11 INFORMATION AND CONSULTATION

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1 11 INFORMATION AND CONSULTATION CONTENTS Introductory list 11.1 General introduction 11.2 Information and consultation rights and obligations on the transfer of an undertaking (a TUPE transfer) 11.3 Information and consultation rights and obligations in collective redundancy situations 11.4 Information rights and obligations for pensions trustees 11.5 Information and consultation rights and obligations in relation to health and safety at work 11.6 Information and consultation rights and obligations in relation to pensions 11.7 Information and consultation rights and obligations relating to EWCs 11.8 The Information and Consultation Regulations UPDATE 12 MAY 2006 PAGE 1

2 PEOPLE AND THE LAW Who has to consult whom when a TUPE transfer is planned? Sections What can employees about to be transferred expect to be told about the transfer? Section In collective redundancies, which employees have to be consulted? Section Who can represent employees affected by a collective redundancy? Section What must employers consult employee representatives about? Section Who has the right to receive information about an occupational pension scheme? Section What can employees expect to be told about health and safety aspects of their work? Sections , , Must employers establish a works council? Section What if they refuse? Section What is the aim of the new Information and Consultation Regulations? Section When will the Regulations come into force in the UK? Section What are the requirements to inform and consult? Section What is an undertaking? Section How do we calculate the number of employees in an undertaking? Section What is a pre-existing agreement? Section How are the Regulations triggered? Section What is a negotiated agreement? Section What are the standard provisions? Section What is consultation? Section What is the penalty for failure to comply? Section Are there any confidentiality provisions? Section Do information and consultation representatives receive any special protection under the Regulations? Section UPDATE 12 PAGE 2 MAY 2006

3 11.1 INTRODUCTORY LIST The main HR activities connected to this chapter are as follows: + advising on buying or selling a business + advising on joining or leaving a joint venture + advising on a collective redundancy situation + advising on a phased redundancy situation + reviewing fixed-term contracts and/or changing employees terms and conditions + advising in a multi-national business EWC: European Works Council + reacting to a request to set up an EWC + advising in a unionised business + advising on forthcoming legislation + advising pension trustees + advising on obligations relating to health and safety at work legislation GENERAL INTRODUCTION Increasingly, employees are gaining the right to be given information and take part in consultation exercises with their employers in a number of different employment situations. Employers, therefore, are under a corresponding obligation to inform and consult with their employees in those situations, and need to be aware of the scope of those obligations and when they may arise. The types of situation where employers will need to inform and consult with their employees range from collective redundancies and business transfers, where the right to information and consultation is fairly well established, to EWCs and other less obvious instances, such as where an employer is also an occupational pension trustee. This chapter aims to cover the main employment scenarios where employees have the right to information and consultation, and sets out the broad scope of an employer s obligations in those situations. It will also briefly deal with forthcoming legislation that will affect these rights and obligations. UPDATE 16 SECTION 11.2 MAY 2007 PAGE 3

4 11.3 INFORMATION AND CONSULTATION RIGHTS AND OBLIGATIONS ON THE TRANSFER OF AN UNDERTAKING (A TUPE TRANSFER) TUPE: Transfer of Undertakings (Protection of Employment) Regulations Introduction TUPE affords employees in business transfer situations a number of rights and protections, and consequently confers a number of duties on employers. TUPE applies in most business transfer situations where a business or part of a business is being transferred as a going concern (apart from share sales). This could apply, for example, where a business or part of a business is being bought or sold. These rights extend both to employees who are transferring over from their original employer to an acquiring business and also to those employees already in the acquiring business. Equally, the duties can apply to both the transferring and acquiring employers. (See also Chapter 9 Transfer of Undertakings.) The duty to inform and consult is an important part of any TUPE transfer. It is a duty to consult not directly with the employees themselves on an individual basis, but with appropriate representatives of those employees. The representatives of employees in such a TUPE business transfer have the right to be consulted and to receive information about the business transfer and what their employers may do as a result of the transfer. The duty to inform and consult representatives can be found in Regulation 13 TUPE and the consequences of failing to inform and consult are set out in Regulation 15 TUPE. Regulation 13 (2) TUPE Who owes the duty to inform and consult? Both the transferor and the transferee eg the seller and the buyer of a business may be obliged to inform and consult with appropriate representatives of the affected employees (see also Section 9.12). The transferor will always have a duty to provide certain specified information (which is set out later in this chapter) to their employees, because the employees transferring over will clearly be affected by the transfer. The transferor may also have a duty to consult with their employees if they intend to take any measures in connection with the transfer. What is meant by measures is discussed later in this chapter. The transferee may have a duty to inform and consult if any of their existing employees may be affected by the transfer or if they intend to take any measures in connection with the transfer. Regulation 13 (1) TUPE Who are the affected employees? The affected employees are employees who are either transferring over with the business or part of the business that is being bought. They may also be employees in the acquiring business who may be affected by any changes that come about as a result of the business transfer. SECTION 11.3 UPDATE 16 PAGE 4 MAY 2007

