Key Points:

There is a substantial obligation on the employer to place an otherwise redundant employee elsewhere in its organisation, including within associated entities if it wishes to avoid an unfair dismissal claim.

Employees are unable to make an unfair dismissal application when the dismissal is a "genuine redundancy". Section 389 of the Fair Work Act provides that a redundancy is genuine if:

  • the employee's job is no longer required to be performed by anyone because of operational changes in the employer's enterprise; and
  • the employer has complied with any obligation to consult about the redundancy in a relevant industrial instrument.

Additionally, for the redundancy to be genuine the employer must seek to redeploy the employee elsewhere in the enterprise, including to an associated entity, a matter we looked at in October's Workplace Relations Insights.

Since then, a Full Bench of Fair Work Australia (FWA) has further clarified the employer's obligations in redundancy situations (Ulan Coal Mines Ltd v Honeysett & Others; Murray & Ors v Ulan Coal Mines Ltd [2010] FWAFB 7578).

Timing and relevant matters

The question whether redeployment is reasonable is to be applied at the time of dismissal. Relevant matters include:

  • the nature of the available alternative position;
  • the qualifications required to perform it;
  • the employee's skills experience and qualifications;
  • the location of the position in relation to the employee's residence; and
  • the remuneration offered.

What is a "suitable job" for redeployment?

It is one which the employee has the skills and competence to perform to the required standard, either immediately or with a reasonable period of retraining.

Redeployment requires the placing of an employee into another job

An essential part of the concept of redeployment is that a redundant employee is placed in another suitable job in the employer's enterprise (or an associated one) as an alternative to termination. Advertising a suitable alternative position and requiring the employee to apply and compete with other applicants for the position might subsequently lead to the dismissal being found not to be a genuine redundancy.

Redeployment to associated entities

The "degree of managerial integration between the different entities" will be relevant. If the employer is part of a group of associated entities which are all subject to overall managerial control by one member of the group, then subjecting a redundant employee to a competitive process for an advertised vacancy in an associated entity may result in a finding that the employee was not genuinely redundant.

Alternatively, if the associated entity operates as a stand-alone operation and, for instance, has its own enterprise agreement with its own redeployment processes, then lesser steps may be required in attempting to redeploy into that associated entity.

What does this mean for employers?

There is a substantial obligation on the employer to place an otherwise redundant employee elsewhere in its organisation, including within associated entities, if it wishes to avoid an unfair dismissal claim.