An Introduction to the Information and Consultation of Employees Regulations 2004 (“the Regulations”)

The Regulations require employers with 50 or more employees to set up information and consultation arrangements governing how they will inform and consult with their workforce about economic and employment-related matters where a qualifying request is made by employees. 

Introduction

The Regulations require employers with 50 or more employees to set up information and consultation arrangements governing how they will inform and consult with their workforce about economic and employment-related matters where a qualifying request is made by employees. With effect from 6 April 2020 the threshold level of support needed for a qualifying request to be made was reduced from 10% to 2% of the employees in the relevant undertaking (subject to a minimum of 15 employees). It is therefore possible that employers will be more likely in future to receive requests to set up information and consultation arrangements.The Regulations set out the detail of this requirement, the process for negotiating such agreements and the means of enforcement. 

What do the Regulations require employers to address with their workforce?

The Regulations grant parties wide scope to agree the content of a negotiated agreement for information and consultation, including the subject matter about which the employer is required to inform and consult with its employees. However, if no agreement can be reached, the Regulations provide that standard information and consultation provisions (SICP) will come into force. The SICP provide that the employer must provide information and consult about certain matters such as the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged. 

When do the Regulations apply?

For the Regulations to apply to an undertaking:

• it must employ at least 50 employees in the United Kingdom; and
• its registered office, head office or principal place of business must be situated in Great Britain.

Whether the undertaking has employed the requisite number of employees is assessed on the basis of the average over the previous 12 months in accordance with specific provisions set out in the Regulations.

The Regulations apply by reference to the concept of an “undertaking”. This has been interpreted to mean the relevant legal entity. Accordingly companies within the same corporate group will be treated as separate undertakings for the purposes of the Regulations. 

What is the threshold level of support for the obligations under the Regulations to be triggered?

In order to require an employer to establish information and consultation obligations under the Regulations, a request must be made by at least 2% of the employees in the relevant undertaking - subject to a minimum requirement of 15 employees and a maximum requirement of 2,500 employees. Separate requests can be aggregated to satisfy this requirement provided they are all made within a six month period. This 2% threshold was reduced from 10% with effect from 6 April 2020 and therefore may lead to an increase in the number of requests made as a result of the threshold being easier to meet.

How do employees seeking to establish information and consultation obligations ascertain the number of employees needed to make a request?

An employee or an employee’s representative can request data from their employer for the purposes of determining the number of people employed by the employer’s undertaking in the United Kingdom. In response to such a request the employer must provide data to enable the employee or employee’s representative to:

• calculate the number of employees employed in the undertaking for the purposes of the provisions of the Regulations; and
• determine what number of employees constitutes 2% of the employees employed by the employer in the United Kingdom. 

If an employer fails to respond to a request within one month of the date of the request, or if its response is false or incomplete, employees may make a complaint to the Central Arbitration Committee (CAC). The CAC is the independent body which adjudicates on complaints concerning compliance with the Regulations. 

How is a request made?

To be valid a request must be made in writing and must specify the names of the employees making the request and the date on which it is sent. 

The request can be sent to the employer (at its registered address, head office or principal place of business) or alternatively employees may choose to make the application direct to the CAC (which they may choose to do if relations with the employer are challenging).

If the CAC receives a request, it will notify the employer that a request has been made as soon as reasonably practicable. It will also request any information it needs from the employer to verify the number and names of the employees who have made the request and inform the employer and the employees who have made the request how many employees have made the request so they can establish whether or not it was valid. 

What if an information and consultation agreement is already in place?

Specific provisions govern the situation where an information and consultation agreement is in place. A higher degree of support is necessary to require an employer to establish information and consultation arrangements under the Regulations if there is a written pre-existing agreement in place which:

• covers all employees of the undertaking;
• has been approved by the employees; and
• governs how the employer is to give information to its employees or their representatives and seek their views on such information. 

The Regulations do not set out how employee approval can be demonstrated. Government guidance suggests that employee approval could be established by:

• a simple majority of those voting in a ballot;
• signatures of the majority of the workforce; or
• the agreement of representatives who represent a majority of the workforce.

If there is such a pre-existing agreement (or multiple agreements) in place, the employer will only be required to commence negotiations under the Regulations if at least 40% of employees of the undertaking make the request. 

If fewer than 40% (but at least 2%) of employees make the request, the employer can choose whether to commence negotiations or organise a ballot for the workforce to vote on the request. The request will be endorsed if the majority of those voting and at least 40% of the workforce vote in favour. If the request is endorsed the employer is required to commence negotiations to agree a new agreement. If the request does not receive this level of support the pre-existing agreement continues to apply. 

Can an employer initiate negotiations?

Employers do not have to wait for employees to make a request to negotiate information and consultation arrangements under the Regulations. An employer can also initiate negotiations. 

For an employer to initiate negotiations under the Regulations, the employer’s notification of its intention to negotiate must:

• be in writing;
• be dated; and
• state that the employer intends to start negotiations and that the notification is given for the purpose of the Regulations. 

The notification must be published in a way that, so far as reasonably practicable, brings it to the attention of all employees. 

Are there any restrictions on initiating negotiations?

