Change Negotiations: Just a Formality or a Stumbling Block?

However, the purpose of change negotiations is not to delay inevitable workforce reductions, let alone to increase employment-related disputes. Quite the opposite: the genuine purpose and objective of the provisions is to promote cooperation between the employer and employees, while taking into account the rights, obligations and interests of both parties.

So, what should employers keep in mind to ensure that the objectives of the Cooperation Act, namely improving cooperation, ensuring employees have opportunities to influence decisions and supporting employment in connection with operational changes, are genuinely achieved?

Good preparation is half the battle

The process begins long before the negotiation proposal is submitted. Careful preparation is perhaps one of the most important factors in helping an employer avoid turbulence both during and after the negotiations.

One of the first questions to consider is when the negotiations should be initiated. Under the Cooperation Act, the appropriate time is when the employer is still considering measures that may have an impact on employees. In practice, the provision largely reflects the familiar and self-evident requirement that no decisions may be made before the negotiations have taken place.

In practice, determining the right time to initiate negotiations is ultimately a matter for the employer to assess. Given the employer's obligation under the Cooperation Act to provide the negotiating party with sufficient information on the matters to be discussed, however, the proposed measures should be developed to a stage where a meaningful discussion can actually take place. The employer should therefore be able to explain what measures are being considered and why.

At the same time, the plan does not need to be finalised in every detail. Indeed, it should leave room for alternatives, and there may of course be more than one possible plan. Nor should the proposals be developed in such detail that employees are left with no genuine opportunity to influence the matters under consideration. From the perspective of the Cooperation Act, the employer should come to the negotiating table with the outcome still genuinely open.

It is also worth investing time in preparing the negotiation proposal. It does not need to be a lengthy document, but the proposed measures and the reasons behind them should be described in sufficient detail for the negotiating party to understand why the process is being initiated. A shared understanding of why the negotiations are necessary can in itself help the process run more smoothly.

There is not necessarily any need to attach extensive additional documentation to the negotiation proposal to illustrate the situation. However, gathering relevant material in advance and reviewing it at the first negotiation meeting can be a good idea.

Quality over quantity, and other practical tips

When planning the timetable, employers often also need to consider how many negotiation meetings are necessary. As a general rule, at least two meetings should be held: an opening meeting and a closing meeting. The more complex the matter, or the more significant its potential impact on employees, the more meetings are often needed. Employee representatives or employees themselves are also likely to have more questions in such situations, and the employer needs to respond to them. From the perspective of fulfilling the employer's obligations, it remains essential that all matters required by law, including the grounds for the proposed measures, their effects and possible alternatives, are addressed appropriately and sufficiently during the negotiations.

The employer is not required to continue the negotiations for longer than the Cooperation Act or the applicable collective agreement requires, nor do the parties need to reach agreement on the matter being negotiated. Nevertheless, the employer should not focus on how quickly or with how little effort the negotiations can be completed. The better question is how many meetings are genuinely needed for the objectives of the negotiations to be achieved.

In some situations, two meetings may be sufficient. There is naturally no reason to hold meetings simply for the sake of holding them, nor does every matter falling within the scope of the change negotiations need to be discussed at every meeting. Ultimately, what is discussed and how it is discussed matters more than the sheer number of meetings.

Another approach that has proved useful in practice is to have at least two people representing the employer in the negotiations, with one chairing the meeting and the other acting as secretary. This allows one person to focus on leading the discussion while the other concentrates on documenting it. It may also be appropriate to invite other representatives to individual meetings where their involvement is necessary in view of the matters being discussed.

Keeping a proper record of the negotiations is important, as the employer bears the burden of demonstrating that the matters required by law have been addressed. Preparing draft minutes in advance can also be a useful way to prepare for the meeting and can later serve as a framework for the discussion.

The minutes are generally signed by all parties to the negotiations, and any dissenting views should also be recorded. This ensures that the employees' perspective remains visible in the record. Where possible, it is also advisable to record the parties' view that the relevant matters have been discussed sufficiently. This is generally achieved by giving employees opportunities to ask questions and express their views, and by engaging in genuine discussion of those questions and views.

