“Is it a bird? Is it a plane? No it’s a …redundancy”: Managing workplace restructures

An inevitable fact of a growing business is that at some point it will undergo an organizational restructure. These will undoubtedly affect employees across all levels of the company. Employers should be ready to appropriately manage and communicate these changes to employees.

Changes to duties

From time to time a change in duties will be seen by the employer as a relatively minor change – employees may disagree and perceive the change to be significant.  This situation will almost certainly may open up a wide range of consultation and notification obligations and may trigger a redundancy.

This was found to be the case in a recent dispute before the Federal Circuit Court (FCC).

In Gundi v Sensis Pty Ltd [2017] FCCA 1438, Mr Gundi (the Employee) claimed he had been made redundant by Sensis Pty Ltd (the Employer) as a result of a company restructure.

After four and a half years of successfully managing a portfolio of 160-170 of the Employer’s existing customers, the Employee was advised that, as a result of the restructure, his role as Media Sales Advisor would be changed which meant his portfolio would be dispersed to other staff. He was also advised three new roles would be created in lieu of his position, and he was redeployed into one of them, the primary duty of which was to spot and cold-call prospective customers.

The effect, the Employee argued, was that his role was now redundant. Under the relevant Enterprise Agreement (EA), the employer was required to offer a “reasonable alternative position” in the case of a redundancy, and the Employee claimed this had not been done because:

(i)           He was being directed to perform a role similar to that which he had when he first commenced employment with the Employer; and

(ii)          His ability to earn commissions was significantly reduced as he was no longer able to maintain the client relationship he had spent years developing with his existing portfolio.

In response, the Employer argued that the Employee had not been made redundant at all and that his duties had always consisted of managing both existing and new clients  they had simply shifted the focus of his role onto new clients. In the alternative, they contended that they had offered the Employee a “reasonable alternative position” which he refused and he was therefore not entitled to any redundancy pay.

Justice Anthony Kelly provided a detailed analysis of the concept of “redundancy” noting there was no clear definition in the relevant legislation (although we note there was no mention of the definition of “genuine redundancy” found in the unfair dismissal provisions of the Fair Work Act 2009 (Cth) (FW Act)). He determined the question of whether an employee is made redundant is one of fact and will always depend on the context of the matter.

In this particular context, he found the Employee’s position had been made redundant. Whilst the duties being performed by the Employee remained to be performed by others within the company, the role itself was redundant and the position no longer existed.

He further found that the Employer had not offered a “reasonable alternative position” because there was no correlation between what the Employee had been doing previously and what it now required him to do.

The Employee was therefore entitled to thirty weeks’ redundancy pay under the EA (over $42,000) and the parties have now been invited to make further submissions on questions of a pecuniary penalty for breach of the EA under the FW Act.

Lesson for employers

Each operational restructure will be different and, as the FCC has determined, the specific consultation and notification obligations of an employer will depend on the context, and the obligations that might arise under an industrial instrument, such as a modern award or enterprise agreement.

Organisational change is difficult enough without complications arising from non-compliance with basic consultation and redundancy provisions. Employers should ensure they are familiar with their obligations to consult with employees in circumstances of major change – and think carefully about appropriate redeployment options before announcing change to the employee population.

Shane Koelmeyer is a leading workplace relations lawyer and Director at Workplace Law. Workplace Law is a specialist law firm providing employers with legal advice, training and representation in all aspects of workplace relations, employment-related matters and WH&S.

02 9256 7500 | sydney@workplacelaw.com.au

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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