The Transnational Information and Consultation of Employees Regulations 1999

The "member states" referred to are the member states of the European Economic Area (that is, the member states of the European Union plus Norway, Lichtenstein and Iceland).

Whilst the term "undertaking" is defined in neither the Regulations nor the Directive, the Government suggests⁸ that: "In European Court of Justice decisions it has been held to cover public or private entities carrying out an economic activity, whether or not operating for gain. In general this will include companies and unincorporated entities such as partnerships. Potentially, other organisations such as charities or public sector bodies are also covered where they are carrying out an economic activity."

Community-scale groups

For the purposes of determining the existence of a CSG, a "group of undertakings" means a "controlling undertaking and its controlled undertakings"; and a "group undertaking" means an undertaking that is part of a CSG (reg. 2(1)).

A "controlling undertaking" is an undertaking that can exercise a "dominant influence" over another undertaking by virtue, for example, of ownership, financial participation or the rules that govern it; and a "controlled undertaking" is an undertaking over which such a dominant influence can be exercised (reg. 3(1)).

Unless the contrary is proved, an undertaking will be presumed to be capable of exercising a dominant influence over another where, directly or indirectly, it:

In applying these criteria, a controlling undertaking's rights as regards voting and appointment shall include the rights of its other controlled undertakings, together with the rights of any person or body acting in his or its own name but on behalf of the controlling undertaking or any other of its controlled undertakings (reg. 3(3)).

Dominant influence

If two or more undertakings (whether situated in the same or in different member states) meet one or more of the "dominant influence" criteria set out in reg. 3(2) in relation to another undertaking, the criteria must be applied in the order listed in relation to each of the possible controlling undertakings, and that which meets the criterion that is highest in the order listed is presumed, unless the contrary is proved, to exercise a dominant influence over the undertaking in question (reg. 3(8)). This provision therefore meets the Directive's requirement to give priority to the controlling undertaking that satisfies the equivalent of reg. 3(2)(a), although the Directive does not go on to prioritise the other two criteria.

There is, however, no controlling or controlled undertaking if dominant influence cannot be demonstrated. The Government has declined, for example, to prescribe rules for determining which undertaking should be considered the controlling one where two or more undertakings are equal partners in a joint venture, such that none exercises a dominant influence⁹. But, according to the Government, such a joint venture undertaking may be a CSU in its own right¹⁰.

Further, a dominant influence will not be presumed to be exercised solely by virtue of the fact that an office holder is exercising functions, according to the law of a member state, relating to liquidation, winding-up, insolvency, cessation of payments, compositions of creditors or analogous proceedings (reg. 3(5)). And notwithstanding reg. 3(1) and (2), an undertaking shall not be a controlling undertaking of another undertaking in which it has holdings where the first undertaking is a company referred to in article 3(5)(a) or (c) of Council Regulation (EEC) No. 4064/89 of 21 December 1989 on the control of concentrations between undertakings.

The law applicable for determining whether or not an undertaking is a controlling undertaking is that of the member state that governs it (reg. 3(6)). If the law governing the undertaking is not that of a member state, the applicable law is that of the member state within whose territory the representative of the undertaking is situated (or, in the absence of such a representative, the territory where the management of the group undertaking that employs the greatest number of employees is situated - reg. 3(7)).

Determining number of employees

By virtue of reg. 6 of the Regulations, the number of "employees" (see the definition below ¹¹) employed for the purposes of determining whether an undertaking or group of undertakings is a CSU or CSG is calculated:

The average number of UK employees is ascertained by determining the number employed in each month in the two-year period preceding the relevant date (whether they were employed throughout the month or not), adding all the monthly numbers, and dividing the number so determined by 24¹² (see reg. 6(2)). In the Government's view, the Directive requires that the two-year average period applies in all cases. Therefore, it argues that the formula set out in reg. 6(2) means that where an undertaking has had operations in the UK for less than two years, it should still "calculate the totals for the months it had employees, and divide by 24"¹³.

There is special provision for the treatment of part-time employees for the purposes only of making reg. 6(2) calculations. If for the whole of a month within the two-year period an employee works under a contract by virtue of which he or she would have worked for 75 hours or less in that month¹⁴, the UK management may at its discretion count him or her "as half a person for the month in question"¹⁵ (reg. 6(3)). This does not, however, preclude such an employee from being treated as a full employee in calculating workforce thresholds.

A right to information

An employee or an "employees' representative" (see below) may request information from the management of an establishment or undertaking in the UK for the purpose of determining whether an establishment is part of a CSU or CSG, or an undertaking is a CSU or is part of a CSG (reg. 7(1)). The management receiving the request ("the recipient") must provide the employee or employees' representative "with information on the average number of employees employed by the undertaking or, as the case may be, the group of undertakings, in the United Kingdom and in each of the other member states in the last two years" (reg. 7(3))¹⁶.

A complaint may be made to the Central Arbitration Committee ("the CAC") by the employee or employees' representative who made the request that: the recipient has failed to provide the information referred to in reg. 7(3); or that the information provided by the recipient "is false or incomplete in a material particular" (reg. 8(1)). Where the CAC finds the complaint well-founded it must make an order requiring the recipient to disclose information to the complainant, specifying:

If the CAC considers that, from the information it has obtained in considering the complaint, it is beyond doubt that the undertaking is, or that the establishment is part of, a CSU or that the establishment or undertaking is part of a CGU, it may make a declaration to that effect (reg. 8(3)). The CAC will not consider a complaint unless it is made after the expiry of a period of one month beginning on the date on which the complainant employee or employees' representative made the request for information under reg. 7.

