Meeting Modern Consultation Requirements: how far do you have to go?

The consultation obligations imposed by modern awards can leave employers confused about when consultation is required and to what extent. In regards to award-covered employees, it is crucial that employers carefully consider and adhere to the relevant modern award provision in order to mitigate the risk of a monetary penalty, or that an otherwise genuine redundancy might be transformed into an unfair dismissal.

Employers should also consider following the consultation process for award-free employees to ensure processes are procedurally fair and to ameliorate the risk of an adverse action claim.

When does the obligation to consult arise?

The standard consultation provision contained in modern awards requires employers to consult with employees when it has made a “definite decision” to introduce a “major workplace change” to its enterprise that is likely to have a “significant effects on employees”.

Employers must consult employees when the major workplace change is likely to result in any of the following:

• changes to composition, operation, size of the workforce
• redundancy
• termination
• change to the skills required by employees
• restructuring of jobs
• elimination of job opportunities (including promotion)
• alteration of hours of work or rosters
• employee retraining
• employee relocation

In order to discharge their consultation obligations, employers must provide in writing, and discuss with employees: the changes to be introduced, the likely effects of such changes and what measures might be considered to mitigate detrimental effects of such changes.

Significantly, employers have a duty to commence discussion as soon as practicable after making a “definite decision” to introduce change and it can be difficult to determine when this obligation is invoked. For example, if an employer resolves and minutes at a management meeting that change will be introduced, consult may be invoked.

It is also crucial that employers then give genuine consideration to any matters or views an employee raised during the consultation process. In this regard, at times it may be necessary to hold several meetings with an affected employee to satisfy the modern award consultation obligation.

Need for ‘genuine’ consultation

In a recent decision[1], the Fair Work Commission (‘FWC’) ordered the reinstatement of four employees who were made redundant after Staples Australia (‘the Respondent’) failed to consult in accordance with the Staples Enterprise Agreement 2014-2016 (‘EA’). The EA based its consultation provision on the model modern award clause and imposed an additional obligation to consult a “Joint Consultative Committee” (‘the Committee’) in decision making processes.

On 5 July 2016, the Respondent made a definite decision to reduce warehouse staff in order to minimize its operating costs and announced its decision of the resulting redundancies at a meeting with the Committee on 11 July 2016.

Following the first meeting with the committee, group meetings were held with the affected employees during which they were informed of the decision to implement redundancies. Subsequent to the group meetings a number of individual employees attended a one on one meeting with their manager; all permanent warehouse employees were provided with a letter confirming the redundancies; and each was advised that they would be assessed for redundancy against a selection matrix.

On 13 July 2016, 12 employees were advised that they had been selected for redundancy and were  provided with a letter confirming the same, along with a list of vacant positions.

During individual meetings with the 12 employees, three communicated that they did not wish to engage in a redeployment process and their employment was terminated with effect the following day. The remaining employees were terminated effective 20 July 2016, two of which had expressed a desire to volunteer for selection, whilst seven of these employees we made redundant on a “non voluntary” basis.

The FWC was critical of the consultation conducted by the Respondent, labelling it “unduly hasty and largely tokenistic”, stating that it had made “disingenuous gestures” disguised as consultation.

In particular, Commissioner Cambridge was critical of:

·         the short time frame between advising employees of potential redundancy and the termination of their employment;

·         the failure to discuss measures to mitigate the detrimental effects of potential redundancies;

·         the failure to invite employees to give their views about the changes and impact of the changes; and

·         the failure to include the Committee in the decision making process.

The FWC held that the Respondent’s “grossly deficient” consultation process and failure to adequately consider reasonable redeployment meant that the dismissals were not “genuine redundancies” within the meaning of the Fair Work Act 2009 (Cth). Accordingly, the four employees  who filed the application for unfair dismissal were able to access the jurisdiction and the FWC held that the dismissals were harsh, unjust or unreasonable and ordered that the four employees be reinstated.

The decision is a cautionary tale for employers tempted to expedite a consultation process and acts as a timely reminder that each consultation step needs to be carefully followed. If you would like to discuss your consultation obligations in more detail and ensure you are getting it right, please contact Nick Stevens, Megan Cant or Jane Murray.

[1] Williams and ors v Staples Australia Pty Ltd [2017] FWC 607.