External and internal factors can force a business to reconsider its allocation of its resources. Quite often an operational change in a business also correlates with the termination of a large number of employees, as certain positions are no longer required within the business.

What does the Fair Work Act 2009 (Cth) say about redundancies?

The law governing the end of employment by way of redundancy is very strict and requires compliance with section 389 in the Fair Work Act 2009 (Cth) (the Act). If any of the elements outlined in section 389 of the Act have not been satisfied, there will be an argument that the employee has been unfairly dismissed because the redundancy was not genuine.

In a recent decision of the Fair Work Commission (the Commission), Deputy President Saunders clarified the factors and the type of evidence that the Fair Work Commission will look at when determining if a redundancy is genuine. In Williamson, David v AHG Newcastle Pty Ltd T/A AP Eagers [2020] FWC  2929, the applicant alleged that the termination of his employment was not a genuine redundancy. The applicant’s unfair dismissal application was filed on the basis that his role as a Human Resources Manager still exists in the newly created role of a Human Resources Business Partner.

The important factors and evidence considered by the Commission

The Commission determined that the applicant’s termination was a genuine redundancy for the following reasons:

Undergoing an operational change

First, the Commission determined that the respondent had undergone an operational change (in the form of a merger acquisition). As a result of this operational change, employees in executive management and operational leadership roles were no longer required. The respondent was able to adduce direct evidence in support of this proposition.

The applicant alleged that the newly created role of a ‘Human Resources Business Partner’ meant that his role still existed but was essentially an artificial name change. The Commission rejected this argument for the following reasons:

  • The HR Manager role requires a high level of autonomy than the HR Business Partner role;
  • The HR Business Partner role does not have any direct reports, whilst the HR Manager role did have a direct report;
  • The HR Manager Role is a strategic role whilst the HR Business Partner role is transactional focused.

These important differences meant that the character of the HR Business Partner role was fundamentally different to the nature of the HR Manager role. The respondent was able to rely on written and verbal evidence in support of each of the important differences identified above.

The requirement to consult

Second, if an employee is an Award covered employee, then an employer is required to comply with any requirement to consult in an Award. This means that the employer should inform the employee of the major change and the effect it would have on their employment as well as any other requirements contained in the Award. However, the applicant in this matter was not an Award covered employee and accordingly there was no requirement to consult.

No ability to redeploy

Third, an employer must show that it was not reasonable in the circumstances to redeploy the employee within another component of the business. Accordingly, if an employer contends that a dismissal is a genuine redundancy, they must adduce evidence that it was not reasonable in the circumstances to redeploy the dismissed employee in other areas of the organisation. The following factors are relevant in this assessment:

  • Whether the employer took steps to identify other roles in the organisation,
  • The nature of available positions,
  • The qualifications required of the alternative positions,
  • The employees skills, qualifications and experience,
  • The location and level of remuneration in the alternative position.

The Commission found that the employer took active steps to look for alternative roles for the applicant within the organisation. The applicant was offered the role of HR Business Partner but rejected the position. Furthermore, the Applicant was invited to inform the respondent if he was interested in other roles within the organisation. The applicant did not accept this invitation. Again, the respondent relied on credible verbal and written evidence in support of this.

Key takeaways

Redundancies can be difficult, and it is essential that employers comply with the requirements of the Act.

Employers must make an active effort to review the operational changes in its business, ensure that there is sufficient evidence to support the changes, ensure that any efforts made to consult with an employee and searching for alternative job roles within the organisation is supported by direct evidence.

Ultimately, following the elements contained in the Act will ensure that the redundancy process is carried out according to law, and will reduce the prospects of an unfair dismissal claim succeeding.

Get in touch

Contact us if you require advice on the redundancy process. We can assist you to analyse the operational requirements of the organisation and ensure that the redundancy process is carried out according to law.

Contact Mariam Chalak on 0410 914 128 for a no obligation chat.

If you would rather get in contact through email, send your question through to Mariam at mariam.chalak@jfmlaw.com.au.