'If an employee asks questions as part of their feedback, there's an obligation for the employer to answer those questions'
Recently, Sky Television announced plans to outsource 90 roles in its technology and content divisions.
The company says the move would generate millions of dollars of savings in a few years.
If that’s the case, will other Kiwi businesses follow suit?
Fiona McMillan, partner at Lane Neave told HRD, “Historically, I think it’s a bit of a cycle. All of a sudden, organisations think it’s cheaper or more productive to do things offshore so there’s a flurry of it, and then x number of years later, they bring it back to New Zealand.”
But for organisations looking to outsource right now, McMillan goes on to warn, “The law around restructurings and redundancies, which includes outsourcing, has become incredibly complicated and it’s quite easy for employers to trip themselves up.”
There is a copycat mentality that companies find it easy to fall into, she said.
“Often companies will go, ‘If company x down the road is doing it, maybe we should do it’ — but without proper analysis of whether or not it’s actually going to achieve what they want it to achieve. If you’re going to move things offshore, then you’ve got to be really confident that it is going to be more productive or it is going to result in cost-saving.”
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Communicating outsourcing
When outsourcing is being considered, McMillan explained there are three key steps that centre around communication, feedback, and confirmation. While that sounds straight-forward, there are nuances in each step that employers need to look out for.
Under New Zealand employment law, any restructuring process requires consultation. An employer has to provide employees with information as to what they are looking at doing and the employer is obligated to provide all information it has around the restructure to the employees.
Organisations can’t just say, “We’re going to save $500,000 a year,” they need to show how they got to that figure and, in some cases, why they need to save $500,000 a year, so employees can provide informed feedback, according to McMillan.
“Where it gets a bit murky,” she said, “is yes a company must have obtained enough information to provide to employees to get feedback on, but they don’t want to go so far down the road that it’s a done deal and consultation is now meaningless.”
In acting for employees, one of the things her firm looks for “is if appears predetermined and consultation is just a bit of a tick-box exercise,” she continued.
Feedback from both sides
Employees have to be given the opportunity to provide feedback on the information they have been given, but employers often overlook the fact that employers are obligated to reply to that feedback.
“This is a step that is often missed,” said McMillan. “If an employee asks questions as part of their feedback, there’s an obligation for the employer to answer those questions.”
“For example, if an employee says, ‘No, I don’t think you’re going to save $500k by doing this, why don’t you keep half of us?’ the employer has an obligation to show that they’ve considered that option and give a reason as to why they are accepting or rejecting the idea.”
This step is essentially making a decision and confirming what that means for each individual employee who will be affected by that decision.
With the trend for organisations to offer redundancy packages over and above what is stipulated in employment contracts, that could be more costly than you think, McMillan said.
“We are seeing employers provide things over and above what is in employment contracts: extended notice periods, redundancy compensation if it wasn’t already in the agreement, EAP services, and depending on how senior the position is, outplacement services.”