Posted on August 24, 2023
Redundancies are a genuine means by which employers can manage their staff to meet their operational needs. But what makes a redundancy ‘genuine’?
There are strict legislative requirements as to what characterises a genuine redundancy, and a misstep can mean that you leave yourself open to an unfair dismissal claim.
Do’s and Don’ts
Do’s:
- Do ensure that the role is no longer required to be performed by anyone because of a change in the operational requirements of the business; and
- Do ensure that you consult with the employee about the redundancy if you are required to do so under a modern award or an enterprise agreement.
Don’t
- Don’t fail to redeploy the employee in your business if it is reasonable to redeploy them; and
- Don’t fail to redeploy the employee in an associated entity if it is reasonable to redeploy them.
Sounds simple, right? But this process is one that we see go quite wrong, and unfortunately, quite often. In the recent case of Alesia Khliustova v Isoton Pty Ltd [2023] FWC 658, the Fair Work Commission (FWC) found that the redundancy was not genuine because the employer did not appropriately consult with the employee, and failed to redeploy the employee in its associated entity where it would have been reasonable for it to do so.
But in this case the employer did consult with the employee, and didn’t redeploy them because it did not consider it reasonable in the circumstances to do so. So what went wrong? We explore this in more detail below, but suffice to say, what may initially appear to be a simple list of Do’s and Don’ts can quite quickly become tangled in complicated legal tests and case law which are highly fact specific. And so, if you are an employer considering making an employee redundant, or you are an employee who has recently been made redundant, you may consider seeking legal advice that is specific to your situation to ensure that you do not make a similar misstep.
At Scanlan Carroll Lawyers, we assist clients every day with their employment matters. We act for both employers and employees, and would be happy to provide you with further advice in relation to your rights or obligations (as the case may be) under the Act.
And so back to the cliffhanger ‑ what went wrong?
The employer provided technical support services. The employee was a Software Engineer. The employer planned to increase its commercial presence in India and considered that in doing so, it would increase its competitiveness in Australia. However, in a matter of months, the employer faced a number of financial challenges which resulted in it taking steps to reduce its costs—including by reducing its number of employees. The Commission accepted the employer’s evidence on this fact. The Commission accepted that there was a change in the operational requirements of the employer’s business that meant that it no longer required the employee’s role to be performed. The first Do had been satisfied.
The employer also took steps to consult with the employee as required by the applicable award, it hosted an online meeting and notified the employee that her position was no longer required. It then sent a follow up email stating the reasons for the redundancy and notifying the employee of her final day. The Commission found that no real consultation actually took place. The employee was not given an opportunity to express her views, and to have these considered. The Commission described the consultation as “at best a perfunctory exercise”,[1] and the follow up email did not remedy this failure. The second Do was not satisfied.
As to redeployment, the Commission found that the evidence supported there being redeployment opportunities in an entity related to the employer. The employer submitted that these opportunities were not presented to the employee because it did not consider the employee would accept the role—the position was in India and was for a lower pay. At the hearing, the employee presented evidence that she would have liked the opportunity to try the role, that she was prepared to work in a different culture and to travel notwithstanding the lower wage. The Commission was particularly critical of the employer’s position noting that “It is dangerous for Employers with redeployment options to fetter offers based on their own prejudices”.[2] The Commission found that the employer had a role available, and that it would have been reasonable in all the circumstances for the employee to be redeployed there. The second Don’t was not satisfied.
If you believe you may benefit from legal advice in this area, please do not hesitate to contact Alexandra Vrdoljak or Sharelle Staff of our office on (03) 9853 0311. We would be happy to provide you with up-to-date, experience driven, fact specific advice that is most suited to you and your situation.
[1] Alesia Khliustova v Isoton Pty Ltd [2023] FWC 658, 6[19].
[2] Ibid 7[27].
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