In Brown & Ors v Clermont Coal Operations Pty Ltd T/A Clermont Open Cut [2015] FWC 3862, the Fair Work Commission held that employers were not obliged to terminate labour hire employees to redeploy redundant employees where the labour hire arrangements are in place as part of a legitimate business strategy.
Factual Background. Six former employees ("Applicants") of Clermont Coal Operations Pty Ltd ("Respondent") claimed that the Respondent had failed to consider redeployment (under s 389(2) of the Fair Work Act 2009 (Cth)) to the Clermont mine or other mines run by the Respondent's parent company, particularly those which had a large labour hire workforce. As a result, the Applicants claimed that their dismissal was not a case of genuine redundancy.
Legal Background. Section 385 of the Fair Work Act 2009 (Cth) states that an employee may have access to the unfair dismissal regime if their dismissal was not a case of genuine redundancy. A redundancy is genuine where the employer no longer requires the job to be performed by anyone and the employer has considered redeployment within the employer's enterprise or an associated enterprise. The question whether an employer must offer redundant employees jobs being performed by existing labour hire employees to avoid unfair dismissal claims has been raised on a number of occasions in the Fair Work Commission, and it has led to conflicting views.
Decision. In this case, the Commission considered that operations of a mine involved "symbiotic processes" such that if one unit is unable to complete a task, it would result in major operational difficulties. Accordingly, it would not be reasonable to require an employer to reduce numbers of existing labour hire employees to free up positions so that redundant employees could be redeployed, where the labour hire employees gave the mine the flexibility to cover employees on leave to avoid bringing operations to a standstill. The labour hire employees were found to be part of a "legitimate industrial strategy".
Lessons for Employers. Employers employing labour hire employees pursuant to a legitimate staffing rationale should not be concerned with unfair dismissal claims in circumstances that would otherwise be genuine redundancies. However employers should monitor developments in the area as the Vice President left it open for limited circumstances where it might be appropriate for the Commission to consider work undertaken by contractors for employers or associated entities for the purposes of s 389(2).
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