Consultation obligations can arise from a variety of sources, and the degree of consultation required differs from one source to another.

All modern awards and enterprise agreements include consultation provisions that are usually triggered by a major workplace change, or changes to rostering or hours of work.

When changes such as these occur, employers are required to meet any consultation obligations that may apply under legislation such as the Fair Work Act 2009 (Cth) (‘FW Act’) and industrial instruments (e.g. modern awards or enterprise agreements).

These obligations can be complex, conflicting, and occasionally confusing.

This article explores:

• the different sources of consultation obligations;
• when consultation obligations arise;
• the consequences of failing to consult; and
• what a consultation process typically requires.

This article does not cover the consultation obligations arising from state and territory specific work health and safety legislation.

Fair Work Act 2009 (Cth) (‘FW Act’)

Employers are required by the FW Act to consult with employees and their representatives in certain situations (whether or not a modern award or enterprise agreement applies). This includes:

• When bargaining in good faith and negotiating the terms of an enterprise agreement;
• Where an eligible employee makes a flexible working arrangement request;
• When negotiating an individual flexibility arrangement with an employee under an award or enterprise agreement;
• Where 15 or more employees are being made redundant;
• When an employee requests to extend their parental leave following the initial 12-month period;
• Where an employee is on unpaid parental leave, and the employer makes a decision that will have a significant effect on the employee’s pre-parental leave position (i.e. status, pay, or location); and
• When terminating an employee by reason of redundancy, as per the obligations in an award or enterprise agreement.

Modern Awards  

‘Standard’ consultation clauses are contained within modern awards. These require employers to consult with employees and their representatives if they intend to make major workplace changes (e.g. introduce a new technology) or change an employee’s regular roster or ordinary hours of work.

Consultation about major workplace change

Under the ‘standard’ consultation about major workplace change clause, employers must consult with employees when they make a definite decision to introduce major changes in production, programming, organisation, structure, or technology that are likely to have ‘significant effects’ on employees.

So, when does the obligation to consult arise? As outlined above, this is triggered when an employer makes a definite decision to introduce a major change to the workplace that is likely to have a significant effect on employees. It does not occur at the point when an employer is weighing up whether or not to make a change. After a decision is made, discussions with the affected employees must commence as soon as practicable.

In certain circumstances, consultation is required prior to a definite decision being made (e.g. under work health and safety legislation). This has the potential to cause tension because while you might have made a definite decision to do something, there could be safety considerations attached to this, that require consultation before the decision is ultimately made.

What are significant effects?

‘Significant effects’ include:

• Termination of employment;
• Major changes in the composition, operation or size of the employer’s workforce or in the skills required;
• Loss of, or reduction in, job opportunities (including opportunities for promotion or tenure);
• Alteration of hours of work;
• The need to retrain or transfer employees to other work or locations; or
• Job restructuring.

The ‘standard’ clause also imposes obligations on employers regarding the affected employees and their representatives (if any), such as:

• Giving notice of the proposed changes;
• Discussing the proposed changes as soon as possible after a decision is made;
• Providing all relevant information about the changes in writing (including their nature, likely effect on employees and any measures to avoid or reduce their adverse effects); and
• Giving prompt consideration to any matters raised.

Consultation about changes to rosters or hours of work

Many employers utilise strategic rostering to optimise workforce productivity and align employee shifts with changing operational requirements.

Under the ‘standard’ consultation about changes to rosters or hours of work clause, employers must consult with employees if they propose to change the regular roster or ordinary hours of work at the workplace.

Again, this clause imposes obligations on employers regarding the affected employees and their representatives (if any), such as:

• Providing information about the proposed change (including its nature and when it will begin);
• Inviting views about the impact of the proposed change to be given (including any impact on family and caring responsibilities); and
• Considering the views given before implementing the change.

If the award also contains rules about rostering and ordinary hours (i.e. in a different clause) the employer must first follow those rules.

For example, awards might include a provision which:

• Specifies the amount of notice that must be given to employees regarding a change in their roster or ordinary hours; and/or
• Requires the parties to mutually agree before any changes to an employee’s roster or ordinary hours can be made.

Where an award has provisions similar to the above, employers cannot opt out of their obligations (e.g. giving less notice than required or making a change without an employee’s consent) by way of using the consultation clause.

Enterprise agreements

Under section 205 of the FW Act, all enterprise agreements must contain a consultation term that requires an employer to consult with employees about any major workplace changes, or changes to their regular roster or ordinary hours of work. The term must also allow employees to be represented for the purposes of consultation (e.g. by an elected employee or a union representative).

Schedule 2.3 of the Fair Work Regulations 2009 (Cth) (‘FW Regs’) prescribes the model consultation term for enterprise agreements. This is similar to the ‘standard’ consultation clauses contained in modern awards.

The parties to an enterprise agreement can establish their own consultation term and, as a result, an employer may have additional obligations.

