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Fair Work Commission finds employer’s failure to comply with its consultation obligations rendered an employee’s dismissal to be unfair

The COVID-19 pandemic has had an unprecedented effect on Australian businesses. Employers have had to, with little notice, adapt to these changing circumstances to try and minimise the adverse impact of lockdowns on the business and its employees.

The COVID-19 pandemic has had an unprecedented effect on Australian businesses.Employers have had to, with little notice, adapt to these changing circumstances to try and minimise the adverse impact of lockdowns on the business and its employees.

During the pandemic, many employers have been forced to implement redundancies as a means of trying to survive. Reduced employment opportunities have also resulted in greater scrutiny being placed on employers to ensure that the implementation of redundancies is genuine and is done with proper fairness.

Failure to properly implement redundancies can result in an employee’s dismissal being found to be unfair, as was the case in the recent decision of Sposito v Maori Chief Hotel [2021] FWC 700.  

In this matter, the employee was engaged as a Chef at the Maori Chief Hotel (the Employer) which operated in Melbourne.

In or about July 2020, the Employer informed the employee via email that the government-mandated lockdown left it no choice but to cease trade and that it did not expect business to continue until a vaccine became available. Attached to the email was a letter informing the employee that her position was to be made redundant due to the operational requirements of the business.

At the time of the dismissal, the employee did not contest that her position was made redundant given that she held a genuine belief that the Employer was permanently closing the business. However, in or about October 2020, the employee became aware via a Facebook post that the Employer’s business was re-opening and that they were “looking for chefs”.

The employee subsequently lodged an application in the Fair Work Commission (FWC) contending that her dismissal was unfair because her position was not actually redundant.

The Employer lodged a jurisdictional objection on the basis that the employee’s dismissal was a case of genuine redundancy. It maintained that the employee’s role was no longer required due to changes in its operational requirements. In support of this, the Employer submitted that the Facebook advertisement was posted by an “overly ambitious” manager and, in reality, it had only re-engaged two casual bar staff, who performed no kitchen duties.

In considering the jurisdictional objection, the FWC accepted that the employee’s role had been abolished and had not been reinstated. It was also satisfied that the employee’s redundancy occurred for a proper reason, having regard to the significant effect that the pandemic had on the Employer’s business.  

However, the FWC was not satisfied that the Employer had engaged in consultation to advise the employee that her position was to be made redundant, as it was obligated to do under the Hospitality Industry (General) Award 2020 (Award).

The FWC warned that while the pandemic prevented the Employer from engaging in face-to-face consultation with the employee, the Employer should have called her or arranged to meet via other means.

The FWC found that, as the Employer had failed to discharge its consultation obligations under the Award, the dismissal was not a “genuine redundancy” and the Employer’s jurisdictional objection failed.

While the FWC acknowledged at [25] that while “a finding that a dismissal was not a case of genuine redundancy does not necessarily lead to a conclusion that the dismissal was unfair”, in this case, the dismissal was also unfair.

The FWC held that the Employer’s failure to comply with its consultation obligations rendered the employee’s dismissal to be unfair, even though the employee’s redundancy was a real and bona fide one. The employee was entitled to be consulted in a particular way and this did not occur. According to the FWC, had the employee been consulted, she would have had notice of the impending termination and more time to reduce the personal impact.

Turning then to remedy, the FWC acknowledged that reinstatement would not be appropriate in circumstances where the dismissal would have inevitably occurred even if the Employer had consulted with the employee. Accordingly, the employee was awarded two weeks’ pay as compensation (being the estimated equivalent period of consultation).

Lessons for employers

One of the jurisdictional objections available to employers in cases of unfair dismissal is if the employee’s employment ended as a result of a “genuine redundancy”. In order for a redundancy to be “genuine”, employers must ensure that they have complied with any consultation obligations under a modern award or enterprise agreement.

As demonstrated in this case, failure to do so may result in a finding that the employee was not made genuinely redundant and potentially, was unfairly dismissed.  

Information provided in this blog is not legal advice and should not be relied upon as such. Workplace Law does not accept liability or 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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