In brief

The Fair Work Commission (FWC) has found that an employer's failure to consult fully with an employee when implementing his redundancy – including discussing potential impacts of the JobKeeper scheme, and changed operational requirements – resulted in the unfair dismissal of the employee. The FWC held that the employee should have been consulted in accordance with the relevant modern award and given the opportunity to propose alternatives to his dismissal, including taking unpaid leave to preserve his JobKeeper eligibility, and that the failure to provide such opportunity was unjust and unreasonable.

The case, Browne v MySharedServices Pty Ltd [2020] FWC 4445, suggests that it is unfair to dismiss an employee on redundancy grounds who is willing to alter their employment terms to preserve their own JobKeeper eligibility and remain in employment. The case also underlines the importance of full and thorough consultation with employees in accordance with any relevant awards in implementing redundancies.

The case

The applicant, Mr Matthew Browne, applied to the FWC seeking remedy for his dismissal by his employer, MySharedServices (MSS) in early April 2020. MSS had seen a significant downturn in business in March and April 2020 due to impacts of the COVID-19 pandemic and as such the positions of Mr Browne and three other employees were made redundant. MSS opposed the application on the grounds that Mr Browne's dismissal was a genuine redundancy.

Section 389 of the Fair Work Act 2009 (Cth) (Fair Work Act) sets out the requirements for a "genuine redundancy", including that any consultation requirements in applicable modern awards have been satisfied (subs (1)(b)). Here, the Clerks – Private Sector Award 2010 (as it was then called) required MSS to "advise employees of any change that may have a significant effect on their employment, the likely effect of the change and any measures being taken to mitigate the effect of the change."

At the time of Mr Browne's dismissal, the Federal Government had announced that income support to businesses impacted by COVID-19 would be provided to employees through their employers under the JobKeeper scheme. However, specifics such as the timing of JobKeeper payments and eligibility requirements had yet to be enacted or announced.

In its (brief) consultation with Mr Browne, MSS did not inform him of the nature of the business' changed operational requirements, nor was potential JobKeeper eligibility discussed.

The FWC's findings

Commissioner Bissett of the FWC held that the level of consultation and disclosure afforded to Mr Browne by MSS was inadequate to meet the modern award requirements set out above, and Mr Browne's dismissal was therefore not a genuine redundancy. Consequently, Commissioner Bissett considered whether the termination was an unfair dismissal under the Fair Work Act, on the basis that it was harsh, unjust and unreasonable.

The FWC held that the dismissal was harsh and unjust, and therefore did amount to an unfair dismissal, on the basis that MSS failed to consult with Mr Browne adequately about the changes to the business and potential opportunities for redeployment.

This conclusion was reached in part due to MSS' failure to discuss the potential impacts of the JobKeeper scheme with Mr Browne before Mr Browne was dismissed. The Commissioner held that MSS should have discussed options relating to keeping Mr Browne employed in order for him to receive JobKeeper payments, stating: "It cannot be known what might have come out of a proper consultation process... [Mr Browne] may, for example, have offered to take leave with or without pay until the situation was better understood, or until it was known how JobKeeper, having been announced on 30 March 2020, would operate and if MSS would be eligible for it. As it was, none of this occurred."

MSS argued in response to this point that at the time there was insufficient certainty about how the JobKeeper scheme would operate to know if and how it would impact Mr Browne's employment. The FWC rejected this argument by finding that "the purpose of JobKeeper was to ensure employees and their employer maintained a relationship, to minimise job loss and minimise redundancies. Whilst MSS may not have understood its operation on 8 April 2020 neither did many other employers who managed to maintain employees until such time as the JobKeeper payments came through."

Implications for employers

There are a few key takeaways from this case for employers to bear in mind:

  1. Employers will need to consider eligibility and even potential eligibility for JobKeeper before making an employee redundant. The decision makes it clear that employees should be given the opportunity to suggest arrangements by which they could remain employed and therefore in receipt of JobKeeper payments, including by altering the terms of their employment such as pay or leave.
  2. Despite JobKeeper being a voluntary "opt-in" scheme for eligible employers, employers may nonetheless be obliged to take potential eligibility into account before implementing redundancies and subsequent employee terminations.
  3. Employers should be conscious to uphold the consultation requirements in any applicable modern awards when making employees redundant – including JobKeeper and the general changes to operational requirements which lead to such redundancy. Any suggestions made by employees in response to the proposed redundancy should be genuinely considered. Failure to undertake proper consultation may be deemed a breach of the Fair Work Act even where an employee's current position is no longer required due to altered operational requirements.

While there have been relatively few decisions on the JobKeeper scheme in the context of redundancies to date, the logic of this case suggests that the FWC is likely to take a broad, pragmatic approach in assessing whether options other than terminating the employment were available to the employer at the relevant time.

The full decision is available here.

Further JobKeeper changes

Employers should also be aware of the recently-passed changes to JobKeeper under the Coronavirus Economic Response Package (Jobkeeper Payments) Amendment Bill 2020 (Cth). Significant among the changes are:

  • the extension of the scheme to March 2021;
  • decreased fortnightly payments for employees;
  • limitations on the total reduction of work allowed for an employee; and
  • altered eligibility requirements for businesses and casual employees.

In particular, employers should consider the amended eligibility requirements, and determine whether they and their employees are eligible under the new requirements. Continuing to receive payments where ineligible may result in repayment obligations to the Australian Taxation Office, and penalties are applicable where employers make "JobKeeper enabling directions" despite not being eligible for the scheme.