5 Regulation 13 (3) TUPE [2005] IRLR 84 ERA: Employment Rights Act 1996 Section 47 ERA, as amended by Statutory Instrument 1999/1925 Section 103 ERA, as amended by Statutory Instrument 1999/1925 Sections 61 3 ERA Regulation 13 (2), (3) TUPE COIT 29431/82 Regulation 13 (2) (c), (d) TUPE Who are appropriate representatives? Appropriate representatives can be trade union representatives from a recognised independent trade union. They could also be existing employee representatives who have already been appointed or elected for another purpose, but they must have the authority of the employees they are representing to consult and receive information on their behalf. They may also be employee representatives who are elected for the very purpose of the TUPE transfer information and consultation exercise, but their election must follow a rigorous process, which is set out later in this chapter. It is worth noting that in the situation where there is no recognised union and the employees have not elected representatives within a reasonable time, an employer still has to provide the specified information (dealt with later in this chapter) to each individual affected, although there is no corresponding obligation to consult with each individual (see Howard v Millrise Limited t/a Colourflow (in liquidation) and another) Do appropriate representatives receive any special protection? Employee representatives in general are afforded protections in certain circumstances by way of the ERA. Appropriate representatives under TUPE will also be covered by the provisions of the ERA. Appropriate representatives will therefore have the right not to be subjected to any detriment on the grounds that they are employee representatives. Any dismissal of an appropriate representative will be automatically unfair if the dismissal is on the grounds that the individual is an employee representative or carrying out the function of an employee representative. Appropriate representatives are also entitled to take reasonable paid time off work in order to carry out their functions as an employee representative When must information be given and consultation take place? Unfortunately, TUPE is fairly vague about how far in advance of the actual transfer taking place the employees must receive information and take part in consultation. The legislation simply says that that the information must be given long enough before a relevant transfer to enable the employer to consult, and there is no prescribed minimum timescale. Experience has shown that, for example, three days before completion of a transfer is insufficient time in which to disclose the specified information, as set out below (National Association of Theatrical and Kine Employees v Rank Leisure Limited). Consultation needs to take place only if an employer envisages taking any measures in connection with the transfer, and because the consultation must be carried out with a view to seeking agreement, employers will need to make sure they start consulting long enough before the transfer in order to ensure that meaningful consultation can take place. On this basis, prudent employers would inform and consult as far in advance of the proposed transfer as possible What is meant by measures? Again, the legislation is not very helpful to employers. An employer must inform and consult about measures that it envisages it will, in connection with the transfer, take in relation to UPDATE 16 SECTION 11.3 MAY 2007 PAGE 5

6 [1987] IRLR 373 the employees. If it envisages that no measures will be taken, it must inform and consult about that fact. However, no definition of measures is provided by the legislation. In the case of Institution of Professional Civil Servants v Secretary of State for Defence, measures was interpreted as including any action, step or arrangement that may affect the employer s employees. The sort of things that may fall to be considered to be measures includes any change to the non-contractual terms or working conditions, or proposed redundancies of employees in either the business being sold or the acquiring business. Employers must not forget that they have to inform employees even if they don t intend to take any measures. Where collective redundancies are the proposed measures, employers must also be aware of and adhere to the minimum consultation periods in collective redundancy situations. These are set out in full later in this chapter. (See Information and consultation rights and obligations in collective redundancy situations, section 11.4.) Regulation 13 (2) (a d) TUPE What information must be given to employees? There is quite a long list of information that employees must be given in a TUPE transfer situation. First, and most straightforward, they must be told of the fact that a TUPE transfer is going to take place, when (approximately) it is going to happen, and the reasons why it is going to happen. Second, they must be told of the legal, social and economic implications of the transfer for those employees affected by it. This is a bit trickier, and seems to involve informing the employees of their legal position and any economic and social implications that there may be for them. Third, as discussed above, employees should be informed if there are any measures that the employer intends to take in connection with the transfer, or if there are no measures that are going to be taken. Fourth and finally, the transferor (ie the seller) needs to inform its employees who are transferring of any measures that the transferee (ie the buyer) intends to take, or if there are no measures that the transferee intends to take. This will clearly be possible only if the transferor has been told by the transferee whether it intends to take any measures and, if so, what they are. TUPE has therefore catered for this and contains an obligation on the transferee to give this information to the transferor at such a time as to enable the transferor to inform and consult with its employees prior to the transfer taking place. Regulation 13 (5) TUPE How must the information be given? Although the legislation does not make it entirely clear, the information must be given in writing and either delivered to the representatives or sent by post to an address they nominate or to the relevant trade union s head office What happens if there are measures to be taken? If either the transferor or the transferee decides that measures are going to be taken that will affect the transferring employees or those in the acquiring business, then it must consult the employee representatives regarding the measures with a view to seeking their agreement to the measures it plans to take. During this consultation, the employer must SECTION 11.3 UPDATE 16 PAGE 6 MAY 2007

