A former manager of Bendigo and Adelaide Bank (the Bank) has been awarded $187,000 plus $48,000 interest, after his appeal to the Supreme Court of Victoria was successful. Following the GFC and changing economic and business conditions, the Bank reorganised its internal  structure, moving the finance manger, Mr Gamboni to a different position; Mr Gamboni successfully argued that this internal reorganisation meant that he had actually been made redundant, entitling him to a redundancy payout.

The Bank’s redundancy policy defined redundancy as “a situation where the work being done or position held by an employee, or a major portion of it is no longer required” as a result of changes in economic or business conditions or reorganization, business or management practices etc.

At trial, the County Court decided this definition did not apply to Mr Gamboni, as a “major portion” of his work and position continued to be required after the 2009 restructure.

However, when Mr Gamboni appealed to the Supreme Court, the result was overruled.

The Supreme Court of Victoria reasoned that the post-restructure organisation “required [the manager] to perform entirely different work to which he was not qualified or suited”; that is, a “major portion” of his position was no longer required, and the restructure had effectively made Mr Gamboni redundant.

Justice Kryou, with whom the other Judges of the Full Bench agreed, highlighted the difference in the manager’s position before and after the restructure, saying that before the restructure, the manager’s work  was “almost exclusively the making of commercial property loans” performed by a stand-alone department that he managed with two (2) subordinates.

After the restructure, however, those attributes “did not apply at all to the work that [the manager] was required to perform or applied in a materially different manner”.

Overall, the Full Bench held that the manager’s position after the reorganisation resulted in a position for which he was not qualified or suited and accordingly was not only a redundancy, but also did not qualify as a suitable alternative position, permitting an entitlement to redundancy pay. The result entitled Mr Gamboni to $235,000 redundancy pay.

What does this mean for you?

In determining whether a position or job continues to exist requires thorough assessment of the extent to which the following attributes of the position have survived or been altered:

  • the nature of the work and duties;
  • the title, status and seniority;
  • reporting lines; and
  • level of autonomy.1

Further, making an employee redundant due to a restructure or reorganisation should be executed with care. This is because redundancy involves a position becoming  redundant, not an employee, which may easily become blurred or clouded by surrounding circumstances.

The change in position will be looked at in terms of the company’s policies, and whether a “major portion” of that employee’s position is no longer required.

If an employee has been terminated under the guise of reorganisation or restructure and it is later found by a court that it was not a “genuine redundancy”, a business exposes itself to  liability, which may involve paying an appropriate redundancy payout, or other remedies that follow general protections afforded to employees by the Fair Work Act 2009 (Cth).

NOTE: Most businesses with less than 15 employees are exempted from redundancy pay. It is worthwhile for employers to investigate the application of this exemption to redundancy.