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The Importance of Early Legal Advice


The Employment Appeals Tribunal has handed down its judgement in the case of Mr T Brown v G4 Security (Cheltenham). The comments made by the EAT highlight the fact sensitive nature of assessing the amount of a penalty for non-compliance with the Information and Consultation of Employees Regulations 2004 ("Regulations").

The Regulations

The Regulations endeavour to manage the process of negotiation between employers and employees in order to reach a formal agreement in respect of how and what an employer will be obliged to inform and consult its employees about. The Regulations apply to undertakings carrying out an economic activity with 50 or more employees that have their registered offices or principal places of business in Great Britain.

Employers are not automatically required to comply with the Regulations. The Regulations only take effect if 10% of the employees have made a valid request to negotiate arrangements for information and consultation or the employer has notified its employees of its intention to start negotiation in respect of arrangements for information and consultation.

However, once the employees have made a valid request or the employer has issued its notice, the Regulations provide that an employer must make arrangements as soon as reasonably practicable for employees to elect representatives to negotiate on their behalf, tell the employees which representatives have been successfully elected and invite those representatives to start negotiating.

The Regulations also make allowance for pre-existing agreements between employers and employees. Provided that any such agreements meet certain conditions, the threshold for employees to make a valid request is raised from 10% to 40% of the workforce.

If there are no pre-existing agreements in place and the employer does not start negotiations within six months of a valid employee request, the Regulations remove the discretion for an employer and its employees to negotiate their own terms and provide that a standard set of arrangements (the Standard Information and Consultation Provisions) will automatically take effect. In addition, a Tribunal can impose a penalty for an employer's failure to comply with the Regulations of up to £75,000.

The Facts

In January 2009, Mr Brown presented G4 with a valid employee request that the Regulations be engaged. G4 arranged an informal meeting with its employees to discuss the methods of communicating information to them. However, the six month deadline (29 July 2009) passed without G4 having taken any steps under the Regulations. For example, no elections were held for the employees to elect representatives and negotiations were not commenced in respect of agreeing formal arrangements for information and consultation.

Mr Brown complained to the Central Arbitration Committee (CAC). The CAC, which is the body regulating the Regulations, determined that Mr Brown's request had been a valid employee request and that, despite G4's suggestions, there were no pre-existing agreements in place which met the requirements under the Regulations. The CAC found that G4 had made no attempt to comply with the Regulations and that because six months had passed since the date of Mr Brown's request, the standard information and consultation provisions applied from 30 July 2010. The CAC made an order that G4 arrange and hold a ballet to allow its employees to elect representatives.

In October 2009, Mr Brown applied to the Employment Appeal Tribunal for a penalty to be imposed on G4 for its failure to comply with the Regulations. In November 2009, G4 arranged a ballot to be held in March 2010, and at the time of the hearing meetings with the elected representatives were due to take place imminently.

The Tribunal found that there had been a significant failure by G4 to comply with its obligations under the Regulations until it accepted the CAC's order, the breach could not be described as technical, it had persisted for a significant period of time and although G4 argued that its financial circumstances should be taken into account, it had provided no evidence in support. However, the Tribunal acknowledged that G4 had mitigated its actions to some extent by arranging a ballot after being ordered to do so by CAC and, despite G4's size and its ability to take legal advice, there seemed to have been a misunderstanding as to whether the Regulations applied.

The Decision

The Tribunal imposed a penalty of £20,000. In reaching their decision the Tribunal considered the employers actions in the cases of Amicus v Macmillan Publishers Limited (in which a penalty of £55,000 was imposed) and Mr G Darnton v Bournemouth University (where a penalty of £10,000 had been imposed), but similarly to the EAT's guidance in Mr G Darnton v Bournemouth University, emphasised that in determining the level of the penalty to be imposed each case should be judged on its own facts. It also stressed that although the Regulations themselves provided a list of factors to be considered in determining the level of the penalty, this list was not exhaustive.


The decision emphasises the fact sensitive nature of the cases concerning a breach of the Regulations and illustrates the importance of employers taking legal advice early in the process to avoid a potentially very costly mistake.

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