The EU Information and Consultation Directive 2002 established minimum requirements for companies with more than 50 employees for consulting and informing them on a wide variety of subjects. The Directive does not apply to those businesses with fewer than 50 employees.

The Information and Consultation of Employees Regulations 2004 implement the Directive in the UK. The Regulations apply to public and private undertakings that carry out an economic activity. The undertaking does not have to be operating for gain.

Since 6 April 2008, the Regulations have applied to public and private undertakings that carry out an economic activity where there are more than 50 employees. The undertaking does not have to be operating for gain.

The requirement to inform and consult employees does not operate automatically. It is triggered either where a valid written request to agree consultation arrangements is made by 10 per cent of the employees (subject to a minimum of 15 employees) or if the employer chooses to start the process.

Employers must initiate negotiations for an agreement no later than three months after a valid request is received and have six months from the date of the written request to reach a negotiated agreement. An agreement must establish how the employer will inform and consult employees or their representatives on an ongoing basis but the legislation does allow the flexibility to agree consultation arrangements which suit the individual needs of the undertaking.

Where no agreement is reached, standard information and consultation provisions will apply giving employees the right to information and consultation as set out in the original Directive. These give employees the right to:

• information on the recent and probable development of the undertaking or establishment’s activities and economic situation;
• information and consultation on the situation, structure and probable development of employment within the undertaking and on any measures likely to be taken, particularly with regard to any threat to employment; and
• information on decisions likely to lead to substantial changes in work organisation or in contractual relations, including collective redundancies and business transfers (as defined in the relevant legislation).

Information must be given at an appropriate time and in an appropriate way so that representatives of the workforce are able to conduct an adequate study and, where necessary, prepare for consultation. In other words, it is not merely a matter of involving staff in discussions as to how best to implement decisions that the management has already taken.

The consultation will have to take place at the relevant level on both sides, which will vary with the nature and severity of the matter being discussed.

Employers who have already established procedures for informing and consulting with employees can satisfy the requirements of the Regulations if they gain the agreement of their employees to carry on existing good practice. If a valid employee request is made in such circumstances, the employer has the option of organising a ballot of all employees. If at least 40 per cent of employees and a majority of those taking part in the vote endorse the initial request, the employer is obliged to negotiate a new agreement. Existing arrangements will be considered suitable if they:

• are in writing;
• cover all employees of the undertaking;
• have been approved by the employees; and
• set out how the employer is to give information to employees or their representatives and seek their views on it.

The Regulations allow employers to restrict information on grounds of confidentiality if it is in the legitimate interest of the business to do so. Also, they are not required to disclose information to representatives where this would be prejudicial to or seriously harm the functioning of the undertaking.

Employers who fail to comply with the Regulations could face a fine of up to £75,000.

The Advisory, Conciliation and Arbitration service has an advisory booklet on this topic.

Source: Commercial Client library Content