THE INFORMATION AND CONSULTATION DIRECTIVE

Since March 2005, EU member states have had to implement laws increasing employee consultation obligations and the involvement of workers in key decisions affecting employers' businesses.

Employees in the undertaking

Employers have a number of options. They can:

• Negotiate an information and consultation agreement with employee representatives.
• Allow the standard or "default" Information and Consultation Provisions" ("SICP") to apply.
• Hope that no request is made.

What is an undertaking?
An undertaking is "a private or public undertaking carrying on an economic activity whether or not operating for gain."

The identification of the undertaking is the crucial starting point because it will obviously define the scope of the information and consultation body and the employees to be covered. It is also worth noting that under the relevant regulations an employee or an employee representative will have an entitlement to information on the number of employees in the undertaking. This will obviously enable the employees to determine whether the undertaking is covered by the legislation and how many employees will be needed to submit a valid request.

Voluntary Information and Consultation Agreement

Recognised Trade Unions
Most trade union recognition arrangements have been put in place voluntarily by the employer. Such arrangements will not constitute valid voluntary arrangements for the purposes of the Regulations however unless they meet the conditions set out below.

The most important condition is that the Information and Consultation Agreement should be approved by the whole workforce.

Other employee representative bodies
Many employers have in place other types of information and consultation bodies to provide a useful communication channel between management and the workforce. Employers will have to review their consultation arrangements to ensure compliance with the Regulations if they want to continue them after the effective date.

Conditions
The following conditions must all be satisfied to achieve a voluntary information and consultation agreement that is compliant with the Regulations:

• There must be one or more agreements covering all employees in the undertaking.
• The agreement must be in writing.
• The agreement must set out how the employer is to give information to employees or their representatives and to seek their views on such information.
• The agreement must have been approved by the employees in the undertaking.

There is undoubtedly an advantage for employers to put a voluntary agreement in place. If the employer has such an agreement in place and a valid request for an information and consultation body is made by fewer than 40% of the undertaking's employees, it may opt to hold a ballot of its employees on whether they wish to endorse the request.

If fewer than 40% of the employees endorse the request, the employer is not required to negotiate a new agreement and the existing information and consultation agreement can remain in place. If more than 40% endorse the request, the undertaking is required to initiate negotiations for an information and consultation body and follow the procedures in the Regulations.

The 40% vote relates to all the employees in the undertaking, not just those who have voted.

Negotiating an agreement after the effective date

An undertaking's obligations under the Regulations are triggered when the undertaking receives a valid request made by at least 10% of the employees of the undertaking (subject to a minimum of 15 and maximum of 2,500 employees).

Once the request has been made, the undertaking must, as soon as reasonably practicable but in any event within a month, initiate negotiations for an information and consultation agreement and in particular:

• Make arrangements for its employees to appoint or elect negotiating representatives who will negotiate an information and consultation agreement.
• Inform its employees of the identity of the negotiating representatives.
• Invite the negotiating representatives to enter into negotiations for an information and consultation agreement.

If the undertaking believes that the request is invalid, it can apply to the Central Arbitration Committee for a declaration to that effect within one month of the request being made.

Electing Representatives

The Regulations provide that:

• All employees in the undertaking must be entitled to participate in the appointment or election of the representatives and that:
• the election or appointment of the representatives must be arranged so that, following their election or appointment, all employees in the undertaking have a representative.
  
  

Extended Negotiations

Negotiations must be completed within 6 months of the date at which the undertaking had informed its employees of the identity of the negotiating representative. This can be extended by agreement.

If the information and consultation agreement has not been negotiated by the end of the 6 month period, then the standard or default information and consultation provisions will apply. However, there is a further 6 month period during which the parties prepare the ground for the application of the standard or default information and consultation provisions and this provides a further opportunity to negotiate an alternative to the standard or default model.

During this period the election or appointment of information and consultation representatives must take place. The standard or default model will apply on the earlier of the expiry of the second 6 month period or the date on which the information and consultation representatives are elected.

