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Redundancy: Should employers consider overseas or interstate redeployment?

Employers must consider opportunities for redeployment within the company or its associated entities in order for a redundancy to be genuine, according to the Fair Work Act 2009. Typically the courts have applied and interpreted these provisions quite widely; for example consideration of redeployment options should include positions that are more junior or on less pay. But does this include employee redeployment to an overseas operation?

In an interesting decision last week by the Fair Work Commission, Senior Deputy President Peter Richards held that there was "no basis for a claim that it would have been reasonable in the circumstances for the [company] to have redeployed the [employee] to an international location". (Roy v SNC-Lavalin Australia Pty Ltd [2013])

In this case the employee was a mechanical designer based in Brisbane. The evidence was clear that the Australian operations of the employer company had suffered a downturn and, between August 2012 and March 2013 (when the relevant employee was made redundant) the Brisbane office had gone from 156 employees to just 71. The primary contention by the applicant employee was that the redundancy was not genuine as the employer did not take the appropriate steps to consider redeployment within the company group, specifically to one of its overseas operations.

Redeployment must meet objective and reasonable criteria

Senior Deputy President Richards, in rejecting the employee’s claim, found that not only were overseas labour market conditions unfavourable, but that the company had "never held out that it has a facility to redeploy redundant employees to international locations (even if any such appropriate positions were identified)". He also commented that the relocation costs of overseas redeployment would be a consideration in the reasonableness of any such redeployment.

The case also confirmed that “the test established by the Commission as to whether alternative employment is acceptable is an objective one, relying on comparisons of like terms and conditions, similarity of wage escalations, seniority, job security, career pathways, preservation of service entitlements, inconveniences, distance from residence or location, health and safety risks, the effect on family responsibilities, along with other factors further.”

What this means for employers

Employers can take comfort that they are not expected to consider overseas redeployment, where this is not an established expectation and it would otherwise be unreasonable.

While this case deals with overseas redeployment we can draw some parallels with interstate redeployment. Each situation will vary according to the facts of the matter, but when considering interstate redeployment employers should consider the components of the test outlined above. They should also keep good records documenting this process in the event that the decision is to proceed with a redundancy.

In all cases of redundancy the employer should be able to demonstrate that it has:

  • Thoroughly checked the availability of other roles that may be suitable for the employee. These may be roles not just within the employer’s immediate enterprise, but also within any other associated entities (if any);
  • Not assumed that junior roles, roles on less pay, or with less status will not be suitable, and give the employee a chance to consider these options; and
  • Maintained a consultative process with affected employees in relation to any proposed redundancies.

 

Christine Broad, Solicitor, BlandsLaw

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