The claimant presented a petition to the respondent, requesting that, in accordance with the ICE regulations, arrangements be made for information and consultation between the employees and the respondent. Although an informal meeting regarding methods of communication took place, the deadline for compliance with the ICE regulations passed, with no appropriate steps having been taken under the regulations to arrange for a ballot. The claimant complained to the Central Arbitration Committee (CAC) who held that, whilst the petition was somewhat ambiguous, it was in accordance with the ICE regulations. The respondent claimed that it was under no obligation to comply with the ICE regulations as it had alternative negotiating arrangements in place. The CAC decided that the respondent had confused two entirely distinct issues: collective bargaining arrangements and an employer’s obligations under regulation 14 of ICE. The CAC found that there was no evidence of compliance with the ICE regulations and therefore the employer had failed to carry out their duty under the regulations. The CAC consequently made orders under regulation 19(5) for the employer to arrange the holding of a ballot. The respondent did then concede that the regulations applied. The claimant then applied to the EAT, soon after which the employer consulted with ACAS with regard to holding a ballot.

The EAT accepted that the employer may have been under a misapprehension as to their obligations under ICE, referring to consultation arrangements that they had in place. However, as the CAC had pointed out, those were collective bargaining arrangements and not arrangements under ICE. They also took into account, when deciding the level of penalty, that the employer had since taken steps to comply with their obligations under ICE. In the absence of evidence of possible financial hardship, the EAT imposed a penalty of £20,000.

_____________________________

Appeal No. UKEAT/0526/09/RN

EMPLOYMENT APPEAL TRIBUNAL

58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

At the Tribunal

On 27 April 2010

Before

THE HONOURABLE MRS JUSTICE SLADE

MR D EVANS CBE

MRS D PALMER

MR T BROWN (APPELLANT)

G4 SECURITY (CHELTENHAM) (RESPONDENT)

Transcript of Proceedings

JUDGMENT

For the Appellant MR TIM BROWN (The Appellant in Person)

For the Respondent MR PETAR STARCEVIC (of Counsel)
Instructed by:
Messrs Langleys Solicitors
Olympic House
Doddington Road
Lincoln
LN6 3SE

A penalty of £20,000 was imposed by the Employment Appeal Tribunal on an employer which failed to comply with its obligations under the Information and Consultation of Employees Regulations 2004. Amicus v Macmillan Publishers Ltd [2007] IRLR 885 and Darnton v Bournemouth University UKEAT/0391/09/RN considered.

[No applicable topic number.]

1. This is an application by Mr Brown for the Employment Appeal Tribunal to issue a Penalty Notice under Regulation 22(6) of the Information and Consultation of Employees Regulations 2004, ('the ICE Regulations'). The ICE Regulations are the domestic law implementation of the European Directive 2002/14/EC establishing a general framework for employers to inform and consult employees on various matters including recent and probable development of an undertaking's or establishment's activities and economic situation.

1. The relevant provisions of the ICE Regulations are as follows:

"7. - (1) On receipt of a valid employee request, the employer shall, subject to paragraphs (8) and (9), initiate negotiations by taking the steps set out in regulation 14(1).

(2) Subject to paragraph (3), an employee request is not a valid employee request unless it consists of -

(a) a single request made by at least 10 per cent of the employees in the undertaking.

14. - (1) In order to initiate negotiations to reach an agreement under these Regulations the employer must as soon as reasonably practicable -

(a) make arrangements, satisfying the requirements of paragraph (2), for the employees of the undertaking to elect or appoint negotiating representatives; and thereafter

(b) inform the employees in writing of the identity of the negotiating representatives; and

(c) invite the negotiating representatives to enter into negotiations to reach a negotiated agreement.

…

(3) The negotiations referred to in paragraph (1)(c) shall last for a period not exceeding six months, commencing at the end of the period of three months beginning with the date on which the employee request was made or the valid employer notification was issued.

**

**

18. - (1) Subject to paragraph (2) -

(a) where the employer is under a duty, following the making of a valid employee request or issue of a valid employer notification, to initiate negotiations in accordance with regulation 14 but does not do so, the standard information and consultation provisions shall apply from the date -

(i) which is six months from the date on which the valid employee request was made.

