Those good-natured consultation requirements contained in modern awards (and enterprise agreements) have shown their teeth in a recent decision by the Fair Work Commission that resulted in InfoTrak Pty Ltd paying a redundant employee over $10,000 in compensation.

When Georg Thomas’ employment was terminated on account of redundancy, he lodged an unfair dismissal claim. But what about the exemption you say? In order to escape the perils of an unfair dismissal claim, an employer has to do a little more than simply exclaim “redundancy!”

To amount to a “genuine redundancy” for the purposes of the unfair dismissal exemption, three boxes must be ticked. First, the termination must actually be because the employer no longer requires the employee’s job to be performed by anyone, and not a lazy approach to managing performance or conduct issues. InfoTrak cleared this hurdle because of cashflow problems.

An employer must then comply with consultation obligations in any applicable modern award or enterprise agreement. This obligation is often overlooked. Indeed, it’s where InfoTrak dropped the ball. Mr Thomas was covered by the Professional Employees Award 2010, and like all modern awards, it required InfoTrak to have a compulsory heart-to-heart with Mr Thomas prior to making a decision in relation to termination.

The third box to tick to meet the “genuine redundancy” exemption is exploring possible redeployment opportunities within both the employer’s business and associated entities. Consultation obligations are designed to facilitate this process by compelling employers and employees to get together to chat about potential alternatives to dismissal.

The FWC found that had InfoTrak complied with its consultation obligations, an alternative to termination may have been identified, ordering a $10,000 payment in compensation. A very costly procedural mishap, and a very good reason to consult.