A negotiated information and consultation agreement under the Regulations must:

• Set out the circumstances in which the employer must inform or consult its employees.
• Be in writing.
• Be dated.
• Cover all employees in the undertaking.
• Be approved by 50% or more of all employees.
• Be signed by or on behalf of the undertaking and either:
  
• provide for the appointment or election of information and consultation representatives to whom the undertaking must supply information and with whom the employer must consult on matters within the scope of the information and consultation agreement, or
• provide that the undertaking supplies information directly to its employees and consults with them directly.

This last condition obviously enables employers to avoid the establishment of an information and consultation body as such but instead to inform and consult employees directly via company networks such as intranet.

The standard or default model

The standard or default model will apply where attempts to reach a negotiated information and consultation agreement have failed within a 6 month period (or such period as was extended by agreement). The employer will then have a further 6 months in which to elect information and consultation representatives. The Regulations require one representative for every 50 employees. Once representatives have been elected the employer has 3 separate information and consultation obligations:

• Level 1 - Recent and probable developments in the undertaking's activities or economic situation. The undertaking must produce a "state of the nation" report in relation to the undertaking. The Regulations do not indicate how often this should take place. Undertakings may therefore provide such information annually, quarterly or on an ad hoc basis.
• Level 2 - Probable development of employment including threats to employment. This covers issues such as planned use of temporary workers or consultants and the possibility of redundancy. It particularly focuses on "anticipatory measures envisaged where there is a threat to employment." This suggests that information and consultation obligations arise at an early stage in the decision making process.

It is important that the obligation to consult means the "establishment of a dialogue and exchange of views."

• Level 3 - Decisions likely to lead to substantial changes in work organisation or contractual relations. This will have a great impact. In particular:
• there appears to be no minimum number of employees who are to be affected by the changes in the work organisation or contractual relations.
• "Contractual relations" is also potentially wide. It would appear that the dismissal of just one employee could fall within the scope of a substantial change in contractual relations.
• The change in work organisation or contractual relations needs to be "substantial". It is unclear what is meant by this. However, since the Regulations are implementing an EU directive, the interpretation is likely to be broad.
• A decision likely to lead to substantial changes includes strategic and investment decisions that could have consequences in relation to work organisation or contractual relations (ie outsourcing or the introduction of new technology on site).

It is particularly significant that for Level 3 issues consultation be "with a view to reaching agreement on decisions within the scope of the employer's powers."

Duty to inform

The Regulations require that information must be given at such time, in such fashion and with sufficient content as is appropriate to enable the representatives to conduct an adequate study and where necessary prepare for consultation. In practice, this means that the undertaking must provide sufficient information to allow the representatives to make a counter proposal. Therefore employers will need to provide reasonably detailed information.

Confidential information

The passing of confidential information to employee representatives is obviously a matter of concern. The Regulations impose a statutory duty of confidentiality on representatives. However, for information to be treated as confidential, the employer must make it clear that it is of a confidential nature. The duty does not, however, apply where:

• A recipient reasonably believes that the information disclosed is a protected disclosure under the whistle blowing provisions.
• A recipient challenges successfully the confidential status of the information by applying to the CAC for a declaration.

There may also be certain information which is so confidential that the employer does not want to share it with the representative. The Regulations allow for this limited situation where, according to objective criteria, the disclosure of the relevant information would seriously harm the functioning of or would be prejudicial to the undertaking. This exception is likely to be narrowly interpreted.

Duty to co-operate

Both the undertaking and the information and consultation representatives must work in the spirit of co-operation with due regard to their reciprocal rights and obligations and their respective interests.

Protection for information and consultation representatives

An information and consultation representative is entitled to:

• Reasonable paid time off during normal working hours to enable him or her to perform representative duties.
• Protection against dismissal or other detriment in respect of certain protected activities relating to the information and consultation process.
  
  

Compliance and enforcement

Enforcement is through the Central Arbitration Committee by either the employer, one of the representatives or, where no representatives are elected or appointed, an employee of the undertaking.

A complaint may be made that the terms of the agreement have been broken. The CAC may make a declaration to that effect and an order requiring the defaulting party to take steps to comply with the agreement. A failure to comply with the order will constitute contempt of court. Where the undertaking is the defaulting party, the complainant may, within 3 months of the date on which the CAC's decision is made, refer the matter to the Employment Tribunal for a penalty notice to be issued. There is a maximum penalty of £75,000.

Consideration is required now.