If a redundancy in the workplace is genuine, section 385 of the Fair Work Act 2009 (Cth) (Act) provides that an employee will not have been unfairly dismissed.
For the purposes of the Act, a redundancy will be considered genuine if:
an employer no longer requires an employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s business; and
the employer has complied with any obligation in a modern award or enterprise agreement to consult the employee about the redundancy.
Every modern award or enterprise agreement under the Act now contains a clause requiring an employer to consult with an employee in such circumstances.
Two recent cases in the Fair Work Commission illustrate the potential complications associated with implementing redundancies.
In the first case, a firm providing security services lost a contract at one of the facilities it managed. The employer did not seek to make a particular security guard redundant. Instead it offered him an alternative position at another facility it managed. The employee however, argued that his position was redundant because he was employed to provide the security services at the particular facility for which the contract had now been lost. After some months of not attending work at the new facility, the employer terminated the security guard’s employment. The Commission found that the employer was not required to provide a redundancy payment because an alternative position had been provided.
In another case, the Commission has found that while an employee’s position was redundant in the sense that the employer no longer required the employee’s job to be performed by anyone, the redundancy could not be considered genuine because the employer failed to consult with the employee. This resulted in a failure to consider alternative options for redeployment. Without the genuine redundancy defence satisfied, the Commission found that the employee was entitled to a $59,633 compensation for unfair dismissal. The amount was reduced however to $10,829.70 as the employee had obtained another job in the interim which offset the amount of compensation payable.
The requirement in modern awards and enterprise agreements that an employer consult with its employee or employees prior to making any decision regarding redundancy is a fundamental dictate of the process. If an employer fails to consult with the employee when it is required to do so, the redundancy will not be considered genuine if the redundancy is disputed before the Commission.
