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Employees reinstated following hasty redundancy consultation

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Give me time

Restructuring and redundancies can be difficult under the best of circumstances. Employers have obligations to their employees during these times and sometimes the fast paced demands of the business are at odds with those obligations. In a recent decision, Williams and Ors v Staples Australia Pty Ltd [2017] FWC 607, the Fair Work Commission (FWC) examined the obligations of a particular employer and found that its hasty implementation of redundancies resulted in four unfair dismissals.

Restructuring and redundancies can be difficult under the best of circumstances. Employers have obligations to their employees during these times and sometimes the fast paced demands of the business are at odds with those obligations. In a recent decision, Williams and Ors v Staples Australia Pty Ltd [2017] FWC 607, the Fair Work Commission (FWC) examined the obligations of a particular employer and found that its hasty implementation of redundancies resulted in four unfair dismissals.

 

What is a genuine redundancy?
The warehouse employees in this case made applications to the FWC claiming they were unfairly dismissed. Under the Fair Work Act 2009 (Cth) (FW Act), the FWC cannot make a finding of unfair dismissal if the dismissal was a case of genuine redundancy.

The FW Act states that a genuine redundancy occurs when:

  • the job is no longer required to be performed by any one;
  • the employer has complied with any obligations related to redundancy in a modern award or enterprise agreement; and
  • the employee could not reasonably have been redeployed within the enterprise or an associated entity.

 

What went wrong for this employer?

1. Consultation

The Employer in this case had obligations under an enterprise agreement to consult with employees about major changes in the workplace, like redundancies. The consultation obligations required the Employer to inform employees about the changes it was considering and invite their feedback before a definite decision was made.

The FWC found that the employer did not provide any opportunity for discussion about its decision to reduce staff numbers, nor did it actively invite employees to give their views. Instead, the Employer informed the Joint Consultative Committee (JCC) about its decision to reduce staff numbers and by the next day, 12 employees had been identified as candidates for redundancy. A week later, those employees had their employment terminated.

Whilst the employer did meet with the JCC and employees, the FWC criticised the Employer’s attempt at consultation, labelling it “unduly hasty and largely tokenistic.”

The FWC also criticised the selection matrix the Employer used to identify candidates for redundancy because it contained a number of subjective criteria which had the potential to result in a biased outcome. Furthermore, the employees were not provided with an opportunity to challenge the outcomes produced by the selection matrix.

2. Redeployment

As set out above, a redundancy will not be genuine redundancy if an Employer could have reasonably redeployed an employee into another role. In this case, the Employer argued that it explored redeployment but no reasonable options were identified.

In a strange quirk, the Enterprise Agreement at the heart of this case contained a clause requiring the Employer to hire 19 new warehouse employees within five months of the redundancies.

The FWC again criticised the Employer for its consideration of redeployment options. The FWC said that employees were not given enough time to propose other ideas, like job-sharing, and positions within other business units should have been more fully considered by the Employer.

The FWC also found that the Employer knew it would soon have to hire a number of new warehouse employees and could have therefore redeployed the employees into those roles.

Ultimately, the FWC held that the four employees who made unfair dismissal applications had been unfairly dismissed and that the Employer’s process inflicted a “manifest injustice” on the employees. The FWC ordered that the employees be reinstated.

 

What can employers learn?
When approaching redundancies, employers should carefully review their obligations under any modern award or enterprise agreement and approach consultation with employees in a genuine way. Employees may be able to come up with some creative ideas that prevent job losses including options such as job sharing.

When selecting employees for redundancy, employers should apply a fair and consistent method to any assessment. In particular, employers should avoid applying any selection criteria that could be open to excessive bias, such as assessments of personality traits.

Finally, employers should not rush the process. The needs of the business are obviously important, but in the long run, it could cost the business much more if the employer ends up defending claims in a court or tribunal.

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