INITIATING THE PROCESS

Under reg. 5(1) of the Regulations, the CM of a CSU or CSG is responsible "for creating the conditions and means necessary" for the setting up of a EWC or "an information and consultation procedure" (that is, an ICP) where it is situated in the United Kingdom, and the CM initiates, or is required to initiate, by virtue of a valid request by employees or the employees' representatives made under reg. 9(1), negotiations for a EWC or ICP.

These obligations also apply where the CM is not situated in a member state, but its representative agent (to be designated if necessary) is situated in the UK or, if there is no representative agent (whether or not as a result of being designated), a UK-based establishment or group undertaking employs more employees than are employed by the CSU or CSG in any other establishment or group undertakings in any other member state - see reg. 5(2)). In these circumstances, the representative agent or the management of the relevant UK-based establishment or group undertaking is treated as being the CM (reg. 5(3)).

As drafted, however, reg. 5(1) appears to run together the general (and apparently free-standing) responsibility derived from article 4(1) of the Directive (that is, "creating the conditions ..." etc), and the specific responsibility to initiate negotiations (whether of its own volition or in response to a valid request) derived from article 5(1). This arguably weakens both propositions. More particularly, the Regulations provide that the CM "may" initiate negotiations on it own initiative (seemingly at its discretion in the absence of any request - see reg. 9(5)). Article 5(1), on the other hand, states that "in order to achieve the objective in article 1(1)", the CM shall initiate negotiations on its own initiative or on request.

Requests to negotiate

Whatever the case, the CM must initiate negotiations for the establishment of a EWC or an ICP where:

A "valid request" may consist of either:

All requests (whether single or separate) must be in writing; sent to the central or local management; and specify the date on which they were sent¹⁷ (reg. 9(3)).

Disputes over application and validity

Provision is made in reg. 10 of the Regulations for the CM to contest the validity of a request to initiate negotiations, or indeed the very applicability of the Regulations.

In the former case, if the CM considers that a request (or separate request) did not satisfy any requirement in reg. 9(2) or (3) it may apply to the CAC for a declaration as to whether the request satisfied the disputed requirement(s) (reg. 10(1)). The CAC will consider an application for such a declaration only if:

Under that paragraph, if the central management considers for any reason that the obligation to initiate negotiations under reg. 9(1) did not apply to it on the "relevant date", it may, within a period of three months commencing on the date on which the valid request was made, apply to the CAC for a declaration as to whether that obligation applied (reg. 9(3)). This covers, for example, a claim by the CM that the organisation is not an undertaking, or is not of the requisite Community-scale, or that it already has a valid voluntary "article 3" or "article 13" agreement in place, or an existing EWC or ICP agreement¹⁸.

SPECIAL NEGOTIATING BODIES

A valid request to negotiate under reg.9, or a CM decision to initiate negotiations, effectively triggers the setting up of "special negotiating body" ("SNB")¹⁹, which is the body established for the purposes of negotiating an agreement for a EWC or an ICP (or one or more ICPs) with the CM (see reg. 2(1)). The SNB thus forms the staff side of the negotiations, and has the specific task of determining, with the CM, "by written agreement, the scope, composition, functions, and term of office of a [EWC] or the arrangements for implementing an [ICP]" (reg. 11).

Composition of SNB

Where the CM of the CSU or CSG is located in the UK, the SNB must contain at least one member representing each member state in which the CSU has one or more establishments, or in which the CSG has its controlling undertaking or one or more controlled undertakings (reg. 12(2)). It must also contain a number of "additional" members calculated in accordance with the following formula:

This formula ensures that the SNB has a minimum of three members, as required by the Directive (see article 5(2)(b) - the maximum permitted membership of a SNB under the Directive is 18). The SNB itself is responsible for informing the CM and local managements of its composition (reg. 12(4)).

Selection of UK members

Whether or not the CM of the CSU or CSG is located in the UK, the UK members of the SNB must be determined in accordance with the Regulations. In the draft Regulations issued for consultation, the Government offered only the option of SNB members being elected by workforce ballot. Whilst it continues to believe that such a ballot is the right approach in most cases²⁰ , the Government nevertheless accepted a suggestion that the SNB may in certain circumstances alternatively be nominated by an appropriately constituted "consultative committee".

Workforce ballots

In the absence of such a body, therefore, the UK members of the SNB must "be elected by a ballot of the UK employees" (reg. 13(1)). Responsibility for arranging a ballot lies with the "UK management" (see the definition below) of the establishment(s) or group undertaking(s) (reg. 13(2)). The ballot must satisfy the following requirements (reg.13(3) (a)-(f)):

Note: A synopsis of the provisions governing the conduct of ballots is contained in the box on p.17.

Challenging balloting arrangements

Any UK employee or UK employees' representative who believes that the arrangements for the ballot are "defective" may, within a period of 21 days beginning on the date on which the UK management published the final balloting arrangements, present a complaint to the CAC (reg. 13(4)). Arrangements are to be regarded as "defective" if, in a case where the ballot is to comprise separate ballots, "the constituencies determined by the UK management do not reflect adequately the interests of the UK employees as a whole", or, generally, if any other requirement specified in reg. 13(3) is not satisfied (reg. 13(8)).