7 consider and reply to any representations made by the employee representatives. If the employer decides to reject any of these representations, then it has to give the reasons for the rejection to the employee representatives. In practice, this means that although employers have to listen seriously to and consider the views of employee representatives, they are not bound to actually agree to any of their suggestions, and employee representatives cannot impose their wishes on employers. However, employers should consider any suggestions in a genuine attempt to reach an accommodation and agreement with employee representatives. Regulation 14 TUPE Regulation 13 (10) TUPE How are elections of appropriate representatives carried out? If there are no existing employee representatives that the employer can consult with, then employees should be invited to elect some representatives. TUPE sets out a process that employers must follow in the election. Primarily, employers have to make arrangements to ensure that the election is fair. This includes determining the appropriate number of representatives, working out a fair proportion of representatives to the employees they are going to represent, and determining the length of office of representatives. The employer must also ensure that all affected employees are allowed to vote and stand for office. Importantly, the employer also has to ensure that the ballot is secret (unless it is not reasonably practicable to do so) and to make sure that the votes are counted accurately. may be used by an employer to provide information about the election process. If employees are required to use to cast votes, it should be remembered that it will be difficult to ensure secrecy in these circumstances. It is also worth noting that if an employer has invited the affected employees to elect appropriate representatives, and the employees have failed to do so within a reasonable period of time, then the employer has to give each affected employee individually the prescribed information as set out above. Regulation 15 TUPE What happens if there is a failure to inform or consult? If an employer has failed to comply with any of its obligations to inform or consult with employees in a TUPE transfer, then the affected employees or their representatives may be able to bring a claim at the employment tribunal. If there has been a failure to elect employee representatives, then any of the affected employees, as defined above, can bring a claim. Otherwise, it is generally the employee representatives who can bring a claim. If the employment tribunal finds that there has been a failure to properly inform and/or consult, then it has the power to make an award of compensation of up to 13 weeks pay for each employee. Pay in this case means the employee s actual weekly pay, and it is not capped, as in the case of the basic award for unfair dismissal or a statutory redundancy payment. Employers should be aware that such an award could be payable in respect of each and every affected employee in the TUPE transfer, and therefore has the potential to be very expensive. Recent case law has set out some further guidance in assessing the compensation payable for a failure to consult. Tribunals are likely to adopt the same approach when assessing UPDATE 16 SECTION 11.3 MAY 2007 PAGE 7

8 [2004] IRLR 400 [2006] IRLR 252 compensation for a failure to consult in TUPE transfers as they would in respect of a failure to consult in a collective redundancy situation (see What happens if the employer has failed to comply with its collective consultation obligations in section for the case of Susie Radin Limited v GMB and others). This means that a tribunal should start with the maximum award of 13 weeks pay and only reduce it if there are mitigating circumstances justifying a reduction in the award (see Sweetin v Coral Racing). Regulation 15 (2) (a) TUPE Are there any defences to a failure to inform or consult? TUPE allows employers a special circumstances defence where they have failed to inform and consult in accordance with their obligations. Even if there are special circumstances meaning that it is not reasonably practicable for employers to carry out their information and consultation obligations, they still have to take such steps as are reasonably practicable to try to fulfil their obligations. This means that a failure to comply fully may be defensible, but a total failure to comply with the rules may not be. In any event, this special circumstances defence is of limited use to employers, as employment tribunals have proved reluctant to allow employers to rely on the defence. Checklist Is the business transfer covered by TUPE? (See Introduction, section 11.2) When is the transfer to take place? (See section ) Are you advising the transferor (the seller) or the transferee (the buyer)? Are there existing employee representatives either trade union representatives or otherwise? (See section ) If there are no existing employee representatives, have you arranged for the election of employee representatives? (See section ) Are there any measures that you intend to take? (See sections and ) If you are advising the transferor, have you discussed with the transferee whether they intend to take any measures? (See sections and ) Have you supplied the prescribed list of information to the employee representatives? (See ) Have you consulted with the employee representatives on any measures that are intended to be taken? (See and ) Cautionary tales Employers often believe that if they consult with individual employees direct, they will have fulfilled their obligations to inform and consult under TUPE. This often happens where there are no existing employee representatives, and consequently there is a real temptation to SECTION 11.3 UPDATE 16 PAGE 8 MAY 2007

9 cut corners and dispense with the election process. Although, in reality, an employment tribunal is not going to look too harshly upon an employer who has at least made the effort to carry out some form of consultation, it should be remembered that the duty to inform and consult relates to appropriate employee representatives. The last thing employers will want is the time and expense of being embroiled in post-transfer litigation on the point, even if the ultimate sanction is not particularly significant. If nothing else, a flaw in this part of the process could possibly delay a business transfer process if spotted by an eagle-eyed employee! Transferor employers in TUPE transfer situations also need to be careful in their dealings with their opposite-number transferee employers. Employers have found themselves in post-transfer employment tribunal litigation where the transferee has blithely informed them that they do not intend to take any measures relating to the transfer and the affected employees. Consequently, the transferor employer has consulted with their transferring employees to tell them this and, lo and behold, the transferee employer has then taken all sorts of post-transfer measures affecting the transferring employees. The transferor employer then finds itself facing the claim that it did not consult with the employee representatives about the measures that the transferee employer subsequently took. There is little you can do to guard against an unscrupulous transferee saying one thing and then doing another. However, transferor employers should make sure they have something in writing from the transferee employer confirming that they don t intend to take any measures and make sure they have an appropriate indemnity in any business transfer agreement against this type of claim, requiring the transferee employer to indemnify them in respect of the costs of any litigation and any compensation they may have to pay out. Unfortunately this will not stop employees from bringing claims against the transferor employer, and they will still have to go through the employment tribunal process, but it will cushion the blow. Regulation 11 TUPE Although the changes effective from 6 April 2006 do not really help this particular problem, it may indirectly help employers with the information and consultation exercise as it will require transferor employers to supply transferee employers with some specified basic information about the employees (such as contractual details and information regarding any pending disciplinary issues) in advance of the actual TUPE transfer. This should assist transferee employers in deciding whether they will take measures, and if they do it may mean there is at least a chance that they will advise transferor employers in advance of the transfer to enable consultation to take place INFORMATION AND CONSULTATION RIGHTS AND OBLIGATIONS IN COLLECTIVE REDUNDANCY SITUATIONS Introduction In a collective redundancy situation, employers have a duty to consult on a collective basis with the representatives of the employees affected by the potential redundancy situation. UPDATE 16 SECTION 11.4 MAY 2007 PAGE 9

