30 September 2020
The recent Fair Work Commission (Commission) decision of Lakhan v United Petroleum Pty Ltd  FWC 4970 (Lakhan) examines whether a ‘genuine redundancy’ occurs in circumstances where the employer creates a new role that is similar to a redundant role within one month of the redundancy.
Mr Lakhan was employed by United Petroleum on 28 May 2018 as a Retail Role Specialist.
On 25 March 2020, in response to the COVID-19 pandemic, United Petroleum’s management agreed there was a need to restructure the business’ operations.
By mid-April 2020, United Petroleum’s sales had plummeted by 50 per cent and as a result of this, United Petroleum decided to restructure their retail management division. On 17 April 2020, Mr Lakhan was informed that his position had been made redundant and that his employment was therefore terminated.
On 5 May 2020, Mr Lakhan filed an unfair dismissal claim with the Commission.
On 16 May 2020, after filing his unfair dismissal claim, Mr Lakham discovered an advertisement on LinkedIn for a Retail Operations Specialist position which was strikingly similar to his previous role of Retail Role Specialist.
Given the timeline of events, the Commission recognised that Mr Lakhan had reason to be sceptical of United Petroleum’s conduct since his termination. Specifically:
United Petroleum explained there had been some errors by the human resources team, including posting the wrong advertisement on LinkedIn in mid-May 2020 which referred to the ‘growth’ of the company. Further, the events which involved Mr Lakhan applying for the new position in his son’s name and being offered an interview was attributable to both another error by United Petroleum’s human resources team as well as Mr Lakhan’s conduct in concealing his identity from United Petroleum which made his criticisms about the actions of United Petroleum ‘less compelling’. There was also a factual dispute concerning the settlement negotiations which, in any event, did not determine the case.
The Commission’s considerations of the three elements required to establish a ‘genuine redundancy’ are detailed below.
Genuine redundancy within the meaning of section 389 of the Fair Work Act 2009 (Cth) (FW Act)
Section 389(1)(a) of the FW Act – "The person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise"
The Commission was satisfied that United Petroleum’s evidence demonstrated they no longer required the job to be performed by anyone due to operational requirements. Relevantly, there were a number of similar positions that were made redundant as a result of the restructure and Mr Lakhan’s position had not been backfilled.
Section 389(1)(b) of the FW Act – "The employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy"
As there were no applicable modern awards or enterprise agreement obligations requiring United Petroleum to consult with Mr Lakhan about the redundancy, this consideration did not arise.
Section 389(2) of the FW Act – "A person's dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer’s enterprise or the enterprise of an associated entity of the employer"
The Commission applied Full Bench authorities when considering whether there were any job vacancies either open or in contemplation at the time of the dismissal. While the sequence of events were cause for scepticism, there was no evidence before the Commission that there were any open job vacancies at the time of Mr Lakhan’s dismissal.
Further, United Petroleum’s evidence established that once the COVID-19 restrictions were initially relaxed after Mr Lakhan’s dismissal, the sales performance of United Petroleum improved ‘dramatically’ and the business decided, in these circumstances, there was a need to hire more people.
The Commission was satisfied with the evidence that United Petroleum’s circumstances significantly changed in the period between Mr Lakhan’s dismissal and the advertisement for a new role less than a month later.
The Commission held that it was unreasonable for United Petroleum to redeploy Mr Lakhan at the time of his dismissal, despite United Petroleum creating a new role, which was similar to Mr Lakhan’s redundant role, only one month later.
The Commission recognised the COVID-19 pandemic had created an unstable and unfortunate climate for Australia’s workforce. However, the Commission also found that in the short period of one month the company’s business had transformed from a significantly contracted workflow – during which Mr Lakhan was made redundant – to a more settled work environment where United Petroleum quickly returned to a position where jobs could be offered.
The Commission found United Petroleum satisfied the statutory requirements for a ‘genuine redundancy’ required under section 389 of the FW Act. As a ‘genuine redundancy’ is a complete defence to an unfair dismissal claim, Mr Lakhan’s application was dismissed.
Lessons for employers
A ‘genuine redundancy’ will be determined on the relevant facts at the time of the dismissal.
There is no prescribed period of time in which a business must wait before it can decide to create a new role that is similar to a role that was previously made redundant.
However, creating a new role shortly after a role is made redundant raises the question of whether the employee could have been redeployed to that other role rather than being made redundant. The employer will need to be able to substantiate the change in business requirements between the time of the redundancy, and the decision to create a new and similar role, in order to satisfy the Commission that redeployment was not available at the time of dismissal and this element of the ‘genuine redundancy’ test is satisfied.
Authors: Louise Rumble & Declan Johnston
The information in this publication 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 newsletter is accurate at the date it is received or that it will continue to be accurate in the future.