The dispute arose when Office Max wanted to change the commission structure. The employees who took the matter to the Employment Relations Authority said the change affected them to their disadvantage. They asked the Authority to make an order requiring Office Max to pay them commission in terms of their individual employment agreements. They also sought an award of penalties for breaches of good faith by the employer.
In around December 2004 Office Max commenced a review of commission structures and during the course of 2005 undertook a process of consultation with staff. The new commission structure was introduced on 1 April 2006 and a number of employees gave notices of personal grievances. Office Max changed its mind and returned all of the employees back to the old commission structure. Office Max said because it promptly changed its mind none of the employees had suffered disadvantage or financial loss.
The Authority first asked whether the process adopted by the employer in implementing the proposed change was fair and reasonable.
What came out before the Authority was that although employees were encouraged to talk to their Managers if they had any questions the employees said that they were frustrated because the managers appeared to have little or no information about the proposed new scheme. Additionally many of the employees felt that there was little point in discussing it with their Managers because Office Max was intent upon introducing the scheme anyway.
At the investigation meeting the employees produced a schedule that showed under the new commission proposal employees stood to lose between $6,904.00 and $25,640.00.
The Authority member concluded that despite the “consultation process” there had been no reasonable opportunity for employees to have proper input into the proposal. It also seemed plain there was no realistic prospect of the employees having any meaningful input into the nature and extent of the proposal. The Authority went further still and said that it appeared the new commission scheme was a decided outcome and the consultation process was no more and no less than a sham and was in breach of the good faith obligations under the Employment Relations Act.
The Authority then asked was consent from the employees required in any event? Office Max argued while consultation was required, agreement by the employees was not. The employees argued Office Max could not make unilateral changes to remuneration.
Different employees had different employment agreements. Some employment agreements provided “management reserves the right to change commission structures … as required for the best interests of the company”. Other agreements said “changes to the frame work (pertaining to commission) will be fully negotiated with the employee”.
At the end of the day the Authority found even if the employer could make a unilateral decision, the consultation process had been completely and fatally flawed and decided in the favour of the employees.
Each employee was awarded the sum of $6,000.00 compensation for the way the employer had handled the whole thing.
Moral of the story – consultation means the party consulting listens to the other side. It doesn’t mean the employer has already made its mind up about what it is going to do and asks the other side because something says it has to.
