Economic activity

The Information and Consultation of Employees Regulations (ICE) require “undertakings” which carry out “an economic activity” to inform and consult with their employees about a wide range of issues. In Advisory, Conciliation and Arbitration Service (ACAS) v Public and Commercial Services Union (PCS), the Employment Appeal Tribunal (EAT) held that ACAS fell within the category of an undertaking that carried out an economic activity, rendering it subject to the regulations.

Thompsons was instructed by PCS to act on behalf of their members.

Basic facts

PCS complained to the Central Arbitration Committee (CAC) that the conciliation service, ACAS, had failed to consult with their employees about changes in the organisation in accordance with an agreement that it negotiated in 2006 and which was renewed in broadly similar terms in 2015.

The union argued this was contrary to regulation 22(1) of the ICE regulations. For its part, ACAS argued that the CAC did not have jurisdiction to hear the complaint and that the regulations did not apply because it was not an “undertaking” within the meaning of regulation 2 in that it did not carry out an “economic” (which it interpreted as meaning “commercial”) activity.

Relevant law

Regulation 22(1) states that a complaint may be presented to the CAC where a negotiated agreement has been reached but the “relevant applicant” bringing the claim considers that the employer has failed to comply with the terms of the agreement or one or more of the information and consultation provisions.

Regulation 3 states that the ICE regulations apply to UK based undertakings which employ 50 or more employees. Under regulation 2, an “undertaking” means a “public or private undertaking carrying out an economic activity, whether or not operating for gain”.

CAC decision

Relying on government guidance, the CAC held that it was for it to decide, on a case-by-case basis, whether an organisation was carrying out an economic activity. Although there might be difficult cases, such as those in which a public body exercises “public authority and carries out an economic activity, and it is not clear whether that activity is merely ancillary to the main purpose” or not, the guidance also made clear that the CAC should adopt a “fairly wide interpretation”.

It therefore rejected the argument that the definition of “economic activity” should be equated with “commercial activity” or must involve some “competitive activity”, not least because of the proviso in regulation 2 which stated that they apply to undertakings whether or not they operate for “gain”. It therefore dismissed the challenge to the jurisdiction, holding that all of ACAS’s activities satisfied that requirement. Alternatively, it held that a sufficient part of its activities did so.

ACAS appealed on a number of grounds relating to the question of whether its activities fell into the category of “economic” activities.

EAT decision

The EAT rejected its appeal, holding firstly that ACAS was an undertaking in that it was a “legal entity capable of being the employer of employees”. The CAC therefore had jurisdiction to hear the claim.

As for the term “economic activity”, the EAT held that it did not just apply to the payment for goods and services by a consumer or end-user but also to situations when funding was provided from another source. It could therefore apply to ACAS, 90 per cent of whose services were funded through government grants.

Although it disagreed with the CAC panel that all the services provided by ACAS constituted an economic activity for the purposes of regulation 2, it concluded that enough of its activities fell within the definition to satisfy the provision.