Most employers are generally aware that a ‘genuine redundancy’ is a complete defence to an unfair dismissal claim. However, a redundancy is not rendered ‘genuine’ simply because the redundancy is justified or necessary. The Fair Work Act 2009 (‘the FW Act’) requires employers to undertake a consultation process prior to the implementation of redundancies.
The consultation process requires employers to give employees adequate notice of potential workplace changes (i.e. redundancies), and discuss what steps can be taken to mitigate the effects of the workplace changes.
Section 385 of the FW Act provides that a person will be unfairly dismissed if (amongst other things) the “the dismissal was not a case of genuine redundancy”. Section 389(1) of the FW Act provides that a ‘genuine redundancy’ is a dismissal where:
- the employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and
- the employer has complied with any obligation in a modern award or enterprise agreement to consult about the redundancy.
In addition, section 389(2) provides that a dismissal is not a genuine redundancy if it would have been reasonable to redeploy the employee elsewhere within the employer’s enterprise (including with an associated entity of the employer).
In other words, a failure to adequately and meaningfully consult with employees who are (or may be) affected by redundancies may result in unfair dismissal claims even when the redundancies are otherwise justified or necessary.
The Impact of an Inadequate Consultation Process
The importance of a proper and meaningful consultation process was recently considered in Williams and Others v Staples Australia Pty Ltd  FWC 607.
The essential facts of the case were as follows:
- The employees in question were covered by the Staples Enterprise Agreement 2014-2016. Annexure 3 to the Enterprise Agreement imposed consultation obligations on the employer in the event of major workplace change.
- On 11 July 2016 Staples management notified its employees of its decision to downsize its operation and make between ten and fourteen warehouse employees redundant.
- By the following evening, twelve warehouse employees had been made redundant.
- Four of these twelve warehouse employees disputed the genuine nature of the redundancies, and commenced unfair dismissal claims against their former employer.
In his decision, Commissioner Cambridge determined that:
- the “consultation in respect of the redundancies of warehouse jobs were unduly hasty and largely tokenistic”
- “Staples management did not engage in genuine or meaningful consultation with its employees and their representatives, but instead it made disingenuous gestures which it sought to portray as consultation,”
- there were “no proper opportunity for discussion about measures that might avert or mitigate the adverse effects of the decision to implement redundancies in the warehouse;”
- the timeframe was insufficient to discuss possibilities such as job-sharing; and
- the dismissals “were not cases of genuine redundancy” due to the inadequate consultation process, and were therefore “harsh, unreasonable and unjust.”
Commissioner Cambridge held that the four employees had been unfairly dismissed, and reinstated them to their former positions with continuity of employment and back pay.
Tips for Employers
Our Matthews Folbigg Workplace Solutions team recommends employers:
- review this Fair Work Commission decision;
- seek the assistance of an employment lawyer to understand the impacts of this Fair Work Commission decision;
- prepare new employment contracts as required;
- ensure employment contracts and employment law policies comply with relevant employment laws, industrial instruments (i.e. Awards), Fair Work Commission decisions, common law employment law principles, and contractual obligations
- fairly, consistently and lawfully respond to breaches of employment laws including Awards and enterprise agreements
Employees may be subject to significant penalties for breaches of employment laws, including Awards and enterprise agreements.
Please call the leading employment lawyers in Parramatta, the Matthews Folbigg Workplace Solutions team on 02 9635-7966 to speak with one of our employment lawyers.