Australia: Redundancy - a review of the obligations to comply, consult and redeploy

Workplace Relations And Employment Update (Australia)
Last Updated: 11 November 2012
Article by Simon Billing and Shironi De Silva

WORKPLACE RELATIONS AND EMPLOYMENT UPDATE (AUSTRALIA)

If a dismissal is a 'genuine redundancy' it cannot be an unfair dismissal. A dismissal will be a genuine redundancy when:

  • The job must no longer be required to be done by anyone because of operational changes
  • Consultation obligations contained in an applicable modern award or enterprise agreement must be complied with
  • It must not have been reasonable in all the circumstances for the person to be redeployed within the employer's enterprise or the enterprise of an associated entity.

We explore below the employer's obligations to comply, consult and redeploy in light of several recent cases.

Obligation to comply with redundancy policies and procedures

  • A serious breach of company redundancy policies and procedures may be a breach of the implied term of mutual trust and confidence.

The Federal Court recently awarded a former Commonwealth Bank of Australia (CBA) executive $317,500 in damages for CBA's breach of the implied duty of mutual trust and confidence for failing to comply with its detailed redeployment policy (Barker v CBA [2012] FCA 942).

Although the policy did not become part of the executive's contract of employment, it was found that a 'serious breach' of the policy was a breach of the implied term of mutual trust and confidence. CBA was found to have failed to consult or discuss retraining, consider redeployment options and develop a redeployment plan contrary to its policy. The fact that the executive would only have had a 25% chance of being redeployed if the policy had been followed was not found to be relevant. This decision is subject to an appeal before the Full Court of the Federal Court.

Obligation to consult

  • The failure to comply with consultation obligations in an applicable modern award or enterprise agreement will mean that the redundancy is not a 'genuine redundancy', even though the redundancy may be based on a valid reason.

The Full Bench of Fair Work Australia (FWA) recently found that the failure to consult an employee who was on leave at the time the decision was made to make him redundant was unreasonable and sufficient to lead them to a conclusion that the dismissal was 'harsh, unjust or unreasonable'. This was despite the fact that there were valid reasons for his dismissal (UES (Int'l) Pty Ltd v Harvey [2012] 5241).

An employee recently won $38,946.80 after it was found that his employer unreasonably failed to consult with him about his redundancy, therefore making his dismissal unfair notwithstanding that his position was redundant. Commissioner Roe described 'consultation' as being 'a genuine opportunity to influence the decision maker' and was not satisfied that the employee had been afforded such an opportunity consistent with the applicable enterprise agreement (Ball v Metro Trains Melbourne T/A Metro Trains [2012] FWA 8384).

Obligation to offer redeployment interstate and reasonable training

  • The obligation to offer redeployment may extend to exploring opportunities interstate.

FWA has recently highlighted that in some cases, the obligation to redeploy a worker may extend to offering the employee redeployment within the company's operations interstate (Aldred v J Hutchinson Pty Ltd [2012] FWA 8289) and to offer a reasonable period of re-training to the employee in order to redeploy them to another division of the business (Crema and others v Abigroup Contractors Pty Ltd [2012] FWA 5322).

In Aldred, it was found that a Melbourne construction worker was not genuinely redundant because his employer, a national company, could have redeployed him interstate. Commissioner Lewin said J Hutchinson was a national company employing over 1,100 people and engaging 2,500 subcontractors with a turnover of $1.2 billion and had vacancies in its Queensland operations, which the worker could have been engaged to fill. According to FWA, it would not have been unreasonably burdensome for the company to have explored interstate opportunities.

  • The obligation to redeploy may extend to providing a reasonable period of re-training.

In Abigroup, the employer argued that the workers weren't trained or experienced in civil construction work and were not suitable for redeployment on a new project. However, Commissioner Cribb held that it was unreasonable for four current employees to have been dismissed when four new employees were offered employment and a 10-week training course with support and supervision. On this basis, it was determined that it would have been 'reasonable in all of the circumstances' for the applicants to have been redeployed and found that they had been unfairly dismissed.

If a dismissal is found not to be a 'genuine redundancy', it will not necessary be unfair: Maswan v Escada Textilvertrieb t/a ESCADA [2011] FWA 4239.

Conclusion

The recent cases discussed above highlight that in order to avoid the risk of a finding that the redundancy was not in fact a 'genuine redundancy', consultation obligations in an award or enterprise agreement must be complied with and redeployment opportunities must be properly explored (including in other divisions or interstate operations of the business if reasonable under the circumstances). What is reasonable will be asessed in light of the size and resources of the employer.

It has been emphasised by FWA that it is not the employee's responsibility to identify redeployment opportunities, although the employee may do so during the consultation process.

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.


DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to www.dlapiper.com

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