A Full Bench of the Fair Work Commission (FWC) has recently provided guidance for employers on consultation and redeployment obligations that arise in the context of redundancies and which have important implications from an unfair dismissal perspective.
The Full Bench’s interpretation of the model consultation clause, which is found in modern awards and some enterprise agreements, appears to limit employers’ obligations to consult and redeploy employees in the context of redundancies. Notably, the Full Bench held that the announcement of a restructure as a fait accompli during consultation was permissible in the circumstances. Earlier decisions of the FWC and its predecessor, the Australian Industrial Relations Commission, typically required employers to provide a genuine opportunity for employees to influence the decision maker and consider the changes proposed to satisfy consultation obligations.
Given that the Full Bench’s decision appears to contradict earlier authorities, we recommend that employers proceed with caution and adopt a fulsome consultation process, during which opportunities for redeployment are explored thoroughly, prior to terminating an employee’s employment for reason of redundancy.
As part of a global review of its operations, an employer decided to make the positions of 100 employees redundant. An Australian employee subsequently lodged an unfair dismissal claim.
The employer lodged a jurisdictional objection to the employee’s unfair dismissal claim on the basis that this was a case of genuine redundancy and, as a result, the employee was precluded from seeking an unfair dismissal remedy.
At first instance, the FWC found that the employee’s position was redundant, but that it was not a ‘genuine redundancy’ because the employer did not comply with its consultation obligations under the applicable modern award and because the employee was not redeployed in circumstances where it was reasonable to do so.
What was the decision of the Full Bench on appeal?
On appeal, the Full Bench found that:
- the modern award required employers to start consulting with employees ‘as early as practicable’ after a decision was made, and that a number of factors may impact on the practicability of commencing discussions (including, in this case, the employer’s concerns about protecting the confidentiality of client data and the desire to manage a global restructure consistently across international offices);
- the modern award requirement to discuss change with employees affected does not require an employer to provide an opportunity for the employee to change the definite decision that it has made. The award only requires the employer to discuss certain prescribed matters, namely, the introduction of the changes, the effects the changes are likely to have on employees and any measures to avert or mitigate the adverse effects of such changes on employees (and give prompt consideration to the matters raised by employees);
- it was permissible for the employer to announce to the employee that it had made a definite decision because the employer provided the employee with an opportunity to consider the information overnight and made it clear that the employee could put other information to it for consideration;
- the employer was required by the award to give prompt consideration to matters raised by the employee in relation to the change, but failed to do so because it did not take action in relation to the employee’s request to be redeployed to an overseas position until after the redundancy had taken effect; and
- to make a finding that the employee could reasonably have been redeployed, there must be a specific job within the employer’s enterprise (or that of an associated entity) to which it would have been reasonable in all the circumstances to redeploy the employee.
Although the Full Bench found that the employee’s position was not genuinely redundant, it found that the dismissal was not harsh, unjust or unreasonable, and dismissed the employee’s unfair dismissal application.
Lessons for employers
Employers should exercise care when introducing major changes to ensure that they comply with any applicable consultation obligations, including obligations contained in modern awards, enterprise agreements, company policies and employment contracts. Employers must also consider whether it is reasonable to redeploy employees whose positions are being made redundant to another role within their enterprise or the enterprise of an associated entity.