Where the CAC finds the complaint well-founded it must make a declaration to that effect, and may make an order requiring the UK management to modify the arrangements it has made for the ballot or to satisfy the requirements contained in the final two paragraphs of reg. 13(3). Such an order must "specify the modifications to the arrangements which the UK management is required to make and the requirements which it must satisfy" (see generally reg. 13(5) and (6)).

Nomination by consultative committee

There is, however, no requirement under the Regulations for a workforce ballot to be held to determine the UK members of the SNB where there exists "a consultative committee" entitled to nominate such members. If, however, that committee fails to nominate any of the UK members of the SNB (which includes the nomination of a number of such members that "is less or more" than the number required - see reg. 15(3)), a ballot must be held in accordance with the provisions already considered (reg. 15(2)).

For these purposes, a "consultative committee" is "a body of persons":

An "information and consultation function" means the function of:

An appropriately constituted consultative committee is "entitled to nominate from its number" the UK members of the SNB (see reg. 15(1)), and must publish the names of the persons whom it has so nominated "in such manner as to bring them to the attention of the UK management and, so far as reasonably practicable, the UK employees and UK employees' representatives" (reg. 15(6)).

In the absence of a complaint to the CAC (see immediately below), nominations to the SNB will take effect after the expiry of a period of 21 days beginning on the date on which the consultative committee published the names of those nominated. If there is an unsuccessful CAC complaint, nominations will take effect after the complaint has been determined.

Reference to CAC

If the UK management, a UK employee or a UK employees' representative believes that the consultative committee does not satisfy the requirements set out above, or that any of the persons nominated by the consultative committee is not entitled to be nominated, it or, as the case may be, he or she may, within a period of 21 days beginning on the date on which the consultative committee published the names of persons nominated, present a complaint to the CAC (reg. 15(7)).

Where the CAC finds the complaint well-founded it must make a declaration to that effect. Such a declaration will mean that all nominations made by the consultative committee will be ineffective; and all UK members of the SNB will have to be elected by workforce ballot.

NEGOTIATING AN AGREEMENT

With a view to concluding an agreement establishing a EWC or an ICP "on the detailed arrangements for the information and consultation of employees" (see reg. 17), the CM of a CSU or CSG is under an obligation "to convene a meeting with the SNB and must inform local managements accordingly" (reg. 16(1)).

SNB may decline to negotiate

The SNB may unilaterally decide not to open negotiations with the CM after a meeting has been convened, or to terminate negotiations that are already underway. Such a decision must be taken by at least a two-thirds majority of the SNB's members²³, and will have the effect of terminating the procedure for negotiating and concluding agreements forthwith. It also means that no valid request to negotiate a EWC or ICP under reg. 9 can be made within two years of the SNB's decision, unless the CM and the SNB agree otherwise.

Duty to negotiate

Where negotiations commence or continue, reg. 17(1) of the Regulations follows closely the provisions contained in article 6 of the Directive, and places the CM and the SNB ("the parties") under a joint "duty to negotiate in a spirit of cooperation with a view to reaching a written agreement on the detailed arrangements for the information and consultation of employees in a CSU or CSG" (reg. 17(1)). That agreement may take the form of an agreement establishing a EWC or, alternatively, one or more ICPs (see regs. 17(3) and 2(1)). Unless a wider scope is provided for in the agreement, the powers and competence of a EWC and the scope of an ICP will, in the case of a CSU, cover all the establishments located within the member states and, in the case of a CSG, all group undertakings located therein (reg. 17(8)).

For the purpose of the negotiations, the SNB may be assisted by experts of its choice, and the CM must pay for any reasonable expenses relating to the negotiations that are necessary to enable the SNB to carry out its functions in an appropriate manner. But where the SNB is assisted by more than one expert the CM is required to pay expenses only for one of them (reg. 16(6)).

EWC agreements

Where the parties decide to proceed with the establishment of a EWC, the agreement must determine at least:

Where a CSG comprises one or more undertakings or groups of undertakings which are themselves CSUs or CSGs, the EWC must be established at the level of the first-mentioned CSG, unless the agreement provides otherwise.

The ICP alternative

Significantly more flexible and limited minimum requirements apply if the parties decide to establish an ICP instead of a EWC. In this case:

An "information and consultation representative" is defined by the Regulations simply as "a person who represents employees in the context of an [ICP]" (reg. 2(1)).

Content of consultation?

A EWC or ICP agreement under these provisions is not subject to the subsidiary requirements on statutory EWCs (see below), except to the extent that the parties provide in the agreement that any (or all ) of those requirements are to apply (see reg. 17(6)). As drafted, therefore, the minimum requirements even for a negotiated EWC agreement are essentially technical and procedural. They do not expressly prescribe the issues to be covered, or the nature and quality of the consultation required.

It is nevertheless clear that a "consultation" must in principle take the form, at least, of "the exchange of views and establishment of dialogue" between EWC members or information and consultation representatives and the CM or any more appropriate level of management (see the general definition below). Consultation must also, it is submitted, conform with the Directive's general aim to "improve" employees' information and consultation rights (see article 1(1)).

