When planning significant workplace changes, employers should not simply announce a decision and proceed. Consultation obligations contained in modern awards and enterprise agreements require employers to genuinely engage with affected employees before implementing changes that may have a significant impact on them.

Consultation is intended to promote communication, transparency, minimise workplace disputes and ensure employees have an opportunity to influence decisions that affect their employment.

 

Consultation under modern awards 

Most modern awards contain a consultation clause requiring employers to consult with employees when a definite decision has been made to introduce a major workplace change that is likely to have a significant effect on employees.

The purpose of these provisions is to ensure employees are informed about proposed changes and have a genuine opportunity to express their views before the changes are implemented.

Examples of workplace changes that may trigger consultation obligations include:

  • the introduction of new technology;

  • workplace restructures;

  • changes to staffing levels;

  • outsourcing of work;

  • relocation of work;

  • significant changes to job duties; and

  • changes to hours of work or work organisation.

 

What is a‘significant effect’?

Modern awards generally provide that significant effects may include:

  • termination of employment 

  • major changes in the composition, operation, or size of the employer’s workforce or in the skills required 

  • the elimination or diminution of job opportunities, promotion opportunities, or job tenure 

  • the alteration of job hours of work 

  • the need for retraining or transfer of employees to other work or locations, and  

  • the restructuring of jobs. 

Consultation provisions must be taken seriously. There is a difference between saying ‘this is what is going to be done’ and saying to that person ‘I’m thinking of doing this; what have you got to say about that?’ Only in the latter case is there ‘consultation’.

Employers are not bound to follow employees’ suggestions but they are nevertheless obliged to give employees a real opportunity to provide them. This means employers should not make assumptions about the outcomes of consultation. See Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited [2010] FCA 591. In this case, the employer was fined $660,000 (reduced to $384,000 on appeal), because the employer had merely ‘dictated… the proposal’ and ‘failed utterly to consult with [its] workers'. 

 

Enterprise agreements 

An enterprise agreement must contain a consultation term, being a term that requires an employer to consult employees about major workplace changes that are likely to have a significant effect on them. The clause must also allow for employees to be represented for the purposes of that consultation. If an enterprise agreement does not include a consultation term (or the consultation term does not comply with the provisions of the FW Act), the model consultation term is taken to be a term of the agreement. 

 

Changes to rosters and working hours

Consultation obligations are not limited to major organisational restructures.

Employers are often required to consult employees before making changes to regular rosters or ordinary hours of work. This ensures employees have an opportunity to raise concerns about the practical impact of the proposed changes and suggest alternatives before a final decision is implemented.

 

Bottom Line

Consultation should be viewed as a genuine process, not a procedural formality. Where a proposed workplace change is likely to have a significant effect on employees, employers should provide relevant information, invite feedback and genuinely consider employee views before implementing the change. Failure to do so may lead to penalties, workplace disputes and challenges to subsequent employment decisions.