The employer’s guide to restructuring and redundancy. Part 3: consultation

Welcome to the third instalment in our series of articles on how to compliantly proceed with a restructure and redundancy where we run through what a lawful consultation process looks like during a restructure.

The consultation process

So, what does the consultation process look like from start to finish? Well, it normally takes at least two weeks but can run longer where complicated issues exist. Here’s a list of the likely steps you’ll need to go through:

1. Preparing a written business change proposal;
2. First consultation meeting;
3. Time to consider/seek advice;
4. A way to communicate ideas and counter-proposals;
5. Second meeting to give feedback, and discuss/question proposals;
6. Date for a final decision and time frame to implement;
7. One-on-one meetings (with representatives) for affected employees; and
8. Letters advising of the outcome and giving notice.

The business change proposal

A written business change proposal should contain the following eight steps, as a minimum:

1. An introduction (a need for change has been identified);
2. How the employer is currently structured;
3. What has changed (or what does the employer want to change, e.g. technology, process);
4. What impact such change has had, or might have, on the business;
5. What possible impacts the change might have on team structure and positions (not individuals at this stage!):
   • Jobs might change – split up, combined, relocated etc.;
   • New positions with different skills might be needed; or
   • Jobs might no longer exist.
6. What the employer has considered (specifically) to try and avoid or minimise that possible impact on those positions, and why those options didn’t (or couldn’t) work;
7. If consultation doesn’t change that outcome, and if the number of positions reduces, e.g. five to three, a proposal should also be offered on selection criteria – how the employer might choose between similarly affected employees (hint: always select for retention, not for termination); and
8. A proposed, ideal timeline.

This proposal forms the basis for consultation, so it should contain all the relevant information that employees might need to properly consider the suggested business change. Giving incomplete information, or incorrect information would immediately be in bad faith. The temptation here can be to try and steer the consultation towards the desired outcome, and while this is legitimate and acceptable, it should not take place through deceit or dishonesty.

The consultation period

This is the period of time that employees have to process the (sometimes very upsetting) news that they have just received, and to take up their role as a contributor to the decision-making process. It should be enough time to think about the proposal, to understand it, and to develop ideas about whether it is a good proposal or not. It should be enough time to come up with alternative ideas that might have less of an impact on people’s jobs.

The consultation period should include the freedom to discuss the proposal, at the very least, with each other and also with an employment law expert or adviser if the stakeholders so desire. It would be a breach of confidentiality and bad faith, however, to discuss the proposal with someone outside that group – such as a friend who works for a competitor firm, for example.

Stakeholders should also have a clear way to submit their ideas in writing to the employer (an email address, a Dropbox, etc.).

Ideally, this time frame should be about five working days, give or take. Shortening this should be done carefully and only with very good reasons – it could be regarded as not being in good faith, as a shorter time frame prevents proper consideration and seeking of advice.

At the end of the consultation period is a second meeting, where the employer should present all the submissions made, back to the employees, and explain what about those submissions is workable and what isn’t. The employer should also prepare a decision document that includes the workable and beneficial submissions that were made.

If the employer has already decided, they likely won’t want to accept any input that could change that decision. If they’ve consulted in good faith, however, the submissions they receive might make a difference to either the actual decision itself, or how that decision works out in reality.

Using our ongoing example from previous articles, the new timekeeping system might be known to have huge flaws or restrictions on use that mean it wouldn’t work in this company’s environment. An employee might know this, for example, having worked in a previous company with this system and seen its failings. Or the stakeholders might agree that the system is worth implementing, but instead of two FTE jobs becoming one FTE job, they might want to ask for two 0.5 FTE jobs to be created so that no-one loses their employment.

The consultation should cover a number of things, as per the proposal. These should be individually addressed:

• The actual proposal – what is good or bad about it, and are there any alternatives that haven’t been considered?
• Have all the ways to reduce the impact on employees been thought of, properly considered and reasonably accepted or rejected?
• If redundancies are inevitable, and selections have to be made between similar employees in similar roles, how would those selections be fairly made?

The feedback received from stakeholders should cover all these areas, and enable the employer to create a final decision that includes employee representations wherever possible. The final restructuring plan will set out the employer’s approach in detail.

After you’ve properly consulted your stakeholders, you’ll need to start making decisions and translating your plans into real-world outcomes. We’ll talk about redeployment in our next article.

If this article has raised any questions or concerns or you’d like to learn more about how we can help your business, please reach out to our workplace relations experts via our 24/7 HR Advice Line.