Hundreds in line for layoffs as Spark asks staff to sign new contracts

UPDATED: Spark outlines, defends new contracts. Employment lawyer raises flags. Shares rise.
Spark chief digital officer Claire Barber says "Our staff numbers have moved up and down over the past few years."

Spark has given about 40% of its staff a week to consider new contracts or leave the company.

The move comes as part of the telco's "Quantum" restructure, under which employees and managers are being asked to embrace new "Agile" or flexible ways of working (read more about the Agile restructure here).

As NBR reported on May 25, the company has already told the NZX the Quantum initiative will shave $90 million from its annual wage and salary costs, driving the total down to $470m.

That figure implies about 860 jobs will go if cuts are applied equally to all levels (Spark had 5384 staff as of December 30).

On May 25 Spark also told investors acceleration of the Quantum programme would lead to an extra $25-30m in costs – presumably in part tied to pending redundancy payments.

Spark has confirmed some staff will lose jobs but won't put a number on it.

The telco says managing director Simon Moutter was unavailable for interviews but chief digital officer Claire Barber was.

Take it or leave it
Do hours change with the new contracts?

"It’s not intended to change our working hours, although Spark has recently implemented a new flexible working policy to support people’s differing needs," corporate communications head Michelle Baguley says.

"This is not about changes to the contract, because for the most part the terms and conditions remain the same – it’s mainly providing more flexibility when it comes to roles and titles.  This is about changes to the way Spark is going to operate and run."

She adds, "Agile is a very different working style which may not suit everyone, and we respect that. So the purpose for the change is to give impacted people the opportunity to consider whether Agile is for them or not."

Spark chief digital officer Claire Barber says "there is substantial excitement around the building" about the transition to agile.

However, NBR notes that even if there is 100% enthusiasm, $90m will still have to be shaved from the wage and salary bill to stay in line with the company's forecast.

Employment lawyer raises flags
Employment law specialist Jennifer Mills says one week would generally be regarded as an acceptable timeframe, although it depends on the exact nature of the new agreements.

She also notes that affected staff have the right to ask questions and that Spark must respond in good faith — a process that could extend beyond one week.

The 1900 staff affected ought to seek legal advice, she says, although she adds, "at a time of restructure, the need to seek advice may add to employees' financial pressure if their employment is hanging in the balance."

Staff may have grounds to challenge a redundancy if it's based purely on the move to Agile, Ms Mills say, though she qualifies that her ability to comment on that scenario is limited by the fact she has not seen one of the new agreements.

"To our knowledge, this may mean organising people into smaller self-managing teams. They are often referred to as 'squads' and 'tribes.'  However, it is unclear how much change this will bring to the existing employees' employment," she says.

"Where the proposed changes are minor or incremental, this may not justify disestablishing the existing positions. If the proposed changes are not significant, Spark may be able to make the changes without having to disestablish the existing roles."

Move away from traditional job descriptions
More broadly, Spark is playing down the nature of the new contracts.

"We’ve taken the opportunity to rework the language into plain English – so it is an easy-to-read outline of expectations and obligations on both employer and employee, and less like a formal contract full of legalese," Ms Baguley says.

"We have also moved away from traditional titles, detailed job descriptions and reporting lines because in the Agile model the nature of a person’s Agile role will be much more dynamic and changing.

"A lot of things about the contracts are not changing – for instance; pay, usual terms and conditions, and each employees’ existing compensation payment entitlements in case of redundancy, remain unchanged. In some cases people have received a pay increase as we’ve used this change to address any pay equity issues."

(If you're a Spark staff member who disagrees with that take, or thinks context is missing, get in touch, in confidence, with NBR.)

No target
While the blunt maths of Spark's labour cost forecast implies hundreds will lose their jobs, Ms Baguley says there is no set head-count target.

She adds, "While we do expect there to be reductions in our core telco business, and therefore in our business overall, we are growing in other areas like cloud services and security. For this reason our staff numbers have moved up and down over the past few years."

Around 200 staff have already moved to new jobs under the restructure over the past few weeks, Ms Baguley says.

Dr Barber calls the early agile-adopters "forerunner tribes."

Other staff could check out the trial agile groups, and "town hall" companies meeting were held to explain the changes.

Dr Barber says if some staff among the 1900 affected by the move to Agile don't like it, they don't necessarily have to leave the company. They also have the option to seek roles in other parts of the building.

For those worried that service and support will be degraded, Dr Barber says "All of our frontline staff, the people in our stores and contact centres, and in our service organisation for enterprise customers -- those people are not part of this change."

Moutter: short-term pain, long-term gain
In May, Mr Moutter said the short-term pain of the restructure would be worth it for long-term gains.

The broad thrust of the Quantum programme is for more flexibility with cross-function teams and, on the technology side, more automated and customer-DIY service and support functions.

The cull has already claimed two executive positions: Spark Ventures chief executive Ed Hyde had his role axed in May (he has since turned up at Chorus), while Jason Paris' former role of chief executive home, mobile and business (HMB) has also been eliminated. Acting chief executive HMB Grant McBeath is being sent back to his former role in sales.

Spark shares [NZX:SPK] rose to $3.80 at close of trading on Thursday. 

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