Key Facts to Consider When Making an Employee Redundant
- WR
Last week, the Full Federal Court dismissed an appeal by Helensburgh Coal Pty Ltd which has implications for the manner in which redundancies are to be carried out where employers are also engaging contractors.
Legislation
As clubs are aware, in order for a redundancy to be considered a genuine redundancy, the club needs to fulfil the following criteria:
- The employer no longer required the dismissed employee's job to be performed by anyone because of changes in the operational requirements of the employer's enterprise;
- Whether there was any obligation imposed by an applicable modern award or enterprise agreement to consult about the redundancy and whether the employer complied with that obligation; and
- Whether there was a job or a position or other work within the employer's enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the dismissed employee.
Genuine redundancy provides for protection from unfair dismissal. A person will not be unfairly dismissed if their dismissal was a genuine redundancy. If the dismissal is a case of genuine redundancy, the Fair Work Commission (FWC) has no jurisdiction to consider the unfair dismissal application.
Case Details
Clubs might be aware of previous decisions by the FWC with respect to Bartley & Ors v Helensburgh Coal Pty Ltd [2020] FWC 5756, Helensburgh Coal Pty Ltd v Bartley & Ors (2021) 306 IR 219, and Bartley & Ors v Helensburgh Coal Pty Ltd [2021] FWC 6414.
In those decisions, because the 2019 COVID-19 pandemic impacted on the demand and price of coking coal, the employer, which extracts coking coal at a mine, decided to decrease its production and workforce levels at the mine. Following consultation, 47 employees, including the 24 employee applicants, were dismissed by reason of genuine redundancy.
At first instance, the Commissioner was satisfied the employer had complied with its consultation obligations. However, in considering reasonable redeployment, the Commissioner focused on whether the employer was obliged to redeploy the employees into roles being performed by contractors. The Commissioner was ultimately not satisfied the work performed by the contractors was specialist work, and found the relevant employees had the necessary skills, qualifications and experience to undertake this work. Accordingly, the Commissioner found it would have been reasonable for the employer to insource the relevant work undertaken by contractors and redeploy the dismissed employees into these roles.
The employer appealed the case and was referred back to the FWC for reconsideration in 2021, which again decided that the none of the dismissals was a case of genuine redundancy. An appeal was made again in 2022, but it was dismissed.
In its latest appeal to the Federal Court, Helensburgh sought to quash all the FWC decisions and compel the Commission to cease dealing further with the unfair dismissal applications. But the Full Court of the Federal Court also ruled that the dismissals in 2020 were not genuine redundancies, as similar work continued to be performed by the contractors. The Federal Court accepted the argument that the sacked employees in 2020 could have been reasonably redeployed.
The full court said the following (judgement accessible here):
Section 389(2) "requires that the possibility of redeployment should be assessed according to what 'would have been' reasonable".
"That necessarily envisages some analysis of the measures that an employer could have taken in order to redeploy an otherwise redundant employee."
"In its proper context, 'redeployed' can only refer to the prospect that an otherwise redundant employee might be taken from a position no longer required and deployed to the discharge of other tasks.”
"If, in a given case, there were measures that could have been taken and which, in all of the circumstances, could reasonably have led to redeployment, that will suffice to engage the exemption to the immunity.”
"Given the undeniable width of the text in which the exemption is couched, there is no reason to excise from 'all [of] the circumstances' the possibility that an employer might free up work for its employees by reducing its reliance upon external providers.”
"The existence of that possibility in any given case is a circumstance that is capable of informing whether redeployment 'would have been reasonable'."
What Does This Mean For Clubs?
Clubs will now need to investigate whether employees could replace already-engaged contractors before making an employee redundant. Considerations around redeployment must extend not only to such positions, but also those which are about to become available (e.g. if an employee is about to retire) or where an unqualified employee requires further training.
According to the judgement, these factors are apt to be considered as to whether an action is a case of genuine redundancy.
If clubs seek to make employees redundant who could potentially be redeployed to other roles (even if not immediately) then it is possible that this will result in their decision not being treated as a genuine redundancy. In such cases, remedies are available to workers which potentially involve compensation or reinstatement.