10 TULR(C)A: Trade Union and Labour Relations (Consolidation) Act 1992 Sections TUL- R(C)A The duty to collectively consult and consequences of a failure to consult are set out in TULR(C)A. Case law and the law relating to unfair dismissal suggest that it is also best practice to individually consult with the potentially redundant employees in addition to the collective consultation Collective consultation Section 188 (1) TUL- R(C)A ERA: Employment Rights Act 1996 Section 139 ERA Section 195 TULR(C)A Case C-385/05 When does the duty to collectively consult arise? The duty to consult on a collective basis with potentially redundant employees arises only where an employer is proposing to dismiss 20 or more employees at one establishment within a period of 90 days or less (see also Section 10c.2.1, under heading Duty to consult and inform appropriate representatives ). What is meant by one establishment is discussed later in this chapter. Employers should be aware that for the purposes of TULR(C)A, redundancy has a slightly different definition from what they may be used to for example, the definition used when determining whether an employee is entitled to a redundancy payment as set out in the ERA. For consultation purposes, redundancy means a dismissal for a reason not related to the individual concerned or for a number of reasons all of which are not so related. This is a wide definition and can apply even where there is no intention to shed staff or jobs. In practice, it could mean that employers may be required to carry out collective consultation if they were, for example, seeking to change employees terms and conditions through dismissal and re-engagement on new terms and conditions. A recent European Court of Justice decision has also confirmed that it is not permissible to exclude certain categories of employees when calculating whether the workforce is of a sufficient size to trigger collective redundancy consultation or the obligation to set up information and consultation arrangements (see Confederation Generale du Travail and others v Prime Minister and another). Section 188 (1) TUL- R(C)A Who are affected employees? Affected employees in the context of a collective redundancy situation are those who may be affected by the actual proposed dismissals or any employees who may be affected by measures to be taken in connection with the dismissals. What this could mean is that if there were, for example, a business reorganisation that meant an employer was going to collectively dismiss 20 or more employees and redistribute some of their duties amongst retained employees, then those retained employees should also be consulted. Section 188 (1B) TULR(C)A Who are appropriate representatives? The employer s duty to consult on a collective basis is with appropriate representatives of the affected employees. Appropriate representatives can be trade union representatives from a recognised trade union. They could also be existing employee representatives who have already been appointed or elected for another purpose, but they must have the authority of the employees they are representing to consult and receive information on their behalf. They could also be employee representatives who are elected for the purpose of the collective consultation exercise, but their election must follow a rigorous process, which is set out later on in this chapter. SECTION 11.4 UPDATE 16 PAGE 10 MAY 2007

11 Section 47 ERA, as amended by SI 1999/ 1925, Section 103 ERA, as amended by SI 1999/1925 Sections 61-3 ERA Section 188 (1A) TULR(C)A [2002] IRLR 324 [2005] IRLR 920 EAT 0486/03 [2005] IRLR 242 UKEAT/0184/05 [1980] ICR 148 Do appropriate representatives receive any special protection? As with appropriate representatives under TUPE, employee representatives in general are afforded protections in certain circumstances by way of the ERA. Appropriate representatives under TULR(C)A will therefore also be covered by the provisions of the ERA. Appropriate representatives will thus have the right not to be subjected to any detriment on grounds that they are employee representatives and any dismissal of an appropriate representative will be automatically unfair if the dismissal is on grounds that the individual is an employee representative or carrying out the function of an employee representative. Employee representatives are also entitled to take reasonable paid time off work in order to carry out their functions as an employee representative. When must collective consultation take place? TULR(C)A sets out a timeframe in which collective consultation must take place. It must begin in good time and in any event within the specified minimum time periods. Where an employer is proposing to dismiss 100 or more employees at the same establishment, consultation must start at least 90 days before the first of the dismissals takes place. Otherwise, where 20 or more employees at the same establishment are to be dismissed, an employer must commence consultation at least 30 days before the first of the dismissals takes place. Proposing to dismiss is an important concept when dealing with collective redundancy situations and in deciding when the requirement to consult arises. It means that an employer must have some actual proposals to make, rather than merely having formulated a plan at a management level that may result in redundancies at some future date. In the case of MSF v Refuge Assurance plc and another, it was held that proposing to dismiss means more than a mere contemplation, or consideration of dismissal. Other case law elaborates that this may be where the proposals are still at a reasonably formative state but will be before formal ratification of proposals or recommendations. There is no need for the person who makes the proposal to have the ability to carry it through in order to trigger the obligation to consult (see Leicestershire County Council v Unison and Dewhirst Group v GMB Trade Union). Employers also have to consider carefully the number of employees they are proposing to dismiss in deciding when the requirement to consult arises. The number of employees to consider when making this calculation must include employees who may be re-deployed as part of the redundancy exercise if the re-deployment proposed amounts to a termination of the employee s existing contract of employment (see Hardy v Tourism South East). In good time is not a concept clarified by legislation, although case law shows that this needs to be considered together with the concept of the proposal to dismiss. Consultation can still be in good time where it is expedited as long as the proposals are still at a formative state and there is sufficient time for the employee representatives to respond and for the employer to consider those responses. Thus, there is some flexibility for employers (see Amicus v Nissan Motor Manufacturing (UK) Limited). Care still must be taken as an employment tribunal could still decide that consultation did not occur in good time even where the minimum collective redundancy consultation periods have been adhered to (GKN Sankey Ltd v National Society of Motor Mechanics). UPDATE 16 SECTION 11.4 MAY 2007 PAGE 11

