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Employers’ consultation obligations when implementing major workplace change

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When an employer is required to make changes to the workplace which are likely to have significant effects on employees, the employer must ensure that it meets any consultation obligations which might apply under various laws and industrial instruments prior to implementing any redundancies that might arise.

When an employer is required to make changes to the workplace which are likely to have significant effects on employees, the employer must ensure that it meets any consultation obligations which might apply under various laws and industrial instruments prior to implementing any redundancies that might arise.

For example, all modern awards and enterprise agreements will contain comprehensive requirements for employers to genuinely consult with employees about major workplace changes, including potential redundancies. If done correctly, genuine redundancies can also form the basis of a jurisdictional objection to claims of unfair dismissal under the Fair Work Act 2009 (Cth).

The requirement to consult can be very challenging for employers. Understandably, many employers would prefer to just “rip the bandaid off” rather than have to go through a prolonged process that will often result in termination of an employee’s employment.

A recent decision of the Fair Work Commission (FWC) has nonetheless highlighted the value and importance of going through that process of consulting with an employee prior to implementing a redundancy.

In Tuchin v Mills Brands [2020] FWC 583, the FWC was required to determine whether a customer service representative at a product distribution company, who was made redundant and was pregnant at the time, was unfairly dismissed.

A key issue in this matter was whether or not the employer genuinely consulted with her about the redundancy prior to terminating her employment, as it was required to do under the applicable modern award (the Clerks – Private Sector Award 2010).

The employee argued that she had not known that she was going to be made redundant until the day of her dismissal in June 2019. If she had known in advance, then she would have been able to consider alternative employment or make other plans to manage her pregnancy and upcoming parental leave.

The employer argued that it had consulted with her and that her claim should therefore be dismissed because it was a genuine redundancy. It pointed to three meetings in particular:

  • in March 2019, during which management had made general comments to staff foreshadowing that there would be changes to the business;
  • in April 2019, during which the employee and her manager discussed her daily tasks as well as the structural changes in the business; and
  • in May 2019, during which the manager had told the employee that her role may be made redundant. The employer claimed that there was a minute-taker for this meeting but was unable to produce the minutes or provide any evidence from the minute-taker. The employee disagreed with this version of the meeting and said that the only discussion on this day was in relation to managing stock.

The FWC did not consider the first two meetings to amount to any form of consultation. It noted that the employer had provided no specifics about the potential redundancies, and it was not on the employee to inquire about whether or not her job would be affected by the proposed changes.

In relation to the May 2019 meeting, whilst this could have amounted to consultation, the FWC preferred the employee’s evidence as she presented as a more credible witness. It was therefore satisfied that the employer did not consult with the employee prior to implementing her redundancy in June 2019.

The FWC found that the dismissal was unfair because the employer failed to engage in any meaningful dialogue with the employee about the potential redundancy, even though it would have been a difficult and unpleasant process.

The failure to consult was particularly harsh in circumstances where the employer knew about the pregnancy, and the impact that the redundancy would have on the employee, including denying her access to parental leave and other entitlements. The FWC noted that the employee would have been more reliant on the consultation obligations than employees who were not pregnant.

The employer was ordered to pay $4,026.00 in compensation to the employee.

Lessons for employers

Regardless of how difficult it may be to have these conversations, employers must be mindful of the serious impact that a redundancy will have on an affected employee. It is for this reason that there are obligations in place requiring employers to genuinely consult with employees prior to making a final decision about their employment.

Employers should review any relevant modern awards and industrial instruments to ensure that they are complying with their obligations to consult prior to commencing any organisational restructure.

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability for any loss or damage arising from reliance on the content of this blog, or from links on this website to any external website. Where applicable, liability is limited by a scheme approved under Professional Standards Legislation.

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