All modern awards and enterprise agreements include a provision requiring employers to “consult” with employees prior to enacting certain changes likely to have a significant effect on employees, the workplace and/or their employment.
Section 389(1) of the Fair Work Act 2009 (Cth) also provides that an employee’s dismissal will only be a case of “genuine redundancy” where the employer has complied with any obligation in an applicable modern award or enterprise agreement to consult with the employee about the redundancy.
Why do employers need to consult?
Failure to satisfy this consultation obligation can expose employers to liability for compensation or a reinstatement order in unfair dismissal claims by employees, and the court can also order a non-compliant employer to pay penalties and/or compensation to an employee for breaching the terms of a modern award or enterprise agreement.
It is therefore important that employers understand and fulfil these consultation obligations, however determining whether the obligation to consult is triggered by a proposed change, and how to satisfactorily fulfil this obligation, is not always clear.
When do employers need to consult?
The obligation to consult under modern awards or many enterprise agreements is triggered once an employer makes a definite decision to introduce a major change to the production, operation, structure or technology of the business, and the proposed change is likely to have a significant effect on the business’ employees.
The consultation provisions in modern awards and most enterprise agreements then require that the employer engage in consultation with the affected employees as early as practicable after the employer has decided on the proposed change.
However, the Federal Court of Australia confirmed in Australian Nursing Midwifery Federation v Bupa Aged Care Australia Pty Ltd [2017] FCA 1246 that a major workplace change that may lead to one or more redundancies will not necessarily trigger the obligation to consult affected employees.
In this matter, Bupa Aged Care employed over 3,000 employees and sought to restructure by replacing 23 employees across its facilities with 55 new Clinical Care Manager positions. The new positions would encompass the duties performed by the employees employed in the redundant roles while other administrative duties would be redistributed to other employees throughout the business.
The Australian Nursing and Midwifery Federation (“ANMF”) sought orders to prevent Bupa from implementing the restructure and sought a declaration that Bupa had breached section 55 of the Fair Work Act 2009 by failing to fulfil the consultation requirements of the relevant enterprise agreement on the basis that the proposed redundancies constituted a major workplace change and Bupa had not consulted with the remainder of the employees that would be given new administrative duties as a result of the redundancies. The Court dismissed ANMF’s application and determined that making a small proportion of the employer’s workforce redundant was not likely to have a significant effect on the remainder of Bupa’s employees to an extent that would trigger the consultation obligation.
What does consultation involve?
Consultation involves enabling a discission with the employee affected by the proposed change to provide the employee with notice of the proposed change and the likely effect of the change on the employee. The decision should always be framed as a preliminary or proposed decision prior to consultation, rather than a firm and final decision.
Proper consultation “is not perfunctory advice on what is about to happen … consultation is providing the individual, or other relevant persons, with a bona fide opportunity to influence the decision maker“.[1]
Where an employer does not consult an employee before making a definite decision about a redundancy, or where they consult with the employee simply to “check the box” without any intention to genuinely consider the concerns raised by the employee, or reconsider the decision, the employer is unlikely to sufficiently meet their obligation to consult.
This was found to have occurred in the case of Monks v John Holland Group Pty Ltd [2012] FWA 6453, in which the employer did not consult with the employee regarding its decision to make the employee’s position redundant and replace her position with a new role, until after the final decision had been made, the new position was created and the employer had selected a new employee to fill the new position. The employer did not give the employee an opportunity to raise her concerns or convince the employer that she was a suitable candidate for the new position and the employer therefore had not adequately consulted the employee.
This is not to suggest that employers cannot follow through with the proposed decision, contrary to an employee’s wishes or notwithstanding an employee’s concerns, however the employer must provide the employee with an opportunity to express their views and raise their concerns, and the employer must take these into consideration when making a final decision. The final decision does not need to reflect the employee’s views and concerns.
What do employers need to do?
To comply with consultation obligations generally, in most circumstances, employers should:
- Consider whether the relevant consultation provision is triggered by the proposed decision. In this context, the Court in Bupa referred with approval to a decision of the Full Bench of the Federal Court in Port Kembla Coal Terminal Ltd v. Construction, Forestry, Mining and Energy Union, where it was stated that the following circumstances should be considered in determining whether a change is a major change:
- the seniority and importance of the employees who are to be made redundant;
- the extent to which the employees work in an integrated or disconnected manner; and
- the consequences for the continuing employees of the redundancies and terminations.
Employers should not assume that the reasoning in Bupa will apply to their business, even where only one employee is to be made redundant. Obtaining advice on this issue is recommended.
- Consult with the affected employees as soon as practicable in the decision-making process. Determining when it will be “as soon as practicable after a definite decision has been made” will depend on the relevant circumstances. There have been cases in which an employer’s delay in consulting with employees about workplace changes and failing to consult with employees before a decision had been made meant that the employer did not fulfil its consultation obligations.[2]
- Engage in meaningful consultation with the affected employee and provide the employee with relevant information, in writing, on the proposed change, the anticipated effect of the change on the employee and any measures to be implemented by the employer to alleviate the effect of the change on the employee. This does not require you to share sensitive or confidential information.
- Allow the employee sufficient time to consider the information provided during the initial consultation and prepare their response. Ideally, consultation should occur over several days to enable the employee to consider the information, obtain professional advice if required and put forward their views and concerns.
- Obtain the employee’s views and concerns, whether during a second consultation or in writing. This meeting or exchange should be viewed as an opportunity to engage with the employee and discuss their concerns rather than as an insincere attempt to satisfy a procedural requirement.
- Take any views or concerns raised by the employee into genuine consideration when determining whether the employer will press ahead with the proposed change or amend the proposed decision to accommodate the employee’s feedback. Employers should then communicate the final decision to the employee, in writing.
For advice or assistance with introducing workplace changes or navigating your obligations under the Fair Work Act 2009 (Cth) and industrial instruments generally, contact the experienced Employment Law team at Hunt & Hunt Lawyers.
By: Olivia Shirvington, Lawyer
[1] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Vodafone Network Pty Ltd, PR911257 (AIRC, Smith C, 14 November 2001) at para. 25.
[2] Freebairn v Dandiie Pty Ltd [2020] FWC 3915