In certain circumstances the Regulations restrict both employees and employers from initiating negotiations, thereby providing some stability for existing agreements. In particular, a request by employees under the Regulations or an employer’s notification that it wishes to initiate negotiations will not be valid if it is made within three years of:

• the date of an agreement previously negotiated and agreed under the Regulations - unless the parties have agreed to terminate the agreement - in which case the request or notification will only be valid following the date on which the termination takes effect; or
• the date on which the standard information and consultation provisions (which apply if the employer and the employee representatives are unable to reach an agreement under the Regulations) took effect; or
• where a pre-existing agreement applies, the date of any previous unsuccessful request to commence negotiations under the Regulations to replace that agreement (i.e. a request by fewer than 40% of employees that was not subsequently endorsed in a ballot). 

However, these restrictions will not apply in certain circumstances where there are material changes in the undertaking, for example, if, as a result of a merger, an agreement previously negotiated under the Regulations no longer covers all employees in the employer’s undertaking. 

Once this initial three year period has ended, employees are free to make a request to negotiate and employers are free to initiate negotiations for a new agreement. 

What are the next steps following a valid request or notification?

Where a valid request or notification has been made under the Regulations the employer must take steps to commence negotiations as soon as reasonably practicable by:

• making arrangements for employees to appoint or elect representatives – there is no requirement for a formal ballot provided that employees have been entitled to take part in the appointment/election process;
• informing employees in writing of the identity of the representatives; and
• inviting representatives to negotiate information and consultation arrangements - negotiations may last up to six months and must start within three months of a valid request or notification. This negotiation period can be extended, by such period as the parties agree, by agreement between the employer and the representatives.

What must a negotiated agreement include?

The content of an information and consultation agreement may be negotiated by the employer and the representatives. However, to be valid under the Regulations the agreement must:

• set out the circumstances in which employers will inform and consult with employees;
• be in writing and dated;
• cover all employees of the undertaking;
• be signed by or on behalf of the employer;
• provide for the appointment of information and consultation representatives to whom the employer must supply information and consult with on matters within the scope of the agreement. Alternatively, the agreement may provide that the employer must supply information to all of its employees and consult with them directly; and
• be approved on the employees’ behalf. This can be done by:

1. signature of all representatives; or
2. signature of majority of representatives and either approval in writing by at least 50% of the workforce or approval in a ballot by at least 50% of voting employees.
    

What if the parties cannot reach an agreement?

If an agreement is not reached within the prescribed period, employers have a further six months to try to reach an agreement. If an agreement is still not reached (i.e. within six months of the end of the initial negotiation period) or if the employer fails to initiate negotiations within six months of a valid request the standard information and consultation provisions (SICP) will automatically come into force – these are effectively default information an consultation arrangements. 

The SICP provide for the election of information and consultation representatives by ballot and provide that the employer must provide such representatives with information on:

1. the recent and probable development of the undertaking’s activities and economic situation (e.g. changes to products or services, takeovers and mergers, changes in senior management);
    
2. the situation, structure and probable development of employment within the undertaking and on any anticipatory measures envisaged, in particular, where there is a threat to employment within the undertaking (e.g. levels of employment, re-organisations, use of agency workers);
    
3. decisions likely to lead to substantial changes in work organisation or in contractual relations (e.g. changes in policy on flexible working, overtime or shift patterns, substantial changes in terms and conditions).

Employers must also consult with the representatives regarding the information at (2) above and consult with a view to reaching an agreement regarding the information at (3) above. The SICP do not prescribe strict time frames in which employers must carry out their information and consultation obligations. Instead, the SICP provide that information must be provided at such a time as is appropriate to enable the representatives to conduct an adequate study and where necessary to prepare for consultation and consultation should be conducted in such a way to ensure that the timing, method and content is appropriate. 

How can employees or their representatives complain about failure to comply with the Regulations?

If an employee or employee representative considers that an employer has not complied with the Regulations it may be able to make a complaint to the CAC. In particular, an employee or employee representative may complain that:

• the employer has not complied with the requirements for the appointment or election of negotiating representatives – if the CAC considers the complaint well-founded, it can make an order requiring the employer to commence the process of election or appointment;
• a ballot which has been held did not satisfy the requirements set out in the Regulations – if the CAC finds the compliant well-founded, it can make an order requiring the employer to hold an appropriate ballot; or
• where there is a negotiated agreement in place or the SICP apply, the employer has failed to comply with the terms of the negotiated agreement or the SICP – if the CAC finds the complaint well-founded it shall make a declaration to that effect and may make an order requiring the employer to comply with the negotiated agreement or the SICP. If the CAC makes a declaration, the complainant may apply to the Employment Appeal Tribunal to impose a penalty. The maximum penalty that can be awarded is £75,000. The level of penalty ordered will take into account the size of the undertaking, the gravity of failure, the period of time over which the failure occurred, the reason for failure and the number of employees affected. 

Practical considerations for employers

Whether an employer will wish to take the initiative to set up an information and consultation arrangement for the purposes of the Regulations will depend on its specific industrial relations and human resources context and the extent to which less formal or detailed representative and consultation structures are sufficient to address and facilitate employee communication and change programmes. If an employer is concerned that employees may wish to seek formally to establish an information and consultation arrangement under the Regulations then it may wish to consider initiating negotiations as it may then be more able to influence the content of the agreement eventually implemented.