A recent Fair Work Australia (FWA) decision acts as a reminder to employers of the importance of making appropriate efforts to redeploy otherwise redundant employees.

Implications for employers

This decision highlights the need for employers, in a redundancy situation, to take care to ensure the Fair Work Act 2009 (Cth) (FW Act) test for a “genuine redundancy” is satisfied. In particular, an employer should consider and put to the employee all potential redeployment opportunities, even those outside of the state or territory in which the employee is working at the time of redundancy. Failure to do so may lead to a finding that the termination was unfair.

Background: legislation

Under the FW Act, an employee may not make an unfair dismissal claim if his or her dismissal was as a result of “genuine redundancy” (section 385). A “genuine redundancy” occurs where:

  • due to operational changes at the employer’s enterprise, the employee’s job is no longer required to be performed by anyone; and
  • the employer has complied with any award or agreement consultation obligation; and
  • it is not reasonable in all the circumstances for the employer to redeploy the employee to another role within the employer or an associated entity (section 389).

Background: facts

Mr Aldred was employed as a construction worker in the Victorian division of J Hutchinson Pty Ltd, a large national construction company. He was terminated for redundancy, as the job he was performing on the Docklands Project was no longer required. At the time of dismissal, there were vacant employment positions in the employer’s company in Queensland, for which Mr Aldred possessed suitable qualifications, skills and experience. The evidence indicated that Mr Aldred would have accepted such a position and would have moved to Queensland at his own cost. However, senior management in the Victorian division of operations of the employer did not make enquiries about available employment opportunities in Queensland prior to terminating Mr Aldred’s employment.

Mr Aldred made an unfair dismissal application, arguing that he was not genuinely redundant and his termination was unfair.

Decision

The matter was heard by Commissioner Lewin, who found in Mr Aldred’s favour.

Was the dismissal a “genuine redundancy”?

Commissioner Lewin considered that Mr Aldred’s redundancy was not a genuine redundancy. This was because:

  • The employer had not fully complied with the consultation obligations in the relevant enterprise agreement, as it had not provided details of the changes to Mr Aldred in writing. However, this was given only limited weight.
  • More importantly, Commissioner Lewin held that it would have been reasonable for the employer to redeploy Mr Aldred to Queensland. Noting that whether or not redeployment is reasonable will depend on the factual circumstances in each case, Commissioner Lewin observed that:
    • there is no limit on the geographic area in which an employer should consider redeployment opportunities. Given the character of the work performed by the employer’s employees in this case and the fact that it was a national company, it was not unreasonable to expect it to make enquiries about interstate opportunities. Interstate transfers are not unusual in the 21st century labour market; in fact they are now “notorious”;
    • the responsibility to identify potential redeployment opportunities is primarily on the employer. In this case, had enquiries been made, a position would likely have been found. Such enquiries would not have been burdensome, given the size and scale of the employer’s business;
    • the fact that an employee does not (as in the case of Mr Aldred) expressly raise the possibility of transferring interstate does not mean it would not be reasonable to consider that option. It may not be reasonable to redeploy an employee interstate if the employee does not wish to go or insists upon unreasonable conditions;
    • there was no evidence in this case that the transfer would have been costly to the employer, despite concern expressed by the employer at hearing in this regard. Mr Aldred was content to pay his own relocation costs; and
    • Mr Aldred had made it very clear to the employer that he was keen to obtain alternative employment.

Was the dismissal unfair?

Yes. In a situation where it would have been reasonable in all the circumstances to redeploy a redundant employee, that is a relevant consideration when assessing whether termination was harsh, unjust or unreasonable. Here, the employer did not take sufficient steps to redeploy Mr Aldred to available positions in Queensland, in circumstances where Mr Aldred was not unwilling to transfer and would have done so at his own cost. It would have been just to do so. This had a significant effect on Mr Aldred.

Remedy

Commissioner Lewin did not make an order reinstating Mr Aldred as the position he held immediately prior to being dismissed had been made redundant, and there was insufficient evidence to enable him to determine whether a suitable position was now available. The matter was adjourned.

In a final decision on remedy handed down on 13 December 2012, Commissioner Lewin found that no suitable position was now available for Mr Aldred in Queensland or elsewhere. This was because the employer had undertaken extensive redundancies, particularly in Queensland. Commissioner Lewin was therefore unable to order reinstatement and instead ordered compensation of three months’ pay, noting the notoriously short term of engagements in the construction industry and the fact that even if the employer had relocated Mr Aldred to Queensland, it is likely he would subsequently have been made redundant. Also relevant was the fact that Mr Aldred had mitigated his loss and received redundancy payments from the construction industry redundancy scheme Incolink.