Don’t Discount Redeployment Options to a Junior Role When Making Employees Redundant

The Fair Work Act 2009 (Cth) (“the Act”) provides guidelines and provisions on the process of dismissing an employee, and in what circumstances a dismissal may be consider unfair. Under the Act, an employer will be exempt from an unfair dismissal remedy if the dismissal is made by way of a redundancy. However, the redundancy must be one that is considered genuine. At s389 of the Act, a person’s dismissal is not classed as a genuine redundancy if “it would have been reasonable in all the circumstance for the person to be redeployed within (a) the employer’s enterprise; or (b) the enterprise of an associated entity of the employer”.

FWA has considered the notion of a genuine redundancy and redeployment in various cases, and in particular, has addressed the issue for redeployment to a more junior role or a lesser paid role. In August 2010, in the matter of Gim Pheng Ho v A. P. Eagers Limited (U2009/13208) the applicant was an accountant for a car dealership. He was 62 years old, and argued that he was unfairly dismissed on the 9 October 2009 following a restructure where he was made redundant. The applicant was successful in his argument that even though his position no longer existed, he was not afforded the right to apply for, or be redeployed to the more junior position of ‘assistant accountant’ which was on a lesser salary. Commissioner Simpson stated that the redundancy was not a genuine and that the applicant’s dismissal was harsh and unreasonable in all the circumstances. The applicant was awarded $25 000 in compensation. When making his decision, Commissioner Simpson drew attention to s389 of the Fair Work Act and stated that this provision was meant to be read widely, and that intention of the provision was to ensure redeployment options remained open for employees to consider, whether those options were more junior or not.

As recently as August 2011, similar circumstances were considered again in the matter of Iryna Margolina v Jenny Craig Weight Loss Centres Pty Limited [2011] FWA 5215. In this matter, the applicant was a manager for a Jenny Craig Weight Loss Centre who was made redundant after a restructure. The company did not offer her another position, even though a more junior one was available, and stated that management thought she would be insulted to be offered a lower paid role. Additionally, the company failed to follow the provisions of the Clerks-Private Sector Award by failing to follow any sort of consultation process with the employee, and therefore denying the employee the right apply for, and possibly be redeployed to, another position. Commissioner Ryan went on to state that

“By being precious about not wanting to ‘insult’ the [manager] with an offer of redeployment to a lower paid position [Jenny Craig] denied both itself and the [manager] the opportunity of properly considering the reasonableness in all the circumstances of redeployment of the [manager] to a lower paid position within the [company’s] enterprise.”

Lessons for employers

These two cases highlight how important it is for employers not to automatically assume that an individual would not be interested in a more junior role in a redundancy situation. In all cases of a restructure resulting in a redundancy, the employer should;

• Thoroughly check 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.
• Not assume 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
• Maintain a consultative process with affected employees in relation to any proposed redundancies.

For more information on redundancy, please contact us.

Authors: Andrew Bland, Principal and Danica Leys, Solicitor.