A step by step guide to effective employee consultation

Employers are required to ‘consult’ with employees before making certain changes to their employment under various industrial and employment related instruments which govern employment relationships. Failure to consult can lead to legal disputation and awards of civil penalties, damages and even reinstatement following a redundancy related dismissal.

Most recently, BHP has come under fire for not consulting appropriately in relation to the implementation of a mandatory COVID-19 vaccination policy at Mt Arthur Coal (BHP Case).¹  In the BHP Case, the policy direction was found to be lawful, but not reasonable, due to the failed consultation process.  Other examples of when an employer may be required to consult include:

1. if an employer is considering dismissing an employee on redundancy grounds and the employee is covered by a modern award or another industrial instrument, such as an Enterprise Agreement, which contains consultation obligations;
2. if an employee is covered by a modern award or other industrial instrument:
   • in relation to a definite decision by the employer to make major workplace changes that are likely to have significant effects on employees (for example, major changes to the workforce, job restructuring); or
   • in relation to a change to regular roster or hours of work;
3. if an employee is on unpaid parental leave, in relation to decisions that have a significant effect on the status, pay or location of the employee’s pre-parental leave position;
4. pursuant to state and territory specific work health and safety legislation requiring businesses to consult workers who are, or are likely to be, directly affected by a matter relating to work health or safety. Management of COVID-19 risks, including implementation of mandatory vaccination policies, falls into this category; and 
5. under the express terms in some employment contracts.

In this alert, we address ‘how to consult’ in the sense of it being a legal requirement in some circumstances in employment. However, genuine consultation can also be an effective tool in employee engagement when managing change in the workplace. It can also provide better business outcomes as a result of the input of employees affected. The principles and steps outlined below also apply to other change situations. 

What exactly is ‘consultation’? 

In simple terms, to consult with someone means to say to that person, “I’m thinking of doing this; what have you got to say about that?” as opposed to “this is what is going to be done”.² What that looks like in practice will vary according to the circumstances and the specific legal consultation requirements. However, there are three key inclusions to any consultation process:

1. providing relevant information to the employee about the proposed change;
2. giving the employee the opportunity to present their views in response to the information; and 
3. a genuine consideration of the views of the employee prior to a final decision and implementation.

Importantly, a right to be consulted is not a right of “veto” in relation to the decision³ - the views of the employee need to be genuinely considered, but do not have to be adopted.

Our six-step consultation process

The process to be followed in consultation will vary according to the decision being made and the relevant circumstances. Below is a general guide that will fit with most consultation requirements, particularly if step one is followed. 

1. Carefully read through the relevant consultation provision to understand what is required. Consider: 

• Do you need to consult? If there is any doubt as to whether it is required, consult! In many cases, it will only add a few days to the process and may avoid a world of pain in legal disputation. The information provided by the employee may also provide a different and more effective solution to the issue and improve relationships with employees.
• Which employees need to be consulted? Consider who will be directly affected by the change, and whether the consultation clause requires that those who are indirectly affected also need to be consulted. If it is a health and safety matter, consultation must involve health and safety representatives.
• Is there any requirement that a relevant union is involved in the consultation? Depending on the industrial environment, even if not specifically required, it can be useful to engage with the relevant union/s early in a change process to assist with employee engagement.
• Plan what the consultation will look like to ensure it meets the criteria and works within the business needs, and that all affected workers (and union representatives where applicable) are provided with the opportunity to provide feedback (either directly or indirectly through others). Ideally, workers should be provided with more than one avenue for feedback (eg by email, direct telephone, in a feedback meeting or through a representative).

2. Consult as soon as practicable  

The consultation clause is likely to give guidance on when this should happen, but generally it should occur as soon as practicable in the decision making process, or, at least once there is a high degree of confidence in relation to the proposed course of action.⁴

In some cases, consultation is required prior to a definite decision being made (for example, under work health and safety legislative requirements),⁵  and it can also be useful from a change management point of view to involve and increase employee “buy-in”. In other circumstances consultation obligations are “triggered” after a definite decision is made (for example, under the standard workplace change provisions in modern awards). 

It is important to comply with any applicable consultation provisions in deciding when to commence consultation. For example, in the case of Freebairn v Dandiie Pty Ltd⁶, an employer was found liable in an unfair dismissal claim because the Fair Work Commission held, in a redundancy scenario, that while some discussion had taken place in the workplace about potential changes, consultation required by the applicable modern award had not occurred.7 This was partly because no consultation occurred following a “definite decision” by the employer to implement the changes, which is what triggered the obligation under the relevant award consultation clause.  In those circumstances the employer was unable to rely upon the “genuine redundancy” defence to the claim.⁸

Deciding when is “as soon as practicable after a definite decision is made” (wording from the standard award clause) in relation to consultation will depend on the circumstances. For example, in the case of Ventyx Pty Ltd v Murray ⁹ the Fair Work Commission considered that it was reasonable to delay consultation to ensure it was coordinated across the business internationally. In this case, the Commission also found that it was reasonable to consider customer data security (protected under contractual obligations) in the timing and coordination of the consultation.

