Employers are required to ‘consult’ with employees before making certain changes to their employment under various industrial and employment related instruments which govern employment relationships. Failure to consult can lead to legal disputation and awards of civil penalties, damages and even reinstatement following a redundancy related dismissal.

The most recent addition to the list of consultation requirements for employers was under the Federal Government’s JobKeeper Scheme1 where there’s a requirement for employers to consult with employees before giving ‘JobKeeper Enabling Directions’ to stand down, reduce hours, change usual duties or change location of work. Other examples of when an employer may be required to consult include:

  1. if an employer is considering dismissing an employee on redundancy grounds and the employee is covered by a Modern Award which contains consultation obligations;
  2. if an employee is covered by a Modern Award:
  • in relation to a definite decision by the Employer to make major workplace changes that are likely to have significant effects on employees (for example, major changes to the workforce, job restructuring);
  • in relation to a change to regular roster or hours of work;
  1. if an employee is on unpaid parental leave, in relation to decisions that have a significant effect on the status, pay or location of the employee’s pre-parental leave position; and
  2. there may also be consultation requirements in some employment contracts.

In this alert, we are addressing ‘how to consult’ in the sense of it being a legal requirement in some circumstances in employment. However, genuine consultation can also be an effective tool in employee engagement when managing change in the workplace and can provide better business outcomes as a result of the input of employees affected so the principles and steps outlined below apply to other change situations also.

What exactly is ‘consultation’?

In simple terms, to consult with someone means to say to that person, “I’m thinking of doing this; what have you got to say about that?” as opposed to “this is what is going to be done”.2 What that looks like in practice will vary according to the circumstances and the specific consultation requirements, however, there are three key inclusions to any consultation process:

  1. providing relevant information to the employee about the proposed change;
  2. giving the employee the opportunity to present their views in response to the information; and
  3. a genuine consideration of the views of the employee.

Importantly, a right to be consulted is not a right of “veto” in relation to the decision3 - the views of the employee need to be genuinely considered, but do not have to be adopted.

Our six-step consultation process

The process to be followed in consultation will vary according to the decision being made and the relevant circumstances. However, below is a general guide which will fit with most consultation requirements, particularly if step one is followed.

  1. Carefully read through the relevant consultation provision to understand what is required. Consider:
  • Do you need to consult? If there is any doubt as to whether it is required, consult! In many cases, it will only add a few days to the process and may avoid a world of pain in legal disputation. The information provided by the employee may also provide a different and more effective solution to the issue and improve relationships with employees.
  • Which employees need to be consulted? Consider who will be directly affected by the change, and whether the consultation clause requires that those who are indirectly affected also need to be consulted.
  • Is there any requirement that a relevant union is involved in the consultation? Depending on the industrial environment, even if not specifically required, it can be useful to engage with the relevant union/s early in a change process to assist with employee engagement.
  • Plan what the consultation will look like to ensure it meets the criteria and works within the business needs.
  1. Consult as soon as practicable

The consultation clause is likely to give guidance on when this should happen, but generally it should occur as soon as practicable in the decision making process, or, at least once there is a high degree of confidence in relation to the proposed course of action.4

Deciding when is practicable will depend on the circumstances. For example, in the case of Ventyx Pty Ltd v Murray5 the Fair Work Commission considered that it was reasonable to delay consultation to ensure it was coordinated across the business internationally. In this case, the Commission also found that it was reasonable to consider customer data security (protected under contractual obligations) in the timing and coordination of the consultation.

  1. Provide the employee with information relevant to the change

For the consultation to be meaningful, the employee/s need to understand the changes being considered. Some consultation clauses require information to be provided in writing, and generally this is a good approach even if it is not specifically required because it (a) provides evidence of the exchange; and (b) provides the employee with a better opportunity to consider the information provided and obtain independent advice if needed.

Usually, this does not need to include information confidential to the business or to other employees, but it should be specific about the potential implications for the employee and any actions taken by the business to mitigate any adverse effects of the change (if possible). A good way to provide the information is in a letter to the employee.

If at all possible, managers should meet individually with employees to provide the written information both as a matter of courtesy/good relationship management, but also to allow them to ask questions they may have. However, if the business is needing to consult with a number of employees, information can be provided collectively.6

  1. Give the employee time to consider information

The employee must be given time to consider the information provided in order for them to consider their response to the change. Generally, consultation should occur over the course of a couple of days or even up to a week or more depending on the circumstances.7 As a guide, there should be a minimum of 48 hours between giving the information to the employee and any follow up meeting. Importantly, these timeframes also give employees time to obtain professional advice if they wish.

  1. Obtain the employee’s views

Usually this should happen in a meeting with the employee where the employee is able to respond and ask questions in relation to the proposed course of action. It can also be done in writing or the employee can be provided with both options. It is generally good practice to offer the employee the opportunity to be accompanied by a support person for any meeting, but whether or not that offer is not made, an employee’s request to be assisted by a support person should be allowed.8

This meeting should be a genuine opportunity to engage and discuss feedback with the employee and must not be tokenistic.

If the employee is provided with the opportunity to provide their views, but does not take that opportunity, this is the employee’s prerogative. So long as a reasonable and genuine effort is made to involve the employee and to solicit their feedback, a consultation requirement will be met.9

Because of this, it can be useful to invite an employee to contact the employer by a certain time (i.e. prior to the scheduled meeting) if they do not have any feedback to provide to avoid an unnecessary meeting. The employee should however be informed of the consequences of that, i.e. that the employer will likely proceed with the proposed course of action.

  1. Genuine consideration of the employee’s views and making a decision

In some circumstances, this will require further investigation and consideration of the employee’s input, however, sometimes it will be immediately apparent that the business is not able to accommodate any suggested changes.

Regardless, it will often be a good idea (or in some circumstances legally required e.g. as part of the process of termination of employment or in connection with the giving of a JobKeeper Enabling Direction) to record the outcome of the consultation in writing. This not only provides a record of the consultation, but it also ensures that all parties are clear on the outcomes.

Genuine consultation with employees (following the above steps) in times of change will assist employers to avoid legal disputation and can also provide an employer with useful information in finding solutions to issues in the workplace.