SUBSIDIARY REQUIREMENTS: THE STATUTORY EWC

Regulation 18 of the Regulations implements the requirements of article 7 of the Directive, and provides that subsidiary requirements setting out the template for a "statutory" or "model" EWC will apply where:

The subsidiary requirements are contained in the Schedule to the Regulations, and are summarised in the box on p.21.

The six-month and three-year periods just mentioned will be suspended until the determination of an application to the CAC by the CM challenging the validity of a request to negotiate (under reg. 10(1)) or the application of the general obligation to initiate negotiations (under reg. 10(3) - see reg. 10(4)). But if the CAC does not make any declaration in favour of the CM, and considers that the CM has, in making the application or conducting the proceedings, acted frivolously, vexatiously, or otherwise unreasonably, the CAC must declare that the suspension of time provided for in reg. 10(4) does not apply (reg. 10(5)).

Cooperation in operation

The CM, the EWC and information and consultation representatives are under "a duty to work in a spirit of cooperation with due regard to their reciprocal rights and obligations" (reg.19). This must refer to their reciprocal rights and obligations in operating a negotiated EWC or ICP agreement, or a "statutory" EWC.

COMPLIANCE AND ENFORCEMENT

The referral and dispute-resolution mechanisms considered thus far almost all involve references or complaints to the CAC (or, depending on the complaint, where the CM, UK management or recipient of confidential information is located in Northern Ireland, the Industrial Court). An appeal lies from the CAC to the EAT on a question of law (and from the Industrial Court to the NI Court of Appeal).

In contrast, disputes over the CM's duty to establish a EWC or ICP or about breaches by either party in relation to their operation are to be determined in the first instance by the EAT (although the Industrial Court remains the initial forum in NI).

Failure to establish EWC or ICP

A complaint may be presented to the EAT by a "relevant applicant" (that is, the SNB, or in the absence of a SNB, an employee, employees' representative, or person who was a member of the SNB - if that body existed previously), who considers:

For these purposes, "failure" means "an act or omission", and a failure by the local management is treated as a failure by the CM (reg. 20(2)).

Where the EAT finds the complaint well-founded it must make a "decision" to that effect, and may make "an order requiring the [CM] to take such steps as are necessary to establish the EWC or ICP in accordance with the terms of the agreement under reg. 17 or, as the case may be, to establish a EWC in accordance with the provisions of the Schedule" (reg. 20(4)). An order made under this provision must specify: the steps that the CM is required to take; the date of the failure of the CM; and the period within which the order must be complied with (reg. 20(6)).

Further, if the EAT makes a decision under reg. 20(4) (whether or not it also makes an order), it must issue a "written penalty notice" to the CM requiring it to pay a penalty to the Secretary of State in respect of the failure (reg. 20(7)), unless it "is satisfied", on hearing the representations of the [CM], that the failure resulted from a reason beyond the [CM's] control or that it has some other reasonable excuse for its failure" (reg. 20(8)). The amount of any penalty notice is to be calculated in accordance with reg. 22 of the Regulations.

The EAT cannot, however, uphold a complaint under these provisions where either:

Disputes about operation

Where a EWC or ICP procedure has been established by agreement under reg. 17, or a statutory EWC under the Schedule to the Regulations has been established by virtue of reg. 18, a complaint may be presented to the EAT by a relevant applicant who considers that, because of the failure of a defaulter, the terms of the agreement under reg.17 or, as the case may be, the provisions of the Schedule, have not been complied with reg.21(1).

Relevant applicants under this provision are, in the case of a "failure" (defined in the same terms as s.20(2) - see reg. 21(2)) concerning a EWC, either the CM or the EWC; or, in the case of a failure concerning an ICP, either the central management or any one or more of the information and consultation representatives, and the "defaulter" is the CM, EWC or information and consultation representative(s) against whom the complaint is presented (reg. 21(3)).

Again, where the EAT considers that a complaint under these provisions is well founded, it must make an order to that effect. It may make an order requiring the defaulter to take such steps as are necessary to comply with the terms of the agreement under reg. 17 or, as the case may be, the subsidiary requirements of the Schedule, and specifying: the steps that the defaulter is required to take; the date of the failure; and the period within which the order must be complied with. If the defaulter in question is the CM, the EAT must issue a "written penalty notice", unless the CM can demonstrate one of the permissible reasons set out above (reg. 21(6) and (7) - mirroring reg. 20(7) and (8)).

Penalty notices

A penalty notice issued under regs. 20 or 21 must specify the amount of the penalty which is payable, up to a maximum of £75,000; the date before which the penalty must be paid (which must itself be not earlier than the end of the period within which an appeal against the EAT's decision or order may be made); and the failure and period to which the penalty relates (reg. 22(1), (2) and (4)).

In setting the amount of the penalty, the EAT must take into account:

If the date specified in a penalty notice has passed and, either, the period for appeal has passed, or such an appeal has been made and determined, the Secretary of State may recover from the CM, as a civil debt due to him, any amount payable under the penalty notice that remains outstanding (reg. 22(5)). The making of an appeal suspends the effect of a penalty notice (reg. 22(6)).

Reference for conciliation

If the CAC, EAT or the Industrial Court, "is of the opinion" that any application or complaint brought before it under the Regulations "is reasonably likely" to be settled by conciliation", it must refer the application or complaint to ACAS or (in Northern Ireland) the Labour Relations Agency ("LRA"). It must notify the applicant or complainant and any persons whom it considers have a proper interest in the application or complaint accordingly, whereupon ACAS or the LRA, "shall seek to promote a settlement of the matter" (reg. 39(1)).