12 DTI: Department of Trade and Industry [2005] IRLR 311 [1996] IRLR 168 [1978] ICR 319 There has also been important European case law which further clarifies this point. Previously, it had been the practice of many employers to give notice of termination at the same time as starting the collective consultation process so that notice ran concurrently with the consultation period. The European Court of Justice has effectively stated that this practice is no longer permissible and that notice of termination for redundancy must not be given until the collective consultation process has finished and after the employer has notified the DTI of the proposed redundancies (see section ). However, it may still be permissible for employers to give notice at some point during the ongoing consultation exercise and for it to run concurrently with the consultation period, so long as the notice expires after the end of the 30 or 90 day consultation period and the substance of the consultation exercise has finished (see Junk v Kühnel). What is meant by one establishment? TULR(C)A does not include a definition of the concept of what is meant by one establishment. Does this mean one site only? Or could it mean multiple sites in, say, the same area or even the same country? The European Court of Justice case of Rockfon states that the establishment was the unit to which the redundant employees were assigned to carry out their duties. In an earlier case, it was decided that 14 separate building sites amounted to a single establishment where each site was linked by telephone to their headquarters (Barratt Developments (Bradford) Ltd v UCATT). We can extract some pointers from case law as to when an employment tribunal is likely to find there are separate establishments. These include: + exclusive occupation of premises + a degree of permanence to the workplace + central organisation and administration of work + separate management and managerial independence + separation of services + separation of profits + separate accounting. Section 188 (4), (5) TUL- R(C)A [2004] IRLR 9 What information must be given to employees? There is a prescribed list of information that must be given to the employee representatives set out in TULR(C)A. This includes the reasons for the proposed redundancies, the numbers and descriptions of employees who are at risk of redundancy, and the total number of those types of employee who are employed at the establishment in question. The employer must also set out their proposed method of selecting employees, their proposed method of carrying out the actual dismissals (including any time-frame), and their proposed method of calculating any redundancy payments to be made. This information has to be given to the employee representatives in writing. When must the information be given to employees? The information must be given to the appropriate representatives in good time during the course of the consultations (Securicor Omega Express Limited v GMB). SECTION 11.4 UPDATE 16 PAGE 12 MAY 2007

13 Section 188 (2) TULR(C)A [2002] IRLR 332 [2004] IRLR 9 IDS Brief 614, June June 1998, Case no /97 Section 188A TULR(C)A Section 188 (7B) TUL- R(C)A What must consultation include? The legislation sets out some minimum standards of what must be included in the collective consultation process. The employer has to consult about ways to avoid the dismissals, ways to reduce the number of employees to be dismissed and how to mitigate the consequences of the dismissals. These three elements of consultation represent separate obligations, requiring employers to consult about each separate element, even if, for example, an employer believes it would be futile to consult about ways to avoid redundancies because they believe that redundancies are inevitable. Even if that employer genuinely consulted about the other two elements, that is, ways to reduce the numbers of employees to be dismissed and how to mitigate the consequences, their failure to consult on the issue of avoiding redundancies altogether could effectively render the whole consultation exercise void (Middlesbrough Borough Council v TGWU and another). This consultation has to be undertaken with a view to reaching agreement with the representatives. However, there is no obligation in TULR(C)A on employers to actually agree with suggestions made by the employee representatives or to give reasons to the representatives for rejecting any proposals or suggestions. In terms of both the content and timing of the consultation, employers do not have to consult about the actual decision itself to close a plant or factory as consultation does not extend to the economic background or context in which the proposal for redundancy arises in order for it to be fair and meaningful (Securicor Omega Express Limited v GMB). However, it should be noted that there were previous tribunal decisions which stated that, in the context of the closure of a plant or factory, employers would have to consult about the actual decision to make the closure itself (GMB and AEEU v Campbells UK Ltd, and similarly GMB and others v Premdor Crosby plc). How do we carry out elections of appropriate representatives? If there are no existing employee representatives that the employer can consult with, employees should be invited to elect representatives. TULR(C)A sets out a process that employers must follow in the election. Primarily, employers have to make arrangements to ensure that the election is fair. This includes determining the appropriate number of representatives, working out a fair proportion of representatives to employees, and determining length of office of the representative. The employer must also ensure that all affected employees are allowed to vote and stand for office. Importantly, the employer also has to ensure that the ballot is secret, unless it is not reasonably practicable to do so, and to make sure that the votes are counted accurately. It is also worth noting that if an employer has invited the affected employees to elect appropriate representatives, and the employees have failed to do so within a reasonable period of time, the employer has to individually give each affected employee the prescribed information as set out above. What happens if the employer has failed to comply with its collective consultation obligations? If an employer has failed to comply with any of its collective consultation obligations with employees in a collective redundancy situation, the affected employees or their UPDATE 16 SECTION 11.4 MAY 2007 PAGE 13

