Workplace Restructuring

Workplace restructuring is the deliberate reorganisation of a business’s operations or workforce. This process may include closing offices or retail locations, merging, combining, dividing, or eliminating entire departments, and altering employee roles and responsibilities. Australian employers planning to restructure the workplace must do so with an awareness of the employee protections contained in the Fair Work Act 2009. This article looks at the legal implications of workplace restructuring in Australia.

Reasons for workplace restructuring

Most commonly, workplace restructuring is a response to significant changes in a business’s operations and its human resource requirements. For instance, a restructure of the workplace may be prompted when the business:

• is newly acquired or new management assumes operational control;
• adds or removes a service from their catalogue;
• recognises the inefficiency of their current processes or staff hierarchy;
• makes a change to the business’ organisational goals; or
• loses or gains a significant number of clients or amount of revenue.

When restructuring the workplace, some businesses introduce new technology (such as mechanisation, automation, or artificial intelligence) to increase efficiency and decrease labour costs. Other businesses outsource certain tasks to specialist companies to save money on staffing, as outsourced operations are typically less expensive than in-house labour.

Role of redundancies

Workplace restructuring does not always mean the termination of existing staff. Ideally, when existing roles are eliminated during a restructuring, the employer can redeploy affected staff members into new roles. In fact, employers must attempt to find all displaced employees a new position in the business, at an equal or higher level of seniority and remuneration. Occasionally, the employer might find a comparable position for the employee in another business under the same corporate umbrella, or even in a partner business. The employer should only make an employee redundant when there is no alternative, in which case the employee is entitled to a redundancy payment.

Consultation about major workplace change

The Fair Work Act requires an employer to notify the relevant registered labour organisation and Centrelink if there is a plan to terminate more than 15 workers for financial, structural, technological, or similar reasons. If the employer fails to comply, the Fair Work Commission may issue an order.

In addition, employers are required to consult employees about proposed workplace restructuring. Modern Awards have a standard consultation clause requiring the employer to give notice in writing as soon as practicable before making major changes in the workplace. Where Modern Awards do not apply, enterprise agreements have a “consultation term”, and industrial instruments usually include consultation requirements. Typically, these requirements include having to consult with employees if there are major changes in the workplace that could significantly affect them. Failing to comply with these consultation clauses violates the Fair Work Act and can lead to financial penalties.

It is important to understand that it is not sufficient for employers to merely notify employees of planned changes, they must conduct a proper consultation process with employees and their representatives. The consultation should not be a one-time meeting, but a process that continues throughout the workplace restructuring. During these discussions, employers do not have to disclose confidential information when this is contrary to the company’s interests. However, the employer does need to discuss with workers any significant effects, such as the chances of:

• employee termination;
• job restructuring;
• major changes to the operation, composition or size of the workforce, or the skills required from employees;
• loss of promotional opportunities or job tenure;
• alteration of work hours or pattern of work; or
• need for retraining or transfer to another location.

During this consultation, the employer should seriously consider any measures proposed by employees or their representatives to reduce the adverse effects of the restructuring on employees.

Case study

In Communication, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v QR National Ltd [2012], the Federal Court of Australia ordered the employer, QR National, to comply with its legal obligations to consult under an enterprise agreement before entertaining voluntary redundancies.

In 2012, QR National announced plans to terminate more than 500 jobs as part of a workplace restructuring. The employer sought expressions of interest in voluntary redundancies from the workforce. The unions requested that the FWC intercede over QR National’s failure to meet their consultation obligations under multiple enterprise agreements. The union argued that expressions of interest in redundancy should not have been sought until substantive consultation had taken place. QR National was previously fined nearly $250,000 in 2010 for its failure to conduct consultations in line with its enterprise agreements when it privatised some of its operations.

The court agreed with the union and ordered QR National to conduct consultation according to its existing agreements. It further ordered QR National to allow any employee to withdraw their expression of interest in voluntary redundancy, allow any employee a further time to make an expression of interest, and not make a final decision until all expressions of interest were submitted.

The employment law specialists at Go To Court Lawyers can provide advice about workplace restructuring, staff reductions and provide representation during any unfair dismissal cases. Please get in touch with the team on 1300 636 846 for assistance.