Concerns Over Dubious Restructure Process

August 15th, 2019 - Barbara Buckett

Spark is currently undergoing a significant business restructure which will affect almost 2000 members of its staff. On the face of it, these 1900 or so employees will be losing their jobs. These staff will either be placed on new employment agreements or made redundant. We have been looking at this process from an employment law perspective and we are sceptical about the company’s restructure approach.

Our first concern is that redundancy would not be the appropriate alternative in this situation. Unless the majority of the work these employees are carrying out is no longer available, this is not a situation where the employer should be considering redundancy, as there has been no actual disestablishment of their earlier roles. The legal test of whether the employee is superfluous to the needs of the business is not being considered.

We also have concerns about the tight timeframes Spark is following such as the five-day consultation timeframe for employees to provide feedback on their proposed roles. The Employment Relations Authority expects more robust processes from larger employers, holding them to higher standards than most businesses. It could be argued that Spark should be giving its employees a longer timeframe for consultation, especially since there is a wide spectrum of new roles to be filled. Spark appears to be unduly rushing through the consultation process which is undermining the integrity of the restructure.

The framework for Spark’s restructure is a transition to an Agile business model, however we are concerned that there may not have been sufficient consultation with employees as to whether an Agile business model will actually serve Spark’s needs. Generally untested in New Zealand, Spark also needs to consider whether the Agile business model is a legally complaint infrastructure.

Another issue with the approach taken is that the restructure and allocation of new roles is being determined by designating bands based on current salaries and slotting employees into different roles based on which salary band they fit into. There is a risk with this approach that employees may not be placed into roles appropriate for their skillset and expertise.

As an additional concern, it appears Spark is not releasing information to its employees about the parameters of these salary bands. This prevent employees from knowing how close/far they are from moving up to the next salary band, and whether they should consider themselves for positions in the salary band above theirs. It also makes it more difficult to hold the employer to account for how these salary bands were set and whether this is being done in a fair and even-handed way. Employers need to be transparent with their staff when navigating business restructures, so that employees can participate meaningfully in the process.

We would also criticise the piecemeal approach of the restructure. Employees in one area of the company are being faced with a decision of either leaving or accepting one of the available new roles if offered to them. However, Spark intends on restructuring other areas of its company later on this year, where additional roles will be available for employees to take up, but these roles are not open yet. Employees are being expected to commit to a particular role or to accept redundancy without knowing what else is on the table. Employees are being asked to make decisions before the process is completed. Rather than this creating a dynamic or organic process, this approach indicates that Spark may be playing a bit too fast and loose with its obligations to consult and canvas options for redeployment.

Spark has not created job descriptions for the hundreds of new roles which are being created. With no role-specific job descriptions, staff are not in a fully-informed position as necessary to enable them to decide whether to stay or go. Employers should be able to give detail on the day-to-day tasks and responsibilities of a role so that employees can get a sense of what to expect if they agree to stay. We question whether this free-flow process increases the risk that vulnerable employees may be picked off. These employees are entitled to security in their employment.

With Spark entering relatively uncharted territory in introducing an Agile business model, it is more important than ever that the company is transparent in how it assesses its employees, relying on clear, fair measures and providing sufficient time for consultation. However, this does not appear to be the case here. In such untested waters, it is difficult to see why 1900 employees need to lose their jobs. Overall, this is a potential recipe for disaster which leaves Spark open to challenge.

Note: BuckettLaw takes no responsibility for the consequences of any actions taken on the basis of our articles. Any views expressed or comments made in an article are the writers option only. The content in our articles does not constitute legal advice. If you need legal or expert advice you should obtain specific advice about your case or matter from a professional. For legal advice based on your individual situation please contact us to speak with one of our expert lawyers.

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Barbara Buckett

Barbara Buckett is a highly experienced senior employment lawyer with over 35 years of practice in New Zealand. She provides expert advice on all areas of employment law and has a proven track record of delivering excellent results for clients. Barbara has extensive experience in resolving workplace issues and is an experienced litigator. In her free time, she enjoys reading, traveling, working out, and fine wine and dining with friends.

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