Changes made of necessity may be retained for the longer term

As the wave of Covid-19 infections subsides (at least in Australia), and life starts to return to normal, one big question is what will be meant by "normal" in a post-virus world. For businesses dealing with organisational change, seemingly the only clear answer at this point is that it won't be the same as the old "normal".

Change has been thrust on businesses, government agencies, and other organisations without, seemingly, the chance to give the change any thought. Almost certainly, a significant amount of this change will prove lasting. Businesses that have found they can trade successfully online - perhaps with fewer staff or many staff working remotely, and possibly with reduced rental costs - may want to stick with that model, entirely or perhaps with some modification.

The further question is what consequences there will be for organisational change. These days organisational change policies are recognised as vitally important for survival in a rapidly evolving world, and organisational change clauses in awards and enterprise agreements are part of the furniture. But how did we get to this point?

Industrial revolution, production lines and the advent of Taylorism

The arrival of organisational change policies, and their recognition in law, has a longer history than may be generally thought.

Doubtless the seeds were sown in the industrial revolution, when machines started to transform the way work was done. When, in the twentieth century, Henry Ford became an industry colossus, the images in popular culture were those of the production line.

In fact production lines were conceived of late in the nineteenth century, by Frederick Winslow Taylor, and the resulting management theory came to be called Taylorism.

Taylor was of a scientific bent, and thought it indisputable that the most efficient way of producing anything was to break the process down into the smallest portions, with an army of workers each carrying out these individual tasks. However in the aftermath of World War II it came to be realised that the joy of spending all day on the production line fitting the driver's side front wheel onto its axle eventually wore off.

Tedious tasks and declining productivity

In a fascinating Australian study from that time, the managers of a factory tried to remedy falling productivity through a series of workplace changes, only to find that, after a while, productivity slumped again.

It was only when productivity rose after the reversal of a change which had itself boosted productivity, that it was realised that what had energised the workers was not the content of each change, but instead the mere fact that something was different.

Acceptance that employees have a right to be consulted

Over the subsequent decades it was recognised and accepted that employees worked best and most productively when they felt involved - involved in the output of the business and the achievement of its goals, and involved in the way the business operated.

Now, it is accepted that employees have not merely a financial stake in the sense of an expectation of continuing employment, but also a right to be consulted about changes which affect them. This is the current world of organisational change.

Consulting employees about organisational change promotes cooperation

It's a pretty widely accepted fundamental that, when circumstances require change in an organisation, that's most effectively achieved when its employees - or at least those employees potentially affected by the change - are consulted.

Apart from the fact that employees may have value to add to the conversation - possibly some options which have not occurred to management - the resulting change is more likely to bed down effectively if staff have some "ownership" of the change because they have been involved in its planning.

This has been recognised as a matter of good business practice before legal formalisation. Clauses in some awards and enterprise agreements predated current federal legislation, but this is a convenient place to start.

Unfair dismissal and genuine redundancy under the Fair Work Act

Under the Fair Work Act 2009, a termination of employment which might potentially be challenged as being an unfair dismissal is immune from that kind of challenge if it is a "genuine redundancy". There are two main tests for what is a "genuine redundancy".

One is that the employer no longer requires anyone to do the work which was being carried out by the employee in question. This is a protection intended, obviously enough, to guard against the dismissal and quick replacement of a troublesome employee, by calling the termination a "redundancy" and thus averting challenge in the Fair Work Commission.

The other is that the employer must be able to show that it has complied with any obligation under an award or enterprise agreement to consult about the proposed redundancy before taking action.

Another part of the same section (section 389) says that a termination is not a genuine redundancy if it would have been reasonable for the employee to be redeployed elsewhere within the business.

Consultation of employees under awards and enterprise agreements

Here we are talking about what are sometimes collectively called "industrial instruments", made under the Fair Work Act: awards (referred to under the Act as "Modern Awards"), and enterprise agreements, which are brought into being by negotiation between employees (and/or unions), and employers, but which must be registered by the Fair Work Commission in order to be enforceable.

Modern Awards routinely include consultation and dispute resolution provisions, including a clause specifically requiring consultation about "major workplace change"; and a proposed enterprise agreement would be unlikely to be registered by the commission if lacking consultation and dispute resolution provisions.

Workplace changes arising from the Covid-19 pandemic

Whatever the law, awards or enterprise agreements might say, the Covid-19 pandemic required immediate action. At this stage it is hard to say with certainty whether serious legal problems have arisen. Most changes introduced related to pay, and no law changes were required to allow employers to negotiate with staff about working from home or in different modes.

Importantly, these measures were envisaged as being temporary, and redundancy and "major workplace change" provisions generally assume changes of a permanent, or at least indefinite, nature.

It's likely that the real test is yet to come, because retention into the future of substantial organisation change will require compliance with the "rules" applying to organisational change.

The question for affected businesses will be how to go about this process.

How-to for organisational change - the steps

There are few hard-and-fast requirements, but sensible steps for businesses are as follows. Obviously, how these things are done will be much affected by the size and nature of the business.

Following the "rules" for your business or industry

Following the adage "when all else fails, read the instructions", if there is an award, enterprise agreement or other industrial instrument applying to your business or industry, read what it has to say about consultation on organisational change.

What is the impetus for change?

It's essential for managers to say what changes are intended, but equally important to say why.

Employees see through cost-cutting measures dressed up as changes designed to improve customer service. If the business does need to cut costs, say so. Little is to be lost by being open with employees about these things.

Presenting staff with a proposal, not a fait accompli

However well designed a change proposal may be, it is likely to meet resistance if presented to staff as a fait accompli.

It's best for a plan to be laid out as a proposal: "This is what we see as the problem; and these are the changes we think should be made to deal with it. But we won't make final decisions until there has been consultation."

Give employees time to consider your plan

Give the employees a plan, invite them to comment, and give them a reasonable time to do so - a week at a minimum. There will always be opposition and objections, but it's better to be able to say that objections have been considered and rejected for a reason, than to have change resisted on the basis that some objection has been neither considered nor even heard.

On the positive side, where a reduction in the size of the workforce is required, consultation can reduce the pain by potentially allowing reduction to be achieved to some extent through staff who are willing to leave, possibly saving jobs for those who really need them.

Requests for flexible work need to be considered seriously

Don't forget that receptiveness to flexible work practices is now a settled part of the employment arena.

Employees cannot require an employer to allow specific flexible work patterns, but they have a right to have these requests heard, seriously considered, and rejected only for sound business reasons. One thing the pandemic has shown has been just how easy and effective transition to working remotely can be.

Taking account of these aspects won't guarantee a painless change process, but should at least make it a little easier.

In summary, the pandemic has brought organisational change into sharp focus but, for business and industry, what's happened to date is just the beginning.

Geoff Baldwin
Employment law
Stacks Champion

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.