19. - (1) Where the standard information and consultation provisions are to apply, the employer shall, before the standard information and consultation provisions start to apply, arrange for the holding of a ballot of its employees to elect the relevant number of information and consultation representatives.

…

(3) In this regulation the "relevant number of information and consultation representatives" means one representative per 50 employees, or part thereof, provided that number is at least 2 and does not exceed 25.

(4) An employee or an employee's representative may complain to the CAC that the employer has not arranged for the holding of a ballot in accordance with paragraph (1).

(5) Where the CAC finds the complaint well-founded, it shall make an order requiring the employer to arrange, or re-arrange, and hold the ballot.

(6) Where the CAC finds a complaint under paragraph (4) well-founded, the employee or the employee's representative may make an application to the Appeal Tribunal under regulation 22(6) and paragraphs (7) and (8) of that regulation shall apply to any such application.

…

22. - (1) Where

(a) …

(b) the standard information and consultation provisions apply

a complaint may be presented to the CAC by a relevant applicant who considers that the employer has failed to comply with the terms of the negotiated agreement or, as the case may be, one or more of the standard information and consultation provisions.

…

(4) Where the CAC finds the complaint well-founded it shall make a declaration to that effect and may make an order requiring the employer to take such steps as are necessary to comply with the terms of the negotiated agreement or, as the case may be, the standard information and consultation provisions.

…

(6) If the CAC makes a declaration under paragraph (4) the relevant applicant may, within the period of three months beginning with the date on which the declaration is made, make an application to the Appeal Tribunal for a penalty notice to be issued.

(7) Where such an application is made, the Appeal Tribunal shall issue a written penalty notice to the employer requiring him to pay a penalty to the Secretary of State in respect of the failure unless satisfied, on hearing representations from the employer, that the failure resulted from a reason beyond the employer's control or that he has some other reasonable excuse for his failure.

(8) Regulation 23 shall apply in respect of a penalty notice issued under this regulation.

23. - (1) A penalty notice issued under regulation 22 shall specify -

(a) the amount of the penalty which is payable;

(b) the date before which the penalty must be paid; and

(c) the failure and period to which the penalty relates.

(2) No penalty set by the Appeal Tribunal under this regulation may exceed £75,000.

(3) Matters to be taken into account by the Appeal Tribunal when setting the amount of the penalty shall include -

(a) the gravity of the failure;

(b) the period of time over which the failure occurred;

(c) the reason for the failure;

(d) the number of employees affected by the failure; and

(e) the number of employees employed by the undertaking or, where a negotiated agreement covers employees in more than one undertaking, the number of employees employed by both or all of the undertakings."

The maximum penalty which may be imposed by the Employment Appeal Tribunal is £75,000.

1. Mr Brown is an employee of the Respondent, one of an establishment of about 350 employees in the relevant undertaking. The PCS union is recognised by the employers for collective bargaining purposes. About 70 of the 350 employees, those of managerial, specialist and administrative status, are not members of the union. The background to the request for information and consultation arrangements under the ICE appears to have been pay negotiations. However, it is important to have in mind that the ICE regulations are not concerned with collective bargaining, but with arrangements for information and consultation between employers and employees.

1. In January 2009 the Claimant collected 85 signatories to a petition requesting that the ICE regulations be engaged. This number represented over 20 per cent of the affected employees. The petition was presented to the Respondent on 30 January 2009. The wording of the petition was somewhat ambiguous, but the CAC determined that the request in the petition was in accordance with the ICE Regulations.

1. An informal meeting took place on 3 March 2009 regarding methods of communicating between the Respondent and employees. The deadline for compliance with the ICE Regulations passed on 29 July 2009 with no appropriate steps having been taken under the Regulations.

1. On 4 August 2009 the Complainant submitted a complaint to the CAC under regulation 19. The position of the Respondent on receiving such a complaint was that it was not under an obligation to comply with the ICE Regulations, as it had alternative negotiating arrangements in place. Following a request by the CAC for clarification, the Respondent later conceded that the regulations did apply. The CAC in a letter to the Respondent, dated 14 August 2009, wrote:

"The response, and in particular paragraphs 4 and 7, appears to confuse two entirely distinct issues: collective bargaining arrangements on the one hand and an employer's obligations under regulation 14 of ICE on the other, in the event of a valid employee request under regulation 7."

