NSW councils face historic change as employers in the Fit for the Future reform environment.

Councils have by now mapped-out, on a self-assessment sustainability basis, staffing either on a ‘stand-alone’ or a new amalgamated employer model.  However the true Fit for the Future impact is yet to be determined in terms of managing employee anxiety and the risk of industrial unrest in the coming months.

Councils as future fit employers will need to successfully navigate the intersecting industrial, legal and human resource management risks to ensure workforce sustainability.

While the outcome may not yet be certain for most Councils, the Government’s Fit for the Future reform provides a unique opportunity for a ‘root and branch’ review of some of the bolder but enduring human resource challenges.  Now is the ideal time to be planning for real change in inefficient utilisations of labour; better alignment of performance and incentive schemes; and redesigning future engagement, attraction and retention pathways for future skills and career development in local government.

The ‘people part’ of the business case for change

In many ways, managing the people part of the business case is one of, if not the most, significant challenges in any organisational transformation project. This holds true for councils with employment issues in the fit for the future reform process.

There are understandable collective and individual anxieties associated with major workplace change.

Careful contingency planning is needed to maintain industrial calm, to promote employee confidence, and to engender positive associations with business case reasons supporting workplace change.

Even though Part 6 of Chapter 11 of the Local Government Act operates to restrict and preserve redundancy and employment entitlements during the proposal period, there is still much scope for councils to be putting in place pre and post fit for the future industrial and employment change and contingency plans.

We have worked closely with senior management and HR professionals in many sectors, including local government, to put in place workplace transition plans, including:

  • robust human resource management restructure plans
  • staff and representative communication strategies that anticipate the best and worst outcomes
  • workplace industrial instrument redesign projects with realistic short term and longer term stretch goals
  • unregistered industrial instrument, employment contract and policy audits to look for the ‘known unknowns’, as well as some ‘unknown unknowns’
  • position description and job re-evaluation systems that will be consistent with possible joint, shared or amalgamated ‘council cousins’
  • senior staff transition processes that realistically acknowledge likely new senior management structures in a fit for future scenario
  • remuneration and benefits systems better aligned with corporate values and mission and heightened community service expectations.

In Fit for Future planning, we see the process diagrammatically as follows.

Click here to view image.

On top of this broad planning process, there are important industrial consultation and expectation management issues that require careful thought and execution.

Communication is the key

The success of workplace change hinges on the quality of communication with staff and stakeholders.

Failure to engage can result in key decisions being made without valuable input.

Staff input can occur by way of targeted messaging and engagement dialogue built on direct staff and industrial representative consultation.  It can be done in stages to ensure consistency of message and to avoid unexpected consequences of too much or too little information too soon.

The old adage of winning hearts and minds holds true in an industrial relations context especially when transitioning to new employer structures and implementing significant workplace change.  The process involves addressing equally valid emotional and intellectual points of view to gently sway any individual or collective resistance in favour of embracing change.

A unique opportunity for building workplace sustainability for the future – but not without challenges

If a good communication plan is capable of winning hearts and minds, then the journey towards building a new sustainable workforce for the future is more assured. However, as many of our clients have experienced in less dramatic workplace transformation processes, despite the best laid plans, encouraging employees to see the benefit of longer term impacts on conditions and pay can sometimes be challenged by unions with non-aligned industrial or political agenda.

Councils operate in an industrially regulated environment with a rich history of resistance to imposed change. The industry Award provides for an industry wide approach to setting minimum terms and conditions, with some small platforms for localised arrangements. Making sure that localised arrangements are compatible or consistent is sometimes not easy.

Sometimes challenges to change come from more unexpected quarters. For instance, over time and with turn-over of supervisory staff, it can be alleged that little known ‘local arrangements’ or unregistered industrial agreements, such as ‘MOUs’, operate to prevent or limit change. These local arrangements, asserted to be permitted by, but sitting outside the Award, may be alleged to have contractual force or impose obligations to consult which can be used to thwart workplace change.  Again, not factoring these issues into workforce transitioning plans can prove to be deal breakers of change.

For NSW councils exploring alternative labour source possibilities, whether in a shared services, joint or regional organisation of councils, or via other corporate labour hire arrangements, the prospect of Federal industrial law intruding into local council staffing arrangements is real. Not being fully aware of the risks can seriously impact on the success of the opportunity.

Most union industrial disputes are concerned with maintaining the ‘status quo’ – which is industrial jargon for leaving things as they have been for a long time unchanged. Challenges are often built on alleged failure to adequately consult, or on notions of ‘custom and practice’ requiring union and staff agreement to change. Industrial manoeuvring on these concepts can seriously delay or derail change initiatives.

One question that has been looming for some time for NSW councils is their legal status as employers. This question will loom larger if council entities merge to form larger council employers.

A question on the legal status of NSW council employers – now and in the future

Since the High Court’s decision in CPSU v Queensland Rail on 8 April 2015, the conundrum of the true legal status of NSW councils and their exposure to the Federal Fair Work system has raised its head again.

In this case, the High Court found that Queensland Rail was a trading corporation despite legislative efforts by the State of Queensland to expressly declare that Queensland Rail was “not a body corporate”. A consequence of this judgment was that Queensland Rail was a national system employer covered by the Fair Work Act (FWA), bringing into question the legal validity of industrial instruments approved under the Queensland Industrial Relations Act.

Section 220 of the NSW Local Government Act defines the legal status of NSW in the following interesting, and somewhat circular, way:

  1. A council is a body politic of the State with perpetual succession and the legal capacity and powers of an individual, both in and outside the State.
  2. A council is not a body corporate (including a corporation).
  3. A council does not have the status, privileges and immunities of the Crown (including the State and the Government of the State).
  4. A law of the State applies to and in respect of a council in the same way as it applies to and in respect of a body corporate (including a corporation).

One point of distinction in the Queensland Rail case was that legal entity was capable of being seen as separate to the body politic of the State of Queensland. Other points of distinction may be that the NSW Government expressly did not refer to the Commonwealth jurisdiction over local government employees and employers. Another is that many, but not all, smaller councils do not, on a total revenue or total activities basis, carry on ‘significant’ trading activities sufficient to be characterised at law as being ‘constitutional corporations’.

However, the question still remains how the legal status of councils as employers under the NSW Local Government Act would be judged after the formation of new and larger amalgamated council employer entities.

Part of the Fit for the Future workplace challenge potentially involves managing FWA coverage in whole or part, depending on change models used to transition to shared service or amalgamated entities.

Measuring success

Ultimately, whether councils transitioning through fit for the future stages are successful in proving workforce sustainability will largely be seen from how success is measured in the first place.

Modern human resource management philosophies go beyond simple metrics around workforce productivity versus the costs of labour.

Ideally measurements of industrial and human resource transitional change should be closely aligned with council corporate service delivery goals and meeting heightened and larger community service expectations.

Council employees are the essential link in the provision of community services.

Successful engagement of the hearts and minds of council staff to embrace transition into a new Fit for the Future sustainable workforce will be measured not just on quantitative productivity improvements, but also qualitative assessments.

The degree of ongoing job satisfaction, career development and ability to attract and retain skilled and engaged new staff in an aging labour market will all be true measures of success for NSW councils embarking on the fit for the future transition journey.