Information and Consultation Regulations - Employment Law News Autumn 2003

01 October 2003

In July the Government published its consultation paper containing draft regulations for implementation of the EC's Information and Consultation Directive.

The gist of the Directive is to impose on employers an obligation to inform and to consult employees or their representatives on the development of the business and on factors material to their employment and to employment prospects.

This is radically different from existing obligations, such as compulsory union recognition (which, where applicable, extends only to collective bargaining on pay, hours and holiday) and information and consultation duties arising on business transfers and collective redundancies (which are event-specific, applying where basic commercial proposals have already been formulated).

Unfortunately, with the new information and consultation (‘I & C’) law coming into effect in less than 18 months' time, the draft regulations do not answer many of the questions predictably arising from the Directive.

We can, however, confidently predict the following:

• Undertakings with 150 or more employees will be subject to the new regime by 23 March 2005; those with 100 plus, by March 2007; and those with 50 plus, by March 2008. At the relevant time they will become obliged, at the request of a qualifying number of employees, to start the process of establishing I & C arrangements;
• An employer with a pre-existing arrangement which meets certain conditions can ballot employees on whether or not to continue with the process of establishing the new I & C arrangements;
• Where the process is to continue, the employer must seek a negotiated agreement with employee representatives over the practical arrangements for I & C, which must cover all employees in the undertaking. A set period is granted for this, failing which the employer has a further period to put the statutory default provisions into place;
• Whilst the parties will have flexibility to agree the practical arrangements which best suit their needs, they will inevitably use the statutory default provisions as a yardstick;
• Under the statutory default provisions, an I & C committee is to be set up, representing all employees; representatives are to be elected by ballot; and the employer will be required:

1. To inform representatives about ‘the recent and probable development of the undertaking's activities and economic situation’,
2. To inform and consult them about ‘the situation, structure and probable development of employment within the undertaking and any anticipatory measures envisaged, in particular where there is a threat to employment’, and
3. To inform and consult, with a view to reaching agreement, about ‘decisions likely to lead to substantial changes in work organisation or in contractual relations, including collective redundancies and business transfers’;

• Non-compliance could result in penalties of up to £75,000; and
• The Central Arbitration Committee is to play a key role in upholding or rejecting attempts by employers to protect what they consider to be confidential information

A further round of consultation closing this November will hopefully result in clarification on some unresolved issues, including:

• How are the regulations to be interpreted, and various thresholds to be applied, in relation to pre-existing and negotiated arrangements operating at group or establishment levels? These levels are, respectively, above and below that of an ‘undertaking’ (ie a legal entity such as an individual company) upon which the draft regulations are formulated;
• What must a pre-existing agreement cover if it is to be presented by the employer as an alternative to negotiations on a new I & C arrangement?
• How will the potential overlap between (a) the requirements of I & C arrangements and (b) an employer's corresponding obligations under collective redundancy and TUPE regulations, be resolved?
• What impact will requests for new I & C arrangements have on existing collective agreements with unions?

The uncertainties hamper planning opportunities. Nonetheless, for many organisations, particularly the single company employer not operating through divergent establishments, now is perhaps the time to review strategic options.

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