Workplace change does not necessarily mean removing (also known as disestablishing) jobs (though this may happen) but it could mean that people’s jobs change. Workplace change can also be known as restructuring.
If an employer is considering making a change, their first step is to look at the employment agreements and workplace policies, since these set out the basis for the employment relationship and the process for changing its terms.
Employers who follow a careful change process will reduce their chances to claims of:
- breaches of the duty of good faith
- unjustifiable disadvantage
- unjustifiable dismissal.
There are standard rules that apply to all change processes, these cover:
Genuine business reason to make a change
Employers have a right to make changes to their businesses, and structure their business in the way that they believe will be the most effective to deliver to their customers and their strategy.
Workplace change is not a way to avoid managing individual employee performance issues. You can’t ‘restructure’ to ‘get rid of’ an employment problem – these must be handled in the correct way.
Employers must be able to show that any proposals that could affect jobs must be for genuine business reasons. Employers should be able to produce evidence of the need for change, or the identified and stated benefit, if this is required in the process. Examples of genuine business reasons are:
- improved technology
- more productive business processes
- product changes
- loss of suppliers or markets
- shifts in customer or market requirements
- financial reasons.
Changes of this nature may result in a structural change such as:
- adding new roles
- merging two or more existing roles
- refocussing aspects of a role
- removing roles that are not needed
- a combination of these things.
Employers should take care to document all decisions and reasoning about any change that might result in an employee’s job being significantly changed, or an employee being made redundant.
The workplace change process gives an outline of the process an employer should follow when working through a change.
Requirement to consult with employees in a fair and reasonable way
Where a proposed change might affect people’s jobs, employers need to include a fair and reasonable consultation process. This must comply with minimum standards of good faith; this includes giving affected employees information about the suggested change and an opportunity to comment on it.
A fair and reasonable consultation process needs to include the following minimum steps:
- Before any final decisions are made, circulate the business proposal for change to all employees likely to be affected
- Give employees reasonable time to respond, comment and suggest other options
- Consider, and take into account, the responses before any final decisions are made about the business.
Transparent selection process
Where a change includes a decision to sell, transfer or contract out some, or all, of the work to another party the employer has to follow a set of rules that apply to business transfers.
See more information on restructuring when there’s a sale or transfer of work.
'Restructuring’ does not include the sale or transfer of shares in a company or while the employer is bankrupt, or in receivership or in liquidation.
A technical redundancy occurs where businesses are sold, but not by sale or transfer of shares, and employees are offered employment by the buyer on substantially the same terms and conditions. Employees in this situation will be “technically redundant” because their employment agreements with the employer who sold the business end at the time of sale, but their employment with the business will continue if they accept the offer of employment.
Employment agreements that provide for redundancy compensation usually include a clause to say that the employee will not be entitled to compensation if they choose not to transfer their employment in a technical redundancy situation.