Understanding the Importance of Employee Consultation

The team at Akyra is often asked “what does consultation with my workers really mean?” and “how do I make this happen?”

In essence, an employer has a legal obligation to consult with their workforce when considering significant changes to the workplace and/or terms and conditions of employment.

Modern Awards and enterprise agreements all have this as a standard obligation during major workplace changes – e.g. alterations to working hours, duties, locations or redundancies.

Whilst the standard obligation to consult with your workforce is clearly articulated, there is minimal guidance on how that obligation can actually be met.

Furthermore, consultation must be seen to be and be meaningful and not perfunctory – it cannot be just a minimalist approach for the sake of saying that consultation has occurred.

The requirement to consult can thus be very challenging for employers. Many would prefer to just “rip the band aid off” or try to avoid conflict rather than have to go through a process that may result in either termination of a worker’s employment or a review of business operations to optimise efficiencies.

In this week’s Akyra blog, we provide some guidance on the parameters that you need to follow to meet your consultation obligations with employees – and the dangers of avoiding them.

Case Study

A Fair Work Commission (FWC) decision in 2020 (still applicable today) highlights the importance of a fair and transparent process of consulting with an employee prior to implementing a redundancy.

In Tuchin v Mills Brands [2020] FWC 583, the FWC was required to determine whether a customer service representative at a product distribution company (made redundant while being pregnant) was unfairly dismissed.

A key issue in this matter was whether the employer genuinely consulted with her about the redundancy prior to terminating her employment – something which is required under the Clerks – Private Sector Award.

The employee argued she had not known she was going to be made redundant until the day of her dismissal in June 2019. If she had known in advance, then she would have been able to consider alternative employment or make other plans to manage her pregnancy and upcoming parental leave.

The employer argued it had consulted with her and her claim should therefore be dismissed because it was a genuine redundancy. It pointed to three meetings in particular:

1. March 2019: management had made general comments to staff foreshadowing changes to the business;
2. April 2019: the employee and her manager discussed her daily tasks as well as the structural changes in the business; and
3. May 2019: the manager advised the employee her role may be made redundant. Whilst the employer said there was a minute-taker for this meeting, they were unable to provide any such evidence. The employee disagreed with this version of the meeting and said the only discussion on this day was in relation to managing stock.

The FWC did not consider the first two meetings to amount to any form of consultation. It noted the employer had provided no specifics about potential redundancies, and it was not on the employee to inquire about whether or not their job would be affected by the proposed changes.

In relation to the May 2019 meeting, whilst this could have amounted to consultation, the FWC preferred the employee’s evidence as she presented as a more credible witness. It was therefore satisfied the employer did not consult with the employee prior to implementing her redundancy in June 2019.

As a result, the FWC found the dismissal was unfair because the employer failed to engage in any meaningful dialogue with the employee about the potential redundancy; regardless of whether it would have been a difficult and unpleasant process.

What does a consultation process look like?

Consultation in the workplace involves seeking and considering employees’ views when making decisions about major workplace change or changes in terms and conditions of employment.

It’s a collaborative process that fosters cooperation and harmonious working relationships.

Here are the key aspects of consultation:

• Understanding whether a modern award or enterprise agreement applies that has a consultation obligation; if neither of these applies, there is no legislative requirement to consult about the redundancy before a decision is made to make an employee redundant. There is further information HERE.
• Clearly outlining the reasons for the changes before any decision is made by the employer.
• Providing your workforce with a reasonable opportunity to express their views, raise concerns and contribute to the decision-making.
• Taking workers’ views expressed during the consultation process into consideration when making the decision. Consultation can be evidence of meetings and emails exchanged regarding the changes. Consultation evidence will not be met if affected employees are on leave; employer decides on the major change(s) and then advises employees.
• Advising workers of the decision resulting from the consultation process; this transparency will help employees better understand the rationale behind the decision(s).
• Employers retain the right to make any final decision(s) regarding major changes to the workplace; however, taking your workforce on the journey reduces anxiety and fosters a better acceptance of change.