Sarah Smith of Bevans solicitors discusses the new Information and Consultation Regulations that came into force in March.
If you are an owner, manager or HR manager of a business with more than 150 employees then March was an important month for you and not because it meant that you had a four day bank holiday: it was the month that the new Information and Consultation Regulations began to bite. Briefly, these are rules which require companies to share certain information with employees. The goods news is that if you have less than 150 employees, then you have a reprieve, for the time being, as implementation is staggered. The rules will come into effect as follows – the date is the staging date:
150 or more staff in undertaking: 23 March 2005
100 or more staff in undertaking: 23 March 2007
50 or more staff in undertaking: 23 March 2008
What these regulations mean for your company
In essence, the regulations require companies to consult with employees on matters which affect the working of the organisation and its relationship with employees. It is important to note that the obligation is to establish a dialogue and an exchange of views. It does not go as far as collective bargaining or co-determination legislation.
Now that the regulations are in force, your company has three options:
- negotiate an information and consultation agreement with employees; or
- do nothing and allow the “default” information and consultation provisions to apply; or
- wait and hope that no request is made
What if you’ve had an agreement in place with employees before April 2005?
This may fulfil the obligations under the regulations if certain criteria are satisfied and the whole workforce is covered and has approved the agreement. A big advantage to having an agreement in place before April 2005 is that it can only be challenged if 40% of the workforce agrees.
What if there’s no agreement in place before April 2005?
This makes it much easier for a workforce to request an agreement: only 10% of employees need to make a request for an agreement and then you are obliged to consult.
As set out above, at least 10% of the workforce must request an information and consultation agreement. Once a valid request has been received, negotiations on the agreement must commence within 3 months. Although, in theory, the parties are free to agree whatever they want to in this agreement, in practice it is likely to follow the default provisions in the regulations (for which, see below). If nothing has been agreed within 6 months, then the default model under the regulations will apply. Which brings us on to…..
……when negotiations fail
A further 6 months is allowed as the company will have to elect information and consultation representatives. Once representatives have been elected, the default provisions set out three broad sets of circumstances on which employers will have to consult those representatives:
- recent and probable developments in the undertaking’s activities or economic situation, i.e. a “state of the nation” type report to go to employees.
- probable development of employment including threats to employment, e.g. use of consultants and possible redundancies
- decisions likely to lead to substantial changes in work organisation or contractual relations. This third provision is likely to have the most impact: the dismissal of one key employee could be covered if it leads to a substantial change. This provision could also cover the introduction of a new technology or the decision to use outsourcing. It is also important to note that this is the only one of the three types of consultation which must be with a view to reaching an agreement on decisions within the scope of the employer’s powers (so, a decision passed down from on high from a non-UK parent would not be covered).
- Ensure that managers are aware of the regulations so that they know how to recognise a request and know that it must be actioned within 3 months
- Prepare managers for the cultural change that big management decisions will no longer be the exclusive preserve of the boardroom
- Check any current workforce agreements to see if they fulfil the requirements under the legislation
- Consider whether you have a workforce which you think is very unlikely to make a request, then consider sitting tight and hoping that no request for an agreement is made.