On a more practical note, it is advisable to leave a few days between negotiation meetings. This gives sufficient time to finalise and sign the minutes and allows the employer to respond to any questions raised by employees.

The Cooperation Act allows the parties to reach agreement on the matters under negotiation. In practice, however, this is generally not the case, and the final decisions remain for the employer to make after the negotiations have concluded. It is worth emphasising that the negotiations are not over until they are actually over. Decisions should therefore not be recorded in the minutes of the final meeting unless the parties have mutually agreed on them. If an agreement has been reached, this should be stated unequivocally in the minutes.

Don’t put down your pen just yet

Once the negotiations have concluded, the employer may feel that the most demanding part of the process is behind it. However, the end of the negotiations does not mean that the employer's work is finished.

After the final negotiation meeting, attention quickly turns to implementing the changes in practice. Before doing so, however, the employer must within a reasonable period of time, in practice generally within a few days of the conclusion of the negotiations, provide an assessment of the planned decisions, their impact on employees and the timetable for implementation.

The timetable is often particularly important. How should the planned business measures and their impact on employees be implemented while taking into account, for example, employees' different notice periods? In some cases, a reorganisation may need to be implemented as quickly as possible. In others, implementation may be appropriate only at a later stage.

From the perspective of the Cooperation Act, an employer may implement measures discussed during the change negotiations even several months after the negotiations have ended. What matters is that the measures implemented are based on the grounds that were discussed during the negotiations and that, in their nature and scope, they remain within the parameters of what was negotiated.

From the employees' perspective, communication is usually particularly important in this respect. If the employer has appropriately informed employees that potential measures and their effects may be implemented, for example, over the following six months, the process is less likely to give rise to uncertainty or disputes over interpretation.

The actual impact on employees must be implemented in accordance with the Employment Contracts Act and the applicable collective agreement. The Employment Contracts Act does not contain specific provisions governing, for example, how employees should be selected for termination. As a general rule, the employer may determine the selection criteria at its own discretion, provided that the selection is not based on discriminatory or otherwise inappropriate grounds.

A further fundamental principle under the Employment Contracts Act is that termination may only concern employees whose work has decreased substantially and permanently. At this stage, particular attention should also be paid to the employer's obligation to offer other work and provide training, and the need for and implications of any new recruitment should be carefully assessed.

Hard work pays off

Change negotiations are rarely a pleasant process for anyone, nor can they usually be made into one. They can, however, be seen as a tool, and the value they provide depends to a large extent on how the negotiation process is managed.

For the employer, carefully conducted negotiations are above all one of the best safeguards against disputes arising afterwards. When the negotiation proposal has been prepared thoughtfully, the grounds, effects and alternatives have been genuinely discussed, the documentation is in order and employees have been kept adequately informed, the risk of problems arising is reduced at every stage. If disagreements do arise later, resolving them is also easier when the process has been properly documented.

At least as important, however, is what the process ultimately means for employees and the organisation as a whole. Even if the ultimate outcome does not satisfy everyone, the experience of having one's views heard, questions answered and alternatives genuinely considered can have a considerable impact on how the change is perceived. This is particularly important for those who remain with the employer. Moving forward after the change is easier when trust has not been lost along the way.

The objectives of the Cooperation Act, improving cooperation, ensuring employees have opportunities to influence decisions and supporting employment, need not remain mere rhetoric. They can be achieved when the employer sees the negotiations as a means of managing change openly and listening to employees, as well as an opportunity to engage employees in the change, rather than simply as a formality or another chance to stumble over the detailed requirements of the law.

Change negotiations require effort, but in this context too, hard work pays off.

Change negotiations involve many practical questions for which the law does not always provide a ready-made answer. We are happy to assist at every stage of the process, whether in planning the negotiations, preparing the negotiation proposal and minutes, conducting the negotiations or implementing changes once the negotiations have concluded.