undertaking. The CAC will have the power to order disclosure if it deems the information not harmful to the undertaking.
What should employers being doing?
Some employers may take the view that their workforce will not trigger a request and therefore, they will take the strategic decision to wait and see what happens. However, it is prudent to have a strategy in place should a valid request be triggered, due to the relatively tight negotiation timescales.
The DTI and Acas have both produced guidance which explain the requirements of the legislation and give good practice advice to employers who are setting up their own arrangements.
This guidance is provided by law firm Stephenson Harwood
www.shlegal.com