14 Section 189 TULR(C)A representatives may be able to bring a claim in the employment tribunal. If there has been a failure to elect employee representatives, then any of the affected employees, as defined above, can bring a claim. Otherwise, it is generally the employee representatives who can bring a claim. There is a defence open to employers, where there were special circumstances meaning that it was not reasonably practicable for them to inform and consult. However, this is available in only fairly limited circumstances (see below). If the employment tribunal finds that there has been a failure to properly consult, it has the power to make a declaration to that effect and make an award of compensation known as a protective award. This can be up to 90 days pay. Pay is calculated with reference to the employee s actual weekly pay and is not capped, unlike when calculating the basic award for unfair dismissal or a statutory redundancy payment. Employers should bear in mind that such compensation could therefore be payable in respect of each and every employee involved in the redundancy situation and therefore could be extremely costly. The awards are at the discretion of the tribunal, and various factors will be taken into account in deciding on the level of the award. A good starting point will generally be the number of days consultation that the employees have lost. [2004] IRLR 400 [2005] IRLR 683 UKEAT/1027/05/CK, UKEAT/0129/05/CK [2005] IRLR 86 UKEAT/031/05/MAA, UKEAT/0132/05/MAA Recent case law has set out helpful guidance in determining the amount of the protective award. The courts have stated that the purpose of the protective award is to provide a sanction for the employer s breach of its information and consultation obligations and not to compensate employees for loss that they have suffered as a consequence. On this basis, tribunals have to focus on the seriousness of the employer s default. In practice, this means that in a case where there has been no consultation, the approach the tribunals will take is to start with the maximum award of 90 days pay and only reduce it if there are sufficient mitigating circumstances to justify reduction. In determining whether to reduce the award, tribunals may look at whether the breach was deliberate and whether the employer had access to legal advice (Susie Radin Limited v GMB and others). There is little guidance on what might be considered to be mitigating circumstances although the tribunals will take into account steps taken before the redundancy proposals were actually crystallised. An example of this is the case of Amicus v GBS Tooling Limited (in administration) where meetings had taken place with employee representatives and the possibility of redundancies had been discussed. In this particular case, the 90 day award was reduced to 70 days. A tribunal has also reduced a protective award from the maximum where the employer was technically in breach of its obligations but the relevant union had been unwilling to co-operate with the employer. This was found to be a factor which the tribunal was entitled to take into account (see GMB v (1) Lambeth Service Team Limited (2) Cleanaway Limited). What is clear is that an employer s insolvency and an inability to pay out an award will not be considered to be mitigating circumstances as the courts have re-iterated that tribunals should focus on the seriousness of the employer s breach of its obligations and declared that an employer s insolvency is an irrelevant factor (see Smith and another v Cherry Lewis Limited (in receivership)). It will also apply regardless of the length of the consultation period in question. The starting point will always be a protective award of 90 days, even if the employer is only obliged to consult for a minimum of 30 days (see Newage Transmission Limited v TGWU and others). SECTION 11.4 UPDATE 16 PAGE 14 MAY 2007

