A Full Bench of the Fair Work Commission (FWCFB) has provided guidance on the question of when an employee may be “genuinely redundant”, considering in particular the questions of what constitutes satisfactory consultation and when overseas redeployment may be required.

Implications for employers

This decision highlights that in a redundancy situation, employers need to be very careful to ensure they satisfy their consultation obligations under applicable awards and enterprise agreements. In particular, employers should be conscious of the need to genuinely consider and promptly respond to issues raised by employees during consultation.

The decision also provides valuable guidance on two issues which may be of concern to many employers dealing with their award consultation obligations (the situation may be different under a differently worded enterprise agreement consultation clause):

  • the question of balancing the obligation under awards to consult as “early as practicable” with other commercial objectives. In particular, it appears that a short period of consultation prior to redundancy being effective may be acceptable in a situation where an employer wishes to make a global announcement regarding redundancies and/or needs to protect data which may be damaged by disaffected employees; and

  • while the particular circumstances of the case will always need to be considered, it appears that overseas redeployment is unlikely to be expected where the employer’s practices and policies suggest this would be unusual. This is broadly consistent with earlier single member Fair Work Commission decisions on this subject.

Background: relevant law

Under the FW Act, an employee who is “genuinely redundant” cannot bring a claim for unfair dismissal (essentially, that the dismissal is harsh, unjust or unreasonable) upon termination. A “genuine redundancy” will occur where:

  • there is no longer a need for the person’s job to be performed because of changes in the company’s operational requirement; and

  • the employer has complied with any obligation in a modern award or enterprise agreement to consult about the redundancy; and

  • the employer has been unable to redeploy the employee within its own enterprise or the enterprise of an associated entity.

Modern awards contain a provision requiring that employees be consulted on major workplace change. Consultation discussions are required to “commence as early as practicable after a definite decision has been made by the employer to make the change”.

Background: facts

In January 2012, Mr Murray commenced employment with Ventyx as a technical project manager. In June 2012, the project Mr Murray was working on was cancelled and he began working on other projects. From May 2013, Mr Murray was placed “on the bench”, meaning that he was between projects and insufficiently occupied with work.

Around this time, Ventyx determined that its business globally was not performing to expectations. Ventyx determined to address the problem globally by reducing the number of employees “on the bench”. From the beginning of June 2013, Mr Murray’s name was on a list of employees who may be made redundant in Australia.

On 1 July 2013, Mr Murray was informed of his redundancy, to take effect from the following day. Ventyx elected not to provide employees with greater notice of their redundancies as it wished to advise all employees across the globe at the same time. Further, Ventyx had contractual obligations to ensure the integrity and confidentiality of its clients’ data and wished to avoid the possibility of a disaffected redundant employee causing damage by mishandling data.

Upon being advised of his redundancy, Mr Murray was given a list of job vacancies, including overseas vacancies. Ventyx and Mr Murray met to discuss his redundancy after 1 July 2013. Mr Murray expressed an interest in redeployment to Atlanta, Georgia, USA. However, he was advised that the decision to make him redundant was final. No real consideration was given to redeploying him to Atlanta (such redeployment would have cost at least $15,000).

Mr Murray brought an unfair dismissal claim. Ventyx resisted the claim, on the basis that Mr Murray was “genuinely redundant” and not eligible to bring the claim.

Decision at first instance

At first instance, Deputy President Gooley concluded that Mr Murray was not “genuinely redundant” and had been unfairly dismissed. DP Gooley found that:

  • it was true to say that there was no longer a need for Mr Murray’s position to be performed;

  • however, Ventyx had failed to comply with the consultation procedures set out in the applicable award. In particular, DP Gooley found that:

    • Ventyx failed to discuss the redundancy decision with Murray as soon as practicable. Ventyx’s desire to notify all employees at the same time and avoid security risk did not absolve it of its award obligation;

    • the discussion conducted on 1 July 2013 was not a discussion in effect, but rather an announcement of the decision to make Murray’s position redundant; and

    • the award required that Mr Murray have an opportunity to change Ventyx’s decision. Ventyx failed to provide Mr Murray with that opportunity; and

  • finally, it would have been reasonable to redeploy Mr Murray to one of the positions on a list of vacancies that was provided to Mr Murray during the discussion on 1 July 2013, including potentially to an overseas role. “At the very least these matters should have been fully explored during the discussion process”.

Mr Murray was awarded compensation in addition to the sums already paid in lieu of notice and by way of redundancy pay. Ventyx appealed to the FWCFB.

Decision on appeal

The FWCFB, comprised of Senior Deputy President Richards, Deputy President Sams and Commissioner Simpson, agreed that Mr Murray’s termination was a genuine redundancy, although they did not entirely agree with DP Gooley’s reasoning. They then went on to find, however, that Mr Murray’s dismissal was fair and he was not entitled to the relief awarded by DP Gooley.

On the question of “genuine redundancy”, the FWCFB noted that:

  • it was clear that Mr Murray’s position was no longer required to be performed;

  • on the question of consultation:

    • an award which requires consultation discussions to occur “as early as practicable” is intended to be applied in the context of the circumstances faced by the employer. Contrary to DP Gooley’s findings, the desire to notify all employees at the same time and the obligations upon Ventyx to ensure the security and confidentiality of its clients’ data meant that it was not practicable for Ventyx to discuss the redundancies at an earlier stage;

    • the consultation requirement in the award was premised upon the discussions with employees occurring prior to, or in advance of, the implementation of the redundancies but after a definite decision regarding the redundancies had been made. Ventyx was not required under the award to provide Mr Murray with an opportunity to change its decision. It was required only to discuss matters such as mitigation of the adverse effects of the change with Mr Murray. Ventyx had reached a “high degree of confidence” that Mr Murray’s position would be made redundant. However, Ventyx expressly left it open for Mr Murray to put forward further information to mitigate the effects of the decision. There was no evidence that the opportunity given to Mr Murray was not genuine;

    • however, although Ventyx had cleared the first two hurdles, Ventyx fell down at the stage where it was required to give “prompt consideration” to Mr Murray’s proposal to avert or mitigate the effects of the change. This was because the evidence indicated that Ventyx did not promptly consider Mr Murray’s proposal that he be redeployed to Atlanta. This was perhaps a consequence of the “limited period”provided for discussion about the change;

  • there was insufficient evidence for DP Gooley, and the FWCB, to determine whether it would have been reasonable to redeploy Mr Murray; and

  • due to the “prompt consideration” omission, Mr Murray’s redundancy did not satisfy the test for “genuine redundancy”, as it did not meet the award consultation obligation.

The FWCFB went on to consider whether Mr Murray had been unfairly dismissed, observing that:

  • there was a valid reason for Mr Murray’s dismissal;

  • insofar as Ventyx did not give proper consideration to matters raised by Mr Murray, it may be said that Mr Murray was terminated harshly. However, this element was not decisive in relation to a finding as to whether the dismissal was unfair in all the circumstances;

  • Mr Murray was not treated harshly or unfairly because he was not redeployed internationally instead of being made redundant. An employer is not required to redeploy an employee to any vacant position. The circumstances on a case by case basis may affect what is reasonable in this respect. The evidence indicated that Ventyx did not consider such redeployment practical and the Ventyx redundancy policy did not suggest that overseas relocation was an option. Ultimately, “international relocations were far more the exception than the rule … Mr Murray could have had no reasonable expectation” of such a relocation; and

  • there are no other material matters to suggest the termination was harsh, unjust or unreasonable. Mr Murray’s applicant for unfair dismissal was therefore dismissed.

Ventyx Pty Ltd v Murray [2014] FWCFB 2143