UES (Int’l) Pty Ltd v Harvey [2012] FWAFB 5241

Mr Harvey was employed by UES as a storeperson. Due to a downturn in business, UES decided that it was necessary to reduce its warehouse staff from four employees to three. Mr Harvey was the warehouse employee chosen for redundancy because it was determined that he was less efficient than his coworkers.  

Although Mr Harvey’s redundancy was genuine in the sense that UES no longer required his job to be performed by anyone and there were no reasonable options for redeployment, it was not a “genuine redundancy” for the purposes of the Fair Work Act because UES failed to consult with Mr Harvey about the redundancy as required by the modern award that covered his employment.  

Since the dismissal was not a case of “genuine redundancy”, Mr Harvey’s unfair dismissal claim could proceed and FWA was required to consider whether his dismissal had been harsh, unjust or unreasonable.  

The issue then became whether FWA could consider the process used to select Mr Harvey for redundancy when deciding whether the dismissal had been harsh, unjust or unreasonable and particularly whether there was a valid reason for the dismissal.  

The Act is clear that, when considering whether there was a “genuine redundancy”, the selection process for the redundancy is not a relevant consideration. The majority of the Full Bench decided that, if the selection process cannot be considered when determining whether or not there was a “genuine redundancy”, the logical conclusion is that the selection process also cannot be considered when determining whether or not there was a valid reason for the dismissal.  

In reaching this conclusion, the majority of the Full Bench overturned the initial decision of Commissioner Ryan. The decision also deviates from previous decisions of the Federal Court and the former Australian Industrial Relations Commission, although those decisions were made in a different legislative context.  

Ultimately, the majority concluded that the dismissal was unfair due to UES’ failure to consult with Mr Harvey about his redundancy. However, they reduced the compensation that he was originally awarded by Commission Ryan by almost 80%. Commissioner Ryan had based his award on the notion that Mr Harvey would have remained employed for a further 8 months had he not been dismissed. Given that their finding that the dismissal was unfair was entirely based on UES’ failure to consult, the majority of the Full Bench determined that Mr Harvey’s compensation was limited by the fact that if UES had consulted with Mr Harvey this would have only delayed his dismissal by two weeks.  

It is also important to note that, while the majority determined that the selection process for redundancy is not relevant to whether or not there is a valid reason for dismissal in the context of an unfair dismissal claim, employers must still take care to ensure that their selection processes are in no way discriminatory, because a discriminatory process may expose an employer to an adverse action claim or a claim based on State or Federal discrimination legislation.