15 Section 188 (7) TUL- R(C)A [1978] ICR 1076 COIT 1915/214 Section 188(7) of TULRCA [2004] IRLR 18 Are there any defences to a failure to inform or consult? TULR(C)A allows employers a special circumstances defence where they have failed to inform and consult in accordance with their obligations. Even if there are special circumstances meaning it is not reasonably practicable for employers to carry out their information and consultation obligations, they still have to take such steps as are reasonably practicable to try to fulfil their obligations. However, this special circumstances defence is of limited use to employers, as tribunals have proved reluctant to allow employers to rely on the defence. Special circumstances may include a sudden withdrawal of a key contract or some other unexpected financial crisis that necessitates a business closure at short notice, so that consultation can only take place in a shorter timeframe than is required by statute. Otherwise, the two most commonly cited reasons for a failure to inform and consult in redundancy situations relate to insolvency arising from an employer s financial difficulties and the desire to keep redundancies secret and confidential. Unfortunately, both of these reasons tend to receive little sympathy from the employment tribunal, and neither will amount to the requisite special circumstances (Clarks of Hove Ltd v Bakers Union and NUJ v The Western Times Co Ltd). There has been recent case law clarifying the use of the special circumstances defence in circumstances where the decision leading to the redundancies is taken by a third party controlling the employer. There is an exception to the special circumstances defence. provides that in this situation, a failure on the third party s part to provide information to the employer does not constitute special circumstances, so the employer cannot rely on the special circumstances defence. Employers have sought to make sure that they do not fall into the exception by arguing that the decision of the third party must be fairly detailed when it comes to the ensuing redundancies. However, the courts have stated that in these circumstances it is enough that the third party s decision must give rise to the occurrence of the redundancies alone in order for the employer to fall within the exception and be denied the protection of the special circumstances defence. The third party does not need to give any further thought to the redundancies, such as contemplating any particular number of dismissals or that they will take place at any particular establishment (GMB & Amicus v Beloit Walmsley Ltd) DTI notification In addition to their information and consultation obligations to the employees, employers also have the obligation to notify the DTI in writing of their intention to carry out collective redundancies. From 1 October 2006, the Collective Redundancies (Amendment) Regulations 2006 amended Section 193 TULR(C)A to provide that an employer proposing collective redundancies must notify the DTI of its proposal before it gives notice of dismissal to any of the affected employees. The timeframe for notifying employees mirrors the information and consultation timetable. If 20 or more employees are to be made redundant, the employer must notify the DTI at least 30 days before the first dismissal is to take place. Where 100 or more employees are to be made redundant, the employer must notify the DTI at least 90 days before the first dismissal. Case law has confirmed that the 90-day period fixes only the start of the consultation it does not determine when it finishes. In practice, this means that where a consultation takes more than 90 days and the proposed dismissals are deferred, an UPDATE 16 SECTION 11.4 MAY 2007 PAGE 15

16 [2006] IRLR 674 employer is under no obligation to submit a fresh notice to the DTI after the expiry of 90 days. However, if consultation ceases and an employer considers the prospect of redundancies once again at some future date, a fresh consultation and notice will be required (Vauxhall Motors Ltd v Transport and General Workers Union). The notice to the DTI must be given in a prescribed form, form HR1, which is available from the DTI and can be obtained from any Redundancy Payments Office or Jobcentre Plus Office see website: page12594.html for further details. This ties into the information and consultation process in that the employer has to notify the DTI of the identity of the employee representatives and the date on which consultations began. Further, employers also have to give a copy of the DTI notice to the employee representatives. Caution A failure to notify the DTI is a criminal offence and may lead to a conviction and a fine of up to level 5 on the standard scale of the magistrates court Individual consultation In addition to the obligation to collectively consult, employers should still consult individually with employees in a redundancy situation. SECTION 11.4 UPDATE 16 PAGE 16 MAY 2007

17 Checklist How many employees are you proposing to dismiss as redundant in each establishment? (See section , When does the duty to collectively consult arise?) When are you proposing to make the first dismissal? (See section , When must collective consultation take place?) Are there existing employee representatives either trade union representatives or otherwise? (See section , Who are appropriate representatives?) If there are no existing employee representatives, have you arranged for the election of employee representatives? (See section , How do we carry out elections of appropriate representatives?) Have you supplied the prescribed list of information to the employee representatives? (See section , What information must be given to employees?) Have you consulted with the employee representatives about the proposed redundancies? (See section , What must consultation include? and What happens if there is a failure to inform or consult?) Have you consulted with the employees on an individual basis about the proposed redundancies? (See section ) Have you notified the DTI of the proposed redundancies? (See section ) Have you given the employee representatives a copy of the DTI notice? (See section ) Cautionary tales Employers who cut corners or skip the information and consultation process can often find themselves in the employment tribunal defending claims not only for protective awards but also for failing to carry out a fair redundancy process in unfair dismissal proceedings. It is therefore doubly important to get this step right in a collective redundancy process. In a recent case, an employer had failed to elect employee representatives and had instead unilaterally appointed some representatives of its choosing. The employee in question suspected the representatives were simply stooges of the employer and that they would not properly or fairly represent the interests of the workforce. Importantly, under the provisions of TULR(C)A, it is not open for an employer to simply appoint employee representatives: they must be elected by the workforce. The employee wrote to the employer (and copied in the entire workforce) pointing out the employer s error. The employer was compelled to set up a proper election process, and the redundancy programme was set back by a number of weeks, costing time, money and embarrassing coverage in the trade press. UPDATE 16 SECTION 11.4 MAY 2007 PAGE 17