This provision is not to be confused with conciliation in individual employment protection cases under s.18 of the Employment Tribunals Act 1996, which has been amended to cover the Regulations (reg. 33).

CONFIDENTIAL INFORMATION

In its consultative document and the draft Regulations, the Government controversially proposed criminal sanctions for a breach of the duty, contained in article 8(1) of the Directive, on past or present members of SNBs or EWCs, information and consultation representatives, and experts assisting them (including those assisting EWC select committees) not to disclose information expressly provided to them in confidence by the CM. Following consultation, however, the Government resiled from this position, and accepted that it might be difficult to prosecute such an offence and that it could set "the wrong climate for a positive dialogue"²⁴.

Breach of statutory duty

Regulation 23(1), therefore, provides that a person in one of the groups identified above ("the recipient") must not disclose any information or document that is or has been in his or her possession by virtue of his or her position, which the CM "has entrusted to him on terms requiring it to be held in confidence". But this obligation is a duty owed to the central management, the breach of which is actionable as a civil breach of statutory duty. It will, however, be a defence to such an action if the recipient "reasonably believed" the disclosure to be a "protected disclosure" within the meaning of s.43A of the Employment Rights Act 1996 ("the ERA"): or, as the case may be, article 67A of the Employment Rights (Northern Ireland) Order 1996 ("the 1996 NI Order" - see generally The Public Interest Disclosure Act 1998).

Where the CM is situated in the UK, a recipient who has been entrusted with any information or document in confidence may apply to the CAC (read Industrial Court in NI) for a declaration as to whether it was reasonable for the CM to impose such a requirement (reg. 23(6)). If the CAC considers that the disclosure of the information or document by the recipient "would not, or would not be likely to, prejudice or cause serious harm to the undertaking", it must make a declaration that such a requirement was not reasonable (reg. 23(7)). The information will not thereafter be regarded as having been entrusted to the recipient who made the application, or to any other recipient, on terms requiring it to be held in confidence (reg. 23(8)).

Withholding of information by CM

Regulation 24 gives effect to article 8(2) of the Directive. It thus provides that the CM "is not required to disclose any information or document to a recipient when the nature of the information or document is such that, according to objective criteria, the disclosure of the information or document would seriously harm the functioning of, or would be prejudicial to, the undertaking or group of undertakings concerned" (reg. 24(1)).

The CM or a recipient may apply to the CAC for a declaration as to whether the information or document withheld is of such a nature. If the CAC makes a declaration that it is not, it must order the CM to disclose the information or document. Such an order must specify: the information or document to be disclosed; the recipient or recipients to whom the information or document is to be disclosed; any terms on which the information or document is to be disclosed; and the date before which the information or document is to be disclosed (see generally reg. 24(2)-(4)).

INDIVIDUAL EMPLOYMENT PROTECTION

Article 10 of the Directive requires that SNB and EWC members, and information and consultation representatives acting within the framework of an ICP, enjoy the same protections and guarantees provided to other employees' representatives by the legislation and/or practice in force in their country of employment. Part VI of the Regulations accordingly deals with the right to paid time off; protection against dismissal; and protection against detrimental treatment short of dismissal.

Right to time off

An employee who is:

is entitled to be permitted by his or her employer to take "reasonable time off" during his or her working hours in order to perform his or her functions as such a member, representative or candidate (reg. 25(1)). For these purposes, the working hours of an employee shall be taken to be any time when, in accordance with his or her contract of employment, the employee is required to be at work (reg. 25(2)).

Payment for time off

An employee who is permitted to take such reasonable time off is entitled to be paid remuneration by his or her employer for the time taken off at "the appropriate hourly rate" (reg. 26(1)). The "appropriate hourly rate", in relation to an employee, is the amount of one week's pay²⁵ divided by the number of normal working hours in a week for that employee when employed under the contract of employment in force on the day when the time is taken (reg. 26(3)) - see also reg. 26(4) and (5), which deal with the situation where normal working hours vary from week to week or over a longer period.

A statutory right to payment under these provisions does not affect any right to remuneration under the employee's contract of employment, although any such contractual remuneration paid in respect of a period of time off required under reg. 25 goes towards discharging the employer's duty to pay statutory remuneration in respect of that period, and vice versa (reg. 26(6) and (7)).

Complaints to tribunals

An employee may complain to an employment tribunal (or, in NI, an industrial tribunal) that his or her employer has unreasonably refused to permit him or her to take time off required by reg. 25; or has failed to pay the whole or any part of any amount to which the employee is entitled (reg. 27(1)).

The complaint must be presented: before the end of the period of three months beginning with the day on which the time off was taken or on which it is alleged the time off should have been permitted; or within such further period as the tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of the three-month period (reg. 27(2)).

Where a tribunal finds a complaint to be well-founded, it must make a declaration to that effect. If the complaint is that the employer has unreasonably refused to permit the employee to take time off, the tribunal must also order the employer to pay to the employee "an amount equal to the remuneration to which he would have been entitled under reg. 26 if the employer had not refused" (reg. 27(4)); if the complaint is that the employer has failed to pay the employee the whole or part of any amount to which he or she is entitled under reg. 26, the tribunal must order the employer "to pay to the employee the amount which it finds due to him".

