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Consultation – Just how wide of a net do employers need to cast?

21 September 2020
The Australian economy is continuing to feel the unprecedented effects of the global COVID-19 pandemic. As further restrictions affect businesses’ ability to trade, particularly in Victoria, and with the scaling back of JobKeeper, unfortunately some businesses may be facing the difficult task of downsizing their workforce. 

Redundancies by their very nature are difficult and stressful for all involved, and if not handled properly employers can find themselves on the receiving end of a claim under the Fair Work Act 2009 (Cth). 

All modern awards and enterprise agreements require employers to consult with employees regarding any major workplace change that may have a significant impact on their employment. Whilst there is generally no obligation to consult with employees who are not covered by a modern award or enterprise agreement, it may be best practice to do so in certain circumstances.

Meaningful Consultation

A spate of cases from the Fair Work Commission (Commission) in recent years have added breadth to this requirement, and have found that an employer must be able to demonstrate that it has consulted with affected employees in a meaningful way. This means that consultation cannot be a 'box ticking exercise' and employers must ensure that affected employees:

  • are made aware of the change/s that are to be implemented and how these changes are going to affect them (directly or indirectly); and
  • given an opportunity to respond, provide feedback and employers must participate in such discussions and consider any responses.

In a recent pandemic-related decision, Deakin University planned to cut 400 non-essential positions. To achieve this, it established 15 proposals affecting particular areas and viewed each proposal as a separate ‘major workplace change’ for the purposes of its consultation obligations under its enterprise agreement. Deakin University sought to silo the consultation process, and proposed to consult affected employees only to the extent that each proposal pertained to that particular area.

The Commission found that the decision to cut 400 non-essential positions was, of itself, a major workplace change and would have implications for Deakin University’s wider workforce. Therefore Deakin University’s proposed consultation process was deficient and in order for it to meet its meaningful consultation obligations, it will now be required undertake a university-wide consultation prior to implementing any further changes.   

Why is this important?

The Commission has warned employers that desperate times don’t necessarily justify desperate measures. 

In Australian Municipal, Administrative, Clerical and Services Union v Auscript Australasia Pty Ltd [2020] FWC 1821, the Commission sent a clear message to employers that the effects of the current pandemic will not obviate their obligations to engage in meaningful consultation with their workforces, after it ordered Auscript to refrain from taking any further steps until it had done so. 

The Cost of Consultation

The ultimate cost of consulting may be minimal with the Commission finding in Jeremy Hurley v Tex Onsite Pty Ltd [2020] FWC 4724 that, whilst the pilot’s redundancy was not genuine due to his employer’s failure to consult, had his employer consulted him he would have only remained employed for an additional week. 

However, the employer’s failure to consult opened it up to liability and this meant that it was then on the receiving end of a claim from the employee that the dismissal was harsh, unjust or unfair. This meant that the employer was required to defend the application, and go down the costly and time-consuming unfair dismissal path all the same.

This was a costly lesson for this employer and a timely caution for others. 

How can we help?

If your business finds itself in the unfortunate but sometimes unavoidable position of having to downsize its workforce, please contact a member of our Employment team who can work with you to ensure your consultation processes are compliant. 

If you require further information or have any queries in relation to this legal update, please contact Michelle Dawson or a member of our Employment team.

We would like to acknowledge the contribution of Nicole Davis to this article.

Further Reading