When a company is contemplating a change of brand, a vital part of the change management process is engagement with employees. A change in brand, focus and company culture affects employees. They are the people who will be tasked with managing and supporting the changes that a rebranding will bring. The company will invest time and money in planning, designing and implementing the new brand. It must also focus on whether the change of brand, focus and company culture complies with employment law.

It is useful to examine two high profile re-branding exercises demonstrating the importance of employee engagement. One rebranding was a resounding success and the other a regrettable mistake. A key factor in the success and failure of each was the manner in which each enterprise engaged with its employees at the time. Two UK cases provide good examples for Irish businesses on the need to vet rebranding changes for compliance with employment law.

The Success: Arthur Anderson Consulting to Accenture1

Arthur Anderson Consulting was an offshoot from the Arthur Anderson accountancy firm. The consulting element of the business overtook the accountancy firm in financial terms; benefitting from a surge in popularity of consulting firms in the 1980’s. This led to a split between the two with the consulting wing paying 15% of profit to the accountancy firm.

The inevitable legal battle followed; lasting for two and half years, costing millions of dollars and ultimately being resolved at arbitration in August 2000. Part of the ruling of the arbitrator was that Anderson Consulting had to change its name by December 2000 and it was released from the requirement to pay 15%.

To begin with, the views of all employees were sought on what the new name of should be. 2,677 suggestions were made by employees from 42 countries. The names were then voted on until Accenture was settled upon. Given the short time frame, the business moved quickly to phase in the new name while phasing out the Anderson Consulting brand.

By New Year 2001, employees returning to work post-holiday came back to fully rebranded offices right down to their individual business cards. The CEO and the Chairman communicated directly with the employees through web casts in each of the global offices. Managers were provided with information packs for clients and for the market for immediate delivery.

Arguably there was a legal imperative behind the swift efficiency – the arbitrator’s award had to be complied with. Nonetheless it is an impressive example of how to manage a major change beginning with a global workforce.

The Failure: Royal Mail to Consignia and Back Again

The origins of Royal Mail can be traced back to the 1500’s. The UK Government under Labour decided that it would liberalise the postal and communications market within the UK in 2001. This led to a decision by Royal Mail to undergo a rebranding exercise.

It is understood that work was done on the name change from the self- explanatory Tudor designed Royal Mail to Consignia without any employee engagement, any customer opinions being tested and without any advertising about the name change. The lack of engagement on the change with employees led to the unions boycotting it.

The reaction was neatly summarised by John Keggie of the Communications Workers Union who said: “We should be trading on the British Post Office's worldwide reputation for honesty and integrity. I cannot see the point of inventing a new name to replace a highly respected tried and tested brand which the public hold close to their hearts. We will campaign to persuade the Post Office to change its mind.” 2

The result of the exercise was a cost of £2 million including disposal of Consignia branded signage that didn’t comply with UK Company law requirements to begin with. Different interpretations of the new name were possible notably that it was close to Spanish for “left luggage”. The name was ultimately changed back to Royal Mail.

Employment Law Issues

Legally, a re-brand and a desire for corporate change or for a particular corporate image can breach employment law. In the case of Lisboa v Realpubs Ltd & Ors UKEAT/0224/10/RN, the claimant was a gay man who started a job at a pub which previously attracted a mainly gay clientele until it was taken over and re-launched by the respondents. The respondents were keen to implement a re-positioning strategy, by broadening the appeal of the pub, and thus widening its clientele.

One of the directors of the respondent wanted the claimant to put a notice outside the pub, informing the public that it was no longer a ‘gay’ pub. The claimant objected and suggested an alternative notice which was accepted. The respondent also encouraged staff to seat non-gay customers in prominent places in such a way that they could be seen from outside the pub. There was also a re-organisation of staff, in keeping with the respondent’s policy to have a more even balance between the sexes. Finally, the director had made some remarks specifically directed towards the claimant on the grounds of his sexual orientation.

After just a few weeks in employment the claimant resigned, claiming constructive dismissal on two grounds:

1. Direct discrimination as a result of the comments specifically directed towards the claimant on the grounds of his sexual orientation and
2. Unlawful discrimination whereby the claimant was put under pressure to  work in and co-operate with a policy of making the pub less welcoming to gay customers than to ‘straight’ customers. The ET upheld the complaint of direct discrimination and awarded him compensation for injury to feelings, but rejected his ground two argument. They found nothing was done to make the pub unwelcoming or less welcoming to gay customers.

His claim of constructive dismissal failed, the ET finding that he did not resign because of the derogatory comments but because of his mistaken perception that the respondent was a homophobic organisation. The claimant appealed. The EAT held that the ET had failed to ask itself the critical question of whether, in the process of widening the appeal of the pub following its re-launch, the respondent had implemented it in a way that the old gay clientele was less favourably treated than the family customer base. They stopped short their enquiry at the point where they found that the re-positioning strategy was lawful.

The view of the EAT was that it was plainly and unarguably the case that gay customers were treated less favourably on the grounds of their sexual orientation, and consequently it followed that the claimant’s reason for resigning was prompted by unlawful discrimination against customers. Similarly in the case of Dean V Abercrombie & Fitch (2203221/2008). Ms Dean was recruited to work in a flagship store in London for the company. She was born without a left forearm and had a prosthetic limb from her left elbow down. She was required to work in the stock room and on the shop floor. While on the shop floor she wore a cardigan over her uniform polo shirt however her line manager told her to work in the stock room and that she could only work on the shop floor if she took the cardigan off in order to comply with the company “look”.

The Court held that management “conspicuously failed to acknowledge that the claimant might have been justifiably upset at the peremptory way she was told to leave the shop floor, that this could have offended any sensitivity she might have felt about her disability or that any apology might have been appropriate.” An award of £7,800.00 together with £1000.00 for loss of earnings was made in favour of Ms Dean.

Employees are at the fore front of any rebranding process. The chances of success of the process are greatly improved with employee engagement from the very beginning. As illustrated by the above UK case examples, employers in this jurisdiction must also vet the proposed changes to ensure that they do not breach employment law. For example, a new requirement for employees to project a particular physical image or lifestyle and/or dress in a particular way may be discriminatory and breach the Employment Equality Acts 1998-2015.

In addition, a business that seeks to attract a new customer base or consumer market share may breach the Equal Status Acts 2000-2012 by discriminating in the way that it offers its goods and services to the public. Both the Equality Acts and the Equal Status Acts prohibit discrimination on the grounds of gender, sexual orientation, disability, civil status, age, membership of the Travelling Community, race, religious belief and family status.

1 “Corporate rebranding a success and a failure” Alison Tucker, Added Value, 12 June 2013.

2  AJ McElroy, The Telegraph, 10 January 2001.