Talk to Me: the importance of consultation in the redundancy process

 

The Fair Work Act 2009 (Cth) (FW Act) provides that a person will not be unfairly dismissed where the person was dismissed as a result of genuine redundancy.

To obtain the “genuine redundancy” exemption a redundancy must meet certain criteria under section 389 of the FW Act, namely that:

(a)  The employer no longer required the person's job to be performed by anyone because of changes in the operational requirements of the employer's enterprise;

(b)  The employer complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy; and

(c)  It would not have been reasonable in all the circumstances for the person to be redeployed within the employer's enterprise or an associated entity.

In two recent unfair dismissal decisions, the Fair Work Commission (the FWC) dismissed the jurisdictional objections of two employers who claimed that their employees were genuinely redundant, and were not unfairly dismissed.  The FWC found, in both cases, that there was no consultation with the employees about the redundancy of their positions prior to their employment being terminated. The employers had failed to meet the second limb of the genuine redundancy exemption.

In Cruise v Baxter Cassidy Pty Ltd T/A Ray White Langwarrin [2019] FWC 1751, the employee was employed as a part-time Assistant Property Manager. In early August 2018, the employer made the decision that the business required the role of Assistant Property Manager to be performed on a full-time basis. The employer met with the employee and advised her of its decision and offered her the full-time role. The employer later sent an email which set out the proposed hours of work and salary for the full-time role.

The employee responded by requesting further information about the role, in particular about the additional duties to be performed and querying the hourly rate of pay, as it was lower than her current rate of pay. The employer never responded to the employee’s email despite the employee following up by text message.

The employer later met with the employee and advised her that she had been given an opportunity to consider the full-time role but had not accepted it and so her employment would be terminated as a result of a redundancy.

The employee lodged an unfair dismissal claim alleging that the employer did not comply with the genuine redundancy consultation obligations and that the full-time job proposal was a way to force her to resign because she would not have been able to perform the role given her family responsibilities.

In response, the employer argued (amongst other things) that the employee’s dismissal was a genuine redundancy.

In determining the matter, the FWC noted that, in the case of a genuine redundancy, the employer was required to comply with the consultation obligations under the relevant modern award, in this case, the Real Estate Industry Award 2010.

The Commission was not satisfied that the employer complied with those obligations. In particular, the FWC found that the employer did not discuss the effect that the change would have on the employee, if there were measures to mitigate the effect of the change on the employee, and it did not respond to the employee’s enquiries about the full-time role.

In this regard, the FWC stated: “The evidence indicates instead that after sending the outline to her on 7 August the business did not realistically engage with her again until the brief discussion on 24 August when Ms Cruise was told her employment was to be terminated with immediate effect.”

The FWC also found that the employer made no attempts to discuss or consider alternatives to redundancy.

For these reasons, the FWC dismissed the employer’s jurisdictional objection. The employee’s dismissal was found to be unfair and the employer was ordered to pay $14,578.11 in compensation to the employee.

Similarly, in Hu v ACY Capital Pty Ltd [2019] FWC 1635, an employee who was employed as an Accounts Officer was advised that her position was redundant when she returned to work after a period of leave.

While the employee was on leave, the employer had acquired another business. On the employee’s arrival back at work, her desk was occupied by someone else and her belongings had been moved. The employee was then advised that as a result of the acquisition, the business had additional staff and it no longer required the employee. The employee’s employment was terminated with immediate effect and she was later paid a redundancy payment. She then lodged an unfair dismissal application.

The employer relied upon the jurisdictional objection that the employee’s dismissal was a genuine redundancy and the unfair dismissal application should be dismissed.

The employer submitted that as the acquisition and details about the purchase were confidential and commercially sensitive, it could not consult with the employee before she was dismissed. The employer sought to rely specifically upon the consultation provisions under the Banking, Finance and Insurance Award 2010 which provide that an employer is not required to disclose confidential information during consultation if disclosure would be contrary to the employer’s interests. The employer argued that the purchase of the business was confidential.

The FWC dismissed the employer’s jurisdictional objection. It held that the employer did not consult with the employee about the redundancy prior to the termination of her employment. It noted that the employer’s reliance on confidentiality “fundamentally misconstrued” the Banking Award provisions:

This term does not relieve the employer of the obligation to discuss the change, it only allows that as part of those discussions it may not be required to provide confidential information which would be contrary to the employer’s interests.

The FWC also found that the employer did not take any steps to consider redeployment opportunities.

Accordingly, as the employer did not comply with consultation obligations and did not properly consider redeployment, the FWC could not be satisfied that the employee’s dismissal was a genuine redundancy.

The employee was found to be unfairly dismissed and the employer was ordered to pay $7,690.00 to the employee.

Lessons for employers

The FW Act provides that an employee will not be unfairly dismissed in the case of a genuine redundancy. For an employee to be genuinely redundant, employers are required to comply with their consultation obligations under industrial instruments. Typically, this requires employers to notify the employee of major workplace change, including where those changes could result in redundancy, and engage in meaningful consultation about the change. A failure to do so may mean that the employee was not genuinely redundant and may expose the employer to an unfair dismissal claim.

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.

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