No more secrets

From April this year, businesses with at least 150 employees may be forced to tell their staff far more than they would want. The new Information and Consultation Regulations 2004 oblige businesses to consult and inform employees on significant matters that may affect their employment.

The regulations are coming into force on a phased basis. They currently apply only to businesses with 150 or more employees; from April 2007 to those with 100 or more employees; and from April 2008 to those with 50 or more employees.

The regulations may sound daunting but they do not actually oblige employers to do anything unless a valid request is made by 10% of employees. The request must be in writing; dated; sent to the employer directly or to the Central Arbitration Committee (a government body) if the employees do not want to reveal their identities; and can come from several employees separately and be aggregated into one request.

Once a request is received, the employer will usually have three months to initiate negotiations and six months to reach an information and consultation agreement. The negotiated agreement must specify the circumstances in which the employer must inform and consult with the employees, be in writing, be dated, be signed by the employer and be approved by the employees.

A lot of large companies already have agreements to inform and consult employees and if they satisfy certain criteria, it is harder for staff to request a new information and consultation process. The agreement must be in writing; cover all the employees; be approved by the employees; set out how employees or their representatives are to be informed; and ensure that employees’ views are sought on such information.

If the business already has this sort of procedure in place, 10% of the employees alone cannot trigger a new procedure. Instead, the employer can call a ballot. The business will then only be obliged to put in place a new procedure if 40% of the employees want one, and it wins a majority vote in the ballot.

As a result, it is a good idea for employers to take action now. Businesses can get away with much more relaxed information and consultation requirements if they set up an agreement voluntarily. Once the business is forced to set up a procedure, it will be hard to negotiate anything less stringent than the default information and consultation procedure which comes into place if the employer and employees cannot agree on what to do.

Businesses can get away with more relaxed information and consultation requirements if they set up an agreement voluntarily

In this situation, the employer must set up a procedure that obliges it to:

• deal with employee representatives, rather than the workforce direct
• negotiate with representatives with a view to reaching an agreement, rather than merely give them information
• give employee representatives information about issues such as business performance, product changes, production methods, take-overs and mergers, restructuring, business plans, and changes in senior management
• consult over issues such as projected staff numbers, new recruitment, changes in overtime levels, redeployment, training and skills, flexible working, changes to shift patterns, redundancies, and changes to procedures.

With this kind of agreement in place, an employer would only be entitled to withhold information from employees in very rare circumstances where disclosure would seriously harm the functioning of the business. And if employers do not comply with the regulations, they could potentially face fines of up to £75,000.

The final decision on whether to go for a pre-existing agreement or to wait until a request is made will probably depend on the existing culture, approach to employee communication and financial capabilities of each employer. However, there are real advantages to prevention rather than cure – in particular, that an employer will be able to communicate on its own terms rather than those set down by the government.

See www.employmentbuddy.com and www.dti.gov.uk for further information.

Ceri Durham is a solicitor at Clarks. Email cdurham@clarkslegal.com or visit www.clarkslegal.com