Consultation is not Optional

Many organisations are thinking about restructuring. A recent decision in the Employment Court reminds employers of the need to provide employees with information to ensure they have a ‘real’ opportunity to provide feedback before a decision is made.  Consultation is all about providing information to employees who may be affected (even in an indirect way) about proposed changes and having the ability to participate in meaningful discussions about these proposed changes.

The point of consultation is to hear what the affected employees may wish to say before the employer makes final decisions that may affect them.   This Employment Court decision was decided in 2023, having first been decided in the employee’s favour in 2019 in the Employment Relations Authority (ERA).  The employer was not happy with the ERA’s determination and in the appeal relied heavily on Section 4(1B) and 4(1C) of the Employment Relations Act 2000, which says the employer does not have to provide access to certain types of confidential information.   The decision demands a further spotlight as the Court of Appeal recently declined the employer’s application to appeal, which reaffirmed the decision of the Employment Court.

Birthing Centre Limited (BCL) v Matsas, as part of a proposed restructure, considered transferring employees from BCL to the MidCentral District Health Board. Various discussions, negotiations and ‘understandings’ were formally reached between BCL and the Health Board over time, and it was not until the transfer of the employees was a ‘fait accompli’ that BCL notified its employees.  It omitted to consult with its employees about this proposed transfer and did not advise the employees that such a transfer may affect their employment.  The employer claimed that it did not need to consult with the employees until they had made the decision to proceed with the transfer, and relied on a need for ‘confidentiality’ of the transfer until decisions had been made (claiming it wished to avoid ‘gossip and speculation’).  The Employment Court found that the employer’s claim that the employees may ‘share confidential information’ was far from being an adequate reason to deprive the employees of their statutory right to be consulted. The Employment Court further discussed the ‘confidentiality’ aspect of Section 4 and said that just because the employer genuinely believes the information to be confidential, does not mean that it is. The Employment Court said that there were options of making sensitive information available to employees, and this included providing it on an ‘embargoed’ basis or providing it to the employees on the understanding of strict confidentiality.

If you are an employer and are considering a restructure, please take the time to obtain some advice about your obligations first and before making any decisions.  We can advise you about what type of information is required to be provided, and when this must be done.  Balancing the obligation to provide information with the desire to preserve ‘sensitive’ information can be tricky.