An important feature of the Victorian 2012 -2013 Budget (the Budget) was the announcement by the Treasurer of significant savings as a result of further reductions in employee numbers in the Victorian Public Sector (VPS). In fact, the Budget was peppered with descriptions of these savings, using language of "streamlining of corporate and administrative services", achieving "operational efficiencies" and "reductions in spending on policy and back-office functions".
The Budget announcement means a further reduction in VPS staff numbers of around 600, in addition to 3,600 VPS job losses announced in December 2011. Unlike the December announcement, there was no guarantee in the Budget that the job losses would be voluntary reductions and largely from attrition.
Many VPS departments and agencies will undergo significant change as the budget is implemented. Workplace change is a critical part of any dynamic and sustainable organisation, including the VPS. Workplace change enables an organisation to realign its people with its goals and priorities. How well an organisation manages change will largely depend on its engagement with employees and union representatives and compliance with legal obligations.
In this article we set out some important hints and tips for managing a change process in the VPS.
As VPS departments and agencies are facing a pivotal time of workplace change some key industrial and legal considerations for planning and implementing change include:
- compliance with enterprise agreement (Agreement) requirements;
- ensuring that if there are redundancies, they are genuine redundancies for the purposes of the Fair Work Act (FW Act) unfair dismissal provisions; and
- that selection processes for those employees affected by change do not give rise to adverse action or discrimination claims.
Agreements will contain a range of provisions that are required to be met during a change process within each department and agency. These include clauses dealing with:
- the role of a consultative committee in relation to restructuring;
- consultation obligations covering both impacted employees and unions. Of particular importance are agreement provisions about when the obligations under consultation provisions commence and what the department or agency is required to do. For example, clause nine of the Victorian Public Service Agreement 2006 (2009 extended and varied version) (VPS Agreement) requires that the employer "advises" employees and CPSU of the proposed changes when a proposal is being "considered" and "as soon as practical after the proposal has been made";
- redundancy and redeployment procedures must be complied with, including whether a department or agency is required to implement a voluntary redundancy process and whether a "spill and fill" process can be used; and
- grievance procedures may set specific time frames for employees to lodge grievances about procedural and selection issues which can impact on the selection and appointment process for successful candidates if there is a spill and fill.
Tip: Compliance with Agreement provisions is critical as a failure to follow the requirements of an Agreement may result in a dispute at Fair Work Australia (FWA) under an Agreement's dispute resolution clause, or a claim of breach of an Agreement under section 50 of the FW Act, which is a civil remedy provision dealt with by the Courts.
It is also important that workplace change resulting in redundancies is managed so that they are 'genuine redundancies' for the purpose of the FW Act. A genuine redundancy will not be subject to the unfair dismissal provisions of the FW Act.
There are three obligations under section 389 of the FW Act that FWA will apply in determining whether there is a genuine redundancy:
- the person's job is not required to be performed by anyone because of changes in operational requirements. A substantive change to a position, such as a reclassification or change in functions, and distributing functions across other positions will generally mean that the person's job is not required to be performed by anyone1;
- consultation obligations under a relevant modern award or agreement, that applied to the employment, are complied with; and
- if it would have been reasonable, in all the circumstances, for the person to be redeployed within the employer's enterprise or the enterprise of an associated entity of the employer.
Tip: VPS departments and agencies must take steps to ensure that they meet the genuine redundancy provisions under the FW Act or otherwise be subject to unfair dismissal provisions, which require that a termination of employment is not harsh, unjust or unreasonable.
Adverse action and discrimination
While the process for selecting which employee is to be made redundant is not relevant in determining whether a dismissal is a case of 'genuine redundancy'2 under section 389 of the FW Act, it may be a relevant consideration if the employee claims that their selection for termination, reclassification or redeployment was because of a workplace right or their industrial activity under the adverse action provisions in the FW Act, or because of prohibited reason either under anti-discrimination legislation or the FW Act.
Tip: For this reason it is important that departments and agencies have clearly articulated reasons for making changes that impact on employees.
These reasons must not be for reasons that include workplace rights that employees have (including the right to make complaints; in relation to their entitlements and responsibilities under industrial instruments and laws; or participation in proceedings); their involvement or otherwise, in industrial activities or for a prohibited (discriminatory) reason.
In our experience there is a range of other risks that departments and agencies should consider as they undertake organisational change. Some of these issues include:
- an increase in workplace bullying and stress complaints that can arise if employees feel under pressure in their roles as a result of change and possible uncertainty; and
- an increase in workers' compensation claims.
VPS departments and agencies should also consider any contractual entitlements that employees may have under executive and senior manager contracts, including whether contract terms (such as the position held) can be changed unilaterally, and notice of termination obligations.
Similarly, VPS departments and agencies should consider whether casual and contract employees impacted by change may have entitlements that do not form part of written terms and conditions, such as long service leave and notice of termination rights, if in fact the person is likely to be considered an on-going employee at law. For example, a casual employee who has been engaged on a regular and systematic basis with a reasonable expectation of continuing employment by the department or agency is likely to have unfair dismissal and notice of termination rights.
Tips and hints – consultation and engagement
In addition to the tips outlined in this article, we recommend that any process dealing with workplace change should incorporate transparent and proper consultation that engages employees and the relevant unions as soon as it is possible to do so.
In our experience, consultation that includes one on one discussion about the possible impacts of change on employees, as well as an opportunity to receive feedback from impacted employees, can make a significant difference to how successfully a change process is implemented and whether claims or grievances are made.
Norton Rose Australia has significant experience in advising departments and agencies considering or implementing workplace change.
1Brooks v The Gowrie (WA) Inc  FWA 1471
per Williams C.
2Kekeris v A.Hartrodt Australia Pty Ltd  FWA 674 per Hamberger SDP.
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.