The Information and Consultation Regulations 2004 originate from an EU directive which establishes a general framework for information and consultation in the workplace.  The Regulations give employees in larger businesses (with 50 or more employees) rights to be informed and consulted about issues in the businesses they work for, such as changes to the structure of the company, plans for employment and changes in work organisation.  The purpose behind the Regulations is to establish a meaningful dialogue between employers and employees, so that members of staff are involved or at least aware of key decisions affecting the business.

Implementation of the Regulations has been staggered.  The Regulations apply to undertakings (any organisation, whether public or private which is involved in an economic activity, including not for profit charity organisations) with:

  • 150 or more employees from 6 April 2005;
  • 100 or more employees from 6 April 2007; and
  • 50 or more employees from 6 April 2008  

The Regulations do not impose on an employer a duty to inform and consult automatically; it is triggered by 10% or more of employees asking for an information and consultation agreement (“I&C agreement”) or by the employer initiating the process themselves.  Employers and employees will normally negotiate an I&C agreement that sets out how and when consultation will take place on an on-going basis.

On receipt of a employee request, employers must acknowledge it; inform the workforce as a whole of the request; and explain the  implications of the request and how they intend to respond to it.  Following this, the employer will normally have to arrange for the employees to appoint or elect negotiating representatives to represent them.  The employer then has 3 months from the date of the employee request to do this.  The negotiating representatives are elected by ballot. Once they have been chosen the employer must inform all the employees of who they are and then invite them to enter into negotiations in establishing an I&C agreement which will set out how things will proceed. 

Negotiations between the parties may last up to 6 months. The negotiation period is extendable without limit by agreement between the employer and the majority of the negotiating representatives.  Employers cannot avoid informing and consulting their employees by failing to respond to a valid request because if they fail to start negotiations following a valid request, the standard fallback provisions will apply (as explained below).

Alternatively, employers and employees can at any time agree voluntary arrangements.  Voluntary arrangements tend to be used where the employer has a voluntary pre-existing agreement in place.  The employees may therefore decide if they are happy with the voluntary arrangements.  However, if a significant number of employees formally request something different, then employers and employee representatives must negotiate to try to reach a new legally enforceable I&C agreement.  The voluntary arrangements are not governed by the Regulations, and can therefore be made at any time.  Both parties can however agree on what remedies should be in place for failing to abide with the terms of the agreement, but it would not be enforceable at the Central Arbitration Committee (CAC). 

To ensure that voluntary agreements are genuine, and not simply imposed by management, they must be in writing; cover all the employees of the business; set out how the employer is to give information to employees or their representatives and to seek their views on it; and have been approved by the employees.  An employer can decide to run a ballot to see whether there is support for a request for a new I&C agreement.  40% of the workforce must endorse the employee request, otherwise the existing voluntary agreement can continue.

If a formal request for an I&C agreement has been made and an agreement cannot be reached, then certain “standard provisions” on information and consultation will apply.  The standard provisions require employers to arrange for the election of employee representatives and to inform and consult those representatives on the following business matters:

Information on recent and probable developments of the undertaking or establishment’s activities and economic situation.

Information and consultation on the situation, structure and probable development of employment, any anticipatory measures that are envisaged, especially where there is a threat to employment.

Information and consultation on decisions likely to lead to substantial changes in work organisation or contractual relations.

Although the Regulations encourage open dialogue between employers and employees; an employer can restrict any information provided to I&C representatives on confidentiality grounds so that it may not be passed on to anyone else, such as share price-sensitivity.  Whilst information can be restricted on the grounds of confidentiality, employers should nevertheless engage in a meaningful and open dialogue with staff to foster better work relations.

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