Brown v. G4 Security (Cheltenham)

A penalty under the Information and Consultation of Employees Regulations 2004 is mandatory following a declaration by the Central Arbitration Committee and an application under regulation 22(6), unless the employer establishes a reason beyond its control or another reasonable excuse.

The amount is a broad, fact-specific evaluation. The factors in regulation 23(3) are mandatory considerations but are not exhaustive. The Tribunal may consider additional relevant matters, including subsequent compliance and the extent to which the employer’s conduct was remedied. The number of employees affected must be assessed in context and is not determinative. Financial hardship cannot be taken into account without evidential support.

Mr Brown applied to the Employment Appeal Tribunal for a penalty notice against his employer under regulation 22(6) of the Information and Consultation of Employees Regulations 2004.

The Central Arbitration Committee had found that a petition signed by more than 10 per cent of the relevant employees was a valid employee request. It found that the employer had failed to initiate the required arrangements and had not arranged a ballot for information and consultation representatives. The employer subsequently arranged a ballot, held on 29 March 2010.

The central issues were whether a penalty was mandatory and, if so, the appropriate amount.

1. The application succeeded. The Tribunal imposed a penalty of £20,000, payable within 14 days. The failure was the employer’s failure to arrange a ballot of its employees to elect the relevant number of information and consultation representatives.

2. Once the CAC had made the relevant declaration, regulation 22(7) required the Tribunal to issue a penalty notice unless the employer showed that the failure resulted from a reason beyond its control or that it had another reasonable excuse. The employer accepted that the penalty was mandatory in the circumstances. Its collective bargaining arrangements did not discharge its separate obligations under the ICE Regulations.

3. The assessment of the penalty under regulation 23 was a broad evaluation. The matters listed in regulation 23(3), including gravity, duration, reason for failure and the number of employees affected, had to be considered, but the list was not exhaustive. The weight given to each matter depended on the facts.

4. The breach was significant and non-technical, and persisted for a substantial period. The employer’s initial misunderstanding of its obligations was accepted, albeit with scepticism. The fact that the whole workforce was affected was relevant, but numbers alone did not determine gravity. A breach affecting a small workforce may be nearly as serious as one affecting a small proportion of a much larger workforce.

5. The employer’s steps after the CAC’s determination, including arranging the ballot, mitigated the penalty. The Tribunal could take those subsequent steps into account. No financial hardship was established because the employer supplied no accounts or other financial evidence.

6. Amicus v Macmillan Publishers Ltd [2007] IRLR 885 was factually distinguishable because it involved prior breaches, more dilatory conduct and a much larger number of affected employees. The broad evaluative approach described in Darnton v Bournemouth University UKEAT/0391/09/RN was endorsed.

1. Central Arbitration Committee: found that the employee request was valid, that no compliant pre-existing arrangements existed, and that the employer had failed to arrange the required ballot. It ordered the employer to arrange and hold the ballot.

2. Employment Appeal Tribunal: on Mr Brown’s application under regulation 22(6), imposed a penalty of £20,000, payable within 14 days.