The Fair Work Act 2009 (Cth) (FW Act) requires Enterprise Agreements to include a consultation clause obliging employers to consult with their employees about “major workplace change” or a change in regular rostering or ordinary hours of work.
The Fair Work Act 2009 (Cth) (FW Act) requires Enterprise Agreements to include a consultation clause obliging employers to consult with their employees about “major workplace change” or a change in regular rostering or ordinary hours of work.
In addition to Enterprise Agreements, Modern Awards also include consultation terms where employers must notify employees of major workplace change and engage in discussion.
Consultation clauses are activated when an employer determines to restructure its workforce. This may lead to, for example, a reduction in personnel numbers, reduction in job opportunities and / or more work for the remaining employees. Compliance with the requirements of such clauses in a Modern Award or Enterprise Agreement is important – especially if redundancies are implemented.
To ensure that the “genuine redundancy” exemption from unfair dismissal is secured, the employer must be able to show compliance with an applicable consultation obligation. Section 389 of the FW Act provides that an employee is made genuinely redundant if:
- the person’s job is no longer required to be performed by anyone due to operational requirements;
- the employer complied with the obligations to consult in any applicable Modern Award or Enterprise Agreement; and
- redeployment was not reasonable in all of the circumstances.
In NT v Crown Melbourne Limited [2016] FWCFB 4675, the Employee appealed to the Full Bench of the Fair Work Commission (FWC) on the grounds that the Employer did not comply with the consultation obligations in the Crown Melbourne Enterprise Agreement 2013 (the Agreement) prior to the redundancy of his position in April 2015. There were two applicable consultation clauses in the Agreement: one which required the Employer to consult when there was major workplace change (clause 24) and another clause which was relevant to redundancies (clause 33).
At first instance, the Commissioner agreed with the Employer’s jurisdictional objection and determined that the Employee’s employment was terminated by way of genuine redundancy.
On appeal, the Employee argued that the Commissioner fell into error as she did not correctly interpret and apply the Agreement’s consultation clauses.
The Employer submitted that clause 33 of the Agreement set out the obligation to consult with employees in circumstances of redundancy. This clause required the Employer to consult with the relevant union to determine alternatives to redundancy. The Employer argued that the relevant union, United Voice was contacted and alternatives to redundancy were discussed. It relied upon a letter from the United Voice which stated that telephone correspondence took place and that the Employer consulted with them prior to the Employee’s redundancy.
The Full Bench held that the consultation on major workplace change clause applied where major workplace change affected a group of employees rather than individual redundancies. It determined that given the United Voice had acknowledged that the Employer had consulted with them in relation to the redundancy, the Employer had complied with its obligations to consult. The Employee’s appeal was dismissed.
Best practice consultation
Whilst in the above case the Employer’s consultation with the union was held to be enough to satisfy the consultation obligations in the Agreement, best practice indicates that consultation with employees will include notifying the employee of the change as well as discussing the change with employees. Part of this process will include taking into account concerns or other matters raised by employees and meeting with the employee/s to address their concerns properly.
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