18 11.5 INFORMATION RIGHTS AND OBLIGATIONS FOR PENSIONS TRUSTEES The Regulations: Occupational Pension Schemes (Disclosure of Information) Regulations Introduction Where employers have set up occupational pension schemes, they may also be trustees of the pension scheme. If so, they will need to be aware of their obligations as pension scheme trustees to disclose certain pieces of information about the pension scheme to various categories of people. These obligations are set out in the Regulations When does the duty arise? The Regulations broadly apply to any tax-approved or public-service pension scheme with more than two members, so the duty will arise wherever the employer is also a trustee of such an occupational scheme Who is entitled to receive information? Broadly speaking, the classes of person to whom information should be given in accordance with the Regulations include: any member or prospective member of an occupational scheme (as defined above); or their spouse; or a beneficiary of such a scheme; or an independent trade union which is recognised for the purposes of collective bargaining in relation to members or prospective members of such a scheme. This can differ slightly, depending on the type of information that is to be given, but it is not proposed to discuss this at length in this chapter. Further information can be found in the Regulations themselves What information are they entitled to receive? Anyone entitled to receive information about such an occupational pension scheme, as described above, is entitled to receive a number of different pieces of information. These categories of information include basic information about the scheme, details of benefits payable under the scheme, a copy of the scheme s annual report, a copy of the latest actuarial valuation of the scheme, a schedule of contributions to the scheme, a payment schedule and statement of investment principles of the scheme. The Regulations set out the contents and requirements of these various categories of information and documents. It is not proposed to go into any further detail of these requirements in this chapter When are individuals entitled to receive this information? Each class of information or document has its own time-frame in which it must be given to the person entitled to receive it. This varies from within two months of a request for the SECTION 11.5 UPDATE 16 PAGE 18 MAY 2007

19 information to within six months. If a pension trustee is requested to supply such information, you should check the Regulations for the specific time limit What happens if a pension trustee fails to comply with their obligations to provide information? If a pension trustee fails, without reasonable excuse, to comply with any of their obligations under the Regulations, the Occupational Pensions Regulatory Authority may impose financial penalties, ranging from a penalty of 200 up to a maximum of 10,000 in certain cases INFORMATION AND CONSULTATION RIGHTS AND OBLIGATIONS IN RELATION TO HEALTH AND SAFETY AT WORK HASAWA: Health and Safety at Work Act Introduction Within the general legal framework for health and safety at work and an employer s duties to provide a safe place and system of work, there are also a number of obligations on employers to provide information on health and safety issues and to consult with their employees. These are mainly contained in Section 2 of HASAWA, in the Management of Health and Safety at Work Regulations 1999 and the Health and Safety Information for Employees Regulations There are also obligations contained in the Safety Representatives and Safety Committees Regulations 1977 and Health and Safety (Consultation with Employees) Regulations 1996 that also govern the provision of information and consultation on health and safety matters with employees What information must be provided? On a general note, employers must provide as much information as is necessary to ensure the health and safety of their employees. Section 2 HASAWA Regulations 3, 10 Management of Health and Safety at Work Regulations 1999 Employers are required to provide information (and instruction, training and supervision) in order to ensure the health and safety at work of their employees. Employers must also prepare (and revise where appropriate) a written statement of their general policy with respect to health and safety at work and provide it to their employees. Employers also have to make their employees aware of the arrangements they have put in place for carrying out that health and safety policy and make sure that they bring the statement and any subsequent revisions of it to the notice of all their employees. Employers are also under an obligation to carry out risk assessments in respect of their employees and to provide them with comprehensible and relevant information on any UPDATE 16 SECTION 11.6 MAY 2007 PAGE 19

20 identified risk to their health and safety in the risk assessment and on any preventive or protective measures that are required to deal with those risks. Regulations 3 5 Health and Safety Information for Employees Regulations 1989 Regulation 7 Safety Representatives and Safety Committees Regulations 1977; Regulation 5 Health and Safety (Consultation with Employees) Regulations 1996 As well as the appropriate statement of a general policy on health and safety at work, employers also have to display posters and distribute leaflets, as approved by the Health and Safety Executive, to their employees. These posters and leaflets must cover the basic health and safety obligations and regulations that the employer is bound by. The posters or leaflets must also contain the name and address of the relevant health and safety enforcing authority for the employer s premises (eg the local authority) and the address of the local area s office for employment medical advisory services. On a practical level, employers are required to keep any posters in a readable condition and at a place or position that is reasonably accessible. Employers must ensure that the poster can be easily seen and read by their employees. Employers have the obligation to provide information to trade-union-appointed safety representatives or the employees themselves or any representatives that they elect for the purposes of consulting on health and safety matters. The information that employees are obliged to give them is the information that will enable them to effectively consult To whom must the information be provided? In all the cases set out above, the information must be provided either direct to the employees themselves or to trade-union-appointed safety representatives or representatives that a group of employees have elected for the purposes of consulting on health and safety-related matters. Such safety representatives and, in certain cases, the actual employees themselves have the right not to be subjected to any detriment (short of actual dismissal) by their employer on the grounds, broadly speaking, that they are acting as such a safety representative, consulting with their employer on health and safety issues, taking steps to bring issues of health and safety to their employer s attention or attempting to safeguard people from circumstances of imminent danger. This is embodied in Section 100 of the ERA, which provides wide-reaching protection to employees from victimisation relating to health and safety issues. Example A chef who was dismissed after walking off the premises after refusing to cook food that he felt was a potential hazard to public health was found to have been unfairly dismissed under Section 100 ERA (Masiak v City Restaurants (UK) Limited [1999] IRLR 780), as was a machine minder who was summarily dismissed after leaving in the middle of his shift following abusive behaviour from a colleague that he felt put him in danger (Harvest Press Ltd v McCaffrey [1999] IRLR 778). SECTION 11.6 UPDATE 16 PAGE 20 MAY 2007