ICE Regulations in depth

The Information & Consultation of Employees (ICE) Regulations 2004 require employers with 50 or more employees in the UK to set up permanent arrangements for consulting employees on business issues that may affect them.   But the rules do not apply automatically, and there is considerable flexibility in the law to set up arrangements suited to individual business needs. The Regulations implement an EU Directive.  All EU Member States have their own legislation implementing the Directive – in many countries it takes the form of long-standing rules concerning works councils.  The UK ICE Regulations are quite different from works council laws in Continental Europe.  They are also totally separate from UK laws on trade union recognition and collective bargaining.

What do you have to do?   Employers are only obliged to set up consultation arrangements under the Regulations if they receive a request to do so from 10% of their UK workforce. For smaller companies, at least 15 employees must put their names to the request.  For larger companies, no more than 2,500 signatures are needed.  In large companies it takes a concerted effort to get this number of signatures, and in practice it’s most likely to be trade unions that have the organising capability to get it going.  Trade unions have limited resources of course, and so will select their target companies where they expect to achieve more, eg where they already have significant numbers of members, or in parallel with an organising campaign, and/or where they foresee restructuring in the company.

Pre-existing agreements:   Employers can pre-empt a formal request from employees or trade unions by setting up consultation arrangements on their own initiative. This is the best way to keep control over the process and design arrangements suited to individual business needs.  The Regulations allow companies to put in place “pre-existing agreements” – meaning pre-existing a formal request from employees.  Pre-existing agreements must meet the following criteria:

  • They must be in writing – not just informal arrangements;
  • They must cover all the employees of the undertaking – in group structures an agreement can cover the entire group, parts of it, or individual subsidiaries, but whatever you decide to go for all the employees within that part of the business must be covered, right up to senior management;
  • They must be approved by the employees. It can’t be imposed on employees, but there is flexibility as to how you get their approval.  If you recognise a union you’ll need to consider whether their support is important.  You don’t need an expensive ballot of employees to get their approval, but you will need a decent case that they support the arrangements, and documentary evidence in the event that the agreement is challenged;
  • They must set out how employees will be informed and consulted. There is a great deal of flexibility here, both as to the structure of the arrangements and the subjects and timescale for consultation.  Direct forms of consultation are allowed, without the need for representatives.

It is possible for a collective agreement with trade unions to constitute a pre-existing agreement for the purpose of the Regulations, but considerable care is needed to make sure it fits the criteria.  A number of companies have been caught out because they wrongly thought their agreement complied. Pre-existing agreements are not enforceable at the Central Arbitration Committee (CAC), so there are no legal penalties for getting it wrong.  They also prevent employees or trade unions seeking to set up legally-enforceable consultation arrangements which may well be alien to your employee relations culture.

Whether you decide to take the initiative and go for a pre-existing agreement will depend on a number of factors including whether you already have some form of employee consultation in place, the degree of trade union activity in the company, the degree of “activeness” of your employees or any existing employee representatives, whether you expect to receive a formal request to set up a consultation committee at some point in the future, and more generally whether it fits with your employee relations and communication culture.

What to do if you receive a formal request to set up a consultation body. Whatever you do, don’t ignore it! If it’s a valid request you cannot avoid having to set something up, and if you don’t act you’ll be liable to fine of up to £75,000.  Further fines can be imposed if you don’t start consulting in the way the legislation demands.  You could even find yourself in contempt of court.  So the first thing to do is to check whether it’s a valid request.  Then decide whether any existing consultation arrangements you have in place allow you to challenge the request.  If there’s no way round it, you will need to get your skates on, and arrange for representatives of your employees to be chosen to negotiate the arrangements to be put in place.  You will want to make sure these representatives adequately reflect the range of employees you have – including management.  You don’t want it to be dominated by individuals with their own objectives that run counter to business interests.

Even if you do receive a formal request from employees, perhaps organised by a trade union, you should still be able to negotiate consultation arrangements that are tailored to your business and that are in line with your employee relations and communication culture.

What’s the penalty for getting it wrong?  If you don’t meet your obligations under the ICE Regulations you could be taken to the Central Arbitration Committee (CAC).  If the CAC rules against you, you could then be liable to an automatic fine of up to £75,000 imposed by the Employment Appeal Tribunal (EAT).   The EAT has so far handed out three fines, one for £55,000 to publishing house Macmillans, another for £20,000 to Group 4 Security.  Both companies  were caught out because they hadn’t understood their legal obligations.  Every future failure to consult correctly could land you back in front of the CAC, with a further fine.

 

Got any questions or need advice?  Please contact us. We have genuinely unique knowledge and experience of the ICE Regulations.  We advise employers on how to comply with the legislation, and on strategies and tactics to achieve the best results for the business.  We also provide training to employee representatives and management on their roles, and how to make it all work well.