Employees in companies with 150 or more staff have the right to be informed and consulted on issues affecting the business. The rules came into effect on 6 April 2005.

The Information and consultation of Employees (ICE) Regulations, which implement an EU Directive, give employees rights to be informed and consulted by their employers about the business they work for, including the prospects for employment, and substantial changes in work organisation or contractual relations.

The rules applies if 10% of the workforce makes a written request for information and consultation (I & C) arrangements or employers start negotiations for an I&C agreement themselves.

Organisations employing 100 or more employees will be subject to the legislation from 6 April 2007 and organisations with 50 or more employees from 6 April 2008.

1. Information and consultation (I & C) definition

I & C means employees are given the opportunity to express an opinion about particular issues, and employers consider and respond to their views.

The process can take place through employee representatives, direct with the employees or through a combination of both.

I & C is not the same as collective bargaining, negotiation or joint decision-making. Decisions remain the responsibility of company management.

2. Undertakings

The legislation applies to 'undertakings' which are defined as 'a public or private undertaking carrying out an economic activity, whether or not operating for gain.'

The Department of Trade and Industry interprets this as 'separate incorporated legal entities as distinct from an organisational entity such as an establishment, division or business unit of a company.'

It also includes partnerships, co-operatives, mutuals, building societies, friendly societies, associations, trade unions, charities and individuals who are employers – if they carry out an economic activity. It may also include schools, colleges, universities, NHS trusts, and Government bodies (both central and local) if they also carry out an economic activity.

3. Requirements of legislation

The law applies if one of the following happens:

  • at least 10% of the workforce makes a written request for information and consultation arrangements
  • employers start negotiations for an I & C agreement on their own initiative

If this happens the employer must make arrangements to allow the workforce to elect or appoint representatives to negotiation an I & C agreement.

A 3-year moratorium on further employee requests applies where a negotiated agreement is reached.

If there is a valid pre-existing agreement in place and a request for new arrangements is made by less than 40% of employees, the employer may ballot them to see if they endorse the request for new arrangements. If at least 40% of the workforce and the majority of the ballot voters back the request, the obligation to negotiate a new agreement will apply. If not, the pre-existing agreement may continue (see section 6 below).

Where is request is made but no agreement is reached, standard provisions apply (see section 7 below).

4. Employer obligations

This will vary depending on what type of communication systems are currently in place within particular organisations. The DTI advises employers to review, and revamp if necessary, any existing consultation arrangement that are in place.

Employers and employees may put in place whatever processes best suit their particular situation be it informal arrangements or pre-existing agreements. Both must meet the requirements of the legislation and must always be agreed with employees. Employers cannot unilaterally impose arrangements.

5. Employee obligations

The requirements of the legislation do not apply automatically. They are triggered when at least 10% of the workforce asks for an I & C agreement.

When this happens the employer and employee representatives will normally negotiate an I & C agreement that sets out how and when the informing and consulting will take place.

There would normally be a period for drawing up and agreeing the on-going information and consultation arrangements to be put in place.

6. Pre-existing agreements

To be valid under the new Regulations, a pre-existing I & C agreement must be:

  • in writing
  • state how employees and representatives will be informed and consulted
  • cover all employees in the undertaking
  • approved by employees or their representatives

Pre-existing agreements may cover more than one undertaking or establish different consultation arrangements in different parts of an undertaking.

7. Standard provisions

Where no agreement is reached, the standard provisions apply. The employer is obliged to provide information to elected employee representatives (one for every 50 employees) on the following issues:

  • a) the recent and probable development of undertaking's activities and economic situation
  • b) the situation, structure and probable development of employment within undertaking and any anticipatory measure envisaged, in particular, where a threat to employment
  • c)decisions likely to lead to substantial changes in work organisation or in contractual relations

The information must be provide in such fashion and with such content as are appropriate to enable employee representatives to conduct adequate study and, if necessary, prepare for consultation.

Employers must consult employee representatives on matters a) and b) above as follows:

  • so that its timing, content and method are appropriate on the basis of information supplied by the employer and any opinion expressed by employee representatives
  • so that employee representatives can meet the employer at the relevant level of management depending on the subject, and to obtain a reasoned response to any opinion they give
  • in relation to substantial changes in work organisation or in contractual relations, with a view to reaching agreement on decisions within the scope of employer's powers

8. Breached legislation

If an employer has an agreement covered by the legislation, or is subject to the standard provisions, and fails to inform and consult as required, a complaint can be made to the Central Arbitration Committee (CAC). It may involve Acas in conciliation.

CAC will take the steps it thinks are needed to put any breach right. Where a complaint is upheld against an employer, an Employment Tribunal application can be made which could lead to a penalty of up to 75,000.