Australia: FWA determines extensive redeployment obligations for redundancy

Last Updated: 2 December 2010
Article by Kathy M. Dalton

Two recent Fair Work Australia (FWA) decisions provide a beneficial reminder to employers that failing to properly consider redeployment may give rise to unfair dismissal challenges by redundant employees.

Redeployment to a more junior role was reasonable

An employer will be exempt from a challenge under the unfair dismissal provisions of the Fair Work Act 2009 (Cth) (FW Act) where a dismissal is a case of genuine redundancy. The FW Act provides that a person's dismissal will not be a case of genuine redundancy if it would have been reasonable for the person to be redeployed within the employer's enterprise or the enterprise of an associated entity of the employer.

In August 2010, Commissioner Simpson rejected an argument that an employer's decision to dismiss a 62 year old accountant of 24 years service after failing to consider him for a more junior, assistant accountant, position was a case of genuine redundancy, finding that it was reasonable for the employee to be redeployed to the more junior role.

Commissioner Simpson found that the termination was not a genuine redundancy because:

  • redeployment is not limited to the transfer of an employee to a position which is identical to an employee's current role
  • the employer did not take appropriate steps to satisfy itself that the employee could not perform the available role when his skills, qualifications and experiences suggested the junior position was well within the employee's capacity
  • the employee's age and length of service meant that it would be difficult for him to find alternative employment and it would have been reasonable for the employer to have at least made the offer of redeployment.

Commissioner Simpson found that there was no valid reason for termination of the employee's employment and in the circumstances the dismissal was harsh, unjust and unreasonable. Commissioner Simpson declined to reinstate the employee, and ordered that the employer pay to the employee a gross amount of A$25,050 compensation.

Redeployment to associated entities

More recently, on 12 November 2010 a Full Bench of FWA on appeal found that it would have been reasonable for an employer, a large mining company, to redeploy six of 14 redundant employees to associated entities despite the substantial geographical distance of the available positions and the fact that the entities had separate management structures.

At the time of termination, there were a number of available positions at related entities of the employer, the closest of which was approximately 100 kilometres from the employer's place of business. The employer identified available suitable positions and facilitated applications by the affected employees, but the affected employees were not given preference and were required to compete with other applicants for the positions which were advertised externally.

The Full Bench found that to fulfil its redeployment obligation it was not sufficient for an employer to require redundant employees to compete with other external applicants for vacancies. The fact that some of the redundant employees had found other jobs at related entities did not constitute redeployment as "it was an essential part of the concept of redeployment that a redundant employee must be placed in another job in the employer's enterprise as an alternative to termination from employment."

In determining whether redeployment is reasonable, the Full Bench stated that employers should have regard to the nature of available positions, the qualifications required, the employee's skills, qualifications and experience, the degree of managerial integration between the different entities, the location of the job in relation to the employee's residence and the remuneration offered.

Importantly, the Full Bench said that a position may still be suitable notwithstanding "a reasonable period of training" was required and indicated that geographic distance would not be a barrier to redeployment unless employees indicated that they were unwilling to be redeployed.

Lessons for employers

An employer may be liable for an unfair dismissal claim following a redundancy if it does not properly discharge its redeployment obligations.

The obligation to consider redeployment means that an employer will need to:

  • check the availability of other roles suitable to the employee including roles with lesser pay and responsibilities and different geographic location – avoid assumptions regarding whether an employee is likely to take up a role
  • offer suitable available positions to existing employees whose employment will be terminated before advertising externally and opening up available positions to new applicants
  • look to associated entities – is it practical for the employee to be redeployed to an associated entity, notwithstanding geographical disparity or other factors?
  • if it has any doubts regarding an employee's capacity to perform a role, conduct an objective assessment to determine whether he or she could perform the role – even with a reasonable period of training.

Middletons is able to assist employers to comply with the obligations imposed by modern awards and the FW Act in respect of redundancies in the workplace.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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