The recent Fair Work Commission decision in Mr Georg Thomas v InfoTrak Pty Ltd T/A InfoTrak [2013] FWC 1134 highlights the importance for  employers of considering both the substance and the process surrounding redundancy.

In this case, Mr Thomas, an Operations Manager of an IT company, brought an unfair dismissal case alleging that his redundancy was not ‘genuine’ because his employer had not discussed it with him or considered him for alternative positions.

Valid reason(s)

When considering the reasons for a proposed redundancy, there must not be any performance issues at play. The redundancy relates to the role and not the person. The role itself must no longer be required. In this case, Commissioner Roe held that there were valid reasons for the redundancy and that the employee’s role no longer existed despite the employer previously raising some general performance issues with the employee.

Redundancy without consultation = unfair dismissal

Critically, however, the employer failed to consult with the employee about the proposed redundancy. The employee was covered by the Professional Employees Award which includes an obligation on employers to consult with employees where there is a major workplace change. A redundancy is a major change and the employer should have discussed the proposed change(s) and their adverse effects with the employee.

The employer’s failure to consult meant that the employee’s redundancy was not a ‘genuine’ redundancy as set out in the Fair Work Act. The dismissal was held to be unfair and an order was made for compensation of just over $10,000. Whilst redeployment may not have been very likely, the employer still had to discuss the changes and consider any possible options, with Commissioner Roe describing it as a “common sense matter” [para 39].

What does consultation mean?

Most awards or enterprise agreements include a provision which obliges employers to consult with employees in relation to potential redundancies. What does this mean in practice?

1. Offer a support person – An employee whose role is to be made redundant should be given sufficient notice of any meeting to discuss the proposed redundancy, and offered the opportunity to bring a support person to the meeting.
2. Consider all redeployment options – The employer needs to consider whether the employee can be redeployed to another position within the business or an associated enterprise. The redeployment options should be carefully canvassed and include consideration of positions which may involve less pay or a reduction in seniority. The options can then be discussed with the employee in the meeting.
3. Have a genuine discussion – At the meeting ensure that there is a genuine and interactive discussion which explains the nature of the changes and includes asking the employee for their input. This discussion is not to justify the reasons for the redundancy but rather to explore all possible options together with the affected employee. It is also an opportunity to put any other positions to the employee for their consideration and feedback.

The lesson for employers here is that a redundancy must be based on valid reasons and the correct process must be followed, for it to be considered genuine under the Fair Work Act. In particular, employers should be aware of their obligations to consult employees and consider all available redeployment options. Failure to follow the correct process or the mishandling of a situation may result in a redundancy becoming the subject of a subsequent claim.

Sarah Waterhouse, Paralegal, BlandsLaw