Australia: The need to redeploy in a genuine redundancy

Last Updated: 10 March 2017
Article by Tim Greenall

In brief: The unfair dismissal provisions of the Fair Work Act 2009 apply to all employees covered by modern awards, enterprise agreements and other employees who are not "high income" employees. High income employees are defined as employees with a base salary of $138,900 per annum inclusive of any non-monetary fringe benefits, but exclusive of 9.25% statutory superannuation contributions.

What you need to know:

  • A "genuine redundancy" is exempt from unfair dismissal laws if, and only if, the following three criteria are satisfied prior to any termination of employment:
    1. The employer no longer requires the job to be performed by anyone because of changes in the operational requirements of its enterprise;
    2. The employer has complied with any obligation in a modern award or enterprise agreement that applies to the employee affected to consult about the redundancy; and
    3. It was not reasonable in all the circumstances for the employee whose position is being made redundant to be redeployed within the employer or its associated entities.
  • Prior to implementing a redundancy, employers and HR Managers are advised to consider carefully whether they have taken sufficient steps to identify whether an employee can be reasonably redeployed within the enterprise as a group.

BACKGROUND

This is illustrated in a recent decision of the Full Bench of the Fair Work Commission in Skinner & Ors v. Asciano Services Pty Ltd t/as Pacific National Bulk [2017] FWCFB 574,* where the role of the Applicants as train drivers was no longer required to be performed as a result of the reduction in consumer demand in exports of grain with a consequent reduction in workload and labour rationalisation.

The Full Bench noted that in determining whether it would have been reasonable in all the circumstances to redeploy a person, a number of relevant factors might need to be considered, such as:

  • the required qualifications of the position;
  • the skills, qualifications and experience of the employee;
  • the location of the position; and
  • the level of remuneration.

The Full Bench confirmed that it was not necessary for an employer to dismiss other employees in order to create a vacant position, to which a person whose role has been made redundant could be transferred. Furthermore, an employer is not obliged to offer voluntary redundancies to other employees to create positions for such persons.

However, it was held that the possibility of swaps for those who wish to volunteer for redundancy should have been considered, and the failure to do so meant that the terminations were not exempt from unfair dismissal laws as "genuine redundancy".

The employer was held to have failed to do what was "reasonable in the circumstances" in this particular case because:

  • the employer was a large business employing a significant number of employees who undertook the same role as those being made redundant e.g. train drivers;
  • the number of employees performing the same or substantially the same role; e.g. train driving, means that allowing a swap would not place onerous training requirements on the employer;
  • there were potential swaps, possibly available in depots reasonably proximate to the depots in which the redundant workers had been located, so the employer would not have been exposed to relocation costs for transferring employees;
  • the employer had previously allowed swaps in similar circumstances; and
  • the employer had suggested this as a possible option to mitigate the effects of the redundancy in implementing the dismissals of the employees concerned.

CONCLUSION

Prior to implementing a redundancy, employers and HR Managers are advised to consider carefully whether they have taken sufficient steps to identify whether an employee can be reasonably redeployed within the enterprise as a group. For large employers or where an employer has previously used a voluntary redundancy or swap process, this will include consideration of the possibility as to whether there are other employees who wish to volunteer for redundancy.

*[2017] FWCFB 574

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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.

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