Preston Russell Law - Legal Services for Southern People

The Importance of Consulting Employees When Restructuring

Friday, October 28, 2011 by Mary-Jane Thomas, partner category Work to Rule

The importance of consulting your employees during restructuring has again been highlighted by a recent decision of the Employment Relations Authority.

Mr M had worked as a Records Officer in the Department of Prime Minister and Cabinet for 20 years. Prior to the elections in 2008, Ministerial Services advised Mr M that there was a possibility, if the result of the elections was a change in government, his position could be affected by any restructuring that the new government intended to do.

Within days of coming to power, the National government gave notice of its intention to restructure the Mail and Records department, moving to multi-skilled teams. Mr M was notified of this intention. 

Before Mr M could be given further information on these changes or consulted about them, he rushed to Australia for a family bereavement. Ministerial Services told him not to worry about his job.

Upon Mr M’s return he was told that the mail system was to be changed and new staff were to be employed.  As a result, his role as Records Officer no longer existed and the surplus staffing provisions of his collective employment agreement applied. This system meant that he would be deployed elsewhere if possible. When this avenue had been exhausted, redundancy, with a severance pay, would be the final option.

Mr M cleared his desk in early December, as it was decided to wait until Mid-January to look into alternative employment options. Mr M was offered an employee assistance program, and CV and job interview assistance. 

Mr M again returned to Australia to deal with family matters, whilst there he broke his ankle. In the new year Ministerial Services rang offering him a job within the department as a Records Officer but he was unable to take it up, with his injury, meaning the department had to fill it with a permanent appointee.

On2 June 2009 Mr M was finally well enough to work.  Ministerial Services proceeded to exhaust every avenue to arrange work for Mr M. It wasn’t until October 2009 that they advised him that redundancy was now the only option. 

On 19 November 2009, Mr M was given one months notice of redundancy and on 18 December 2009 his outstanding leave and redundancy compensation payments were made.

Unfortunately no one had bothered to give Mr M sufficient information about the initial restructure which resulted in the loss of a position he held for 20 years. It wasn’t until an employment investigation meeting in early 2011 that Mr M was given the before and after position diagrams, which clearly showed the combining of the Mail and Records services, which required a greater skill level than Mr M had.

Had Ministerial Services provided this information at the time the restructuring took place, Mr M would not have a claim. Up to this point Mr M had never been given a reason why, as it appeared to him, someone else was doing his job.  

The Authority referred to Employment Court decisions which noted that employees that are informed and involved in any process promotes better decision-making by employers. This in turn gives a greater understanding by employees of the final decisions that are made and that, in certain circumstances, redundancy of their position has been a genuine business decision.

The Authority found that there was no consultation with Mr M before the changes were made that eventually resulted in the loss of his position.  Mr M’s initial absence meant that he had no input into the changes and the upgraded position. 

It was unacceptable for Ministerial Services to fail to provide Mr M with the documentation which showed why his position had been made redundant, and the reasons why he was not the most suitable person for the new position. 

Here, the Authority awarded compensation in the sum of $5,000.00, which was for the procedural defects in the process for   the lack of proper information given and lack of consultation. This award was based on the finding that the redundancy of Mr M’s position had been genuine, because of a business restructure. Had the finding been that the redundancy was not genuine, the Authority would have had the ability to award lost wages and additional compensation.