1. The employer's response of 7 September 2009 indicated that originally it was of the view that the ICE Regulations did not apply as the Claimant was not a trade union representative, nor were the petitioners sufficient in number for a regulation 18 requirement to be engaged. It is to be noted that the Respondent did not unequivocally accept that the Regulations applied.

1. The CAC decided that the petition of 30 January 2009 was a valid employee request under the ICE Regulations; it held that there were no pre-existing arrangements so as to satisfy the ICE Regulations; that the employer had not taken the necessary steps under regulation 14 to reach a negotiated agreement; that regulation 18 applies and that the standard information and consultation provisions apply from six months from the valid employee request. Accordingly the statutory provisions applied from 30 July 2009.

1. The CAC found that there was no evidence of compliance with regulation 18, therefore it found the employer had failed to carry out their duty under the Regulations and the complaint under regulation 19 was upheld. Further, the CAC made orders under regulation 19(5) for the employer to arrange the holding of a ballot. The CAC pointed out that schedule 2 to the Regulations applied to the holding of that ballot.

1. The decision and order of the CAC were originally issued on 5 October 2009 but amended and reissued on 12 October 2009. On 20 October 2009 Mr Brown applied to the Employment Appeal Tribunal. In November 2009 the Respondent consulted with ACAS with regard to holding a ballot in compliance with the order of the CAC. They also took advice from the Electoral Reform Society. A document related to such advice and steps to be taken is dated December 2009.

1. The Respondent arranged for a ballot which took place on 29 March 2010. Meetings with representatives elected in accordance with the ballot are due to take place imminently.

1. Mr Brown, acting in person, has conducted the hearing before us in a very focussed and helpful way. He points to the chronology of events and contends that the employers only took action to comply with their obligations under the regulations once he had made his complaint to the Employment Appeal Tribunal. He referred to the case of Amicus v Macmillan Publishers Ltd [2007] IRLR 885, in which the Employment Appeal Tribunal held that Macmillan Publishing Limited was in serious breach of the 2004 Regulations and imposed a penalty of £55,000.

1. Mr Brown referred to paragraph 10 of the judgment in which the Employment Appeal Tribunal stated that:

"The CAC observed that this was a confusing response. The employers were accepting that the standard procedures applied and yet at the same time were contending that there were pre-existing arrangements in place."

Mr Brown seeks to draw a parallel between that observation in the Amicus case and the relevant facts of the application which he has brought before us.

1. Mr Brown recognises that the default in the Amicus case was in relation to a much larger number of employees and, as had been pointed out by Mr Starcevic, the circumstances and the history of prior failure to comply with the regulations was bad and is to be contrasted with the current case.

1. Mr Starcevic for the Respondent very properly recognises that a penalty in the circumstances of this case is mandatory since there has been a failure to arrange a ballot within six months of the request under the ICE Regulations. As for the factors to be taken into account by the Employment Appeal Tribunal in determining the amount of the penalty, as to gravity, Mr Starcevic accepts that the Respondent's was a significant failure of compliance with the ICE Regulations. There has been no attempt to conduct a ballot until ordered to do so by the CAC. He also, very properly, said that he cannot contend that the breach in this case was a technical failure.

1. As for the period of time over which the failure occurred Mr Starcevic points out that the ballot was held on 29 March 2010. He accepts that there was a delay of some eight months from the date they were obliged to do so. The period since the determination of the CAC is five and a half months. However, he points out that there were negotiations within a very short time of the determination of the CAC and he prays in aid what the Company has done since then.

1. As for regulation 23(3)(d) and (e), the number of employees affected by the failure and the number of employees employed by the undertaking is the same in each case. The establishment is just over 350, although by reason of departures and unfilled places, at any one time the actual number of employees employed will be less than 350.

1. So far as other factors to be taken into account are concerned, Mr Starcevic urges us to have regard to the fact that some arrangements were in place between the Respondent and their workforce with the regard to negotiations. Those are set out in the CAC's determination. The response given by the employer in proceedings before the CAC which have a bearing on this issue is as follows:

"There was/is an established and legitimate negotiating procedure in place under TULR(C)A. This is supported by a quarterly JCC, news letters, annual employee survey, team briefings and individual development reviews."

