How to manage employment contract changes amid COVID-19

Lawyer offers advice on how to avoid straining relations with workers and unions

How to manage employment contract changes amid COVID-19

Employers have to act fast in a crisis. Sometimes, they may even end up seeking to readjust certain terms in workers’ contracts to balance the interests of the company with the welfare of their employees.

How can employers ensure sudden but necessary changes to employment terms, especially collective agreements, do not strain relations with workers and unions?

“The key as always is good communication but, most importantly, a sound basis for the decision,” said Hamish Kynaston, a partner at Buddle Findlay. “The thought process is often explained by employers in very basic terms: ‘We need to cut costs’ – fair enough – ‘we are therefore going to disestablish these roles or make these changes because they will save $X.’”

Read more: Personal grievance: Are you liable to contractors?

Kynaston, who will be speaking at the HRD Employment Law Masterclass – Wellington, advises employers to be upfront about their reasoning, sometimes even right down to the information about specific job cuts.

“Employees and unions want to know why those particular roles and those changes, what alternatives have been considered, and why they were disregarded,” he told HRD. “They also want an opportunity to contribute to the solution, beyond responding to a single proposal.”

Engaging with employees and unions, working with them towards a win-win solution, is pivotal. “The employers who came through the lockdown with their employee and union relationships intact often started by presenting the problem and asking for help with the solutions, rather than starting out by presenting the solutions,” Kynaston said.

“Many of those employers had to move quickly after that, or to move to a more traditional proposal/feedback process, but the fact that they began with a more open process had real benefits, and will have real benefits long term.”

Read more: COVID-19 no excuse to ignore work rights

Despite the economic crunch that some employers face as a result of the COVID-19 pandemic, financial pressure is still not a “get out of jail free card,” the lawyer said.

“Good faith obligations continue to apply, and these apply to all parties – employers, employees and unions. Employers can ask employees and unions to concede ground for financial reasons, but need to ensure that those financial reasons are sound, accurate and shared,” Kynaston said.

While there will often be a need to make significant change and quickly, it is as important as ever – if not more so – to ensure any change is implemented lawfully. “Practically, employees facing the loss of employment in a depressed job market are more likely to challenge decisions, and to succeed if they are unsound, rushed or poorly explained decisions,” he said.

Learn more about legal provisions for managing employment relationships from Hamish Kynaston at the HRD Employment Law Masterclass Wellington

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