The insurance-based funding model under the NDIS will fundamentally impact the way disability care and support is provided in Australia. We predict there will be significant movement in the not-for-profit (NFP) sector during this time of uncertainty and adjustment.
In order for NFP organisations to maximise their opportunities under the NDIS, it is essential that organisational change be carefully managed. The evolution of the NFP sector in the wake of the NDIS is likely to see changes to the structure and ownership of many NFPs, which may lead to substantial changes to employees’ roles and employment conditions. These sorts of changes are subject to considerable regulation under the Fair Work Act 2009 (FW Act) and applicable industrial instruments.
We had the opportunity to discuss the key considerations during periods of organisational change with a number of our NFP clients at our inaugural NFP HR Managers Forum held at Maddocks earlier this year. Our summary of these considerations is set out below.
My organisation is merging/acquiring/restructuring – what should we be doing to manage the HR/IR and OHS issues?
Before finalising and implementing major organisational change, employers in the sector will usually need to notify and consult with their employees who are affected by the change, and any unions representing them, about the proposed change. This requirement may arise under the FW Act or an applicable industrial instrument (such as the Social Community Home Care and Disability Services Award 2010 or an employer’s enterprise agreement) as well as (where relevant) under health and safety legislation. Failure to consult as required under the FW Act or an applicable industrial instrument can give rise to a substantial civil penalty (up to $54,000 for corporations and up to $10,800 for individuals).
The obligation to consult usually requires an employer to notify affected employees of the proposed changes, provide them and their representatives with relevant information and discuss the proposed changes with them and their representatives at a particular time before change is implemented. While genuine and prompt consideration must be given to any views raised by affected employees and their representatives before change is implemented, it is not usually necessary to gain the agreement or approval of employees or unions before implementing change.
Redundancies are a common consequence of major organisational change, particularly in the case of a merger where there may be a duplication of roles in each of the merging organisations. Where this occurs, careful consideration needs to be given to which roles will be selected for redundancy.
Redundancies may give rise to a number of obligations under the FW Act and applicable industrial instruments, including liability for redundancy pay and a requirement to give proper notice of termination and consider redeployment options. Exceptions may apply depending on the nature of the organisational change that has occurred and the size of the NFP organisation. In addition, employers may be obliged to avoid redundancies under the applicable industrial instrument.
Transfer of Employee Entitlements/Instruments
A merger with, or acquisition of, an organisation may also enliven the transfer of business provisions under the FW Act. This may have consequences for employee entitlements and the application of industrial instruments.
Where a transfer of business occurs, a new employer of transferring employees must recognise those employees’ service with their previous employer for the purposes of service-based entitlements (such as leave entitlements) unless a relevant exception applies. This can lead to potentially unexpected liabilities for a new employer.
In addition, a transfer of business can result in a previous employer’s enterprise agreement binding the new employer. This can have significant impacts on the cohesiveness of, and costs of administering, the merged organisation, with employees of the same organisation employed under differing terms and conditions.
Careful consideration needs to be given to the potential applications of the transfer of business provisions, and their consequences well before organisational changes are decided and implemented. In some circumstances, it may be possible to prevent unfavourable consequences.
Changes to work practices following organisational change can present potential occupational health and safety (OHS) risks that necessitate the development of new safe systems of work. Consultation about changes that affect health and safety is required under OHS laws.
Whilst organisational changes and restructuring are examples of reasonable management action and cannot alone constitute bullying, such environments may amount to a work stressor and increase the risk of workplace bullying claims arising. Such changes may also be a stressor for employees, as a consequence of loss of employment security, increased workloads and reduced morale.
Redundancies following organisational changes can also lead to a loss of valuable safety know-how.
Communication during times of change is essential, so that employees are informed and expectations are clear. Employers should also consider implementing additional procedures to identify and minimise OHS risk, particularly during and following major workplace changes.
It is essential NFP organisations operating in the new NDIS environment are alive to the issues which may arise during times of organisational changes. Consideration should, if possible, be given to these issues before changes are decided on and implemented.
For further advice regarding the management and implementation of organisational change, or if you wish to be on the mailing list for our next NFP HR Managers Forum, please contact a member of our Employment, Safety and People Team.