Automatically unfair dismissal

It will be regarded as automatically unfair for the purposes of Part X of the Employment Rights Act 1996 ("the ERA" - or Part XI of the 1996 NI Order) to dismiss (or select for redundancy) an employee who falls into one of two (potentially overlapping) groups. There is no qualifying period of continuous employment required for either of these groups to bring an unfair dismissal complaint, and no upper age limit.

The first group comprises the same employees as have the right to paid time off considered above - that is, members of a SNB or EWC; information and consultation representatives; or candidates in an election leading to any person becoming such a member or representative (reg. 28(2)). An employee in this group is protected if the reason, or principal reason, for dismissal, or selection for redundancy, is that:

The second group comprises "any employee" [our emphasis] whether or not he or she falls within the first group (reg. 28(5)), and such an employee is protected if the reason, or principal reason, for dismissal (or selection for redundancy) is that he or she:

Protection from detriment

An employee in either of the groups just identified also has the right "not to be subjected to any detriment [short of dismissal] by any act, or deliberate failure to act, by his employer", which is done on "a [specified] ground". The specified grounds are in all material respects identical to the prohibited reasons for dismissal under the Regulations, and apply to the same groups (see generally reg. 31).

Employees may complain to an employment tribunal (or, in NI, to an industrial tribunal) that they have been subjected to a detriment in contravention of that regulation (reg. 32(1)). The provisions of ss.48(2)-(4) and 49 of the ERA govern, respectively, the complaints process (including time limits) and remedies. We considered the latter provisions most recently in our Guidance Note on "The Public Interest Disclosure Act 1998". Regulation 41 ensures that the normal conditions on prohibiting contracting out of the protection of the Regulations, ACAS settlements and compromise agreements apply.

Footnotes

¹ "Implementation in the UK of the European Works Council Directive - a consultative document" ("the consultative document" - URN 99/926), Department of Trade and Industry.

² The Directive was the first measure to be adopted under the Protocol and Agreement on Social Policy appended to the Treaty of Rome, and was extended to the UK by the "extension" Directive of 15 December 1997 (No. 97/74/EC).

³ SI No. 3323. The DTI has produced brief guidance on the Regulations (December 1999).

⁴ The EWC Directive should have been transposed into UK law by 15 December 1999. According to the Government, the slight delay in implementation was justified by the need to "make sure that employers and employees had sufficient time to familiarise themselves with the new rules" (DTI press release (P/99/1023), 14.12.99).

⁵ See the consultative document. Alan Johnson recently dismissed suggestions that this underestimates the number of UK-based companies likely to be affected (3.2.2000, Seventh Standing Committee on Delegated Legislation, Official Report, cols. 10-11 and 21).

⁶ Where such UK-based CSUs or CSGs already have a negotiated EWC or ICP agreement or a statutory EWC in place subject to the law of another member state, they may agree to "repatriate" it so that it is in future operated subject to the Regulations (see regs. 42 and 43). Note that certain provisions in the Regulations apply irrespective of whether the central management of the CSU or CSG is located in the UK, including: information on employee numbers; determining UK members of special negotiating bodies and statutory EWCs; the individual civil duty of confidentiality; and individual employment protection rights.

⁷ The Directive is silent about the legal status of voluntary agreements, and the Government has decided that both this issue and the question of arrangements for dispute resolution should be left to the parties (see the DTI note on the "Outcome of the public consultation on implementation of the EWC Directive" - "the DTI note", December 1999).

⁸ See especially the consultative document. This suggestion would seem to be based in particular on ECJ case law on what constitutes an undertaking under the Business Transfers Directive (No. 77/187/EEC), which is itself now enshrined in new article 1(1)(c) of that Directive as amended.

⁹ See the DTI note.

¹⁰ ibid.

¹¹ ibid. The Government did not consider the wider definition of "worker" to be appropriate (see the DTI note).

¹² Taking an example drawn from the consultative document, if the aggregate of monthly numbers of employees employed by an undertaking over a two-year period was 16,800, the UK average number employed would be 700.

¹³ See the consultative document.

¹⁴ Based on the assumption that the month in question contained 21 working days, and that the employee had no absences from work and worked no overtime (see reg. 6(3) (a)-(c)).

¹⁵ Article 2(2) of the Directive states that: "the prescribed thresholds for the size of the workforce shall be based on the average number of employees, including part-time employees, employed during the previous two years ..." The Government believes that the pro rata option offered under reg. 6(3) is consistent with what it describes as the "numerical approach" contained in article 2(2), and that it is appropriate for these purposes (see the DTI note).

¹⁶ The first reference to the European Court of Justice on article 11(1) and (2) of the Directive (broadly speaking, the equivalent of reg. 7) raises the question of whether the right to information laid down therein exists even where it is not (yet) established whether there is a "controlling undertaking" in a group of undertakings (so as to establish a CSG), and whether it includes the right to request information which gives rise to a presumption of "dominant influence". It also raises the more general issue of whether the right to information includes "the right to request documents from an undertaking to clarify and explain such information" (Betriebsrat (Works Council) of Joseph H Boquoi Deutschland West GmbH & Co KG v Joseph H Boquoi Deutschland West GmbH & Co KG, Case No. C-62/99).