3. Provide the employee with information relevant to the change 

For the consultation to be meaningful, the employee/s need to understand the changes being considered. Some consultation clauses require information to be provided in writing, and generally this is a good approach even if it is not specifically required because it (a) provides evidence of the exchange; and (b) provides the employee with a better opportunity to consider the information provided and obtain independent advice if needed. 

Usually, this does not need to include information confidential to the business or to other employees, but it should be specific about the potential implications for the employee and any actions taken by the business to mitigate any adverse effects of the change (if possible). As indicated in the recent BHP Case, at least in work health and safety matters, information should also include the reasons for the proposal, rationale and data (including a risk assessment if applicable) supporting the proposal. A good way to provide the information is in a letter or email to the employee so there is written evidence of the employer discharging its obligations.

If at all possible, managers should meet individually with employees and their representatives (including unions) to provide the written information both as a matter of courtesy/good relationship management, but also to allow them to ask questions they may have. However, if the business is needing to consult with a number of employees and their representatives, information can be provided collectively.¹⁰

4. Give the employee time to consider information 

The employee must be given time to consider the information provided in order for them to consider their response to the change. For example, it is unlikely to be adequate to simply ask the employee if they have any questions, comments or suggestions in a 15-minute discussion without any prior notice.¹¹ Generally, consultation should occur over the course of a couple of days or even up to a week or more depending on the circumstances.¹² As a guide, there should be a minimum of 48 hours between giving the information to the employee and any follow up meeting, however, timeframes will need to be longer if numerous employees / representatives are involved, or if there is a significant amount of information to consider. Importantly, any timeframe must give employees time to obtain professional advice if they wish.

5. Obtain the employee’s views 

Usually this should happen in a meeting with the employee where the employee is able to respond and ask questions in relation to the proposed course of action. It can also be done in writing (or the employee can be provided with both options) or through a representative (eg union or health and safety representative). It is generally good practice to offer employees the opportunity to be accompanied by a support person for any one-on-one meetings, but whether or not that offer is made, an employee’s request to be assisted by a support person should be allowed.¹³

This meeting should be a genuine opportunity to engage and discuss feedback with the employee and must not be tokenistic.

If employees are given the opportunity to provide their views, but do not take that opportunity, this is their prerogative. So long as a reasonable and genuine effort is made to involve employees and to solicit their feedback, a consultation requirement will be met.¹⁴

Because of this, it can be useful to invite an employee to contact the employer by a certain time (prior to the scheduled meeting) if they do not have any feedback to provide, so to avoid a further unnecessary meeting. The employee should, however, be informed of the consequences of that, i.e. that the employer will likely proceed with the proposed course of action.

6. Genuine consideration of the employee’s views and making a decision 

In some circumstances, this will require further investigation and consideration of the employee’s input, however, sometimes it will be immediately apparent that the business is not able to accommodate any suggested changes.

Regardless, it will often be a good idea (or in some circumstances legally required e.g. as part of the process of termination of employment) to record the outcome of the consultation and the response to feedback in writing. This not only provides a record of the consultation, but it also ensures that all parties are clear on the outcomes.

Genuine consultation with employees (following the above steps) in times of change will assist employers to avoid legal disputation and can also provide an employer with useful information in finding solutions to issues in the workplace. For further advice and practical assistance in consulting with employees and understanding the relevant legal requirements, please contact our Workplace and Employment team.

^{Blog first published 21 May 2020. Last updated 1 February 2021.}

¹ Construction, Forestry, Maritime, Mining and Energy Union, Mr Matthew Howard v Mt Arthur Coal Pty Ltd T/A Mt Arthur Coal [2021] FWCFB 6059

²Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited (QR) [2010] FCA 591.

³Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR Limited (QR) [2010] FCA 591.

⁴Ventyx Pty Ltd v Murray [2014] FWCFB 2143.

⁵ Construction, Forestry, Maritime, Mining and Energy Union, Mr Matthew Howard v Mt Arthur Coal Pty Ltd T/A Mt Arthur Coal [2021] FWCFB 6059.

⁶ [2020] FWC 3915.

7 This was a model clause contained in all modern awards and is substantially similar to the model enterprise agreement clause.

⁸ As to which, see section 389 of the Fair Work Act 2009 (Cth).

9 ibid.

10 Ulan Coal Mines Ltd v Howarth and ors [2010] FWAFB3488.

¹¹ Freebairn v Dandiie Pty Ltd [2020] FWC 3915.

¹²Aitken v Virgin Australia Airlines and Vandeven v Virgin Australia Airlines [2013] FCCA 981 at 277.

¹³ For further information on support persons generally, click here. 

¹⁴ Grant Baldwin v Kev Baldwin Wholesale Confectionary P/L [2019] FWC 8718.