Australia: Fair Work Australia clarifies position - opportunity to apply for alternative employment is not redundancy

Workplace Directions
Last Updated: 8 March 2011
Article by Scott Puxty and Emily Kolatchew

Ulan Coal Mines Limited v A. Honeysett & Ors [2010] FWAFB 7578 (12 November 2010)

Full bench of FWA clarifies the position as to redeployment in redundancy cases

On 7 September 2009 the Construction, Forestry, Mining and Energy Union – Mining and Energy Division (the CFMEU) lodged applications on behalf of ten employees alleging that the termination of their employment by Ulan Coal Mines Limited (Ulan) on or around 25 August 2009 was unfair. Commissioner Raffaelli found on 12 July 2010 that the dismissal of six of the employees did not involve genuine redundancy, because they had the opportunity to apply for other jobs with the same and / or related entities. The remaining four applications were dismissed, as there was genuine redundancy.

Two appeals were brought to the full bench of Fair Work Australia. The first was an appeal by Ulan against the finding that none of the six dismissals was a case of genuine redundancy. The second was a joint appeal by the four applicants that were unsuccessful at first instance, against the finding that the dismissal of each of them was a case of genuine redundancy. Both appeals were made pursuant to s604 of the Fair Work Act 2009 (the Fair Work Act).

The Ulan mine is approximately 50 kilometres north of Mudgee. The dismissals arose as part of a restructuring of Ulan's coal mining operations. Ulan is part of Xstrata Coal Pty Limited (Xstrata). A number of other companies in the Xstrata group that are associated entities operate coal mines in New South Wales. The mines operated by these companies include Baal Bone, Bulga, Beltana / Blakefield and Ravensworth mines. None of these mines is in close proximity to Ulan, with the nearest being Baal Bone, which is approximately 100 kilometres south-east of Mudgee.

At the time of the dismissals there were vacancies for positions as mineworkers at all of the other mines in the group.

Prior to the terminations taking effect, Ulan took a number of steps to ascertain the availability of suitable positions and facilitated applications by the employees whose employment was going to be terminated. For example, on 13 August 2009 Ulan management put up an advertisement for positions at the Baal Bone colliery. The employees were not, however, given any preference and had to compete against other applicants for the positions.

Genuine redundancy is a defence to unfair dismissal. However, section 389(2) provides that a person's dismissal is not a genuine redundancy where it would have been reasonable for the person to be redeployed within the employer's enterprise, or that of an associated entity.

It was held at first instance that the engagement of some of the dismissed workers at other mines in the group was not redeployment for the purpose of the exception in section 389(2), because of the requirement that the employees apply and compete for the new positions. Commissioner Raffaelli stated that redeployment as envisaged by s389(2) required a transfer of the employee. This was so even where there was a new contract of employment.

The Commissioner concluded that it would have been reasonable in all the circumstances for most of the employees to have been redeployed in the vacant positions at the other Xstrata mines, as opposed to being made redundant. He excluded three employees, one was reluctant to travel and preferred weekend shifts, another was also unwilling to travel and the third, who was a farmer, preferred to work around Mudgee.

On appeal to the full bench of FWA, it was submitted on behalf of Ulan that the Commissioner had erred in construing the s389(2) as imposing a positive obligation on Ulan or Xstrata to take steps to redeploy within the enterprise of an associated entity. It was argued that the term "to be redeployed" should have been given what was described as a broad, practical and purposeful meaning.

The full bench stated that because the appeals concerned the interpretation of an important section of the Fair Work Act which had not been considered by a full bench before, it was in the public interest to grant permission to appeal. They then turned to the interpretation of s.389(2) and to the meaning of the term "redeployed" and made a number of observations.

It was discussed that it is an essential part of the concept of redeployment that a redundant employee be placed in another job in the employer's enterprise as an alternative to termination of employment. Of course the job must be suitable, and the employee should have the skills and competence required to perform it. Other considerations may be relevant such as the location of the job and the remuneration attaching to it.

Where an employer decides that, rather than fill a vacancy by redeploying an employee into a suitable job in its own enterprise, it will advertise the vacancy and require the employee to compete with other applicants, it might be found that the resulting dismissal is not a case of genuine redundancy. This is because it would have been reasonable to redeploy the employee into the vacancy. In such a case the dismissed employee would have the opportunity to have their application for a remedy for unfair dismissal heard. The outcome of that application would depend upon a number of other considerations.

Where an employer is part of a group of associated entities which are all subject to overall managerial control by one member of the group, similar considerations are relevant. It was held that was a necessary implication arising from the terms of s.389(2)(b).

In the matter at hand, there was no error found in the Commissioner's reasoning at first instance, and the appeals were dismissed.

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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