¹⁷ The date on which a valid request is made is, where it consists of a single request or of separate requests made on the same day, the date on which the request is or requests are sent; and where it consists of separate requests made on different days, the date of the sending of the request which resulted in the employee numbers threshold being satisfied in at least two member states (reg. 9(4)).

¹⁸ See the DTI note.

¹⁹ If a SNB was validly requested or established in relation to a UK-based CSU or CSG under the law of another member state before 15 January 2000, the Regulations will broadly speaking apply for the future as if the request had been made or the SNB established under them (see generally reg. 47).

²⁰ ibid. The Government also believes that this complies with article 5(2) of the Directive, which requires member states to ensure "that employees in undertakings and/or establishments in which there are no employees' representatives through no fault of their own, have the right to elect or appoint members of the [SNB]".

²¹ The Government has relaxed the originally proposed constraints on the way in which undertakings can be split into constituencies (see the DTI note). Thus, it seems that constituencies might be based on existing establishments, regions, grades of employees or even job functions. But the warning in the consultative document that groupings should not be made so as to favour "a small, unrepresentative part of the workforce" remains valid.

²² An "independent ballot supervisor" is a person who the UK management reasonably believes will carry out any functions conferred on him or her in relation to the ballot competently, and has no reasonable grounds for believing that his or her independence in relation to the ballot might reasonably be called into question (reg. 13(7)).

²³ The SNB otherwise acts by a simple majority vote (reg. 16(2)), including for the purposes of concluding EWC or ICP agreements.

²⁴ See the DTI note.

²⁵ Chapter II of Part XIV of the ERA (definition of "a week's pay") and, in relation to NI, Chapter IV of Part I of the 1996 NI Order apply for these purposes.

Some key definitions (reg.2(1))

"Employees": An "employee" under the Regulations is an individual "who has entered into or works under a contract of employment" (defined as a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing). This includes, for the purposes of the provisions on the protection of employees in relation to time off, dismissal and detriment, an individual who "worked" under such a contract (reg. 2(1)). But note that no "long-haul crew member" of a merchant navy crew can be a member of a SNB or EWC, or be an information and consultation representative, unless the CM decides otherwise. A long-haul crew member is a member of a merchant navy crew other than a ferry worker, or a person who normally works on voyages of less than 48-hours in duration. Such employees must, however, be counted in determining employee thresholds and included within the scope of a EWC or IPC (reg. 46).

"Employees' representatives" means:

(a)If the employees are of a description in respect of which an independent trade union is recognised by their employer for the purpose of collective bargaining, the representatives of the trade union who normally take part as negotiators in the collective bargaining process, and

(b)any other employee representatives elected or appointed by employees to positions in which they are expected to receive, on behalf of the employees, information -

(i)which is relevant to the terms and conditions of employment of the employees, or

(ii)about the activities of the undertaking that may significantly affect the interests of the employees,

but excluding representatives who are expected to receive information relevant only to a specific aspect of the terms and conditions or interests of the employees, such as health and safety or collective redundancies.

"Central management": means the central management of a Community-scale undertaking, or in the case of a Community-scale group of undertakings, the central management of the controlling undertaking. Where appropriate, this is the central management of an undertaking or group of undertakings that could be or is claimed to be a Community-scale undertaking or Community-scale group of undertakings.

"Local management": means the management of one or more establishments in a Community-scale undertaking or of one or more undertakings in a Community-scale group of undertakings that is not the central management.

"UK management": means the management that is, or would be, subject to the obligation to arrange a ballot for the UK members of a special negotiating body or a statutory EWC, being either the central management in the UK or the local management in the UK.

"Consultation": means "the exchange of views and establishment of dialogue" between members of a EWC in the context of a EWC, or information and consultation representatives in the context of an IPC, and central management or any more appropriate level of management.

Conduct of SNB ballots: a summary

Duties of UK management (reg. 14(1)):

The UK management is under a duty to ensure that the independent ballot supervisor carries out the functions prescribed under the Regulations and summarised below, and that there is no interference with his or her carrying out of those functions from the UK management, or the central management (where it is not also the UK management). It must also comply with all reasonable requests made by a ballot supervisor for the purposes of, or in connection with, the carrying out of his or her functions.

Requirements of ballot supervisor's appointment (reg. 14(2)):

A ballot supervisor's appointment must require that he or she:

(i)where no complaint has been presented under regulation 13(4), before the expiry of a period of 21 days beginning on the date on which the UK management published its final ballot arrangements; or

(ii)where a complaint has been presented under regulation 13(4), before the complaint has been determined and, where appropriate, the arrangements have been modified as required by an order made by the CAC as a result of the complaint;

Publication of ballot results:

As soon as reasonably practicable after the holding of the ballot, the ballot supervisor must publish the results in such manner as to make them available to the UK management and, so far as reasonably practicable, the UK employees entitled to vote in the ballot and the persons who stood as candidates in the ballot (reg. 14(3)).

Ineffective ballot reports:

A ballot supervisor must publish "an ineffective ballot report" where he or she considers (whether or not on the basis of representations made to him or her by another person) that:

The report must be published within a period of one month commencing on the date on which the ballot supervisor publishes the results of the ballot (reg. 14(5)), and in such manner as to make it available to the UK management and, so far as reasonably practicable, the UK employees entitled to vote in the ballot and the persons who stood as candidates in the ballot (reg. 14(6)).