An enterprise agreement will automatically have the model consultation term included if:

• It is lodged without a consultation term; or
• The consultation term does not comply with the FW Act.

Failure to comply with consultation obligations imposed by an enterprise agreement

On 17 February 2023, the Federal Court of Australia imposed two $35,000 penalties on Airservices Australia for failing to comply with the consultation obligations of its enterprise agreement and thus contravening section 50 of the FW Act.

The issue arose because of a dispute between the Civil Air Operations Officers’ Association of Australia and Airservices Australia, regarding the implementation of a remote overnight arrival and departure service for the Rockhampton/Mackay sector by air traffic controllers at Cairns.

One of the contraventions of section 50 of the FW Act, was due to Airservices Australia changing the base roster arrangements and therefore, the regular roster of the Cairns air traffic controllers, without engaging in consultation as required by its enterprise agreement.

Effectively, Airservices Australia denied the affected employees a real opportunity to have input into the decision-making process, which involved decisions with potentially very serious consequences for them.

Case Reference: Civil Air Operations Officers’ Association of Australia v Airservices Australia (No 2) [2023] FCA 104

Consequences

The above case is an important reminder for employers to properly consider and follow the consultation obligations under their applicable industrial instrument. Failure to do so can:

• Require an employer to participate in dispute settlement procedures; or
• Expose an employer to substantial civil penalties.

While the focus of this article is not on redundancy, failure to properly consult with an employee prior to making their position redundant may:

• Remove the defensive shield of genuine redundancy (under section 389 of the FW Act); and
• Expose the employer to an unfair dismissal claim.

‘Major’ workplace change

Modern awards and enterprise agreements both refer to ‘major’ workplace change as an event requiring consultation.

What constitutes a ‘major’ change’ was considered by the Federal Court in the Port Kembla Coal Terminal v Construction, Forestry, Mining and Energy Union (2016) case.

In this case, it was determined that whether something is a ‘major’ change depends on:

• The seniority and importance of the affected employees in the employer’s operation;
• The extent to which the affected employees work in an integrated or disconnected manner;
• The consequences for the continuing employees; and
• The number of employees affected.

For example, even changes that adversely impact only a small proportion of critical employees may be regarded as a ‘major’ workplace change.

Case Reference: Port Kembla Coal Terminal v Construction, Forestry, Mining and Energy Union [2016] FCAFC 99

Confidential or commercially sensitive information  

Employers are not required to provide any confidential or commercially sensitive information to employees. This does not discharge an employer of the obligation to discuss the change; it only allows as part of those discussions for confidential or commercially sensitive information to be withheld (i.e. you are still required to consult even if you cannot tell your employees the complete story).

What happens if you cannot reach an agreement with employees?

You might mistakenly believe that consultation involves reaching an agreement with employees – it does not.

Consultation is an opportunity for employees to influence the decisions that affect them by expressing their views and concerns. Employers must consider the matters that employees and their representatives raise, however, they are not bound to follow the suggestions made.

Importantly, consultation is not joint decision-making, nor does it mean that employees can veto an employer’s decision. Employers have the ultimate responsibility and power to make decisions regarding their business. Provided an employer has followed their consultation obligations, they do not have to:

• Change their decision; and/or
• Obtain the consent of those consulted to implement the proposed changes.

Steps for employers to follow

If an employee is award/agreement free, there are limited obligations to consult with that employee subject to any policy requirements. However, in some circumstances, it may be best practice to engage in consultation to assist employees in understanding the rationale for the decision.

To ensure that you are compliant with the consultation obligations imposed by the FW Act or an applicable industrial instrument, several aspects must be considered.

When proposing to introduce change, first consider whether the obligation to consult has been, or will be triggered. If you are required to consult, you should:

• Read the specific industrial instrument your employees are covered under, particularly the consultation and dispute resolution clauses;
• Carefully consider and plan the process whilst ensuring consultation is started as soon as practicable;
• Be transparent, encourage ongoing open communication, and allow for two-way feedback;
• Refrain from making assumptions about the outcomes of consultation;
• Meaningfully engage in consultation, do not treat it as a mere formality;
• Always use terms such as ‘proposed’, ‘provisional’, and ‘preliminary’ in all documents until consultation is complete (i.e. do not refer to a decision as final or concluded before that point); and
• Document everything in writing (e.g. provide written responses to any queries or concerns) to demonstrate how employees were given a ‘real’ opportunity to influence the decision.

How can Business Chamber Queensland help?

Business Chamber Queensland members with HR services as part of their membership are invited to contact the Workplace Advisory Services team:

P: 1300 731 988

E: [email protected]

Businesses who do not have a HR membership may also seek assistance however a competitive consultancy fee will apply for any advice and assistance provided.

For membership enquiries, please contact our membership team on 1300 731 988.