08 August 2023
Employers looking to downsize their workforce through redundancies need to ensure they are following a proper process to avoid unfair dismissal claims.
Under the Fair Work Act 2009 (Cth) (FW Act), a person cannot bring an unfair dismissal claim if the dismissal is a case of genuine redundancy. This happens when the employer no longer requires the person’s job to be performed by anyone else due to changes in business operations and all redundancy consultation obligations under applicable modern awards and enterprise agreements have been met.
Even if the above requirements are met, a person’s dismissal will not be a case of genuine redundancy if it was reasonable for the person to be redeployed within the employer’s enterprise or, the enterprise of an associated entity of the employer.
A recent decision of the Fair Work Commission (FWC) highlights the risk of making assumptions about what alternative roles a redundant employee might consider and thereby taking them off the table as redeployment options.
In Alesia Khliustova v Isoton Pty Ltd  FWC 658, the FWC found an employee’s dismissal was not a case of genuine redundancy and the dismissed employee was eligible to make an unfair dismissal claim.
The employee was engaged as a software engineer. The employer had determined to increase its technical support presence in India in order to be more competitive against other Australian competitors. In late 2022, the employer experienced financial challenges and decided to reduce its expenses which included removing four positions in Australia, one of which was occupied by the employee applicant, and reducing the number of people it had intended to recruit in India.
The employee’s employment was covered by the Professional Employees Award 2020 (Award), which required the employer to consult with the employees who were going to be affected by the redundancy. The employer did not comply with this process.
The employer called the employee into a meeting and told her the role was going to be made redundant. The following day, she was sent an email confirming the last day of her employment. The employee was not given an opportunity to be heard and to express her views before the decision had been made. As the FWC observed, the meeting was “at best a perfunctory exercise”.
The employer also failed to meet the genuine redundancy requirements because it was found to be reasonable to offer the employee redeployment in the Indian subsidiary. At the hearing, the employer asserted it was not reasonable to redeploy the employee to another part of the business. However, the employer was at that time recruiting staff for its Indian business, which was conducted by a related entity. The employee could have performed one of the roles in the Indian business, and the FWC accepted the employee’s evidence that she would have considered taking up the Indian role, even though it attracted a lower pay rate than her role in Australia.
The FWC found that, had the employee been consulted about the Indian role, she would have liked to work in the role for two to three months “to experience” it. The FWC observed, in relation to the employer’s assumption that the employee would not have accepted the role because it paid less, “it is dangerous for employers with redeployment options [available] to fetter offers based on their own prejudices”.
The employer therefore failed to establish the dismissal was a genuine redundancy because it had not observed the Award consultation obligation and it would have been reasonable to offer redeployment to the vacant role in India.
This case demonstrates the need for employers to ensure they follow proper procedures when handling a redundancy. This includes considering all possible options available for redeployment and avoid making assumptions that an employee is not going to consider a lower-paying role or a role in another country as an alternative option for them.
If there is an applicable modern award or enterprise agreement that require employees to be consulted about the redundancy, then a proper consultation needs to occur. An effective consultation process requires more than just holding a meeting with the employee. The consultation must give the employee an opportunity to put forward alternative points for the employer to consider before making their decision about the redundancy.
Employers should also:
If you have any questions regarding genuine redundancies or about avoiding unfair dismissal claims, please contact a member of the team below.
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.