1. Mr Starcevic also points out that it is material to take into account the steps that the company has taken since the determination of the CAC and that it has acted properly and timeously so that now a ballot has taken place. Further, Mr Starcevic urges us to take into account financial circumstances of the Respondent. However despite an invitation and opportunity to do so, no accounts or other financial material has been placed before us. We are merely told that the Respondent's profit on the contract upon which the employees concerned were engaged is 10 per cent of revenue. However, perhaps for understandable reasons, we have not been given the figure which that represents.

1. In the absence of relevant information and of any indication of real financial hardship, and bearing in mind the level of the maximum penalty which can be imposed, we are unable to have regard to any financial hardship in determining the level of penalty in this case because none has been established before us.

1. In our view the circumstances of this case are very different from those under consideration in Amicus v Macmillan Publishers Limited. In that case, as Mr Starcevic has rightly pointed out, there had been prior breaches of the ICE Regulations and the company had acted in a dilatory way in correcting its breach. A very large number of employees were affected by the breach.

1. We also take into account the observations of Underhill P in Mr G Darnton v Bournemouth University UKEAT/0391/09/RN in which, at paragraph 12, the Employment Appeal Tribunal observed:

"We are not in fact convinced that this is a jurisdiction in which assistance from other cited cases is likely to be useful. This Tribunal is obliged to have regard to all relevant considerations which may cover a wide range and are not necessarily limited to those specified under regulation 23(3). The assessment of the right level of penalty is in the nature of a broad evaluation and a nice analysis of the weight to be given to individual components is unrealistic. The factors which principally weigh with us in the present case are as follows …"

The Employment Appeal Tribunal then set out the fact-specific considerations which they took into account.

1. We wholeheartedly agree with the observations made by the Employment Appeal Tribunal in that paragraph. Each case is fact-specific. There is a need to take into account the matters listed in the Regulations at regulation 23, but they are not an exhaustive list. Depending on the circumstances of the particular case additional factors may be taken into account and the weight of each of them will depend on the facts of the case under consideration.

1. So far as the gravity of the Respondent's failure in this case and the period of the time over which it occurred, we accept the submissions made by Mr Starcevic who has recognised, as we have observed, very properly that this was not a technical breach and that it persisted over a significant period of time.

1. As for the reason for the failure, having considered the exchanges between the CAC and the employers we consider that the employers may have been under a misapprehension as to their obligations under the ICE. They therefore referred to consultation arrangements that they had in place. However as the CAC pointed out, those were collective bargaining arrangements and not arrangements under the ICE Regulations.

1. We find that possible misunderstanding by the employers to be very surprising bearing in mind the size of the Respondent. They must have had access to legal advice, even if they did not take it at the stage before the determination of their case by the CAC. Nonetheless, although with some scepticism, we take into account and accept that they were initially mistaken as to their obligations under the ICE Regulations.

1. So far as the number of employees affected by the failure is concerned that is not as large as the number of employees in the Amicus v Macmillan Publishers case but it is the entirety of the undertaking in consideration under the Regulations. In our view, numbers alone are not particularly relevant in determining the gravity of the breach. In a small workforce where every member of that workforce is affected, the breach of obligations under the ICE Regulations may be almost as significant as a breach affecting a small proportion of a much larger workforce.

1. We take into account the measures taken by the employer once they accepted the determination of the CAC. It may well be that the employer was prompted to take action by the application made by Mr Brown to the Employment Appeal Tribunal. Whatever the reason for their action, the employer has now taken steps to comply with their obligations under the ICE Regulations. We reflect that fact in the amount of the penalty.

1. Mr Brown very properly makes no complaint of any delay or any failure of action by the Respondent in respect of the period after the commencement of these proceedings on 23 October 2009. It seems that proper arrangements are now in place for the Respondent to comply with obligations under the ICE Regulations.

1. Taking into account all these matters, in our judgment a penalty of £20,000 is to be imposed. That penalty is to be paid within 14 days. The failure of the employer is that found by the Central Arbitration Committee, namely that the employer had not arranged for the holding of a ballot of its employees to elect the relevant number of information and consultation representatives. The period to which the penalty relates is the period of five months from 30 July 2009 to 29 December 2009: the first being the date by which the Respondent should have complied with its obligations and the second the time after which it took action to do so.

1. We thank both Mr Brown and Mr Starcevic for their assistance.