Where an ineffective ballot report has been published in respect of a single ballot or in respect of every separate ballot, the outcome of the ballot or ballots will have no effect and the UK management will again be under the reg. 13(2) obligation to arrange a ballot. If only one or a number (but not all) of the separate ballots are the subject of a report, the UK management must arrange only for those ballot(s) to be reheld. These ballots will not be effective until they have been reheld and no ineffective ballot report has been published in respect of them (reg. 14(7)).

Costs of the ballot:

All costs relating to the holding of a ballot, including payments made to the independent ballot supervisor(s), are to be borne by the central management (whether or not an ineffective ballot report has been made - reg. 14(8)).

Statutory EWCs: the subsidiary requirements in outline

The Schedule to the Regulations sets out the subsidiary requirements that apply where a statutory EWC is to be established under reg. 18.

Composition of statutory EWCs (para. 2):

A statutory EWC must comprise a minimum of three, and a maximum of 30, members. It must include at least one member representing each member state in which the CSU has one or more establishments, or in which the CSG has its controlling undertaking or one or more controlled undertakings. There will be a maximum of three additional members per member state depending on the proportion of the employees of the undertaking or group of undertakings employed therein, and to be calculated using the same formula as applies to determining the number of additional members of the SNB. The EWC must inform the central management and any more appropriate level of management of its composition. Where the EWC decides that its size so warrants, it must elect from among its members a select committee comprising no more than three members who are to act on its behalf.

Appointment or election of UK members (para. 3):

The UK members of the statutory EWC must be UK employees and:

All of the UK employees will be deemed to be represented by UK employees' representatives for the purposes of the former provision if each of them is a UK employee:

(i)which is relevant to the employee's terms and conditions of employment; or

(ii)about the activities of the undertaking that may significantly affect the employee's interests -

but excluding representatives who are expected to receive information relevant only to a specific aspect of the terms and conditions or interests of the employee, such as health and safety or collective redundancies. Election or appointment where all the employees are represented (or are deemed to be represented) by employees' representatives under this provision "shall be carried out by whatever method the UK employees' representatives decide".

EWC ballots (paras. 4 and 5):

If all the employees are not represented, the UK members of the statutory EWC "are to be elected by a ballot of the UK employees" that complies with requirements in relation to balloting arrangements and conduct that are in almost all material respects identical to those for SNB ballots (for references to SNB read EWC). The only difference of substance is the requirement that only employees of the CSU or CSG are entitled to stand as candidates for election to a statutory EWC. In contrast to the position with SNB ballots, therefore, employees' representatives who are not also employees are excluded from standing.

Competence of statutory EWCs (para. 6):

The competence of a statutory EWC is "limited to information and consultation on the matters which concern the CSU or CSG as a whole or at least two of its establishments or group undertakings situated in different member states". Where the CM of a CSU or CSG is not located in a member state (but is regarded as being located in the UK), the competence of the EWC is limited to those matters concerning all of its establishments or group undertakings situated within the member states or concerning at least two of its establishments or group undertakings situated in different member states.

Information and consultation meetings (para. 7):

A statutory EWC has a basic right to meet with the CM once a year in an information and consultation meeting ("ICM") to be informed and consulted, on the basis of a report drawn up by the central management, "on the progress of the business of the CSU or CSG and its prospects". Central management must inform local managements accordingly. The annual ICM must relate in particular to:

Exceptional ICMs (para. 8):

Where there are "exceptional circumstances affecting the employees' interests to a considerable extent, particularly in the event of relocations, the closure of establishments or undertakings or collective redundancies", the select committee or, where no such committee exists, the EWC has the right to be informed. It has the further right to meet in an "exceptional information and consultation meeting ['EICM']", at its request, the CM, "or any other more appropriate level of management" within the CSU or CSG that has "its own powers of decision", so as "to be informed and consulted on measures significantly affecting employees' interests".

Members of the EWC who have been elected or appointed by the establishments or undertakings that are directly concerned by the measures in question also have the right to participate in an EICM organised with the EWC's select committee. An EICM must take place as soon as possible on the basis of a report drawn up by the central management or any other appropriate level of management of the CSU or CSG, on which an opinion may be delivered at the end of the meeting or within a reasonable time. EICMs do not, however, affect the decision-making "prerogatives" of the CM.

Procedural and operational matters (para. 9):

The subsidiary requirements in the Schedule to the Regulations deal with a number of procedural and operational matters relating to EWCs and the various meetings:

(a)the representatives of the employees in the establishments of a CSU or in the undertakings of a CSG; or

(b)to the extent that any employees are not represented by employees' representatives, the employees themselves -

of the content and outcome of the information and consultation procedure carried out in accordance with the subsidiary requirements.

Reviewing application of subsidiary requirements (para. 10):

Four years after a statutory EWC is established, it must examine whether to open negotiations for the conclusion of an agreement under reg. 17 or to continue to apply the subsidiary requirements in the Schedule. If the EWC decides to adopt the former course, it must notify the central management in writing to that effect. Such notification will be treated as a valid request to negotiate made under reg. 9, and the relevant regulations governing the negotiating process (that is, regs. 16, 17 and 18) will apply as if references therein to the SNB were references to the EWC.

²⁶ Following the consultation process, the Government dropped a proposal that the Chair of ICMs should alternate between a CM appointee and a EWC member. It has thus declined to take advantage of the option in the Directive to legislate on this question, and the matter is left to the parties to decide.